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Mubarak has proved himself a classic dictator, who would rather Civil War than relinquishing power, and the West must step in. What cause do these obviously interested parties have, turning violence and intimidation against largely peaceful campaigners, in comparison to Egyptians demonstrating for change, Human Rights, against torture and for democratic structures? None. It is like the Miners being bussed in to Bucharest in Romania to beat people up. If Mubarak is a true leader and an Egyptian he must step down now, and go with dignity, for the future of his own country.

How Apple Saved Barnes & Noble. Probably.

Happy blackout anniversary! Where were you when the lights went out? We’re sending out a series of alerts this week and next that look at the state of e-books, authorship and publishing to mark the one-year anniversary of the Great Blackout, when Amazon attempted to protect its near complete dominance of the rapidly growing e-book market through a stunning, punitive act against a publisher that dared to challenge its terms. (To see our account of this showdown as it happened — posted last Groundhog Day — go to “The Right Battle at the Right Time.”)

It was one year ago last Saturday that Amazon turned out the lights on nearly all of Macmillan’s books, removing the “buy buttons” from the print and electronic editions of thousands of titles. Macmillan authors, many of whom had linked their websites to Amazon pages that were suddenly disabled and useless, found themselves cut off from readers who frequented the dominant online bookstore.

Amazon’s stunning move was a preemptive strike, an attempt to keep Macmillan from going through with its plan to shift to an “agency model” for selling e-books. Macmillan, which immediately saw its online sales plummet, stood firm and prevailed: Amazon ended the blackout after a week.

The story of the blackout and its aftermath reveals much about the high-stakes device and format war that’s reshaping the publishing industry. Last year’s Amazon-Macmillan showdown was a critical battle in that war.

One Year Ago: Amazon’s 90% E-Book Market Share

By last January, Amazon seemed destined to retain an overwhelming share of the e-book market. It then, by most accounts, commanded about 90% of the U.S. trade e-book market. Barnes & Noble had entered the game just two months before, launching the Nook in time, barely, for the critical holiday season. Few in the industry were optimistic about Barnes & Noble’s e-book efforts, however.

Amazon’s strategy, it seemed clear, was to leverage its formidable advantages — including its dominance of the online print book market — to all but lock up the e-book market. If it was successful, Amazon would control the equivalent of a vast online book club. Any publisher wanting to sell to the club would have to agree to Amazon’s terms. This was an ugly prospect: book clubs tend to be resilient, but ultra low-margin enterprises for all involved, except the proprietor.

Amazon went all-in with the Kindle and its proprietary e-reading software. This commitment was most evident on Amazon’s home page — surely the most valuable retail space on the Internet — on which it featured the Kindle nearly every day since its launch.

Amazon’s most potent weapon in the e-book format and device war, however, was the strategy it deployed so effectively in its conquest of online bookselling: using its seemingly limitless financial resources to discount books at rates no competitor could long sustain. Amazon now pushed this tactic to a new level, routinely buying e-books at wholesale prices of $13 and $14 and immediately selling them at a loss, for $9.99. This not only built customer enthusiasm for the Kindle and e-books, but helped crush online and offline competitors that were selling physical books. Amazon could win the future as it finished off the past.

The prospects for Barnes & Noble in this environment were decidedly grim. Its net income had plummeted during the recession, falling 65% in two years. For Amazon, however, it was as if the Great Recession hadn’t happened. Its revenues had grown 65% and its net income increased 72% over the prior two years. Its market capitalization, which had climbed past $55 billion (it stands at $77 billion today), towered over Barnes & Noble’s $1 billion.

The e-book market, by all appearances, was for sale to the highest bidder — the retailer willing and able to sell the most digital books at a loss. Barnes & Noble was in no shape to compete against Amazon in that game.

Then the game shifted.

Enter Apple
On Wednesday, January 27, 2010, Steve Jobs announced the launch of the iPad and the iBookstore.

