From Kobo Writing Life:

At a recent visit to Kobo’s home office in Toronto, Hugh Howey was interviewed by KWL Director Mark Lefebvre in front of an audience of about 150 people (60 of which were local Kobo Writing Lifeauthors) for a Kobo in Conversation video.

Here are some highlights from the discussion.

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• Hugh talks about how interesting it is that history re-writes itself to fit the model of what people think happened – his first book was actually signed to a small press before he made the decision to try the self-publishing route
• Hugh also reflects on how, in 2009, he was only concentrating on print books and traditional contracts for the first book, but then noticed his eBook sales were overtaking his print book sales
• How Hugh was pressured by friends and family to get his book out to publishers so they could see it in bookstores

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• How Hugh acquired “sequelitis” after finishing that first novel, and how, when you keep writing sequels you’re left always promoting your first book

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• The importance to not run from labels, like “self-published author” – Hugh is proud to call himself a self-published author
• How H.M. Ward continues to turn down multiple 7 figure offers from publishers because their marketing plans aren’t offering anything she hasn’t already built for herself

Link to the rest at Kobo Writing Life

From author Nick Stephenson:

I had a bunch of emails last time I posted on this subject, asking me to update how my adventures outside of KDP Select were going after a month – so, if you haven’t read the previous post, go check that out here.

For everyone else, here’s the skinny: From my very first book release in March 2013, there had always been a common trend. Book sales would spike massively around a promotion (usually Bookbub) and then fall right back down again within a few days. Not that I’m complaining, but my eventual goal was to try and keep sales consistently strong, rather than relying on a monthly spike in numbers and then thirty days of diddly-squat.

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So, I pulled my titles from KDP Select and uploaded them onto other vendors, then set my strongest-rated novel to permafree. I applied for a Bookbub free promotion, which went live on the 27th of June. The results have been better than I could have hoped. Sales have remained consistently higher for over a month, beating out my average daily revenue of $80 by a factor of four. This last month has easily been my strongest to date, and is set to overtake the $7,000 mark by the time July rolls round. And, best of all, sales on non-Amazon retailers make up a significant portion of that figure, and Amazon UK has opened up for the first time.

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I’ve also been extremely impressed with my first experiences with other retailers. iTunes has been easy to work with (despite it taking nearly a week to get a title approved), Nook was simple and fast (12 hours from submission to publication) and Kobo was a dream. Kobo were also kind enough to feature my permafree book as one of their “first free in series” titles, which gave my numbers there a little push. Kobo is now a nice little side earner – and the efforts these guys go to in order to accommodate indies is commendable – especially given the vacuum that opens up every time I try to email Apple or Barnes and Noble. Well done, Kobo!

Link to the rest, including sales charts at Nick Stephenson

From Canadian law firm Affleck, Green, McMurty:

Ebook retailer Kobo is challenging a settlement entered into by the Competition Bureau with ebook publishers. The settlement has been stayed pending this challenge. Kobo‘s challenge may have major implications for competition law enforcement in Canada. Kobo‘s case also highlights a little-known area of risk that Canadian businesses face.

Canadians have taken to ebooks and ebook readers. They have many advantages, such as portability and the ability to buy and immediately download new books from nearly anywhere, at any time. But ebook customers cannot have failed to notice that ebooks are not much cheaper paperback books or sometimes even harcover books, even though the ebookscost less to produce and distribute than physical books.

Competition authorities in Canada, the United States, and Europe noticed this as well and investigated. They found that the replacement of a traditional wholesale price model with an “agency” model, where the publisher sets the retail price and charges a percentage of that price as the wholesale price, led to higher prices for ebooks.

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In Canada, ebook retailer Kobo is challenging the settlement. Kobo claims that the settlement changes the contracts that underpin its business and profitability. The Competition Tribunal has stayed the Canadian ebooks settlement pending Kobo’s challenge.

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Under the wholesale model, the publisher sells the book to the retailer, who then sells it for whatever price it wants. When ebooks were first introduced, publishers typically set wholesale prices about 20% lower than for physical books. Amazon then started selling ebooks for $9.99. Publishers saw this as too low, and they said so. Some of them began to act in concert to protect the higher prices they charged for hardcover books, notably by releasing books in hardcover before releasing the ebook version, a tactic called “windowing”.

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Even before the case against Apple went to trial in the US, the publishers reached settlements with US and EU competition authorities. Apple settled in the EU but not in the US.

The settlements, broadly speaking, were substantially the same on both sides of the Atlantic: the publishers agreed to end retail price restrictions and MFN clauses.

