The business of print publishing — producing physical books and shipping them here and there — has taken two more serious blows in the last month.

H.B. Fenn, Canada’s largest book distributor, filed for bankruptcy on Feb 3, leaving major publishers like Macmillan in the lurch.

Borders, the second largest book chain in the US, filed for bankruptcy on Feb 16. Though the company hopes to restructure and emerge with a pulse, it has set about closing more than 200 of its current locations.

These announcements are simply two in a long string from the past year, including the dissolution of Canadian publisher Key Porter and the closure of indie bookstore after indie bookstore.

The economics of moving print books across the country and around the world are becoming increasingly untenable. It’s relatively expensive to create, ship and store physical books, and with already razor-thin margins, traditional publishers, distributors, and booksellers are feeling the pinch.

But what does it all mean for you as a self-published author?

Physical space for selling books is decreasing
Sobering fact: Your book has less than a 1% chance of being stocked in an average bookstore. With shelf space dwindling, competition for what’s left is fierce. You think it’s hard getting your self-published book into a bookstore now? Expect it to get even harder. The thing is, while mainstream bookstore distribution is great if you can get it, for a lot of business authors, it’s not the only game in town.

Exploit other channels
You’ve got all kinds of other sales channels available to you, such as back-of-room sales at speaking engagements, bulk sales to special interest groups, direct sales to your client base, and online sales through Amazon. Use them.

Lock in your digital strategy
Yes, a print book still confers the most cachet, which is important for the freebies you give as gifts to clients and contacts. But don’t neglect the e-book market — it’s booming and will only continue to grow. At the very least, make sure your print book is available on all the major e-reading platforms. It’s not hard to do.

And start to think about ways you can establish your e-book as the premium gift. How about giving top prospects an e-book reader skinned with your book cover and a link to a free download of your book?

The print book market will be around for quite a while yet, but it will get increasingly harder for self-published authors to get distribution through mainstream channels. Pursue that distribution if you like, but don’t let it be your only or even primary strategy. Multiple channels for reaching readers are your best insurance.

One of the biggest challenges to not living in the United States is the additional wait time for all Apple technology releases. For some reason, we’re always a few months behind. So I’ve only had my iPad (64GM, 3G enabled) since June. During that time, I’ve realized a few key things about it.

1) Reading books on a backlit screen is challenging. Indoors, it’s fine. Outdoors, there’s glare that only gets worse in bright sunlight. The saving grace is reading at night in the dark — then the backlit screen is wonderful.

2) The iPad is very heavy compared to the other e-readers I’ve tried (Sony, Kobo, Nook, & Kindle). And heavy is the last thing you want in a portable reading device, as it reminds you too much of a p-book.

3) It’s totally fun to play free downloadable games on it. (Many hours of mindless distraction later, I still keep gravitating back to solitare.)

4) It holds a ton of music and video, and syncs my calendar, contacts, and multiple email accounts. Plus it can take notes and access web pages, not to mention the 200,000+ apps that do things I didn’t even know were missing from my life. The recent firmware upgrade has added some nice functionality.

The iPad was never meant to be an e-book reader only. The iBookstore is a good add-on for Apple, but it will never make them much money. The publishing industry doesn’t need to worry as much as the music industry did about iTunes (that was a game changer).

What the iPad really does is make laptops and mini-computers obsolete. It’s a completely new way to interact with information; iPod Touches were just the starting point. With the next generation of iPads coming next year, Apple is poised to dominate again. The other options in the market (Galaxy Tab, etc.) just reinforce that it isn’t about reading – it’s about portable connectivity and entertainment. Makes me feel all Star Trekker just thinking about it.

A key economic concept is that of spirals — trends that self-perpetuate. A spiral can happen, for example, when a product moves from early adoption amongst a select few to general adoption amongst a wider audience. At first a few people purchase a cell phone, then more and more; finally a great wave of people purchase one and the product becomes ubiquitous (except for the few Luddite holdouts).

