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Indie eBookstore BooksOnBoard Shuts Down Amid Cries From Publishers of Non-Payment

April 6th, 2013 by · 37 Comments · ebookstore news

booksonboardBooksOnBoard has updated their website this morning with a drastic change. They’ve shut down their ebookstore, and replaced it with this notice:

Please sign in on the login page to download books you have purchased. BooksOnBoard has temporarily stopped selling books. We are re-structuring to compete more effectively against Goliaths who have entered our marketplace since we first launched in 2006, i.e., Amazon, Apple, Google, Sony and Barnes & Noble.

We expect to be back with our new business model soon. Meanwhile, customers can continue to download their prior purchases as long as the publisher and their distributors continue to make them available – same as always and out of our control. As in the past, it’s always wise to download your eBooks as soon as possible after purchase.

Thank you for your support of our store over the last seven years during which we have pioneered many innovations with our customers, including the first eBooks for sale on the iPhone. We look forward to serving you again with an exciting new approach soon.

If you have bought any ebooks from BooksOnBoard, now would probably be a good time to download them one last time. I doubt the site will be around for much longer.

BooksOnBoard has been having financial difficulties for quite some time now, and in fact I have heard from a couple different publishers that BoB has not been keeping up with payments.

This issue first came to my attention in early February 2013 when Dear Author reported that the romance and urban fantasy publisher Samhain Publishing cut ties BooksOnBoard due to unpaid invoices. According to the statement:

Samhain Publishing discontinued a direct relationship with Books on Board over 18 months ago due to non-payment of money owed. However, our books continue to remain available to them via Ingram’s Lightning Source. It is obviously their choice as to which titles they would like to stock, so if you are unable to find a Samhain book listed for purchase with them, we invite you to purchase the title directly from us at store.samhainpublishing.com.

And I know of at least one other publisher who hasn’t been paid. Lyrical Press complained on Twitter in late February 2013 that they had not been paid by BoB for any of the ebooks sold during 2012. Renee Rocco, the head of Lyrical Press, confirmed the complaint in a detailed email.

I didn’t report this story in late February because when I asked BoB for a statement they insisted the nonpayment was an error that they would correct. I gave them the benefit of the doubt, but unfortunately BoB never got around to paying Lyrical Press all of the money owed. I confirmed with Renee Rocco this morning that BoB is still in arrears.

But that’s not all. I have the strong suspicion that BoB wasn’t paying their major suppliers either. I’ve been told that Lightning Source, the main ebook distributor for indie ebookstores, has also complained of non-payment. I was not able to confirm this rumor, but I will note that the shutdown today could very well be a result of LSI no longer distributing ebooks to BoB.

My requests to LSI for comment have gone unanswered. If they respond I will amend this post.

Folks, I’ve already said this but it bears repeating. Go Download Your eBooks Before It’s Too Late.

This ebookstore is very likely D-E-D dead. Someone might buy the assets out of bankruptcy, but the current operation is almost certainly a goner. And if a new ebookstore is resurrected under the BoB name, there’s no guarantee that the new owners will honor past sales.

This is a sad end to one of the older indie ebookstores. B0B was found in 2006 during a time when the ebook market was far more of a dream than a reality.  It’s weathered the rise of the Kindle, the rise and fall of the Nook, and agency pricing.

But margins have always been tight in retail, and ebooks are no exception. And thanks to agency pricing that margin got a lot tighter.

Yes, i do blame agency pricing – at least in part.  While I do like the idea of creators and publishers getting a larger percentage of the retail price, that extra money had to come from somewhere. At least some of it came from the pockets of retailers. I know that publishers like to claim that agency pricing was brought about so they can protect the smaller bookseller from Amazon, but they also made it more difficult for the smaller ebookstores to make a profit.

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37 Comments so far ↓

  • Michael Herrmann

    How did agency pricing reduce margins? The point of it was to force e-retailers, including Amazon, to make a profit. It’s easier to do that when your competition isn’t turning everything into a loss leader. I think you’ve misread the agency plan story. Agency increased overall margins for retailers and reduced them for publishers.

    • Nate Hoffelder

      “How did agency pricing reduce margins?”

      The split changed from a nominal 50-50 to 70-30. If that’s not a smaller margin then I don’t know any arithmetic.

      It’s kinda hard for a smaller competitor to make a profit when costs exceed revenue. At least with the larger margin they had more room to maneuver.

      “Agency increased overall margins for retailers and reduced them for publishers.”

      And yet the major publishers somehow ended up with a larger piece of the pie. Hmm, I wonder how that happened.

