Seth Godin recently posted an article to his blog titled, “Do you own trees?” In it, he (justifiably) tore into the newspaper and book publishing industries for being so tied to paper as a publishing medium. But he’s misunderstanding the reasons for the stubbornness of the publishing industry. He lead with the following fact from the New York Times to establish his argument:

Today’s New York Times reports an astonishing fact: Book publishers wholesale their ebooks to Amazon for precisely the same price as their paper books. Amazon loses money on every ebook for the Kindle they sell because publishers don’t discount zero-cost ebooks.

Apparently, the publishers don’t count the paper, storage, inventory, shredding and shipping expenses in their cost calculations.

Either that, or they own a tree plantation or a printing plant.

And of course, they own neither.

We do count the paper, storage, inventory, shredding, and shipping expenses in our cost calculation. Of course we do, we’re businesses just like any other. And it is these expenses that make ebooks so alluring to many of us. But these costs just scratch the surface of book production.

Godin incorrectly assumes that Amazon is losing money on their Kindle books because the publishers set the price. In fact, Amazon set the prices publishers receive for ebooks—they elected to lose money on each book.

Here’s why: If Amazon’s Kindle is going to fly, Amazon needs an inventory of ebooks to sell. They do not have the luxury of an inexhaustible supply of digital content out in the wild for the Kindle to pick up and use—as Apple did when they inserted the iPod into the already thriving MP3 frenzy. Digitizing books cannot be done by the consumer at home. (Yes, a person could scan each page of a book into a PDF, but with the sorry state of OCR technology these days, the pages would be little more than image files which are useful for little more than reading. And the process would be mega-tedious. Plus the Kindle foolishly doesn’t support PDFs.)

Digitizing books for consumption is most easily accomplished by publishers before we un-digitize them in print, and Amazon knows that. So they wisely chose to loose money on ebooks for the sake of building an inventory, while at the same time taking care of the publisher it depends on for content.

Also, Godin’s “zero-cost ebooks” is—pardon the pun—fiction. Any book, bound or digital, has manuscript development costs: an author advance, copyediting, proofreading, book layout, cover design, etc. These are the major costs of producing a book—spent long before the paper is considered. The manufacturing costs of a bound book account for roughly only 15% of the list price—sometimes a little higher if you’re a green publisher like we are and use as much post-consumer recycled paper as we can, as often as we can.

With margins in the book publishing industry as tight as they already are (between 3-10%), if Amazon asked publishers to part with their highly-polished, well-researched, expensive content for prices much lower than current wholesale prices they could have put many of us out of business, even if it is digital content.

Godin continues:

I worry about my esteemed friends in the book publishing industry as well. The amazing thing about the Times story today was the report that the mood at BEA was ‘unease’ about ebooks. The fastest-growing, lowest cost segment of the business, the one that offers the most promise, the best possible outcome and has the best results… is causing unease! All because of the trees.

Here, Godin is right on (except for the running tree joke). The industry is ignoring the most promising aspect of our business. The next digital revolution—now that the music industry is converted and the movie industry is mid-stream—will be the publishing industry. It is inevitable and vital for the survival of the industry.

Paper books are hugely wasteful. They require an astronomical amount of resources that the planet and the industry can not afford for too much longer: paper, shipping, storage, chemicals, re-shipping, etc. Digital books are infinitely reproducible, require no shipping, take infinitesimal storage space, and, most importantly of all, require no paper. The margin on a 99 cent digital copy, even of a massive volume of 10,000 pages would still rival (if not surpass) the margins on a $7.95 280 page trade paperback. So there are many “no-brainer” advantages to going digital—as long as the consumer will read from a screen. (Which they already do, and will in the future.)

The issue preventing the industry from mass adoption of the ebook format is not that we publishers own stock in logging companies, as Godin humorously suggests. But rather it’s many issues. It’s death (of motivation) by a thousand cuts.

In my estimation there are 4 general barriers to mass adoption of ebooks by publishers.

