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.

Who's winning and losing due to the shift to eBooks?

In my last post, I wrote that eBooks aren't expanding the market for books in general. However, even if eBooks are, overall, simply shifting money from one bucket to another, there are definite winners and losers:

Winners:

• Amazon: The company sells the most popular eReaders and more eBooks than anyone else in the U.S. (although a lot of those sales are unprofitable.) Amazon's dominance in the eBook market scared five of the six biggest publishers into (according to the U.S. Justice Department and more than 30 states) illegal price-fixing in order to take away Amazon's price advantage.
• Barnes & Noble: In the U.S., the bookseller is Amazon's only serious competitor for both eBooks and eReaders. Barnes and Noble has between 25% and 30% of the U.S. eBook market.
• Kobo: The company is Amazon's primary eBook and eReader competitor outside the U.S. It's recovered from the failure of Borders and Borders' licensees (at least, outside the U.S.) Now that it's owned by Rakuten, it has both the financial resources it needs and a natural advantage in Asia.
• Major publishers: Even though eBooks are shifting money around rather than increasing overall sales, publishers are earning more money on each sale, because eBooks have no printing, binding, shipping, warehousing or return processing costs.
• Self-publishers: eBooks have opened up the market to both writers who couldn't find publishers or agents, and writers who've been previously published but didn't earn much money. Royalty rates on self-published eBooks are much higher than those from major publishers, so writers can sell fewer copies at lower prices and still make more money.
• Consumers: Even though the Big 6 publishers have raised the prices of their eBooks under agency pricing, in most cases their eBooks are still less expensive than print. Self-published eBooks are dramatically less expensive than equivalent print titles. In addition, eReaders and tablets are far more convenient for consumers than carrying around multiple print books.

Losers:

• Independent booksellers: Few independent booksellers have successful online eBook businesses, and none of them have the same ease of ordering and delivery that Amazon and Barnes & Noble have. The American Booksellers Association inadvertently tied itself to the "albatross" of eRetailers, Google. which has since given notice that it plans to cancel its distribution agreements with independent booksellers. Whether independents will ever have a significant share of the U.S. eBook business depends almost entirely on who the ABA decides to partner with next.
• Small publishers: Small publishers that are still focused on print are tied very directly to the fate of retail booksellers. They need shelf space in order to build awareness and sales of their books.

Too early to tell:

• Apple: With no more than 10% of the U.S. eBook market and even less internationally, Apple's jump into the eBook business has largely been a bust, plus it's become entangled in Federal, state and private price-fixing lawsuits. Competitors such as Kobo are gaining share more quickly in international markets. Apple may ultimately decide that eBooks are more of a problem than they're worth, and settle for taking 30% of sales from other booksellers.
• Sony: At one time, Sony was the undisputed leader in the eReader market, but a series of missteps have left it an also-ran, even in its original strongholds of Japan and the U.S. Sony can turn things around by aggressively pursuing partnerships with booksellers outside the U.S. and Canada.

None of these judgments are set in stone: Barnes & Noble's partnership with Microsoft could help it build an international business, or its slowly-sinking retail bookstores could bring down the entire enterprise. Major publishers could fail to transition to digital-first strategies and end up with costs that are much too high for their revenues. Independent booksellers could find the right partner and become a viable competitor for eBook and eReader sales. Small publishers could start producing far more eBooks and become more visible in online eBookstores. Apple's rumored new "iPad mini" could be the perfect tablet for reading eBooks and could drive sales of many more titles.

Barbara's Bookstore to open shops within Macy's stores in Massachusetts

According to the Boston Business Journal, Chicago-based independent bookstore chain Barbara's Bookstore, which has operated a full-service bookstore inside Macy's flagship Chicago department since 2003, will open bookstore boutiques in Macy's locations throughout Massachusetts. (One Barbara's Bookstore is already operating in the Boston South Station Macy's.) A new bookstore will be added to Macy's Downtown Crossing store, as well as stores in Hyannis, Holyoke and North Attelboro, MA, with plans to eventually open more locations. One reason for Macy's and Barbara's Bookstore's expansion of their partnership is the closure of Borders' stores and other bookstores near Macy's locations. (It's not out of the question that if the Massachusetts experiment is successful, Macy's could acquire Barbara's Bookstore and expand its in-store bookstores more widely throughout its stores.)