      • Michael Herrmann

        Nate, you’re not alone in not understanding the agency story. Publishers instituted the agency plan essentially to force Amazon to make a small profit on ebooks, to reduce disruption in the industry. Say you have a new release at $25. Under the wholesale model, Amazon would buy the ebook at $12.50 and sell it at $9.99, losing money deliberately. Competitors could either try to match the price or choose not to sell the title. Under the agency plan, the ebook would be released at $13.99 and everyone would pay $10 for it and the $3.99 would be profit. As you can see, publishers make less (30% vs. 50%) and retailers make more when Amazon was forced not to stick to their insane $9.99 price point.But the bottom line is that the nominal margins you refer to never existed in the real world.

        • Michael Herrmann

          Ha, see, I misstated the answer even while I was telling you you didn’t get it. Under the example I give, publishers make $10 per ebook instead of the $12.50 they would make under the wholesale model. I shouldn’t have included the parenthesis about 70% vs. 30%. The point is that the margin publishers proposed to give up was the profit they were forcing Amazon to make. And for trying to do that–for trying to make less money–they were punished by the Justice Department. And the boys who caused the crash in 2008 walk around free. As Don King used to say, only in America.

          • Nate Hoffelder

            “And for trying to do that–for trying to make less money–they were punished by the Justice Department.”

            No, the publishers were punished for conspiracy, not for allegedly making less money. And given that their conspiracy also involved economic blackmail against Amazon I am surprised that you would approve.

        • Nate Hoffelder

          No, I do understand retail pricing and marketing as well as a little economics. And you’re wrong.

          I know enough to be able to tell that your price analogy is a false one. You oversimplify the complexities of ebook retailing to the point that your argument has no relevance.

          If you want to make generalizations about the ebook market you will first need to build a model with a thousand bestsellers and another thousand backlist titles, each with their own price point at a half dozen retailers. Then change the prices of all 2 thousand titles over a 6 month period. Once you’ve done that you will be able to make statements about ebook pricing. Your new model might not be as complex as the real thing, but at least it won’t be irrelevant.

          Also, my point was that publishers ended up with a larger margin, not that they earned more. So when you pull numbers out of the air to show that they theoretically are earning less you don’t actually disprove my point that their margin has increased.

          BTW, agency did hurt the small ebookstores, no matter what everyone might say. Fixed Pricing removes the incentive to shop around, thus removing one of the ways that a smaller ebookstore can compete.

          • fjtorres

            Exactly.
            Worse, the need to shop around went away at the exact same time that eink readers dropped nearly 50% in price and sales volume exploded. Even worse, Amazon had a near-exclusive on Pearl screens for almost half the period during which the conspiracy was in effect.
            The net result was that during the two years of peak ereader adoption–when something like half to two-thirds of all active ereaders were sold–the conspiracy made Kindle the guaranteed safe buy because it not only had the best screen and the best price, it had the best ebookstore, and you were guaranteed nobody would *ever* sell a BPH title for less. (And precious few from any other publisher.)
            It is no accident that B&N’s early success against Kindle stalled in 2010 and they were actually losing ground to Amazon by xmas 2011. Nook did best *before* agency and worse afterwards.
            People have selective memory when it comes to ebook prices: before agency it was quite common to see *some* ebooks on sale cheaper at Fictionwise, Diesel, or BoB, and some ebooks cheaper at Amazon. Amazon never sold every last ebook for less than anybody else; they merely had temporary sales just as any other retailer does.
            And now that we’re seeing the end of the price fix we are starting to see temporary promotional sales all over, even at Apple. But by now it doesn’t really matter anymore; the game is all about the walled gardens and there is very little room for generics.
            The BPHs may have sought to hurt Amazon but all they really did was fortify Amazon’s market position.

  • Mark Coker

    Hi Nate. Sad news.

    I wouldn’t blame agency pricing here. Agency guarantees the retailer a 30% cut, whereas with the wholesale model, their margin was less certain. Depending on the level of price competition, it could be negative if their competitors were selling below cost, or it could be up to 50% if the retailer wanted to price without discount (I’d argue a 50% markup for a digital product is akin to price-gouging on the backs of consumers, and also denying the author/publisher a fair cut).

    Back when agency was first implemented by the big publishers, they offered it initially to only the big retailers. The smaller indie ebookstores faced a period of time when they couldn’t get the agency books under any terms. That was a kick in the gut for the smaller guys. There was at least one small indie ebookstore that closed its doors during that time.

    The bigger challenge faced by the indie ebookstores is that they don’t have devices tethered to their bookstores. More often than not, the most convenient book discovery, sampling and purchase experience is to use the bookstore integrated most tightly with the reading device. This gives Amazon, Apple, B&N, Kobo and Sony advantages that others don’t share.