The Canadian settlement is also similar. The consent agreement prohibits the publishers from imposing retail prices on retailers. Publishers can still set suggested retail prices, but, with one narrow exception, cannot prevent retailers from selling below the suggested retail prices.

A key feature of the ebooks case is that it involves both horizontal and vertical restraints. The horizontal restraint is the agreement between ebook publishers to impose vertical restraints on retailers. The vertical restraints prevent price competition by retailers, a practice known as price maintenance. The ebooks settlements attack the vertical restraints that flow from the horizontal agreement. The anti-competitive conduct that provides the basis for the enforcement action appears to be the horizontal agreement, however.

The Canadian ebooks settlement is based on an anti-competitive horizontal agreement. The settlement recites an allegation by the Competition Bureau that ebook publishers entered into an agreement that lessened or prevented competition substantially in the market for ebooks.

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Kobo argues that its contracts with the four publishers, Hachette Book Group, HarperCollins, Macmillan, and Simon & Schuster, will be fundamentally altered or terminated because of the settlement, and that it will lose money. Kobo claims that a similar settlement in the US led it to close a US office and refocus on other markets. Kobo claims that it also led another ebook company, Sony, to exit the market, and caused Barnes & Nobles’ “NOOK” ebook division to become unprofitable.

The settlements led publishers to replace the agency model with the so-called “agency lite” model. The agency lite model is essentially the same as the agency model with most of the restrictions on retail price reductions removed. Thus publishers continue to establish a retail price, and are paid a wholesale price based on a discount from the retail price. The key difference is that retailers are free to price below the suggested retail price. The wholesale price does not change, however, even if retailers decrease retail prices. This, Kobo complains, means that retailers bear the losses associated with competition in the marketplace, while publishers’ margins remain protected.

Kobo says that unlike in the US, the shift to agency in Canada was not driven by a conspiracy among publishers, but rather, by Kobo itself in its negotiations with publishers.

Link to the rest at Affleck, Green, McMurty and thanks to Felix, who suggests this may indicate that Kobo was involved in a Canadian price-fixing conspiracy, for the tip.

From The Toronto Star:

Toronto-based e-reader company Kobo laid off 63 people on Thursday, only a few weeks after appointing a new president, amid what it called “organizational changes.”

“To focus resources on innovation, partners, and readers, the leadership team has realigned the organization’s structure, which has also meant some staff reductions,” René d’Entremont, a Kobo public relations manager, told The Star.

“As part of this change, teams have been restructured and optimized; redeploying employees to best use their skills to support the company’s core goal of providing the best global eReading experience. All our offices will continue to operate as usual, with a mandate to grow the business in each of our territories.”

Founded in 2009, Kobo currently employs more than 400 people worldwide.

Link to the rest at The Toronto Star and thanks to William for the tip.

From The Digital Reader:

Canada’s Competition Bureau announced a settlement last month with 4 publishers to end agency pricing, but it looks like the process isn’t going to go as smooth as one might have expected.

Kobo has filed an objection to the consent decree, and they ask that the settlement be modified so that they are not negatively impacted by the sudden and radical change to the Canadian ebook market.

As part of their filing. Kobo revealed some rather telling details about their business. They blame the end of agency in the US for the loss of their market share, and they predict that the same will happen in Canada.

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In short, Kobo is saying that when Amazon was allowed to discount ebooks in the US, Kobo was unable to compete effectively, not even by means other than price (marketing, CS, features, community). This is rather curious because other companies, including Zola Books, The Reading Room, Bilbary, Oyster, and Scribd all seem to be able to compete effectively against Amazon in the US ebook market.

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On a related note, if Kobo has only a negligible market share in the US then I have to wonder whether their partners at the ABA, and its IndieBound program, are beginning to regret betting on the losing horse.

Link to the rest at The Digital Reader

From GigaOm:

Canadian ebook company Kobo, which was acquired by Japanese retail giant Rakuten in 2011, is replacing its founder and CEO Michael Serbinis with a Japanese executive, the company announced Tuesday. Takahito “Taka” Aiki, who was the CEO of Rakuten’s telecom company Fusion Communications, steps into the new role effective immediately, while Serbinis remains involved with the company as vice chairman.

According to Kobo’s announcement, Aiki “was responsible for the online business of Japan’s top bookstore and video rental company Tsutaya, where he helped grow its online membership by 250% in only two years” — though his LinkedIn profile says that was from 2002 to 2004, long before the rise of ebooks.

