Shatzkin notes three interesting statistics that came up in All Romance’s presentation at DBW:

• Only 20% of All Romance’s readers strongly resist e-books with DRM.
• 96% of All Romance’s e-book sales by volume are DRM-free.
• 91% of All Romance’s titles are protected by DRM.

He points out:

What this means is that the nine percent of All Romance’s offerings that do not have DRM are selling 96% of their units overall. And since only 20% of their customers find DRM as a strong deterrent to sales, that means those fledglings are outselling all the majors for other reasons.

What might those reasons be? Shatzkin speculates, but doesn’t really come up with any solid reasons. My own speculation is to wonder whether even those people who don’t “resist” DRM could nonetheless be swayed toward embracing DRM-free because they recognize the advantages it has. I know I don’t “resist” e-books from Amazon or Barnes & Noble if they’re not available anywhere else, but I’m more inclined to buy something if I see it’s DRM-free.

But the more interesting thing to me is how much this and other news coming out of DBW suggests that DRM is being discussed at industry events a lot, rather than just being taken for granted as “that thing we don’t publish e-books without.” Might this suggest e-book DRM could be on the beginning of its way out? It still seems a bit unlikely—but then, so did the music industry ditching DRM before it did. How much bigger will Amazon have to get before publishers decide the paper(less) tiger of e-piracy is the secondary threat?

Among the larger issues he predicts will be getting attention are the matters of territorial restrictions on e-book sales, and publishers figuring out how to form direct relationships with consumers. He also thinks more publishers will start experimenting with new business models such as subscription services.

Other subjects worthy of attention include the continuing problem of metadata, reducing reliance on physical book inventory, how a move toward self-publishing will affect the business models of literary agents, and the fate of bookstores and public libraries in an e-book world.

Perhaps the most interesting thing about this article isn’t so much any one thing mentioned in it, but the way that Shatzkin sees the publishing industry continuing to change over the months that come. It wasn’t so long ago that one might confidently expect the publishing industry in nine months to look pretty much like the publishing industry today.

This publisher felt that the advances in reducing the cost of small-scale publishing should make it that much easier for him to publish books. He wasn’t concerned by all the self-published stuff he would be competing with, since 99% of it would be dreck, but as Shatzkin points out, it’s not just self-published stuff he had to worry about—it’s the stuff put out by organizations that have big names in other fields but have heretofore stayed away from books, as well as stuff being given away for free.

At Digital Book World, some panelists expressed concern that there might be enough free promotional books being given away that people will just read them and not bother buying commercial books. And news has also come out that the New York Times and ProPublica are also getting their feet wet in publishing actual books: the New York Times is publishing a $5.99 e-book on the Wikileaks affair, and ProPublica is publishing a 99 cent Amazon Single on the Mumbai terrorist attacks.

Remember when it used to be that in the weeks after some major story broke, like Iran-Contra or 9/11 or the O.J. Simpson trial, you’d see a veritable blizzard of “instant books” published as writers and publishers tried to chase the ambulance as quickly as they could? Now it’s possible for major-name respected journalistic institutions to do it themselves.

Shatzkin notes:

Ten or fifteen years ago, “Open Secrets” would have been an “Instant Book” from a major publisher (if it were anything at all.) The Times could have an opportunity like this 10 or 20 or 30 times a year. They provide themselves with brand extension, revenue, an opportunity to give more exposure to their reporters and their reporting, and total flexibility without the need for the complexities, including contracts and corporate interactions, that arise when getting a book published by somebody else.

So the publishing industry is going to heat up with more competition to independent publishers, including e-publishers. In addition to “free samples,” cheap and free content from respected news and other institutions will give publishers more competition for readers’ scarce attention (and dollars). And the instant-publish ability of e-books will only exacerbate this. situation.

It’s no wonder publishers are getting nervous.

This comes by way of a survey presented yesterday at Digital Book World by Mike Shatzkin of the Idea Logical Company and Constance Sayre of Market Partners International. Apparently as many as 1/3 of agents claim to have negotiated 50% royalty deals. Furthermore, 90% of agents have clients who are potentially interested in self-publishing.

Certainly, authors such as J.A. Konrath who self-publish through Amazon can end up with 70% royalty rates, which isn’t too bad at all—though it does require the writers to do a lot more work on their own than they would have to do with a publisher’s backing.

