Apple iBookstore v. Google One Pass: Which is for You?

by Nancy Humphreys on March 2, 2011

Today, on March 1, 2011, the last holdout against the Agency-pricing model for ebooks, Random House, caved.

The Agency-pricing model for ebooks

The Agency-pricing model for ebooks was signed onto by large publishers, as well as agents who held copyright to their authors’ books, last year when Apple debuted it’s iPad. At that time all of these publishers began paying Apple 30 percent for digital content distributed via Apple’s iBookstore.

Random House has followed the lead of five other big publishers. Random House too will now fold the agency-model price of 30% royalties for the distributor into the price of its ebooks.

Google, however, doesn’t agree with that amount or with the Agency model. Google’s One Pass service will charge publishers only ten percent of the retail price of an ebook. Google says ten percent covers all its costs in serving digital content.

How, you might ask, will Google make money? The answer is: as it always does, by advertising. Google ads are a lucrative business for both Google and the other web hosts of those ads. And this is where Google has a real edge over Apple. Apple does not have “Apple Adwords”!

What’s in a name?

Truly, the answer is: billions of dollars. Apple is demanding that publishers of digital subscriptions like newspapers and magazines give up their right to know the names and addresses of customers who purchase a subscription through Apple. Google, on the other hand, is offering to let publishers know the names and addresses of their customers who purchase through Google.

Why does Apple want this information so badly and what does that mean for authors of books?

Here’s why customer data is so important. Marketing experts teach that cross-selling” or “upselling,” i.e., selling an additional product to people you have previously sold something to, is much easier to do than starting from scratch. A previous customer has knowledge of your product and trust in you. A customer list is essential for cross-selling.

Oddly enough, traditional publishers of books have never taken advantage of this fact. They upsell only through their publisher’s catalogs. These catalogs are distributed to libraries and other institutions, at conferences, and to a few regular customers. For the bulk of their book sales, publishers depend on a network of wholesalers who buy their books at discount rates. Wholesalers then sell the books to bookstores and other retail outlets. The retail stores then wind up with the customer data for book sales.

Apple, however, understands the immense potential for profit from cross-selling millions of ebooks in its iBookstore. This is why Apple and the publishers of subscription magazines and newspapers are vying for possession of the names and addresses of of the customers who buy e-newspaper or e-magazine subscriptions. These publishers understand that Apple’s monopoly over customer data could wind up costing them millions of dollars.

What does Apple’s Agency model mean for authors?

Apple’s grab for customer data appears to be driven by pure greed. Apple’s platform for books, the iBookstore, will enable it to collect revenues from advertising, both general and “targeted,” (i.e., recommendations to readers about similar books.) Publishers and authors of ebooks will be left with no such opportunities to make more money from their books – unless – they litter the pages of their books with ads. I shudder to think about it!

There is more at stake though. Authors of ebooks must market those books. As Apple and Google (as well as Amazon) take over the book-selling function of traditional print book publishers and bookstores, the reputation that a publisher brings for its printed books will not be relevant for ebooks. On the Web you don’t even notice a publisher’s imprint.

Authors will have to make their own reputations in order to sell their books. Without a mailing list of customers, an author (or a publisher) will lack a primary way to market their next book to loyal fans. Their ebook will be lost in space with a million others.

To me it seems logical that the optimum approach would be for Apple to share customer data with authors and publishers. Apple will develop its platform to cross-sell books and make more distribution fees, while authors and publishers will sell more books too, and make more royalties. Everyone would benefit.

Right now ebooks may seem like icing on the cake. In the future, however, ebooks will be an author’s bread and butter. If the Agency-pricing model survives, Apple will be eating your cake, its icing, and a share of your bread and butter too.

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Marketing Your Book to Libraries Marketing Your Books to Libraries: An Insider's Guide for Authors by former librarian Nancy K. Humphreys includes: 
  • How to tell what kind of library to target
  • Types of librarians and books they order
  • Strategies to get past the "gatekeepers" who influence librarians
  • Right ways to approach librarians most likely to order your book

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