Digital Book World's new eBook bestseller list is being compiled by a Big 6 employee

Yesterday, the Digital Book World website owned by F+W Media announced a new bestseller list for eBooks, and claimed that its methodology would make the list more accurate than those published by other sources. In its release of the first edition of the list, Jeremy Greenfield, the site's Editorial Director, wrote that the new list is "a new weekly venture from Digital Book World in partnership with Iobyte Solutions." There's nothing more in the article that describes Iobyte Solutions. A press release announcing the new list has extensive quotes from Greenfield, F+W Media Chairman and CEO David Nussbaum, Iobyte Solutions "managing partner" Dan Lubart, and several others. Other than the quote from Lubart, nothing in the release describes Iobyte Solutions. Finally, Lubart himself wrote a post on Digital Book World, describing the methodology used for compiling the list. Here's how Lubart describes himself in the post:

About Dan Lubart

Dan Lubart is a technology strategist and data junkie who founded Iobyte Solutions in 2000 following a previous decade of solo consulting. Still fairly new to the publishing industry, Dan has been involved with digital disruption in the past, spending a year at Universal Music Group right around the time Napster was rearing its head and now focuses mainly on the familiar challenges and opportunities of the eBook marketplace. With Iobyte, Dan also developed a very cool consumer learning site for Scholastic, and has consulted with major clients in banking, pharmaceuticals, retail and media. Amidst his other current professional endeavors, Dan devotes great chunks of time to enhancing and marketing Iobyte’s eBook MarketView service (retail data and analytics on both physical and eBooks for publishers). Follow him at hiswebsite and on Twitter.

There's just one problem with all of this: Dan Lubart is also the Senior Vice President of Sales Analytics at HarperCollins. That's right--a senior sales executive with one of the Big 6 publishers is responsible for compiling an "unbiased" list of bestselling eBooks. I wouldn't have known anything about this if Mike Shatzkin hadn't mentioned it in passing in his blog. When I first read Shatzkin's blog, I was sure that I was reading it wrong--surely Lubart had worked at HarperCollins before leaving to set up Iobyte Solutions, but a quick check with LinkedIn showed that I read it correctly. Lubart is apparently continuing to run Iobyte Solutions while he also works for HarperCollins.

This opens up an enormous can of worms. Did Greenfield and Nussbaum not know that Lubart had a massive conflict of interest? Mike Shatzkin certainly did, and he's quoted in the press release that announced the new bestseller list. If Greenfield and Nussbaum did know, why didn't they reveal that information? They had plenty of opportunities to do so. Unless Lubart was suffering from a case of selective amnesia, he should have revealed his employment in the post he made describing the list's methodology. He spent an entire paragraph talking about his background, with no mention whatsoever that he's currently employed by HarperCollins.

Any argument that Digital Book World or F+W Media might make about Lubart's ability to somehow keep a "Chinese wall" in his head separating his duties at HarperCollins from his work for Digital Book World is laughable. This is an inherent conflict of interest. It should have been fully disclosed, and even then, it undercuts the impartiality of the list. The best thing that Digital Book World could do is admit what happened and separate itself entirely from Iobyte Solutions and Mr. Lubart. Another option would be if Mr. Lubart ends his employment at HarperCollins, declines to accept any consulting business from the company, and works full time at Iobyte Solutions. Failing that, the Digital Book World list has to be seen as inherently unreliable.

Update, August 21, 2012: Nate Hoffelder at The Digital Reader picked up on the story, and contacted Digital Book World to ask some questions. As of this writing, DBW hasn't responded to Hoffelder, but after it received Hoffelder's request, it edited Dan Lubart's biography to add a mention of his employment at HarperCollins:

About Dan Lubart

Dan Lubart is a technology strategist and data junkie who founded Iobyte Solutions in 2000 following a previous decade of solo consulting. Dan currently works with HarperCollins as S.V.P. of Pricing and Sales Analytics while concurrently managing Iobyte and the eBook MarketView service providing retail data and analytics on both physical and ebooks. (Emphasis added.) Still fairly new to the publishing industry, Dan has been involved with digital disruption in the past, spending a year at Universal Music Group right around the time Napster was rearing its head and now focuses mainly on the familiar challenges and opportunities of the eBook marketplace. With Iobyte, Dan also developed a very cool consumer learning site for Scholastic, and has consulted with major clients in banking, pharmaceuticals, retail and media. Follow him at hiswebsite and on Twitter.

Note that DBW didn't just add a mention of Lubart's employment at HarperCollins--it also edited other parts of the biography out. They did this without explaining the reason why, and without addressing Lubart's conflict of interest. In addition, note the wording that "Dan currently works with HarperCollins as S.V.P of Pricing and Sales Analytics...", implying that his relationship with HarperCollins is that of a consultant or contractor, when his LinkedIn resume makes it clear that he works FOR HarperCollins as a full-time employee.