The same thing happens with pricing. When only a few cell phones are sold, each one is very expensive. The higher price limits the number of people who will buy one. But once there are more sales, the production process can enter what is called an economy of scale. There are cost savings from producing many cell phones at once. These cost savings are passed on to buyers in the form of cheaper prices (plus some retained profits for the manufacturers). A lovely cycle is created where the more a company produces, the more cheaply it can sell the product and still make great margins – as long as market share keeps growing. This is an upward spiral.

However, if the market starts to slow, the great momentum of the spiral turns down. Fewer cell phones being sold (like Nokia is experiencing right now) means production costs go up, which leads to prices needing to go up. Higher prices make it less likely for people to purchase the product. At some point, the downward spiral ends in a predictably bad place for the company that now makes a product that’s too expensive for the market.

With the incredible surge in the e-book market (greater than any predictions), we’re starting to see a corresponding decline in p-book sales. Gradually, there will be fewer copies of each paper book produced. At first this won’t create a big difference in the economies of scale and therefore price of a book. But over time, as print runs become smaller, the price of p-books will have to go up.

Over time, higher book prices will lead to fewer copies sold, which will lead to more expensive production costs, which will necessitate higher prices, which will lead to fewer copies sold, and so on. The downward spiral of p-book publishing will accelerate. And the 3-format book future will come about – fast.

P.S. Thanks to Mike Shatzkin and Eoin Purcell for reminding me of my economics background.

So e-books are taking over the world. Depending on who you ask, that’s either a good thing (readers who travel) or a very bad thing (publishers). Either way, the genie is out of the bottle for good. The big challenge is how to tap into the gift market.

If I purchase a p-book (you know, the traditional paper kind), I can read it myself, lend it to others, or give it away. There’s a lot of value in all three of those options. When I purchase an e-book, leaving aside the problem of being trapped on one type of e-reader, I can mainly just read it myself. That’s pretty limiting to the expansion of the market.

Barnes and Noble have tackled the lending issue with the Nook, which lets you lend an e-book to another Nook owner. While the book is out on loan, you get locked out of reading it yourself. But the loan feature has some major flaws, including the fact that you can only lend an e-book title once and there’s a two-week limit to the loan period. Who reads a loaned book in 2 weeks?

So far, no one has created a legal way for the general public to give e-books as gifts. There are ways to cheat to provide free copies to your friends, but that certainly isn’t happy news for either authors or publishers.

The illicit trading of music files is one of the ways that MP3s permanently transformed the music industry. In response, Apple started iTunes and legitimized the buying of music in single tracks. Now a whole “good” portion of the population is comfortable buying music online. Unfortunately, Apple hasn’t solved the issue of giving music as a gift, other than offering the ubiquitous gift card. E-books suffer the same fate.

Trouble is, gift cards don’t create emotional connections to a personally selected item, like a particular book can. With books being a popular gift (and my favorite), this is a big issue to solve. Wish I knew how to crack this one. I’d be sitting pretty on the royalties.

UPDATE – Sep. 29, 2010: Just discovered that Apple iTunes offers this service for gifting songs, so hopefully they can lead the way with e-books as well!

UPDATE – Nov. 19, 2010: And now the two big main players (Kindle and Kobo) are both offering this option. Love it!

We’ve entered a time where getting a book to market is as simple as 1, 2, 3. First, write the book. Second, make sure it gets a thorough edit. Third, self-publish in print and e-book form. Boom — “published” author. That isn’t to say it’s easy, but there has certainly never been a better time to get a manuscript off the shelf and into the hands of interested readers.

But some are asking, in a world where anyone can become published, how do you find something “good” to read? How do readers sift through the exploding number of titles to find the gems in the pile?

The answer may be, “just as they do now.” Even with a flood of new titles available, it stands to reason readers will continue to choose titles using the same criteria they have in the past. Google has determined (through some fancy algorithms) that there are nearly 130 million published books in the world. Readers have managed thus far to sort through those millions of book titles to find the ones they’re interested in. With that in mind, one can only assume readers will be able to do the same as the self-published market explodes over the next few years.

People gravitate towards what they like. They find authors or genres or subject matters they care about and are interested in, and make choices out of that pool. In fact, adding more titles will only grow the pot for readers, giving them even greater options on the subjects they enjoy.

