The Sky is Falling!

No, not really.

But if you listen to the news blurbs out there in various writing communities, it sure sounds like it.  Two news bites have people riled up.  Borders is entering Chapter 11 bankruptcy, and Apple is threatening to bill Amazon 30% for all Kindle books bought via any app Amazon makes available on their app store.  Both of these issues impact writers.  Neither of them are cause for undue alarm.

Borders first.  They’re dumping 200 stores as part of their reorganization, a little under a third of their stores.  I read one report which stated all the stores closing are their superstores.  Personally, I think this is likely a first wave of closures, and we’ll see more.  But it’s too early to say.  It’s a lot of stores gone, anyway, and they will likely only be paying some percent of the $270 million in reported back bills they owe, leaving a lot of publishers shorter on funds. Great article on this here, by the way.

So what’s the fallout?

Book sales are not going to decrease dramatically.  The stores closing are mostly near a handy B&N, so customers will simply shift their purchases to a new venue.  Some percent will shift to online purchases instead.  I imagine the store closures will probably speed up the movement of more customers to ereaders, so ebook sales may gain ground a little faster than expected.  Publishers might reduce new titles slightly in response to less sales venues, but I think they will not dip much – the recession is fading some, book sales are up, available spending money is up for the average American, and books are still going to be sold.  Writers with books already out there may have some struggles over money issues with their publishers.  And even a small dip in publisher purchases might increase the steady growth of indie/self publishing.  But the opportunities for writers will not decrease so much as change.

Apple is working at playing hardball with Amazon.  They denied Sony’s new app on the basis that it allowed in-app sales of books (rather than opening a browser that sent the user to the Sony website, like the old Sony app and current Kindle app do).  There is concern that they will begin enforcing a provision that will allow them to collect 30% of all sales made via an app that is available in their app store.  That’s the entire amount Amazon makes on an ebook sale, so it’s a deal-breaker.  Publishers are not going to let that money come out of their share; and Amazon is not going to hand their income over either.  If Apple insists on this, Amazon will likely pull their app from the Apple app store, so iOS users will be forced to download it from the Amazon website instead.

Apple should have done this ages ago, to be honest.  Their own store has a fairly tiny market share compared to Amazon (5% compared to 70%, as of the last estimate I read).  The last poll data I saw said that 3/4 of all iOS users who read books on their devices used Kindle software, and that 50% of iPad users either owned a Kindle as well, or planned to buy one within six months.  Apple’s iBook store has been taking a beating from Kindle, and it’s not going to end any time soon.  The store is just not as well designed or as user friendly.  So it makes sense to slow the bleeding.

They can’t *stop* the bleeding, though.  Tens of millions of their users are already invested in Kindle books, which are not compatible with their own reader.  Amazon already has a rep as the best destination for ebook purchases.  That’s not going to vanish.  If Apple pulls the Kindle app from their store, it might force Amazon to spend some more money marketing to Apple device owners, but I don’t see it substantially changing the balance of power.  It’s just too easy to pop over to Amazon, download the iOS app, and keep doing as you were doing.

For writers, there is some concern that this will mean a drop in ebook royalty from 70% to 40% for many Amazon books.  I don’t think that will happen.  As I mentioned before, publishers are not going to allow it; and self publishing represents such a tiny portion of overall sales that it doesn’t really matter right now.  We’re along for the ride – whatever the publishers hammer out with Amazon is probably what indie writers are going to get too, at least for now.  So for traditionally publisher authors, there will be no change – publishers won’t stand for it.  And for indie writers, there might be a small boost in Apple sales at the expense of some Amazon sales, but it’ll be hard to pick out against the solid growth in sales on both platforms as the overall ebook market continues to swell.

Bottom line is that neither of these things is the end of the world.  Panic hats can go away now.  =)

One thought on “The Sky is Falling!

  1. John Lambet

    Kevin,

    I have to disagree with you on one point. The Kindle App on the iPad doesn’t allow purchases within the app like Sony wanted to do.

    Apple needs to decide if they are a hardware/software provider or a content provider.

    Apple created a device that is great for reading ebooks, then designs a store. If they really want to to compete with Amazon for ebook sales then they need to improve iBooks in both price and content.

    They are doing a diservice to consumers by trying to impose such a rule on Amazon.

    This is one of the reason why the DOJ is looking into Apple’s App Store policies.

    Reply

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