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Your iBooks Distribution Options

April 6, 2010
By Michael Cader

The distribution picture for getting your books into the iBookstore is becoming clear with a raft of announcements from service providers and an informational page at the iTunes site. While music and music video vendors can fill out an online vendor application for Apple’s review, it appears that book publishers currently have two options only. Either an iBookstore representative has issued you an “application code” to apply for the iBookstore directly, or else you are directed to a list of seven “Apple-approved aggregators.” As Apple notes, “if you choose to work with an aggregator to distribute your content on the iBookstore, Apple’s contractual and financial relationship is with that aggregator.”

As announced yesterday, Ingram is among those aggregators. Libre Digital is another, along with Smashwords, Lulu, INgrooves, CD Baby, and BiblioCore. The companies appear to provide different propositions and fee schedules for their services.

BiblioCore, for example, says they charge a “simple flat up front fee” rather than a percentage of sales. CDBaby says they charge a “signup fee” of $49 per eBook, and an “annual fee” thereafter of $19. They offer to convert your file to EPUB for $19 a title, or assign you an ISBN, also for $19 a title.

Those companies that charge a percentage of revenues are not necessarily framing the percentages in a consistent fashion. Lulu says “the creator revenue that you receive per sale will be 80 percent of the profit after deducting Apple’s share.” The way Smashwords expresses it, publishers and authors get 60 percent of the retail price, and Smashwords keeps 10 percent. That’s the way LibreDigital charges, as well. To make those equivalent, Lulu is taking 20 percent of the publisher’s net after commission; Smashwords and LibreDigital are charging 14.25 percent.

Ingram declined to specify their fee structure, with chief content officer Phil Ollila telling us they “will operate in a classic service-provider model,” with “fees that are reflective” of the aggregator services performed.

In the case of both Ingram and LibreDigital, the companies have already been providing digital files to the iBookstore on behalf of their Agency Five clients for whom they provide digital repository/fulfillment services, but neither has started supplying Apple with ebooks in the aggregator/distributor role yet.

The appointed aggregators see a large market ahead. The big unknown is the extent to which Apple is willing to engage in direct vendor relationships with more than a small circle of publishers. (Everyone remembers that with audiobooks, Audible was the only option for dealing with iTunes.) Johnson says their expectation is that the iBookstore “will meet or surpass the numbers [of titles available] of other online stores within 90 days.”

While there is clearly a cost to working with third-party aggregators, there may be an opportunity as well. Clients are signing agreements with the aggregators rather than Apple directly. Publishers who have related their negotiations with Apple to us have all characterized that contract as “tough,” often citing a most favored nations clause that enforces price uniformity across ebook retailers.

But Johnson tells us that LibreDigital’s contract has no most favored nations conditions, and another aggregator told us the same thing. The aggregator contracts specify Apple’s stipulated maximum pricing tiers but apparently do not restrict publishers beyond that. Apple does reserve the right, as expressed in the Smashwords publisher agreement, to adjust pricing to meet their contractual requirement or “to refuse to the publish the book” if the pricing does not correspond to their rules. They can also make a judgment about whether the pricing of the ebook version of a paperback is “unrealistic” when a print version has been available for more than a year.

As best we can determine, however, the aggregator contracts do not require publishers to impose Apple pricing across all of their ebook customers. We’ll explore this more in another article later this week, but that could be a significant element of relief for some publishers navigating the new models.

Filed Under: eNews, Free

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