1. No protection. The publishing industry is not blind. We’ve watched the music and movie industries grapple with piracy. A 3MB book file is much easier to distribute than a 2GB movie file—which is getting easier. Do we throw ourselves into the piracy frenzy? (The answer is yes, of course. But not just yet, as there is no widely accepted avenue for purchasing ebooks. A consumer’s only option right now for building a digital collection would be—for all intents and purposes—piracy.)
2. No format. The ebook format wars are still in the ‘limited skirmish’ phase. Open war has not yet begun, let alone been settled. My money is on DRM-free PDFs due to the existing PDF ecosystem and consumers’ distaste for never REALLY owning the items they buy. But where’s the protection in that? Do we bet our jobs on the honesty of readers? I argue yes, absolutely. But you can see why this thought gives publishers reason for pause.
3. No tools. Until this industry agrees upon an ebook format (or two), there will be no tools for ebook creation. Right now publishers create PDFs by the truckload for internal use because of their incredible portability. But PDFs for distribution scare publishers precisely because they’re so portable. Publishers are waiting on easy-to-use tools that will create a portable and protected ebook right from Illustrator or Quark. (Hopefully with a bunch of tasty meta data, but that’s an issue for another day.)
4. Entrenched systems. To build on the tree metaphor: the publishing industry is tall, old, and has very deep roots. Most of our industry tools (and modes of thinking) from author to bookstore (publishing, printing, distribution, fulfillment, etc.) are—by my rough estimation—as old as time. Retooling the industry to get it out of our current rut will require money, training, and new staff. All of which are slowly trickling in.

I’m proud to be at Chelsea Green because, as this new web site indicates, we’re up for the challenge of leading the industry to this new digital, greener, and hopefully more profitable future…even without the cash-cow tree farms.

I recently attended the NewsTools2008 Conference at the Yahoo! HQ in Sunnyvale, California. The conference was a chance for old media types, new media types, programmers, and multimedia gurus to convene in a sunny locale and discuss the technological future of print publishing, journalism’s role in our democracy, and, of course, how to make money. I was the only attendee with a book publishing background, but much of what we discussed about print journalism applied directly to our digital publishing aspirations at Chelsea Green.

The conference was organized by Kaliya Hamlin, author of Unconference and Unconference.net. Instead of organizing the event around the usual stream of presenters and tireless note-taking (or dozing off), NewsTools2008 had an ‘open space’ format. The main days of the conference were largely unplanned and unscheduled. Participants spent a half hour of the morning meeting creating sessions to facilitate throughout the rest of the day. This method ensured that every participant was given the opportunity to discuss what mattered most to him or her.

E-Books
I facilitated a discussion titled “E-Books: When? How?” My goal for this session was simple. I wanted to learn where people felt the e-book format and e-book readers were falling short. Chelsea Green will be making the push to digital book publishing (for reasons I will outline in a future post), and I wanted get some ideas about how to do it better than it is currently being done. I came to a few key conclusions.

1. The push to make an e-book reader’s screen “just like paper” is a mis-step and stands as a barrier to the interactivity users have come to expect from digital content. People stare at screens all day long: on monitors, on cell phones, on iPods, etc. Reading off a screen will soon be a non-issue for users. Books (especially non-fiction) will only benefit from the inclusion of supplemental multimedia information into an e-book. Everyone will benefit from a writer being able to explain a process in text AND show the same process in video.
2. The inventory of digital books must proceed the device. Publishers, such as Chelsea Green, must recognize that the future of publishing is 100% digital, and therefore we must publish digitally for the web now, and for the device when it arrives later on. Writers create their manuscripts digitally–where it is searchable, portable, and infinitely reproducible. Why do we degrade it throughout the publishing process to a format that is none of those things? Not only is print publishing hugely wasteful and resource-intensive, it is economically risky. (I’ll cover more benefits of the book industry’s pending digital revolution in a future post.) Once we build up a substantial digital book inventory, electronics companies will be frothing at the mouth to provide us with the perfect device. The Kindle is not it. The Sony Reader is not it. The iPhone is closest, but isn’t it either.
3. People who love books, love books–not the digital representation of books. The killer device will not sell to real book lovers unless it is able to reproduce the tangible interaction a book lover has with his library. iTunes’s CoverFlow is Apple’s answer for the music-lover. This means, that a person must be able to FLIP pages, VISUALLY BROWSE a library, VIEW cover art & decoration, and EXPERIENCE a physical representation of progress through the text. I would not know how to draw the picture of such a device, but it must achieve all these things for mass-adoption. Perhaps this is why e-books have been “the next best thing” for 10+ years.