    I see an opening for an indie to create a killer ebookstore delivered as an Android app. There’s also some potential with HTML5, but it doesn’t support DRM, so unless the big publishers can drop their opposition to DRM (or unless satisfactory HTML5 DRM solutions are developed), HTML5 will be hobbled for the delivery of killer ebookstores (Note: I’m by no means an HTML5 expert, so would appreciate DRM comments from others here).

    • Nate Hoffelder

      “Depending on the level of price competition, it could be negative if their competitors were selling below cost, or it could be up to 50% if the retailer wanted to price without discount (I’d argue a 50% markup for a digital product is akin to price-gouging on the backs of consumers, and also denying the author/publisher a fair cut).”

      You are assuming that all ebooksellers must match the lowest price at all times. That is a common assumption, and it is completely wrong. It was never true during the wholesale period, and in fact it is not true in most markets with most types of products.

      Let me put it this way: Does your preferred supermarket _always_ have the lowest price? I seriously doubt it; sometimes the sales are better than elsewhere and sometimes they are not. If you apply that same concept to the ebook market then I’m sure you’ll realize the falseness of assumption.

      • Mark Coker

        Retailers who price higher than others do so at their own peril. Consumers gravitate toward lower prices for commodity products. Amazon understands this better than anyone, which is why they’re so merciless in enforcing price parity for their authors and publishers. The gravitational pull of low prices alone is one of Amazon’s most powerful competitive advantages. You marry price, convenience and selection and you have Amazon, or Walmart. For a consumer to consciously pay more, they’ve got to resist the gravitational pull by being lured with other factors that are important to them, like convenience, discoverability, selection, DRM-free, wanting to support an enterprise they like (like local indie bookstore), etc. The challenge, though, is that price is one of the greatest gravitational pulls, so in the battle to attract consumers, it wins more often than not. It makes sense. Look at Maslow’s hierarchy of needs. Our most important needs cost money. Unless someone has a screw loose, to consciously pay more than necessary would require one to go against the grain of their own self-preservation.

        • Robert Nagle

          Two ways to go head to head against Amazon’s price parity is subscriptions and ebook bundles, and I’m surprised that strategy is not more popular. Also, coupon codes and freebies (which I know smashwords does)

          • fjtorres

            And book clubs. Loyalty programs/coupons.
            But all such solutions… indeed, any clever marketting… They’re all decried by traditionalists as “devaluing the perceived value of books”.
            The idea of basket pricing rotating discounts for promotional value is beyond the mental grasp of the old guard. And because it is, indies lost most of their promotional tools during the two most crucial years of the mainstreaming of ebooks in the US.

    • Robert Skyler

      Your time is coming Coker… I always keep my promises.

  • fjtorres

    The biggest challenge I see for the indie ebookstores is differentiation. Their available title catalog is generic, the DRM is generic, Agency left them with generic pricing during the critical years of explosive growth, and as Mr Coker said, they don’t have a tethered device customer base to provide a sales rate floor. They literally have to fight Kobo, Sony, and to a lesser extent, Google for each book sale. (As opposed to the walled garden vendors who upon selling a device get a commitment to a stream of sales.)
    What customer base they do have is a legacy from the hobbyist/enthusiast era and they have failed to generate any visibility with mainstream avid readers, much less casual readers.
    I can’t quite envision a business model that can overcome those visibility issues.

  • Gary

    I was happy to buy from Books on Board if their price was the same or lower than the big name ebook retailers. In total, I bought 69 books through BoB. It’s sad to see them go.

    I always download and back up my ebooks as soon as I buy them. I went to the BoB site, however, and downloaded all of the epub books again just to make sure. The only one that failed to download was a book by Harry Turtledove that was published by ROC (an imprint of Penguin).

    Most of the books I bought at BoB, however, were in Microsoft LIT format. These, of course, were all downloaded and backed up when that format was discontinued. Although they still show up on ‘my bookshelf’ at BoB, they can’t be downloaded any more.

  • Olympia Press

    Ingram/LSI must have cut ties with them a while ago. There was a period, after LSI’s monthly invoices began breaking down sales by retailer, that I saw BoB. I think. Maybe. And then I didn’t see BoB anymore.

    But don’t quote me :)

  • Mikaela

    I liked Books on board but I am not surprised. There was the issue with missing Samhain titles recently. There have also been too manThere have simply been too many sales recently, I mean, how many stores can run a constant sale* of 35-45 % off during two months? Unless you are Amazon, that is.

    In my opinion, it would have been wiser to glance at Allromance, who regularly offers publisher specific discounts (=rebates) but very rarely a store wide discount.

    * I know it was different campaigns, but it felt like it was one long sale in an desperate attempt to get more customers.

