This is about the most disruptive thing in book publishing anyone could have imagined. Perhaps apart from her handing them out for free.
For those who don’t like a little mystery – J. K. Rowling does something interesting.
J. K. Rowling owns arguably the most desired ebook rights on the planet – her deciding to go solo is a cataclysm for both Publishers and Platforms. We’re talking about billions of dollars lost to them.
If that seems excessive – Consider the number of Kindles Amazon could have sold if it had gotten exclusive rights. Add on Amazon’s cut from ebook sales to new and existing Kindle owners. Then add on Harry Potter ebook sales that would be strong year after year after year.
It’s a big loss for Publishers and eReader makers to not strike a deal with J. K. Rowling. From the way she’s gone about things it seems she always intended to go solo.
Reasons this is smart for J. K. Rowling
- If she pulls it off, she will make a ridiculous amount of money. Well, to be precise, she will make an even more ridiculous amount of money than the ridiculous amount of money she would have made if she would have gone with Amazon or a Big 6 Publisher.
- She has complete artistic control.
- She gets to interface with fans directly. That direct communication will be crucial if she intends to keep Harry Potter alive as a franchise for a long time.
- She earns a lot of goodwill with the whole ‘there is no DRM, you can read it on any device’ message. It’s human nature to disregard the commercial benefit to her and consider only the ‘openness and goodness’ of it. More on human nature later.
- She can sell to people across all devices.
- She can completely bypass people like Steve Jobs who would have wanted a 30% tax on every copy of Harry Potter read on any iDevice.
- She can build up an entire industry/site/company around this with a recurring revenue stream. This is exactly what Pottermore is about. It’s still an unknown whether her book success also grants her the magical ability to create and run a huge company around the Harry Potter ebooks. My gut feeling is that she would have been better off sticking to her core competency.
- She dictates terms – For example, Sony is a partner and might sell Harry Potter branded eReaders. Presumably, Sony would pay her a commission for every Harry Potter edition eReader sold.
The upside is huge and it’s a smart, smart move.
Unfortunately, all the comparisons to Radiohead’s foray into selling music direct to customers might be more appropriate than J. K. Rowling realizes.
Reasons going without DRM and without Platforms and Publishers is Stupid
The 75% probability is that J. K. Rowling will fail in her attempt to create a new business empire that she controls totally. She’ll still make a lot of money but significantly less than if she signed up with a Publisher or Platform on intelligent and reasonable terms.
A few simple reasons -
- You can’t discount human nature. Radiohead did its grand experiment of going direct to customers and then shut down the experiment after 3 months. There were claims that as many as 62% of people paid nothing for the music. We’ll soon find out if readers feel entitled to free Harry Potter books or not. Keep in mind that almost everyone who has bought the physical books can easily jump from ‘Let’s spend $10 per Harry Potter ebook’ to ‘I’ve already paid and I’m entitled to a free download’.
- If you leave closed ecosystems, everything changes. Ideal would be to work only in the closed ecosystems of Kindle Store, Apple’s iTunes, and B&N’s Nook Store. Where the customers have good intent and are willing to pay for quality. In bad ecosystems even good customers do bad things.
- The Platforms and Publishers do perform an important function. There is an incredible amount of marketing and product placement and promotion that goes hand in hand with big releases and by offering Platforms and Publishers nothing J. K. Rowling is saying – Don’t need you any more. She’s a bit crazy if she thinks she can replace/duplicate the amount of exposure Platforms and Publishers provide.
- The DRM being replaced with watermarks is the most ridiculous idea ever. Let’s stop using guns and use water pistols.
- It’s driven by a desire to maximize profit. No amount of ‘there is no DRM’ and ‘we are creating a new experience’ can hide the fact that Rowling wants to go direct to customers to maximize profit. There will be some very interesting side-effects and one of those will be that readers get to dictate what they think the Harry Potter ebooks are worth. J. K. Rowling’s hard-core fans might pay her asking price but everyone else won’t. In fact, a surprisingly large number of people will just say – She’s already made billions, me not paying isn’t going to hurt her.
Basically, this could potentially be a massive train wreck of a release.
J. K. Rowling had to choose between (please note that this is assuming total sales over the next 5 years, not the first year of sales and not lifetime sales) -
- A guaranteed billion or so in profits while her partners made a billion or two in profit themselves.
- The possibility of multiple billions in profit by going solo.
What’s easy to disregard with the latter option is the distinct possibility that instead of a profit of $2 billion in the ‘no middle man, no DRM’ scenario, the profit might end up being just a few hundred million.