Nice as it would be for authors to get higher royalties on their books, I have difficulty imagining most publishers being too happy about letting that camel’s nose into their tent. After all, the industry is struggling right now as it is, and e-books are only going to make up a greater and greater percentage of sales—and thanks to agency pricing, publishers are getting considerably less for an e-book sale than for a paper one already.

But who knows. I suppose it’s always possible that publishers might be able to figure out some way of producing books more efficiently in order to stay afloat—but then again, there’s considerable incentive for them just to go ahead and keep that extra money.

Of course, this kind of holds true for adult books, too, at least to an extent. And the star rating system on the app store at least provides some idea of how good or bad a given app is going to be. The eBookNewser piece is rather brief, and does not really go into detail as to exactly what kind of curation the panelists were suggesting, however, beyond a potential for affiliate sales programs.

There is at least some curation already out there, of course. Kids Book Review is an app that reviews other children’s books, for example. But certainly as new as the e-book industry is, there’s still plenty of room for more.

The discussion between American publisher Carolyn Savarese and UK publisher Andrew Franklin is interesting to me, as it presents a sort of microcosm of the positions of the US and UK publishing industries as a whole. The larger US industry could readily serve the 1.4 billion English readers worldwide, and the smaller UK industry seems to be feeling threatened. European readers have been slower to move to e-books than American readers, but once they catch up there is going to be even more demand for books that are currently being restricted by region.

Readers from all over are still being extremely frustrated by this issue, and Shatzkin expects that this globalization may well be next year’s Digital Book World’s dominant theme. As I’ve said before, this is an issue that really needs to be fixed somehow. If they can’t find a way to give consumers what they want legally, many consumers will take it illegally, depriving the publisher and author of money the reader would otherwise have been happy to pay them.

One challenge has to do with knowing some change is going on or about to go on in digital publishing, but not knowing who is a part of it or whether those who are will talk about it. The other has to do with with publishers being willing to discuss things privately, but not publicly—e-book royalty rates, for example.

And as with any business, nobody wants to reveal everything they’re doing in the presence of the competition.

The post is an interesting reminder that publishing, and e-publishing, is still a highly-competitive business, and running conferences for such businesses can be a tricky balancing act. But Shatzkin feels that the advisory council is up to meeting the necessary challenges.

F+W Media announced today the launch of its Digital Book World Community, a new industry resource for book publishers and publishing professionals offering educational and informational resources designed to help them successfully navigate the digital transition. The Community springs forth from the successful inaugural annual conference which was held last week. Guy LeCharles Gonzalez, Director of Programming and Business Development, will continue to head the community, in close collaboration with a newly formed Community Advisory Board. A conference recap, schedule of upcoming seminars, WEBcasts and weekly roundtables; and regularly updated news and commentary from industry professionals can be found at the newly relaunched www.digitalbookworld.com.

Peter Balis, John Wiley and Sons; Niel Del Young, Hachette Book Group; Leslie Hulse, Harper Collins; Andrew Weinstein, Ingram Digital; Mark Coker, Smashwords

Ingram: in ebook supply chain a lot of posturing going on and in a gawky stage. Roles are still shaking out. Still a role for wholesaler in the supply chain. They provide multi-publisher aggregating platform for retailers. They keep track of all the retailers selling the publishers’ books. For majority of US publishers, enforcing territories by the billing address of the purchaser seems to be becoming the standard. Adobe platform is something to watch for 2010 – they are trying to foster innovation. No shortage of 4 color ebooks out there, but since Amazon/Kindle dominates the conversation this means that most people don’t even know about them.

Wiley: understand how supply chain operates, but don’t have a standard operating procedure for digital, but upstream and downstream. Basic formats are PDF and Epub. One reason that ebooks may not have cover is that the publisher could not get the digital rights to the image. Especially true of older books. Wiley can’t afford to deal with small retail accounts and an aggregator makes sense for them. No good way to audit sales make by retailers. Majority of titles they see are not hacked ebooks, they are primarily manuscripts, galleys and scanned paper books. Blio/Microsoft should be watched in 2010.

Harper: had to do a big effort to get the digital rights and establish the royalties for digital. Many times had the digital rights but no royalties were established. Need wider adoption and implementation of Onix. Incomplete integration with Onix is hurting ability to get ebooks distributed. Is a need for an independent auditing body for digital sales. Dark horse for 2010 is Blio/Microsoft.

Hachette: just because we go to Epub doesn’t mean that all the people downstream in the chain can take the file and so delayed implementation until could make this work. Hachette currently restricts ebook sales to US because territories can change daily and hard to flow this info out to supply chain. Also hard to track supply chain to see if proper territorial information has been transmitted down the chain and complied with. Blio/Microsoft should be watched in 2010.

