Conferences

The book world keeps changing, so Digital Book World has to change too


This post invites you to help us shape the agenda for Digital Book World 2015.

It was five years ago this summer that David Nussbaum and Sara Domville of F+W Media took me out to lunch and said they thought the book business could have a more useful digital conference — one, in their words, that would give you things you could go back to the office and use — than the existing set of conclaves, led by Tools of Change, then provided. And they flattered me and provoked my imagination by saying “we think you’re the guy to program it”.

At the time, I was in a partnership with O’Reilly Media, the owners of Tools of Change, working on an initiative called “StartWithXML”. We had a conference in London coming up as part of our team effort that was only a few weeks away. I wasn’t looking for a way to compete with them.

But, when I thought about it, I realized that by changing the focus of our conference from “technology and publishing” (which was theirs) to “the business challenges created by technology for trade publishers”, we would be able to do something quite different than they had. Agents would be included, and, this being long before the agents were hiring people with digital publishing expertise to help their authors, they weren’t invited to be part of Tools of Change. I knew their voices were important when you talked about how the business of publishing would be affected by digital. And real challenges around resource deployment and marketing, which weren’t strictly-speaking about technology but which were top of mind for trade publishers, would make our agenda when we framed it this way as well.

They named the new conference Digital Book World.

This recommendation really just followed my own advice. I had been observing that book publishers needed to become more “vertical”, by which I meant “audience-specific”, in their thinking. Tools of Change was horizontal; it was about all publishing and technology. We’d focus Digital Book World on a particular segment of publishers and therefore be able to make it more meaningful for them.

Now we are planning our sixth Digital Book World conference for January, 2015. A lot has changed. Tools of Change shut down in 2013. Perhaps partially aided by the disappearance of its biggest competitor, Digital Book World has continued to grow, with more than 25 percent growth in 2014 over the year before.

But a big part of the distinction that guided us as we built DBW, the emphasis on trade publishing, is eroding in importance as the trade itself — which means the bookstores and libraries and the wholesalers that serve them — become less robust paths to the consumer. The challenges for an industry beginning to move from physical goods in stores to virtual goods online are different as the new paradigm becomes the dominant paradigm.

Except for self-published genre fiction (and perhaps even for publisher-issued genre fiction too), that paradigm shift hasn’t really happened yet, but the day when it will is in sight. At some future Digital Book World — not 2015, but maybe 2016 and almost certainly before 2020 — we will be looking at a “trade” book industry which does most of its business online, not through brick-and-mortar stores.

(In fact, the world has changed so much that one thing on my list to discuss is a DBW 2015 panel that would reconsider the whole StartwithXML premise. When we were thinking about this in 2009, we figured the biggest payoff from going through what could be a painful workflow change was that you’d be able to make ebooks of complex books much more efficiently. That’s probably still true, but the ebooks for complex books also haven’t sold very well and their future is a bit cloudy. Knowing that, how important was that change to make, really? We’ll ask some publishers who have gone through it and, depending on what reports we get, perhaps put it on the program for discussion in January.)

All of this not only means that what we have called trade publishers may be renamed, they will also find themselves with new channels to consumers and a new set of competitors. The prospective new landscape will get a great deal of attention from us next January and we are beginning to interact with players that wouldn’t really have belonged at DBW in 2010 or 2011 but who might be smack in the middle of our business by 2017 or 2018.

Who are they? They are educational publishers, both K-12 and college. They are newspapers, magazines, and advertising agencies. And they are digital-first publishers, coming out of web sites and other content creators and brands, who see the opportunity to reach audiences efficiently through a book business that no longer requires a big investment in printed inventory and an organization reaching thousands of small sales outlets for meaningful participation. And they are start-ups and technology companies too.

We are going to start this year by looking for the Venn diagram “overlap” between these new audiences and the trade publishing audience we’ve served for half a decade.

For newspapers, magazines, and advertising agencies, that means we’ll be looking for the players who have already found opportunity in the book publishing ecosystem. Although for all of them ebooks are really a highly complementary opportunity, it looks like newspapers have made that discovery more rapidly than the others. Newspapers and magazines, particularly, have content and consumer-facing brands that create a natural fit for ebook creation and marketing. For advertising, the stretch is a little greater and, frankly, we’ll be looking for pioneers that see the opportunity to promote their clients’ wares using ebook discovery and word-of-mouth as tools. It is inevitable that they will but finding the early visionaries will be the first challenge.

There is a new component of the advertising business called “content marketing” which also, ultimately, seems like a fit for the ebook business. What it means today is that a digital ad agency creates content which promotes a client or product; content which is meant to be found online and delivered for free.

There are two ways that book publishing could — and almost certainly will — be part of this new component, although neither seems to have happened with any regularity yet. One is that the agency-created content could be delivered as an ebook, not just as discoverable web content. This has probably not been the first instinct of the agencies for two reasons. One is that they figure that nobody would “buy” what they’re willing to give away for free. The other is that there’s a bit of a learning curve about how to process content into an ebook and put it into distribution. (Frankly, if you’re willing to live with the ebook being made available only through Kindle — which gets you much more than half the market — the learning “curve” is just about a straight line. Amazon makes it pretty damn simple.)

My niece, Kailey Moran, writes a blog about cars for women for a marketing company called Reynolds and Reynolds. It seems to me like a short step for her to put together an ebook for the same audience on the same subject. Her company isn’t doing that yet. I’m betting that within the next couple of years, they will.