Anyone who understands human nature would be very, very wary of assuming that J. K. Rowling has made the right choice. If she can keep beating the drum of ‘doing the right thing for customers’ and stick with no DRM, create the ‘magical and revolutionary’ interactive experience she’s promising, and sell the ebooks at a reasonable price point - then she has a chance. However, the 75% chance is that she learns the same painful lesson Radiohead did about the profit-eating capabilities of the Internet.
Sometimes success in one area bestows people with the belief that success in every other area is just as guaranteed and that things like the 10,000 year rule and core competency/domain expertise don’t apply. In a year or two we’ll know whether J. K. Rowling can pull off the near impossible.
Update: One last thing – It’s a bit sad to see J. K. Rowling forget the part bookstores and her Publisher and online retailers played in her success. This article at The Bookseller talks about physical bookshops being frustrated and they have a right to be. She obviously doesn’t owe anyone anything and has the rights and the power – but it’s nice to remember who your friends were and who helped you. She could have handed over 25% or so of profits and if anything it would have improved her chances of lasting success.
Filed under: publishing Tagged: | independent vs published, things i don't understand
Maybe, just maybe, she’s decided that she’s made enough money and figures that almost everyone who wants the ebooks already has the physical books and has seen all the movies so this is her thank you. Many people will purchase the ebooks outright at the full price because they’ve waited for them so long. Maybe she figures that if the purchasers then share them with friends and family, it’s no big deal. Kind of like each family owning and sharing one set of the books, like we did.
After all, if you want them for free, you can get them now from bittorrent sites.
It would be cool if that’s her aim.
She’s already a billionaire, so either way this goes is just degrees of billions. Not many people will feel sorry for her if this gamble doesn’t pay off.
I think her publisher is still on board. I read somewhere that Bantam still has a role in the publication of the e-books. Of course, I could be totally wrong.
I would be a lot of people feel justified (not that they are, or that it is legal) in taking a copy of the ebook. I know I have bought at least two copies of all the books already.
Could you provide a link to the original story?
For a post like this, you really need to at the very least link to what it is you are talking about, if you don’t tell us straight out. I only figured ou what was going on after several paragraphs.
Fair enough, there are two links – except they are in the middle and at the end.
Let’s look at your reasons why you think she’s stupid, and why you’re wrong:
1. No DRM. Guess what, people that want her books for free can already get them. I on the other hand am significantly more likely to get them if they don’t have DRM, and hence can be easily moved from platform to platform.
2. This argument doesn’t make a lot of sense. Why would it be ideal to only operate in closed ecosystems? What makes you think that customers in closed ecosystems have good intent and those outside don’t?
3. JK Rowling needs _more_ exposure? I don’t think so.
4. DRM is hard to strip, but once you’ve done it and distributed the file no-one can tell by looking at the file who started the pirate chain. With a watermark, unless you can be sure that you’ve found and deleted _all_ the watermarks, the original pirate can be found. Seems like a better systems to me. Watermarks have been used successfully for years in the PDF book world.
5. Why shouldn’t she maximize her profit? Why does Amazon (/BN/whoever) deserve some of her money?
We’ll find out who’s right if/when she releases her sales figures.
If you don’t like DRM and don’t like closed systems then it’s unlikely you could EVER see their benefits.
Just contrast the amount of app sale revenue in the iPhone ecosystem with Android Or the amount of ebook sales outside of Amazon and B&N’s closed ecosystems with what they bring to the table.
If JK Rowlings controls the merchandising empire connected to Harry Potter, selling/giving away the books could be a brilliant move since it would promote the sales of the merch — pieces with a higher profit margin. It’s the reason why the Star Wars trilogy took so long to get to a point where it was shown on broadcast television but now you can depend on seeing it every few months on some cable channels like Spike. Those films keep the mythology alive, driving the sales of the merch.
[...] J K Rowling is making a very smart and stupid move – credit for being bold « Kindle Revi… "It’s a bit sad to see J. K. Rowling forget the part bookstores and her Publisher and online retailers played in her success." (Tags: E-Books Verlag Buchhandel Rowling_J.K. ) [...]
I disagree that going without DRM, platforms and publishers is stupid, because that’s not a factual statement of what JK Rowling is doing. She’s only going without DRM (which one can argue for/against). She’s retaining her ebook rights while partnering with Sony for the platform and her publisher (Bloomsbury/Scholastic) for marketing/other services. That’s actually brilliant as it keeps Sony/Bloomsbury/Scholastic (the movie distibutor and publishers) involved in a revenue stream so they don’t sue her over using the original movie content and book content on Pottermore.com, which is what her fans will want to see. It keeps everyone happy.
And your Radiohead argument doesn’t hold water when comparing to Harry Potter. The HP fan base in CA alone is probably bigger than Radiohead’s entire fan base. I predict a huge success.