Apple wouldn’t sell e-books under the reseller model that Amazon had been using to lock down the market. (Under that model, the publisher sells e-books to a reseller at a discount of about 50%. The reseller can then sell the e-book at any price, constrained only by antitrust law and the reseller’s ability to absorb losses.) Instead, Apple would sell e-books under the same “agency model” it used for iPhone apps. Under the agency model, Apple acts as the publisher’s agent, selling e-books at the price established by the publisher and taking a 30% commission on each sale. To participate, a publisher would have to agree to a set of ceilings on e-book prices, generally $12.99 or $13.99 for new books. A publisher would also have to agree not to sell to others under more favorable terms.

If the agency model took hold, unfettered discounting of e-books would be out. Amazon would lose its ability to buy market share in a nascent, booming industry.

Five of the big six trade publishers (not Random House) allowed their logos to be displayed at Apple’s iPad announcement. The next day, Thursday, Macmillan CEO John Sargent informed Amazon that it would be shifting to the agency model when the iPad was released. It appears that he was the first publisher to do so.

If there were any doubts about the stakes in this battle, they were erased the following day, when Amazon retaliated by removing the buy buttons from all Macmillan titles (with exceptions for textbooks and scholarly books, where Amazon faced stiff online competition). It removed the buy buttons from all editions — not just the electronic version — in an attempt to use its clout in the print book industry to enforce its preferred business model in the e-book industry.

Though the e-book market was growing fast, cutting off Macmillan and its authors from Amazon’s print book market — Amazon controlled an estimated 75% of online trade book print sales in the U.S. at the time — was far more punitive than just severing Macmillan’s ties to the e-book market. Amazon had used this buy button removal tactic before to punish publishers in the U.S. and the U.K. who fail to fall in line with Amazon’s business plans, but it had never done so as boldly or comprehensively.

Amazon blinked, perhaps after consulting with antitrust counsel. After a one-week blackout, Amazon and Macmillan came to terms, and Macmillan could sell e-books through Amazon using the agency model. Four of the other big six would come to terms with Amazon on the agency model. Random House, the largest trade publisher, has chosen not to use the agency model, for reasons we will describe in the future (hint: Stieg Larsson).

One Year Later

Barnes & Noble is, unexpectedly, the biggest beneficiary of Apple’s entry into the e-book market. With five of the big six trade book publishers using the agency model, Barnes & Noble was able to enter the e-book market based largely on its customer relationships and on technological innovation, rather than on its willingness to burn through capital to subsidize book sales. Its share of the e-book market has grown rapidly over the past year, approaching 20% of trade sales. Its introduction of the Nook Color reportedly gave it a substantial lift over the holidays.

Barnes & Noble still finds itself subsidizing sales of Random House e-books — it generally matches Amazon’s price on those titles — but those costs appear manageable. Barnes & Noble faces substantial challenges, as do all physical bookstores, as publishing moves to its partly digital future, but it appears to have regained its footing. Should the agency model ever collapse, however, Barnes & Noble could quickly find itself at Amazon’s mercy. Amazon’s growth and profitability continue to soar, and its appetite for out-discounting competitors at any cost appears undiminished.

In the meantime, Apple is not standing still. According to numerous, but conflicting, reports Apple may be revising the terms for booksellers using iPhone and iPad apps as e-readers. We will be watching these developments closely.

Since this is about the adventure and love of writing and stories, Phoenix are proud to announce that we will first publish Fire Bringer and The Sight, by David Clement-Davies, to eBook on February 14th, 2011, Valentine’s Day.

