All is not well in the e-book market. Amazon and Google have each scaled back some e-book programs in the past week because business was weaker than expected. Both e-book sellers are having trouble doing business with publishers.

Amazon has pulled more than 4,000 books from its e-shelves after publishers wouldn't budge for lower prices. Google is cutting off partners in its e-book affiliates program because sales referrals are too low to be worthwhile.

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What's going on here? E-book sales passed print in all trade categories last year, and e-book library lending is huge, but print still brings in more revenue for publishers. The problem is that consumers expect e-books to be cheaper, so publishers can't charge as much for them as they might like. In other words, it's a problem of business models, not of demand.

Meanwhile, Amazon's profits are sagging, and Google Books trails far behind in terms of sales. They're both getting tired of the middlemen, i.e. the publishers., and the squeeze they put on e-book sales.

Amazon is not shy about its efforts to get authors comfortable with self-publishing of e-books. Meanwhile, when publishing houses can't meet its price expectations, Amazon pulls the plug on their books. Google's affiliate program for e-books gave partners a better deal than Amazon's affiliate links, but it's cutting off the partners who can't perform.

The author and the reader are hamstrung by the presence of not just one but two middlemen. Something's got to give.

Inevitably, it will. It will be the publishers.

It's getting amazingly easy for authors to publish their own books, and Amazon, Apple and Google are all working on ways to let authors expand the idea of the e-book itself. Amazon is poised for a big Kindle push in Brazil. There's no question that the future of the book business is in the hands of these tech companies, not the publishers who can't keep up.

See also: Books Continue to Evolve - Check Out E.O. Wilson's 'Life on Earth' iBook

UPDATE 7:44 p.m.: RWW tipster Porter Anderson just passed along the news that Google has changed its mind and will now reinstate its independent affiliate publishers:

From Publishers Weekly:

"After notifying some independent bookseller Google eBook affiliates late last week that they will be removed from the program as of March 15 and their links deactivated, Google is now working to reinstate all indie affiliates. A Google spokesperson told PW that the company expects to add back those affected soon. She suggests that booksellers who sent e-mails but haven't heard back yet recontact Google."

Once we figure out why Google changed its tune, we'll let you know.

Do you read e-books? Which store(s) and device(s) do you use?

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In case you hadn't heard, there's a bit of revolution underway in the way books are published. Whether they're printed or laid out in pixels and read on screens, authors are increasingly able to publish them on their own, using a growing selection of self-publishing software and websites. Early excitement over Apple's new iBooks Author app quickly gave way to concerns over its restrictive licensing agreement, which Apple then clarified.

For those disappointed in the current selection of self-publishing tools, there's a new option. BookType is a self-hosted, open source and collaborative authoring tool for e-books and print books. Think of it kind of like a Wordpress for books.

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The software has to be installed on a Unix system like Debian or Ubuntu, or it can be installed on a Mac OS X server. Once up and running, the platform allows multiple people to write, edit and ultimately publish books in a variety of formats. The system includes real-time chat and detailed change history reports for a more collaborative, yet fool-proof experience.

Chapters and sections can be imported into the system or input directly into its WYSIWYG text editor. You can manage users, define licensing preferences, reorder chapters by dragging and dropping and import images for use throughout the book.

The finished product can be exported as a PDF Open Text Document, e-book for Kindle or iBooks or a print-optimized file. It can even be imported directly into Lulu.com for use with their print-on-demand platform.

BookType's backend UI is pretty stripped-down. For the most part, the simplicity is a good thing, but it sometimes feels like the interface could use some more polish. In terms of how it looks and feels, it's no iBooks Author. The system also appears to be short on layout tools. For richer, more complex page layouts, you may want to go with another approach for now.

BookType is brand new and still in beta, so we imagine improvements will be forthcoming. For the time being, authors who want a free, straight-forward publishing tools for no-frills e-books and print copies, it's worth taking for a spin.

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Amazon started out as a book retailer, a company that was arguably a friend to book publishers, since it expanded the market for many of their books. But increasingly, the web giant is becoming a competitor to those traditional publishers, as the New York Times details in a recent article and as we have noted a number of times. Just as it did with book retailing, Amazon has its sights set on lowering the barriers between authors and readers, both via the Kindle and through its own publishing deals — and in many cases, the biggest barrier between authors and readers is a traditional publisher. Until that changes, Amazon will continue to win.

Although some are just beginning to see the company as a publishing competitor, Amazon has been marshalling its forces for some time now. As GigaOM Pro analyst Mike Wolf has described in a number of posts, the company has been putting together the pieces of a “book industry in a box” for the better part of a year — launching new imprints of its own for various different genres, including one devoted to popular thrillers. Then in May, it hired publishing-industry veteran Larry Kirshbaum, former CEO of the Time Warner Book Group, and opened a New York office.

In the months since then, Amazon has signed deals with a number of prominent authors, including one with popular writer Tim Ferriss, whose books — such as The 4-Hour Workweek and The 4-Hour Body — have sold millions of copies. The terms of the deal with Ferriss weren’t released, but the author said “The opportunity to partner with a technology company that is embracing publishing is very different than partnering with a publisher embracing technology.” Amazon also signed thriller writer Barry Eisler, who gained attention earlier this year when he turned down a $500,000 two-book deal with a traditional publishing house and said he planned to self-publish instead.

It’s not just about the money
Why are authors signing these kinds of deals? In some cases it could be about the money (a deal with former TV star Penny Marshall was reportedly for $800,000 according to the New York Times), but in many cases it seems to be mostly about getting past some of the legacy processes that are typical with traditional publishers, and expanding the potential market for a book. The core of the problem confronting the industry is summed up in a comment by Amazon executive Russell Grandinetii in the NYT piece, in which he says:

The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.