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Kobo didn’t provide a reason why Serbinis is stepping down. But the company’s share of the ebook market in the U.S. is far behind that of Amazon, Barnes & Noble and Apple. The company has largely focused on an international strategy of partnering with local bookstore chains to sell its e-readers, which may be increasingly difficult as Kindle availability expands abroad rapidly.

Link to the rest at GigaOm

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Thanks to David for the tip.

From The Times of India:

Canada based company Kobo and Crossword Bookstores has ventured into the Indian market with a range of ebook readers and tablets. The line-up consists of Kobo Touch, Kobo Glo and Kobo Aura HD ebook readers and the Kobo Arc tablet. These products will compete against Amazon’s range of Kindle devices in the country.

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Kobo’s new ebook readers and tablets will be available in retail locations across India in partnership with Crossword. Readers will also have access to Kobo’s eBookstore, which has approximately 4 million titles across 68 languages and offers 95% of India’s bestselling content. The online book store will provide buyers access to work from Indian as well as international bestselling authors.

Link to the rest at The Times of India

Chris McCrudden on Publishing:

“I want to talk about self-publishing. In particular the self-published pornography that found its way on WH Smith’s website via the retailer’s partnership with Kobo, which was spotted by The Mail on Sunday and has since led to a virulent press and social media campaign against ‘vile trade’.”

***

“For me this episode highlights a fundamental tension within the eBook selling industry which is all about why being a platform is different to being a retailer. The success of platforms like Amazon’s Kindle Direct Publishing and Kobo’s Writing Life are quality neutral at the point of entry. They exist to scoop up a critical mass of content because they believe consumers want to deal with the platform with the biggest inventory.”

Read the rest here:  If Self-Publishing is the new Wild Wild West, Who’s the Sheriff?

Julia Barrett

From author Ryan Casey:

Last night, a lot of self-publishers and writers went to bed wondering whether they were going to lose a revenue stream as Kobo appeared to yank all self-published books from its shelves. Some eye-witness reports claimed it was UK only, while others from around the world added that their books had also disappeared. At a glance, it appeared that Kobo had for some reason come down hard on self-published ebooks, but without any official word, nobody could really say why. Mass panic and hysteria ensued. Bomb shelters were occupied. Self-published authors braced for the apocalypse.

As the day progressed and more information became available, it appeared that Kobo’s pulling of self-published ebooks was a direct response to WH Smith’s website closure. For those overseas, WH Smith (or ‘Smiths’, as it is more commonly referred in ol’ Blighty) is probably one of the two remaining major high street book retailers. Nowadays, it’s more akin to its former self as a glorified newsagents, making more income from discount Mars bars than books.

The reason WH Smith are so crucial to the understanding of Kobo’s seeming act of insanity is that they are Kobo’s number one UK partner. I’d go as far as saying that if it weren’t for Smiths, Kobo would be as good as non-existent in the UK.

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I still believe WH Smith should take some responsibility for their own inept privacy options. A simple tick box with, ‘do you want your search to feature explicit content?’ would’ve protected children from accidentally stumbling upon such literature. Smashwords have had such an option for years, and they’re doing just fine.

But anyway, I digress. As a result of WH Smith — Kobo’s major UK partner, remember — closing their website and demanding all self-published books were cleaned and properly moderated, Kobo were left with two options. The first, more reasonable option to all, would likely have been something along the lines of what Amazon are doing — policing the self-published environment and gradually removing the offending content. Option two was to immediately cave to WH Smith’s demands and put the interest of its business partnership before its authors and readers.

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However, despite the bad media press, what has been encouraging is the number of ‘Save Indie’ campaigns I’ve seen on Facebook and Twitter, not from writers, but from readers. It seems like readers respect the hard work that all authors put in, whether traditionally published or indie, and are willing to fight for the freedom of self-published authors. It’s a nice sign of the times, that’s for sure, and while the mainstream media continues to be influenced by major institutional relationships, the power of the people is clear to see.

Overall though, I think that Kobogate (can we refer to it as that from now on?) highlights two rather interesting but unrelated points. Firstly, as an author, it has shown me the importance of spreading my output rather than putting my eggs into one basket. Fortunately for me — and for many — I don’t make much money at Kobo. However, just imagine if it had been Amazon that’d had the kneejerk reaction. All those people making money from their series, all those enrolled in Select… *shudders to think*. So, from the end of this week, I’ll be focusing on expanding my work’s reach. My second novel, Killing Freedom, will be available on all platforms this Friday.

Link to the rest at Ryan Casey