B&N's Self-Publishing Service PubIt! Could Upend the Industry -- but Only If the Price Is Right -- UPDATE

Last Updated Oct 4, 2010 4:08 PM EDT

PubIt! landing page**UPDATE**

The PubIt! service just went live today with B&N touting a royalty/revenue share that's 65 percent of sold content for downloads with list prices between $2.99 and $9.99. For those priced $2.98 or less, or $10.00 or more, publishers get 40 percent of the list price. Barnes & Noble is also offering special support for the PubIt! titles: a dedicated bestseller list, "special promotions" in its e-bookstore, and additional focus on "select content" in their in e-mails and newsletters.

In the wake of last week's shareholder vote to keep Len Riggio in command is PubIt! groundbreaking? Not so much. Here's my initial take.


Barnes & Noble (BKS) could really be on the edge of something huge and, dare I say, game-changing. With the launch of its PubIt! service that will allow independent publishers and self-published writers to distribute their books digitally through B&N's Web site and its e-bookstore, the world's largest bookseller has the opportunity to scoop a hefty slice of the market away from its competitors and to shake up things at the big six publishers. But B&N's success will only come if the price is right.

The price of royalties, that is. While it's certainly seductive for an author to think that PubIt! books will be available across a spectrum of platforms including Apple's (APPL) iPad and iPhone, BlackBerry and others, they need to know those downloads are going to generate income. B&N hasn't announced what it plans to pay authors and publishers for using PubIt!, but it must implement a royalty model and compensation process that sets it apart.

You see, in the tech arena, B&N's no pioneer. Remember, its Nook e-reader came quite a bit later than Amazon's (AMZN) Kindle. When it finally arrived, Nook came with considerable bugs. And the retailer struggled to keep up with demand, which would be a good problem to have if it didn't create so many disgruntled customers who got fed up and ordered a Kindle, or a Sony (SNE) eReader. Or simply waited another month to get an iPad.

Likewise, when PubIt! opens its virtual gateway to the delights of digital distribution, it's entering a competitive playing field. There are several services that allow writers to distribute their works, most notably Amazon's Digital Text Platform (DTP), which is a superhighway to its Kindle and other devices that run the Kindle Reader software. Sony, too, has one for its Reader Store and Apple is now allowing self-publishers to distribute their e-books in its iBookstore thanks to a deal with Smashwords, a start-up that specializes in do-it-yourself e-book creation and distribution.

Oh sure, B&N's taking steps to protect these DIY authors and publishers, saying, "Content owners' intellectual property will be well-protected with Barnes & Noble's best-in-class digital rights management technology (DRM)." But so far, the problem of e-book piracy is not as big a threat to the health of the authors' livelihood as the make-or-break royalty agreement.

If B&N wants to take a true swing at establishing itself as the go-to, knocking out trade publishers, Amazon, and Apple in the process, it needs to do better than the latter two companies' agency model, which is a 70/30 split. Publishing consultant Mike Shatzkin broke it down on a recent deal inked between author J. A. Kornrath and Amazon. Kornrath's been self-publishing on Kindle and is now slated to do a new work, Shaken, as an e-book/trade paperback with Amazon's Encore imprint.

Shatzkin writes:

Amazon will publish the Kindle edition at $2.99 in October and release a paperback at $14.95 next February. This is a significant jolt to conventional publishing economics. Sales of Konrath's $2.99 ebook will deliver him about $2.10 a copy, as much or more as he would make on a $14.95 paperback from a trade publisher, and significantly more than he'd make on a $9.99 e-book distributed under "agency" terms and current major publisher royalty conventions. And, however one feels about the degree to which pricing is a barrier to e-book sales, one must assume that the $2.99 price will result in a lot more e-book sales than a $9.99 price would.

B&N's got the economy of scale on its side. It's now up to its number-crunchers to make it work.

Image via BN.com