Author Scott Nicholson explains it well in his article on the topic. He offers the analogy that despite her popularity, he has no idea what Lady Gaga sings, nor does he ever care to. But he finds new music that does appeal to him, when he wants to, through the channels he always has. Finding book titles would be the same. He finds and reads what he already likes.

Perhaps the growing wave of self-published titles will create some complexity and debris in the market, but how much it affects consumer buying and reading habits, if at all, remains to be seen.

UPDATE – July 13, 2010 - Well, it’s happened already. Sony just broke the $100 e-reader barrier. Looks like there will be e-readers for everyone this holiday season! – R.S.

May 1st was a big day for the e-reader market. That’s when the Kobo, at $149, became the cheapest and most stripped down e-reader you could buy. Soon after, Borders started selling a competitive but cheaper reader, the Aluratek Libre for only $119.99. Now Barnes & Noble has a version of the Nook at $149, and Amazon Kindle promptly slashed its price to $189. Sony, not to be left out of the fun, has also dropped their prices. What’s really going on here? Is it simply competitive pricing, or something more?

Let’s look to the printer and toner pricing structure for a possible answer. Each day, printers are sold with more features, and at lower prices. The catch is the toner: It continues to be ridiculously expensive. I break out in hives when I have to buy toner cartridges for my colour printer. I even purchased a new printer once because it was cheaper than buying the toner! Don’t worry, I found the old one a new home at a recycling charity. Seems e-books are the new toner, and e-readers the new printers.

The first e-readers were expensive ($359 for the first Kindle), and e-books were cheap (typically about $9.99 per book). The publishers didn’t like it, but they had to live within a model where the retailer set the price. When Apple’s iPad launched this spring they forced a change that swept the industry, and now retailers have less discount wiggle room. Not surprisingly, e-books prices have shot up to the $12 range today.

The only lever left to support the rapid rise of digital book sales (and save the publishing industry) is for e-reader prices to continue to drop. Cheaper means much more accessible, and the number of people who own an e-reader will explode. Back to my printer and toner analogy, almost anyone can buy a colour printer these days, but the toner is a whole other story. We need to keep an eye on e-book pricing, and take bets on which e-readers will survive the price wars (the iRex has already filed for bankruptcy protection in the USA), and which ones will go down with last year’s colour printer models.

As Bette Davis/Margo Channing said in the movie, All About Eve, “Fasten your seatbelts. It’s going to be a bumpy night!”

In the not-so-distant future, say 10 years from now, books will be sold in three main formats: e-books, cheap print-on-demand paper books, and specialty hard cover collector editions.

1) E-Books
Digital readers are becoming cheaper every day. The Kobo is priced affordably at $149 and the magic sub-$100 price point is coming very soon. At the same time, digital readers are also getting better: better screens, better graphics, color eInk options, wireless and Bluetooth capabilities, and more memory for more books. Although the iPad may not crush the Kindle, it introduces a different kind of experience complete with audio, video, and virtually anything else you want to add. The environmental/green angle of digital books is also a great selling point. Kobo (formerly Shortcovers) was created in 2008 for a digital book market that was expected to account for 5-10% of all book sales within five years. Now the estimate is as high as 95% in 10 years. Add it up and digital is the future of books.

2) Print-On-Demand Books
Some people will still want their “beach-proof” copy of a book or something they can mark up in the margins. Technology like the Espresso Book Machine has made it cheap and easy to print single copies of a book, available in minutes from your local bookstore (yes, they will still exist), Costco, or even the public library. The difference is that these books will be produced digitally, then output to a paper format for a small group of buyers. They still make vinyl records after all, so we won’t be done with paper for a long time.

3) Specialty Hard Cover Collector Editions
Back in the old days of publishing, there were two types of books published: inexpensive paperbacks meant for mass consumption, and leather-bound hard cover books that only institutions or the wealthy could afford. The latter were as much to be collected and displayed as to be read. Well, what goes around, comes around. J.K. Rowling may have single-handedly created the rebirth of the collector concept when she packaged Tales of Beedle the Bard for Christmas 2007, complete with jewel-encrusted cover and handwritten manuscript.