F+W Media's and Digital Book World's logic for how they're handling this revelation isn't clear to me. Surely Lubart isn't the only researcher in the country who could put together this bestseller list. I've done market research and industry analysis for years, and what Lubart says he's doing is nothing that literally thousands of other analysts couldn't do. Instead, DBW's actions are like the New York Times hiring the head researcher for the Obama or Romney campaign to do its election polling, and responding "Yeah? So what?' when the truth is discovered. No organization with any pretensions to journalism would act this way, so the question becomes, what kind of organization is Digital Book World, and why should anyone believe that its eBook bestseller list, or anything else it publishes, is untainted by conflicts of interest?

Zola Books wants to partner with independent booksellers

Jeremy Greenfield of Digital Book World writes about Zola Books, a new eBook retailer that launched in beta shortly before this year's BEA. The company has raised $1.3 million from investors and plans to open its eBookstore to consumers on September 19th. Zola is offering eBook partnerships to American Booksellers Association members that have been selling eBooks through Google Books, but it's not clear whether Zola is under official consideration to replace Google by the ABA.

One ABA member, Katie Fransen of One More Page Books in Arlington, VA, said that the ABA eBook program was much too expensive. The ABA charged a monthly fee of around $200/month to program and maintain the store's website, and to act as a go-between with Google. Fransen, whose store has signed up for Zola's beta program, said that Google offered a very small percentage on sales to its independent bookstore partners. Zola, on the other hand, pays publishers 70% of each sale, and then splits the remaining 30% equally with its partners (Zola pays the 4% credit card transaction fee out of its share of the 30%.) It's a great deal for publishers, but it's significantly less than what most bookstores make on print sales. (Also, it's unclear what the business model truly is--Greenfield writes that Zola gives independent booksellers that run their own online stores 60% of the net proceeds from every sale, which, if net proceeds are measured after the publisher's share, would be a slightly better deal for booksellers.)

To date, Zola has signed up 48 bookstores for its beta test, and half of them have committed to use Zola when it launches in September, although the article says that the number of participating bookstores continues to change.

Amazon Publishing likely to acquire Dorchester Publishing

At Digital Book World, Richard Curtis writes that Amazon is the "stalking horse" bidder to acquire Dorchester Publishing in an auction to be completed on August 15th. Amazon has committed to pay all outstanding back royalties owed to Dorchester's authors and agents as of May 31st if it wins the auction. Curtis writes that it's unlikely that any other company will outbid Amazon, given that Dorchester has been on the market for some time, without any real interest from buyers.

eBooks: Reality sets in for publishers

Forrester Research and Digital Book World released some details yesterday of a survey of book publishers representing 74% of U.S. revenues. According to the survey conducted late last year, publishers are actually getting more pessimistic about the future as eBooks become more important. In a similar survey in 2010, 66% of respondents said that they expected that more people would read eBooks than before; in 2011, only 47% gave the same answer. When asked whether eBooks would cause people to read more books than before, 66% of respondents answered "yes" in 2010, while 60% answered "yes" in 2011.

29% of 2011's respondents believe that eBooks will comprise 50% of all book sales in 2014; 22% of the respondents believe that eBooks won't reach the 50% mark until 2015 or later. 82% of respondents are "optimistic" about the digital transition, but while 51% of respondents in 2010 believed that their companies would be stronger as a result of eBooks, only 28% believed so in 2011.

These are only a handful of responses from what is undoubtedly a much more detailed survey, but they suggest that publishers' mindsets are changing. In 2010, many publishers believed that eBooks were only another "binding"--another way to consume books--and that they didn't represent a fundamental change. Since then, however, you'd have to be living under a rock not to recognize that eBooks are changing just about everything about the book industry:

• eBooks are continuing to cannibalize print sales. Last year, eBook sales more than doubled over 2010, but sales in every category of print books tracked by Nielsen Bookscan were lower in 2011, from a drop of 3% for hardcover adult nonfiction to a 24% decline for mass market paperbacks.
• According to USA Today, for the week including Christmas 2011, 42 of the top 50 titles sold more eBook than print copies (this compares with 19 of the top 50 titles for the same week in 2010).
• When customers walk into the biggest bookstore chain in the U.S., Barnes & Noble, the first thing they see is no longer a table stacked with new print arrivals. Instead, it's a display of Nook eBook readers and tablets, staffed full-time by a salesperson.
• Self-publishing, which was once the domain of vanity presses and the last refuge for writers who couldn't get a contract with a publisher, is now a viable option for writers--even those who could get a conventional publishing deal. It's now possible for authors to sell a million copies of their self-published eBooks.
• The tasks performed by publishers, including acquisition editing, copy editing, book cover design, book layout, typography, format conversion, distribution of eBook masters to resellers and printing, are now being done by contractors, service suppliers or the authors themselves.
• Amazon, which represents both the biggest customer and the biggest frustration for many publishers, got into publishing in a big way in 2011 with five imprints. Amazon is willing to pay top dollar to sign authors such as Tim Ferriss and Penny Marshall, and to acquire backlist titles. 

Publishers are beginning to understand that things aren't going to go back to the way they were before the Great Recession, and that eBooks are much more than simply another way to consume books. They may not represent as shocking a transition as the effect of television on the movie industry during the 1950s and 60s, but eBooks' impact on the book industry will be dramatic, especially given that we're still early in the transition from print to digital. What will things look like on the other side of the transition? That's the subject of a future post.