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E-book Publishers Get Mixed Signals

Now that the explosive growth of the dot-com industry has abated, many are wondering if the same fate awaits electronic publishing. At the annual Frankfurt Book Fair in Germany, where a sober crowd gathered in October 2001, just weeks after the attacks in New York City and Washington, D.C., the Pollyannaish predictions of recent years about e-books were replaced by a more uncertain tone. Keynote speaker Claus Weyrich, a member of the managing board of Siemens, an electrical engineering and electronics company, quoted the 1922 Nobel Prize winner in physics, Niels Bohr, in his opening address: "Predictions are hard, especially about the future."

The fate of e-books has indeed proven hard to predict. In early November, just a month after the conference, Random House Trade Group shut down AtRandom, a division it created exclusively for e-books about one year earlier. Time Warner Trade Publishing followed suit in early December, closing down its iPublish division. And just days later, in mid-December, MightyWords.com, a Web site (53 percent of which was owned by Barnes & Noble) that had published about 30,000 digital titles since its inception in March 2000, sent out word that it too would lock its digital gates come January. Random House and Time Warner both continue to publish digital editions of print books without having divisions devoted to them.

All three companies cited stagnant sales as the reason for their decisions. "The size of the market has turned out to be tiny, at least for now," said Thomas Perry, a spokesman for the Random House Trade Group. Laurence Kirshbaum, chairman of Time Warner Trade Publishing, said, "Sadly, timing is everything in business, and sometimes being too early is as harmful as being too late." And Chris MacAskill, CEO of MightyWords.com, said, "There just weren't enough sales."

But these recent announcements hardly seem to be driving e-publishing to its grave. Dozens of companies specializing in different e-publishing formats currently exist. Some, such as AllStory.com, publish original works of fiction and nonfiction as e-books; others, like Simon & Schuster and Avid Press, publish some books in both print and digital formats; still others, like Fictionwise.com, publish only digital reprints of existing books. Companies such as Xlibris and iUniverse will publish, for a fee, almost any manuscript in electronic or print format.

Fictionwise.com, launched in June 2000, buys electronic rights to previously published works from well-established authors and publishes and distributes these works as e-books; it also sells its titles through other retailers, such as Barnes & Noble, Amazon. com, and Palm Digital Media. Potential customers register at no cost on the site, and according to founders Scott and Stephen Pendergrast, the company currently has 34,000 registered members, most of whom began by downloading free e-books and went on to become paying customers. Sales figures have grown steadily, they say, with a compounded annual revenue growth of over 400 percent.

iUniverse has printed 750,000 copies of books via print-on-demand technology, a process whereby an author submits a manuscript for a fee and receives as payment one or several copies of the book in trade paperback format. As orders come in, additional copies are printed and the author receives royalties equal to 20 percent of net sales. In early January iUniverse began offering authors an e-book publishing option. The e-books are available through its online bookstore and through other retailers. The company celebrated the success of two authors last August, announcing that Ralph Fertig had reached No. 4 on the Los Angeles Times best-seller list for his self-published, print-on-demand book Love and Liberation: When the Jews Tore Down the Ghetto Walls, and that William Mize, author of Resurrection Angel, had been nominated by the Private Eye Writers of America for the 2001 Shamus Award for Best First Private Eye Novel of the Year. Perhaps the most illustrious author to have ventured into e-publishing is Stephen King, who stole headlines in March 2000 when he copublished with Scribner/Philtrum Press his 16,000-word story, Riding the Bullet, as an e-book. The book sold over 500,000 copies at $2.50 each.

M.J. Rose, dubbed "the poster girl of e-books" by Time magazine and "queen of e-book publishing" by Publishers Weekly, self-published her first novel, Lip Service, as an e-book in 1998 and sold it from her own Web site. Because of its success the book was picked up and published in hardcover by Simon & Schuster's Pocket Books. Rose wrote another novel, In Fidelity, also published by Pocket Books (January 2001), and coauthored two books on publishing. While Rose says she is pleased with her lot, she is dismayed by the cold shoulder she gets from many writers and publishing insiders who don't consider her a "real writer." In a recent article in Salon.com, she wrote, "My own scarlet letter is the e before the word book."

Scarlet or not, the letter e isn't going anywhere. What's unclear is what is to be done with it. Paul Aiken, executive director of the Authors Guild, says that he feels optimistic about the long-term prospects of e-books, but not the short-term ones. "People haven't shown great interest to read on e-devices," he says. "I think that will change as the technology improves, and as high school and college students graduate." The next generation of readers, Aiken believes, will be more tech-savvy than today's consumers, and more nimble at downloading files and reading on a screen.

Currently, many companies provide e-book software and reading devices, including Adobe Acrobat, Microsoft, Palm Digital Media, Gemstar eBook (formerly the Rocket eBook), and Franklin Electronic Publishers. (At the Frankfurt Book Fair, Jerome Rubin, founder of Lexis-Nexis and chairman of E Ink Corporation, spoke of new screens currently in development by E Ink that will reportedly look like paper.) While software is usually free, devices are not; Gemstar eBook, for example, sells one version for $149.99, another for $399.99. And publishers and distributors don't all release their books in the same format, so it remains up to consumers to properly equip themselves in order to download books. For some, this makes an already daunting digital realm even more intimidating; it also means that a book compatible with a specific software may be read on the computer screen but not on a reading device, and vice versa. Fictionwise.com credits its success partially to the fact that it enables customers to download e-books in multiple formats.

Legal questions are also an important factor in the e-publishing equation, particularly those concerning copyright. In 1998 Congress passed the Digital Millennium Copyright Act, spun from the World Intellectual Property Organization (WIPO) Copyright Treaty, to update U.S. copyright law for the digital age. On September 20, 2001, at the Second International Conference on Electronic Commerce and Intellectual Property, Patricia Schroeder, president and CEO of the Association of American Publishers, stressed the importance of protecting digital content. "Publishers are really investment bankers in copyright, and investment bankers must be sure their investments are secure," she said. "Publishers and authors alone cannot protect their content in the global environment of the Internet. They need the support of the international legal framework that WIPO is creating, and their own government's help to enforce the international protocols." Chief among her concerns were the ubiquitous attitude that e-content should be free, the vulnerability of digital work to hacking, and the ease with which electronic files can be sent to millions of nonpaying users without a publisher's or author's knowledge.

Another legal red flag is the lack of industry standardization. For example, in May 2001, the Authors Guild warned its members of unfair provisions in the iPublish e-book contracts, including low royalty rates, no advance payment for e-books, an exclusivity option for Time Warner to publish the work in print form but to pay no more than a $5,000 advance against royalties, and control of the author's next work. Worst of all, the Guild warned, was that writers automatically agreed to these terms merely by submitting their work. Though iPublish has since shut down, the Authors Guild's Aiken advises, "Since writers usually don't receive an advance for an e-book, they should only grant the publisher the e-book rights. They should also receive proper royalty statements and be able to get out of the contract at will. And they shouldn't relinquish rights to their next work."

For now, electronic publishing has some glitches to work out, not the least of which is the lackluster response from the paying public. In time it may prove to be a viable medium, but until then the letter e may have to stand for eventual.

Dalia Sofer is a freelance writer who lives in New York City.

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E-book Publishers Get Mixed Signals (March/April 2002)
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