Collector books will have full-colour interiors, embossed covers, and other features that will make them feel like pre-Gutenberg illuminated manuscripts. They will be gifts for people who have everything or decor for people who want to be seen as having everything. They will not be meant for reading, just visual enjoyment. Remember the special edition of The DaVinci Code with all the beautiful pictures? Like that, only more so. Prices will be upwards of $75.

So where will you be in the transition? Leading the wave with your e-reader device or lugging around printed books? As I always tell my 85-year-old mother-in-law, how do you know you don’t like it if you haven’t tried it? Just like cell phones 15 years ago (who needs one of those?!?), e-readers are here to stay.

The e-book self-publishing world is about to get a little more crowded. With the launch of Pubit! this summer, Barnes & Noble (B&N) has inserted itself directly into the publishing process, joining other retailers like Amazon and Sony. Pubit! is a DIY option for independent publishers and authors to deliver their works digitally through B&N’s site and e-book store.

While this may on the surface seem like great news for the indie publishing crowd, there are definite issues. For example, B&N has been noncommittal up to this point about royalty information, which makes it difficult to know if Pubit! can offer a more attractive deal or not. Another challenge authors and publishers face with an ever growing list of retailers offering self-publishing is how to choose. Which retailer might offer the best audience and reach? Does it make sense to manually publish with every major retailer, one by one, to make sure the playing field is covered despite the time and effort?

In order to make this really work, and work well, we’re going to have to see some consolidation happen. A company that is already running ahead with this is Smashwords. Publish with them and they do the distribution for you to their own site, as well as Kobo, Apple, Amazon, Sony, and even B&N. One site, one process, and one revenue payment makes it simple and transparent. What a concept! Big book retailers like B&N should consider taking a page out of Smashwords success manual.

One of the challenges publishers and authors face with e-books is that no one knows what anyone’s reading. Without eye-catching book jackets displaying the author’s name prominently, the potential for word-of-mouth marketing is virtually lost.

GelaSkins, a company that makes covers for every imaginable mobile device and all the major e-readers, could offer a solution to the branding dilemma of e-books. You can currently buy ready-made GelaSkins for devices, or custom design something unique; the options for design are endless.

An author could create a GelaSkins cover of her latest book and offer it as a giveaway to readers. Or publishers could host a contest, like an iPad draw, and cover the prize with a custom-designed book skin. Authors could also sell skins alongside their books to generate extra revenue. With any of these scenarios, the consumer gets a visual cue as well as protection for their e-reader, and the author and publisher get their names displayed for the world to see.

At about $20 per skin this isn’t exactly an inexpensive option, particularly since e-books still come in below that price. But if e-reading continues to grow like it has, authors and publishers will be looking for creative ways to brand their books. GelaSkins might be a product to do it.

Give us your take: Would you pay $20 for a skin that looks like your favourite book cover?

Image credit: Bookshelf design for Kindle 2 by Colin Thompson

No question, e-reading recently got a whole lot sexier. Apple’s iPad, the latest e-book reader, is sleek and shiny, and has definitely upped the ante. Not only can you read your favourite book (in colour), you can surf the web, play games, keep up with social networks, display photos, and so much more.

It’s estimated there are some 10 million downloadable book titles available and a dizzying array of readers to enjoy them on. On the first day of its launch, Apple’s iBookstore saw 250,000 downloads alone. Before the iPad, Amazon’s Kindle was the sweetheart of the industry with a whopping 90% of the market share. Sales of the iPad show it’s looking for a takeover, and many wonder if it will sink the Kindle altogether and leave all other readers in its dust.

But if the iPad is being used specifically as a reader, word on the street is that the Kindle, or other single-purpose reader, may be a better option. There’s the matter of eInk, the technology that makes the Kindle screen delightfully easy to read in any light. Take an iPad to the beach on a sunny day and good luck reading the screen. Then there’s the battery. The Kindle has enough juice for up to two weeks of reading. The iPad? Ten hours.

If the iPad hype and sales have shown us anything, it’s that e-books are teetering on the edge of becoming mainstream, and consumers want digital content and are willing to shell out for it. From that perspective, the iPad could become the tipping point for the e-book market, and publishers and authors need to focus on the implications and opportunities that will bring.