Many book lovers, book worms, and avid readers alike are self-confessed ‘luddites’ when it comes to the revolutionary technology of the internet, and eReading tools like Kindle. Sometimes their fear that such things will drive out the conventional book is completely understandable, yet perhaps it is also a little like some 18th century country yokel looking at the first Steam Engine, and seeing there the work of the devil, or the end of the world. Perhaps every generation experiences the end of the world – as they know it. Part of the problem of course is mythification, and one of the ways to deal with that is to do it yourself. If you download the free Mobipocket creator, from the internet, you will very quickly see what an eReader really is. In fact, you have one in front of you right now. MobiPocket though translates the text from say a Word document, once uploaded, and allows you to preview it up on your web browser, on a laptop, PC or mobile, as others would view it too. There you will very quickly see the need for the simplest formating in the original document, if you are to go to eBook, and above all with text that is not ‘Justified’, ie squared to the shape of a page, because eReaders flow the text in to fill the screen size, and Justifying in the original can break text up, or spread it across a page. If you increase and decrease the size of your web browser page then, just by pulling in and out the edges, the text will adapt and you can recreate the size and shape of say a Kindle screen. Other tips include formating text to contain ‘before’ and ‘after’ spacing, at certain points, because the net langauge, html or Xml, will not always recognise spacing. The biggest mistake conventionally published authors make is to hope to simply translate the format of printed books, and that can’t happen because eReaders have different screen sizes. The rule of thumb is KEEP IT CLEAR AND SIMPLE.

Voila – that is all an eReader is too, and with your web browser open in Mobipocket you will have a primitive one in front of you, without spending a cent. EReaders and the Kindle are nothing more than viewing screens, like single, digital pages. Admittedly they can do specific things, like Justify, change font sizes, and bookmark, while the strength of the Kindle is that it is far superior to a web browser, or something like Ipad, in terms of the way it presents text, in front of your eyes. So it goes for maximum readability, light resolution, grey scale etc, to make it the most comfortable reading experience, and of course can store hundreds of books in one place. Kindle’s genius though is that it is led by Amazon, which has already dominated the market in terms of book sales and distribution, and probably seriously damaged conventional publishers into the bargain. That is also what the modern book revolution is about, dominating the market by creating the most succesful ‘platforms’ to publish on. It began with Self Publishing models too, like POD, print an individual book to order, or ‘Publish on Demand’. Though it remains true that is of most benefit to companies like Amazon and Lulu, by generating immediate income, and not to individual authors – although there are exceptions – who quickly find they are swamped by all there is out there. Then the self published authors face the greatest challenge of what publishing is so ruthlessly about nowadays – marketing. From Kindle to Sony Ereader though, to Barnes and Noble’s Nook, and many others, which will drop in and out of the market, they are all just publishing platforms, and in essence no more than handy screens, where you can access the ether cloud of books. No great mystery then, no great fear, and not to be treated with too much Hoo-Ha either. Conventional books meanwhile, now offer, and should see themselves as offering, something entirely different to eBooks, beyond the information or story; design, physical ownership, the love of the page, the delight of bookshops and libraries, a stronger sense of the author. But the eRevolution is unstoppable, with both positives and negatives, and there the key is not how things are being read, but what is being read and enjoyed – Phoenix Ark Press then can only hope to contribute and succeed with what is surely the true key to it all, certainly in terms of fiction: the love of great story!

With thanks to our chum Dinah, who may have contributed this seeing something of how Phoenixes need the flame. If you would like to contribute any remarkable, favourite, or appropriate bits of poetry to the Poet’s Sweatshop, please contact the blog direct.

So, when the crowd gives tongue
And prophets, old or young,
Bawl out their strange despair
Or fall in worship there,
Let them applaud the image, or condemn,
But keep your distance and your soul from them.
And, if the heart within your breast must burst
Like a cracked crucible and pour its steel
White-hot before the white heat of the wheel,
Strive to recast once more
That attar of the ore
In the strong mold of pain
Till it is whole again,
And while the prophets shudder or adore
Before the flame, hoping it will give ear,
If you at last must have a word to say,
Say neither, in their way,
“It is deadly magic and accursed,”
Nor “It is blest,” but only “it is here.”