Twitter
There was a lot of talk about Twitter. I had been familiar with Twitter before arriving at the conference, and I had an account, but I had never used it for much as I didn’t see it’s immediate value. I thought, “It’s like email…but worse.” I’m happy to admit I was wrong. It’s not like email. It is a different animal, and produces a difference mode of communication. It is a social communication tool, and one that Chelsea Green will be making use of on this new web site. I’m excited to begin “twittering” some “tweets” to our “followers” while learning a new web lexicon. Sign up for Twitter, check out our profile, and follow our tweets!

Old Money Meets New Media
Of course, the major thing the old newspaper men wanted to know was, “How do we make money?” I found it humorous to watch the harried old journalists asking the hairy young technologists this question. It’s obvious to me that the technologists have no idea. The only way they know how to make money is by capturing the eye of a big-time venture capitalist firm which dumps millions of dollars on them. They don’t think about revenue, margins, or profits. Their only concern is “What’s possible?” Not “What’s profitable?” And, I would argue, that’s as it should be.

Journalism That … Monetizes?
There were no major revelations concerning journalism’s role in democracy. We all generally agreed that an open society depends on an open press, and that the breakneck speed of media consolidation these days was a direct threat to our democracy. But even after acknowledging that fact, no one seemed too concerned–believing, I guess, that the hairy troupe of new media bloggers would save our democracy. Every time the subject of our democracy came up, the journalism guys turned the discussion back to money–which indirectly is at the heart of the discussion anyway. If these small independent media outlets can’t find the means to continue operation, they’ll be forced to sell to a larger power, with larger corporate concerns.

The Solution for Local Papers
I think the best bet for these struggling local papers is to focus intensely again on local news. Forget the AP. They should build out their web sites to become an interactive two-way hub of communication for their local community. They will need to relinquish some of their editorial control to the community, and forget all of their ideas of top-down, or “God Model” publishing. The web will never be suited to one-way communication. Local stories, local members, local voices, local advertising.

The Future of Publishing
The conference reinvigorated my passion for publishing. I see a clear path to the long-awaited digital revolution of the book publishing industry. It is an industry that has been around for so long it has very deep, very strong roots in the foundations of existing processes. But Chelsea Green is lucky to be small enough, nimble enough, and progressive enough that we can lead the way for the rest of the industry…much like we did on the growing “no returns” revolution.

I posted a photo gallery of the conference and Yahoo! on Google’s Picasa Web Albums. I probably should have used Flickr (Yahoo!-owned) to post photos of Yahoo!, but I couldn’t resist the irony of posting them to Google. …Yes, I’m a geek.

Chelsea Green is pleased to announce the launch of a completely new company web site, and as you’ve likely guessed, a completely new company web strategy. This new site incorporates all the best features of our previous site (secure e-commerce, book information, author events, etc.) with a slew of new community-minded features. The largest change we’ve made is that we’ll be publishing a blog on our main page. This blog will feature excerpts from our books, interviews with our authors, original articles related to our mission of sustainable living, and links to content around the ‘net that we find particularly interesting.

Every aspect of this new site has been designed with one goal in mind: to build a community. We hope that by publishing original content relating to the politics and practice of sustainable living, we can attract people from all regions of the globe and all walks of life to take part in an on-going discussion of the best ways to move toward a sustainable and future.

We’ve put together some initial content to offer at launch, and we’ll be steadily adding more articles, videos, podcast episodes, and books as time goes on. So please take a look around, sign up for an account, and stake your claim in the beginnings of Chelsea Green’s new community.

I’m Jesse, the Web Editor here at Chelsea Green, and I’m happy to help any of our community members with any questions or concerns. Feel free to email me if you need anything. Enjoy!