  • Ana

    NNNNNOOOOOOOO. Now I have to find another retailer who wants to sell me ebooks without checking my IP. Damn geographical restrictions! :-(

    • Puzzled

      Get a VPN. I find that Hong Kong is a cheap place to buy books…

      • Ana

        I’ll have to get one. But the nice thing with BoB was that I needn’t pay for a VPN, and I had access to DRM-free audiobooks through Overdrive. I’ll have to check bookstores again for audiobooks…

  • willem

    I don’t find the argument that agency pricing had much to do with BoB folding at all convincing. The founder of BoB was actually an enthusiastic proponent of the agency system even though the shambolic process of introducing it by publishers hurt his business.

    It is really more an indication that the ebook business is following the path of music in that very large companies are vying for control, with one being dominant. The idea that indies – ebook or print – will play much of a role in the digital future is one of those delusions that just refuses to die.

    • Jean

      Where did you see that he was a proponent of the agency system? I saw him speak at IDPF a few years back when agency was first instated about the downfalls of the model and how it discouraged an even playing fiel d for competition in the eBook space — all of which has proven to be true.

      I have had several conversations with him at many publishing conferences along the way and I have a large amount of respect for him. If you ever have the time to have a conversation with him I highly recommend it. He is an extremely intelligent man with a good understanding of the path of the industry and despite his early predictions of corporate giants like Amazon dominating the industry he slugged it out and kept the business alive 3 years after they were dealt a tremendous blow where the initial agency content outtages alone caused them to lose 70% of their customer base. It takes a strong, intelligent person to build business back from a disaster of that magnitude. Game-changers like agency have compounding effects and frankly, I applaud him for making it work as long as he did

      I don’t know what happened with the publisher bills, but I guarantee that from what I have seen of Bob that if he could have paid them he would have. He started his eBook business because of his passion for reading and love of authors (apparently prior to getting into eBooks his wife was tired of the hoarders level book collection in their house). On many occasions our conversations led to his desire for the industry to focus on paying it’s talent and which is why he said he promoted independent talent when he could. I wish him and BooksOnBoard the best of luck, and hope for their return.

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  • K. Victoria Chase

    This news isn’t a surprising. I noticed one of my titles had been removed from BoB back in Oct 2012 and had asked my publisher about it. My publisher had claimed they weren’t receiving royalty payments from BoB. Although my publisher said they had a lawyer and were looking into the issue, I haven’t heard anymore about it. I hope this issue is resolved soon, but I doubt authors will see any royalities…

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  • Theresa M. Moore

    It’s sad to see another competitor with Amazon go, as it leaves a vaccuum to be filled by another equally struggling concern. I tried to work with BoB before and never got a reply from them, and their pricing strategy was geared toward encouraging free ebooks to begin with. And maybe we should also be looking at Amazon for nonpayment of authors, since their frequent “glitches” in the sales reporting system have left many high and dry, making their books convenient loss leaders to entice buyers of Kindles. In the face of this highly competitive and damaging strategy, I wonder why I am bothering to produce ebooks at all. I want people to read my works, but not at the expense of my dignity. Authors have to eat, too. Books are becoming commodities of little value to the community at large as the big retailers vie for prominence to increase both sales and profit. I would like a small slice of the pie, too, but I am shouting into the wind, since no one wants to buy the ebooks from ME. They would rather go to Amazon, where they won’t find them for sale.

  • Diesel eBooks

    Mark Coker got it right. Imagine you owned a small grocery store and overnight (no exaggeration here) your top providers like Proctor & Gamble, Unilever, Johnson & Johnson etc… emailed and said to pull ALL of their products off the shelves and were unsure when they could go back up. To make matters worse the top chains had no disruption in supply during this period despite the fact that you had a relationship with these companies before the larger chains ever entered the market. That’ what happened April 1 2010. It took some publishers 6 months before they would allow their content to go back up.

    Scott
    Diesel eBooks

  • ks3404

    ” This ebookstore is very likely D-E-D dead. ” ….D-E-A-D

  • eBookmall

    I have known Bob to be a very intelligent and kind person and feel sorry for him. I wish him and BooksOnBoard the best of luck.

    @Scott; Nice comparison!
    The agency introduction was indeed a tough period but we were lucky to have had a lot of support from LSI.

  • Tim Wilhoit

    A poster on Mobileread indicated the site’s security certificate has expired. You get get the “Danger Will Robinson!” red warning box when you attempt to visit the site. It’s probably the last chance to download books, any of y’all that have delayed doing so.

  • jane

    i just found out about this today! so upset! i’ve been in summer school so i haven’t had time for leisure reading. now i go to buy a book and…. damn it. i need to see if its too late to dl all the books i purchased.this is one of those times when people who say “paper book are dead” will hear the reply: “at least when my distributor goes out of business, i have all my books safely on my shelf”

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