Mindy Stockfield, Hyperion; Robert Gottlieb, Trident Media Group; Steve Ross, formerly of Harper Collins; Michel Tamblyn, Kobo; Brian O’Leary, Magellan Media Partners. Publishers’ margins are very small. Products releases should be windowed. Same question arose in the ’50s when introducing mass market editions. Decided to release them later. Same with DVDs. Represents authors and so asks if you give it away for free what is author’s share of zero? Be careful on innovation in pricing because you can create a market expectation that you can’t deal with later if you model doesn’t work. Ebooks great for mid-list authors who can’t get a publisher to take them on. Ebooks as a small percentage of the industry can cause massive damage to the whole industry if not priced right. Electronic sales are not counted in best seller lists and difference in place in list is not much. If ebooks syphon off sales this can drop a major book on the list.

Kobo: giving first volume of a series, especially an old series, can work,and is also good as “training wheels”. Free commercial titles are a relative rarity so hard to develop information yet on what’s happening. Ebooks are a new release business. The first 90 days represents at least half of sales and windowing radically reduces the amount of sales. No evidence yet that low prices have hurt the industry as a whole.

Hyperion: came from Disney Channel, where they had a windowing strategy for every one of their shows. Feels it should be don’t on a title and author basis, especially since there is so little data available yet. Need to try a lot of new stuff to develop a database of what’s going on. Finding that if give away part of the book it pulls a lot of ebook sales. No need to give away the whole book. With “Long Tail” gave away free ebook with purchase of paper book and did well. Getting bad press on Amazon for not releasing digital edition. Looking back, delaying new Hitchhiker book by 6 weeks was too long. When released as ebook people didn’t know it was out and lost sales. Also got a lot of bad press from Apple fans as released an Apples edition at the same time as hard cover edition at the same price. Caused a lot of ill feeling when cheaper ebook was released.

Steve Ross: originally felt that the more you give away digital content the more you will sell print editions, but talked to a lot of industry people and their analysis and testing showed no examples of where free had pushed other sales. Has changed his mind about free. Market expectations created by Amazon at $9.99 will be difficult to break. Publishers don’t think that Amazon will continue its current pricing strategy much longer. Ebooks can have a detrimental effect on place in Times best seller list. Would window ebooks for books which release under 100,000 cause it will help sales.

Ebook pricing: what they should cost and why

Penguin: have to start with the intrinsic value of the material and the format. Need to look at cost – from the time its bought to the time it goes to the consumer. Ebook should not be looked at on its own, especially since ebooks are such a small point of the total market (<4%). Ultimately ebooks will get to the point where they are just another format and will be released and priced on that format’s merits at that particular time. Penguin sees that $9.99 sells a lot more ebooks but does not seem to sell more Penguin books over the breadth of their list. Does not seem to enhance overall market. Publishers have not done a good job showing consumers that publishers have a value. Digital prices are artificially low, but that has made digital grow so fast.

Curtis Brown: literary agent. author gets from 7.5 to 15% of list rights depending on type of book. Common to get 25% of net today. When publisher licenses rights out to another media author gets about 50%. Amazon told agents directly that Amazon feels that 9.99 is fair for ebook and readers expect that. Costs about $200 to covert an average ebook. Amazon determines which international edition to sell based on location of purchase not location of buyer.

Kobo: publishers often tell Kobo they are trying to defend price of hardcovers and they want to sell at hardcover list price which runs form $14 to over $20. Those books don’t sell. Consumers buy from Kobo primarily in $6 to $12 area for the most part. Very few sales at above $18. Average of ebook purchased through Kobo is $8.76. Does not feel that Kobo is competing against piracy at all – simplicity of purchase process and immediacy of purchase is most important to consumers.

Kassia Kroszer: in a marketplace where info moves fast and needs to stay current you can sell an ebook for $75. Example SEO Book: DRM free, updates for life, extremely current information. To do this have to give customers more than a book. Works better for non-fiction. Some of these sell for up to $150, they are information based. Digital-first publishers do a much better job of giving a high quality-produced product than the big publishers are doing.