Stephen Vincent Benét

I’ve just joined the US Author’s Guild, and boy do they beat the UK in the support stakes. As charming as the Society of Author’s magazine is, as useful as 10% off books in shops may be, the US Authors Guild’s hello email virtually blows you away. Not only do they invite you to make use of immediate members advice and support, and to link your websites to their system for improving rankings, but they also offer to build you a website in a week, free. Of course they may benefit, but it is typical of that most appealing thing about the US, for us fustian, guilt-ridden Europeans, that instant can do attitude. Except of course when you get into their bad books, and then the US quickly proves they can-do you! Now we’ll see if they have anything helpful to say about what happened in New York with a publisher, but in this instance, God Bless America! DCD

Sir Paul Nurse’s excellent programme on the Science-Understanding gap, for the Horizon series, was accessible, human, and very measured. It was a delight to see him trip up journalists like James Delingpole, who exposed the so-called ‘ClimateGate’ story, and accuses others of ‘political’ interests, as if journalists don’t have their own interests too. In the Global Warming debate, which a majority of Americans and 30% of Britains still don’t believe in, he highlighted time and consensus, and there is plenty of both. But if there is a doubt about wider ‘environmentalism’, in a subject that can sometimes become a blinding catch-all, not to mention very doom laden, why don’t scientists just point out the blindingly obvious? If you balance the time they took to create – gas, coal, oil, fossil fuels – are simply finite resources. Obvious fact, that might force us to set our eyes on our children’s futures, and the Horizon. It’s why, apart from dealing with carbon emissions, technologies must change, and as quickly as possible, to generate new and cleaner energy sources, quite apart from the ghastly prospect of BP now joining up with Russia to drill in the arctic. Unless BP truly did learn something from Mexico, with true heart, and not just responding too late to public outrage. Time and again though the lesson is that profits cut the corners, and we learn, but often learn too late. Quite apart from melting Ice Caps though, what are all those drilling platforms going to do to a complex and fragile biosphere, and what can really be protected? It is the same issue with primary rainforests, the massive deforestation of the Amazon that perhaps only united Global political action can stop, and reminds you of the Anthony Newley song “Stop the World, I want to get off!”

Then Paul Nurse turned to more delicate subjects. First the hugely emotive issue of GM products. He pointed out how unreasoned are the attacks on GM, very often, as atavistic as that ‘thou must never meddle’ orthodoxy, in a world and with a species that has always been about ‘meddling’. But more interesting was the New Yorker who tore up the medical prognosis of having just two years to live, after being diagnosed with HIV. Then he treated himself with a diet regime and has been alive for thirteen years. It might inspire the joke ‘Don’t trust me, I’m a Doctor’. In response, Nurse talked well of the complexity theory, the danger of assumed cause and effect, and why in the mysteries of medicine, the New Yorker might have a point. We know the complexity of the immune system, and sense the role the mind takes in it, and there are many people who have refused to swallow the ‘truth’ of a medical situation, and found a way through. Nurse attacked the arrogance of scientists too, who do not engage with the public to tell us what we need to know, and more importantly to understand. They might think like the layman more, sometimes, to be more persuasive. To me the issue with the assumed truths of science is that the whole history of science has time and again been about waking up to new conceptions of ‘reality’, and increasingly complex levels of interrelations and possibilities, but the nobel prize-winning Nurse stressed those vital bulwarks of experiment and observation, and is a very attractive addition to the presidents of The Royal Society.

DRAGON IN THE POST – NEXT INSTALMENT, AND A LITTLE MOVIE TO SPREAD THE ONLINE MAGIC!.

One of the most charming stories Phoenix has heard recently came from a friend directing a programme on Nuclear Submarines, and their bases in Scotland. With one always at sea, the key is supposed to be a stealthy secrecy, fearlessly patrolling the oceanic depths, and maintaining the sterling defence of the realm. What has some of the more secrecy minded vaguely exasperated though, among all that billion pound technology, is a little live webcam sitting somewhere on a hill, overlooking one particular estuary, so that every time the warhead carrying subaquatic juggernaut sets off on a jaunt, the fact is relayed straight to whoever happens to be watching at the time. You can’t imagine that happening in the US or Russia, but in dear old Blighty we clearly have an eye on those universal democrat values!