Yes, of course.
When we’re talking about DRM isn’t necessary then saying ‘music is an example of sans DRM working’ is fine.
When we say experiments without DRM can go haywire and quote a music example then suddenly it has no analogy to books.
Thanks for providing the extra link, I’m good on the details now. Some more comments:
- Physical bookstores are pissed about not being allowed to sell digital editions? Seriously? They need to think about alternate businesses in the first place, because they’re never going to become a successful ebook seller. With or without Potter. National chains may survive in electronic form, but that’s about it. Also, if Rowling is “actively working” to get these onto Kindle and Nook, she’ll presumably give smaller stores a similar deal — whether that is providing appropriately formatted books for people to side load, or whether it is some form of reseller agreement.
- DRM free does not automatically equal bad intent. See also: Baen.
- There are *excellent* Kindle and ePub pirated Potters, DRM free and watermark free. Have been for years. None of what she downloads, no matter what she does with it, will displace the existing editions. The reason DRM gets broken routinely is because very smart people want to move their own content to their own devices. The pirates may have bad intent, but the actual encryption breakers are ironically usually of good intent. Watermarking is something a person of good intent doesn’t need to break, but will discourage ‘lending’ beyond the intimate circle — much the same as the people who read each others physical books.
- The real disadvantage of being outside an ecosystem is having to sideload, and not getting syncing between devices. That is a significant disadvantage. I wonder if Rowling may not have the clout to force something that would be awesome (for the consumer): you buy on her website, once, link that to your kindle, nook, and iBooks accounts, and then you’re licensed for those books in all three ecosystems, whichever you prefer to use at any given time. Okay, so I guess that Amazon nor BN would want to break their stranglehold on consumers in their own walled garden that way… But a guy can dream. (If she does manage it, look for other big names to join her company…)
- Rowling certainly has the financial wherewithal to do her own marketing. She’s got a net worth significantly larger than the marketing budget for the @movie@, and you know how movie marketing is different from book marketing. Let alone ebook marketing. She’s also used to employing people to manage that stuff for her, it’s not like she’s gonna be doing it herself. Speaking of the movie: The timing between this and the release of the 8th and last movie is no coincidence. Hellooooo, free marketing!
Your points are all valid. She is one of the few authors big enough to attempt this ‘let’s go solo’ strategy.
I think if we dissociate what we feel about J K Rowling and her books i.e. whether we like them or not. Then we can talk about just the strategy aspect.
In that strategy aspect, in my opinion, J. K. Rowling is making three big mistakes -
1) Thinking she can circumvent the entire Publishing and Platform industries and go straight to customers.
2) Assuming that she can get people to be honest without DRM.
3) Assuming that it’s possible for her to get all the profit. It’s just not viable. There are very few large enterprises where you can get 99% of the profit or even 90% of the profit.
Kudos to her if she pulls it off. However, my money is on her making less than if she had partnered up and given an incentive to platforms and publishers and bookstores to promote her heavily.
well, exclusivity can cut both ways. I doubt it would happen right away, but I can see Amazon, BN, or Apple finding ways to block Potter ebooks from which they make no profit–right now it would hurt their device sales, but when devices are free and revenue comes primarily from content, why would Amazon want Potter on the Kindle? Especially if, as I suspect, both Pottermore and Kindle are moving to ad-supported devices.
Free Kindles will not want Potter books that have ads not generating revenue for Amazon. Potter will be on an island, and good luck building your new audience on Sony Readers.
Rowling was lucky. She built her success on the backs of others and now lets them peel potatoes in her kitchen. But unless she writes new Potter books, I don’t see the craze ever being what it was. And if she sells these for $10 each, she’s the Leona Helmsley of the literary world.
Great job as always. The only part I would comment on is sympathy for the booksellers and publishers who “helped” her on he way up.
1) Business is business. If you are a business, your goal is to make as much money as possible, NOT to throw bones to other businesses. JKR is a business.
2) Physical book sellers and especially publishers are dinosaurs, JKR is a mammal.
3) Book sellers and publishers did not help her become a success out of the goodness of their hearts, they did it to make money. They are not charities and neither is she.Believe me, they took a healthy chunk out of her on the way up. She just wants their teeth out of her.
4) Should Henry Ford have subsidized the buggy whip sellers?
5) The loyalty JKR should have is to her readers and it sounds like that is exactly what she is doing.
I wish some of these things weren’t that way, but that is just the way it is. Everybody loves mom and pop bookstores and doesn’t want to see them go away. Adapt or die is the harsh reality. It appears JKR is attempting to be the future.