If you were publishing a book this month and did an ebook simultaneously what percentage of total sales would it sell?: They answer: 17% at highest to 5%; 10% now and 35% lifetime; 6% to 15%; 10%

Apple and Google enter the market, what will this do?: They answer: good news for publishers because add big players to compete with Amazon; Amazon will continue to grow but its share will fall; Apple is just an experiment at this point, but Google will have a major impact; Amazon becoming device agnostic with release of Blackberry app and huge potential for further growth; industry needs Amazon, bookstores and big box stores and has to find a model that works for all of them

Erights: new Amazon 70/30 deal will not affect major best sellers but will be beneficial for smaller titles

International rights: will territorial rights survive with ebooks? don’t see why it should change anything and technology may mak
e it easier to enforce; defining territories will be a real mess – where you are, where you bought the device, where you are when you buy the book, etc?; maybe better to split rights as “world English” and “translation”;

Will legacy publishers need to scale down in the next few years: physical infrastructure will need to go down; fixed costs will be cut throughout the supply chain; publishers have cut to the bone and don’t need to be smaller they need to be more responsive; large publishers have one major thing on their side – they can still create “magic”; science of aggregating audiences may take away from the necessity for “magic”

Other comments: in audiobook world a Netflix model has been very successful and this will work well and get bigger in the library model;

Typical problems with current ebooks: plain text cover as opposed to photo; often have to step through blank pages, irrelevant copyright info, wrong ISBNs, table of contents with chapter numbers that are irrelevant content and readers hate this (if use samples then up to half of sample is often irrelevant pages), misspellings, bad line breaks (in some cases the pirated version is actually better than the professionally better one).

First presentation of data from a major industry survey ofebook consumers. 95% confidence level

Demographics: male 51%, female 49%; income over 75K 37%, 35K to 75K, 38%, under 35K, 25%; 23% RURAL, 24% URBAN, 43% suburban

Whey e instead of P?: in order 1. affordability, 2. easy to download, 3. readability, 4. instant access, 5. portability

34% decreased their purchase of hardcover books

What extras would you pay for: in order 1. connect with other readers, 2. color photos graphics, 3. give/lend 4. wireless access

19% now purchase ebooks exclusively and 25% now purchase mostly ebooks

When asked about the major benefits of ebooks three of the major benefits relate solely to price.

Would you wait to buy an ebook after print book comes out? 30% will wait, 24% will buy the print book, 34% not sure

Effect of DRM on ebook purchases: 38% don’t know, 34% not an issue, 28% concerned

Most popular devices: 47% computer/laptop, 32% Kindle, 11% iPhone

Northshire Books: physical bookstores still exist. Print on demand at the retail level. Installed an Espresso 2 years ago (similar machine in photo).

Print 3 categories: self published, public domain, copyrighted books. With state of software, have been doing self published books and they make up 2% of his sales. Partnered with Google to download and print. For copyrighted books software is now available to get book where publishers make content available. POD is often an impulse purchase. Publishers set retail price. Is an alternate channel, not competition for regular print run.

Carina Press: Digital first publisher. Harlequin’s digital first division. Going to do other genre fiction aside from romance. No advance, but get higher royalty based on cover price, not net. 30% for direct sales and 15% for resellers. No options clause. Take rights for only 7 years. No DRM, cause customers in this area are used to this in this genre. Trying to develop a brand in the genres they will be working with. Reader can print book using POD, they don’t don’t do it themselves.

Cursor: Taken lessons from Softskull Press. Cursor is a portfolio of branded publishers. First imprint will be Red Lemonade and then two to four a year. Each imprint wants to capture all value under the demand curve. Pricing will be between $8 and $30. Classes, limited editions, all done in a systematic way. Not just volume. In the area from $0.99 to $10 the current industry is doing its best not to monetize. There is absolutely no evidence that low priced books cannibalize high priced one – for example, fashion business, cosmetics business. Cursor will try to do it. Still do supply chain print books. Three year licenses. Should not use law to demand control over author’s output, should publish them better and then they will stay.

Green Light Books: Hybrid, experimental, gamble. Partly traditional model, digital access not a big part of the market. Will do print, but differently. In Ireland most authors don’t get advances. Use shorter licenses, higher royalties for digital content. Two verticals, Irish history. Print for domestic market and on line for overseas. Second is food and drink and will be primarily for domestic market. For on line side, looking to acquire content. Not big believer in ebook, feels it is going nowhere. Feels that quality, reliable on line content will provide value. Will use POD. Digital and POD titles will be generally offered to authors whose will sell but are not first tier. Will probably start a subscription model. Doesn’t see ebooks as viable long term prospect. Feels they are a way to sell devices rather than a way to bring a good reading experience to the reader.Feels web-based online access will be a better and more popular way of reading that the future.