If you look at the comments made by Barry Eisler about why he decided to take a deal with Amazon instead of self-publishing, he says virtually nothing about the money, or about other factors that traditional publishers are used to focusing on. It’s the other terms of the deal that he was swayed by: for example, the fact that Amazon was going to come out with an e-book version within a matter of days after the book was finished, and then follow that quickly with a paperback — and that both were going to be sold at a cheaper price, instead of the traditional industry’s approach of trying to charge print prices for electronic books.

What I care about is readers, because without readers I can’t make a living [and] I want people to read a lot. To that end, if I can find a way to get readers books that cost less and are delivered better and faster, I want that.

Just part of a wave of disruption
And as we’ve described before, Amazon signing deals to publish authors is just part of the bigger wave of disruption that is sweeping through the industry: self-publishing via the Kindle is becoming a larger and larger phenomenon, thanks in part to advocates such as JA Konrath and the kind of success that writers like Amanda Hocking have had by publishing their own books. Authors such as John Locke have shown that selling a million copies of a self-published book is not only possible but entirely feasible — and the fact that he and other writers who do so get to keep 70 percent of the proceeds is yet another wakeup call for the traditional industry.

And what kind of response have mainstream publishers had to all of this? Most have just continued to offer the old deals they are used to — deals that serve the publisher’s needs, but not necessarily those of the author. And in some cases, they have tried to punish authors who try to meet those needs themselves: the NYT piece describes how Hawaiian writer Kiana Davenport, who signed a book deal with Penguin last year, was threatened by the publisher after she packaged some of her short stories into a Kindle e-book. Penguin wanted all copies of the book removed from the internet; when the author refused, the publisher cancelled the deal and is now suing her for breach of contract.

Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.

Post and thumbnail photos courtesy of Flickr users Umberto Salvagnin and Marcus Hansson

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Amazon said on Wednesday that it will roll out a Kindle Lending Library later this year, which will allow users of the popular e-reader to borrow books from more than 11,000 libraries throughout the United States. While there are some interesting features included in this program — such as the ability to keep the notes you make while reading a borrowed e-book, and transfer them if you buy a copy — the offering also raises questions about who ultimately controls the content in those books, and what happens if Amazon or its publishing partners change their minds about the terms of the arrangement.

The news release from Amazon doesn’t say anything about the details of the program — for instance, whether there is a limit on how long the books can be borrowed for, and if so what it is (maybe libraries get to set the terms?). And it also doesn’t say whether Amazon or the publishers involved will have limits on how many times a library can lend a book.

That’s an important point, because some publishers have already begun to place arbitrary limits on the books they allow libraries to lend. HarperCollins, for example, recently capped its lending program at 26 loans, a limit many libraries and librarians were incensed about. HarperCollins argued that lending books more often than that would hurt its sales and damage the “e-book ecosystem,” saying in a statement:

We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors.

in the wake of HarperCollins’ move, some libraries said they would no longer buy books from the publisher for their systems. “The library model has always been you purchase and own it for perpetuity, and I don’t think the format should matter as long as rights are being protected,” Joan Kuklinski of the Central/Western Massachusetts Automated Resource Sharing consortium told Library Journal. “No one tells a library they have to pull their books off the shelf after a certain number of circulations so why should this be different?” An excellent question.

Because e-books are digital rather than physical objects, publishers and distributors like Amazon have far more control over them than they used to, and in some cases, they’ve exerted that power in disturbing ways. In one infamous incident in 2009, Amazon actually yanked e-books from users’ devices electronically after the publisher changed its mind about offering a digital version — and to make the issues raised by the incident even more stark, the books it removed were George Orwell’s 1984 and Animal Farm, both of which are about the capricious actions of totalitarian states.

More recently, Amazon used its control over its lending API — which third parties use to integrate their services with its offerings — to shut down a book-lending service called Lendle, which is designed to allow users to share books among themselves, something Amazon says it’s in favor of (within certain well-defined limits, of course). The company reinstated Lendle’s access after Lendle changed the terms of its service, but this kind of thing reinforces how much control Amazon has over the contents of the books users believe they have bought and paid for.

As more and more content has moved from the physical to the digital realm, book publishers (and music labels, and newspapers, etc.) have tried to perpetuate the control they used to have over the physical artifact, and in many cases have actually tried to create new forms of control they never had in the physical world. Whether — and how — Amazon and its partners choose to exert this over libraries and book-lending remains to be seen.

Post and thumbnail photos courtesy of Flickr users Marya and Timetrax23

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Google is getting ready to launch its own e-book store and challenge Apple and Amazon. According to The Wall Street Journal, Chris Palma, Google's manager for strategic partner development, announced the timetable for the launch of the company's e-book store during an event at Random House's Manhattan offices earlier today. Google Editions, as the new store will be called, will launch in late June or July.

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Google will allow book retailers to sell Google Editions on their own sites and, according to The Wall Street Journal's report, "keep the bulk of the revenue." Google, of course, also plans to highlight these e-books on its own book search engine. It's important to note that Google is also still trying to win the right to distribute out-of-print books, but the Google Books settlement that would give Google the rights to do so is still caught up in various legal challenges.

When we first heard about Google Editions last year, Google's plan was to offer around half a million books at launch. At the time, Google also noted that it wanted its books to be compatible with any device, whether that's a laptop, phone or dedicated e-reader. Apple's tablet wasn't on the horizon back then, but chances are that Google will also want its books to be compatible with this new platform. Given that Google is already using the ePub standard, we can only hope that Google's plan is to sell DRM-free ePub books.

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