There will also be new interactions occurring between college textbook and school publishers and their counterparts in trade. The educational publishers are moving from being primarily creators and distributors of “textbooks” to becoming creators and managers of “learning platforms”. These not only attempt to contain the syllabus and pedagogy that was in the textbooks, they also provide teachers with monitoring and assessment capabilities. And they will also be the environment in which the required and supplementary reading — often of trade-published books — will take place.

That will increasingly put the educational publishers in the role of aggregators for their institutional customers. This is likely to be a difficult and contentious area for the next several years because trade publishers will have to be satisfied with a new business model. They have historically sold printed books either to institutions (the normal way things happen with public schools) or to the student end-users (the normal way things happen in private schools and colleges). In the latter case, they often are able to make a sale for every user. Doing so is an artifact of the physical world and will get increasingly difficult to do, but trade publishers are understandably reluctant to move quickly to models that pay them less for each use, even if they already sell one printed book for multiple users (over time, because the books don’t wear out) in school situations now.

So the school and college publishers and trade publishers are going to have to talk and I think interaction at Digital Book World could jump-start some conversations.

We are guided in our programming at DBW by our Conference Council, a group of leading industry thinkers — some independent but most of them executives within the industry — who meet with us to discuss the program and then provide suggestions on an ongoing basis for speakers and topics. To prepare for the meeting we schedule to discuss the agenda, we offer our Council the opportunity to offer their opinions about each of the sub-topics we’ve identified under the major headings. (It’s a 2-hour meeting with 30 people or so; we can’t discuss everything and I need the guidance to put things in priority order for time allocation.) This year, for the first time, we are seeking that same input from readers of The Shatzkin Files.

We will be looking to create good programming under seven major themes:

Publishing in a global economy
The changing publishing ecosystem (roles and relationships)
Data-driven publishing
Rethinking marketing
Developing business models
Technology and living on the cutting edge
Education and book publishing are developing a new relationship

If you want to help us decide what are the most important sub-topics under these headings, you can see how we break them down and register your opinion about them on our survey monkey poll. When our Conference Council meets, we will make them aware of the results of this voting, as well as the separate tally we’re keeping of the vote by the Conference Council itself.

And an extra robust thank-you for anybody who can suggest a sub-topic that should have made the list and didn’t.

We don’t really understand the ways of Feedburner, our current (but soon to be past) distributor of the email version of this blog, but it didn’t distribute my last post about when an author should self-publish. So if you’re getting this one by email and didn’t get the last one, we’re trying to make it easy for you to read it now by clicking this link. We will soon be moving over to Mail Chimp so these problems will be in the rear view mirror.

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We got lucky with the speakers we booked for Publishers Launch Frankfurt


Branch Rickey, the fabled baseball executive who gave us racial integration, farm systems, and a host of great teams over fifty years, used to say “luck is the residue of design”. I’d like to think he was right, because we have really been lucky with our Frankfurt show for Publishers Launch, which we present in partnership with the Frankfurt Academy.

The first little lucky break was that we booked Charlie Redmayne to speak when he was CEO of Pottermore. Then earlier this summer he moved back to HarperCollins to become their UK CEO. And now his appearance at Publishers Launch Frankfurt will be his first public address since making the switch from the biggest author online play to running the UK operations for one of the industry giants.

We’d also had the idea that there were big online communities of readers that publishers could increasingly use for marketing. GoodReads had started out with the intention of being a gathering place to discuss books, but Wattpad and Scribd did not. Wattpad was a place for writers to expose their work and get critiqued by other writers; Scribd was a YouTube for documents, a place to put and find all manner of word-and-picture content online. But over time, both grew (as did GoodReads) to become large communities of word-interested people, perfect for book promotion. And when we booked them all a few months ago, both Wattpad and Scribd were well aware of the opportunity they afforded publishers.

But good luck has intervened in all three cases. GoodReads got bought by Amazon, validating (and complicating) their position as a leading gathering place for book readers. Wattpad has done a few promotional tie-ups, but a deal they did with the innovative publisher Sourcebooks that includes a line of co-published YA books and ebooks got a lot of attention. And Scribd just last week announced a new ebook subscription service, with the opening coup of landing a large number of backlist titles from HarperCollins catching everybody’s attention.

Needless to say, all three of their leaders — Otis Chandler of GoodReads, Allen Lau of Wattpad, and Trip Adler of Scribd — will have a bit more to tell our audience than we had bargained on.

We signed up Jonathan Nowell, the CEO of Nielsen Book, to talk to us about markets in transition. Nielsen has a view through both book metadata and book sales data of how markets are behaving in many countries; we wanted Jonathan to give us some clues about where we might see what has happened in the US and UK in a non-English marketplace. In the meantime, Jonathan’s company made a little fresh news too, buying the business intelligence units from Bowker in the US.

Of course, there’s a lot more at the show next Tuesday in Frankfurt. We’ll have Ken Brooks (now SVP for Global Supply Chain at McGraw-Hill) talking about how publishers should use data. We’ll have Russ Grandinetti of Amazon speaking about their view of markets in transition. Marcus Leaver of Quarto and Rebecca Smart of Osprey, two CEOs of extremely innovative global companies that are not Big Five sized, will talk about how they use being nimble and audience-focused to succeed. Micah Bowers, the CEO of Bluefire, will talk about what a DRM-free world would really be like. And Octavio Kulesz, an Argentine publisher/researcher who studies book markets in the developing world, will give us some insight into development that is quite different from what we’ve experienced in rich countries.

And we’re delighted to be hosting a panel of German publishing players about the transition in that market, which might become the first outside the English-speaking world to show real signs of disruption. It appears that this topic hasn’t even gotten as much discussion in Germany as we think it should; we’re delighted to be hosting a conversation that should be of great local interest far from where we live.

Our Frankfurt conference runs next Tuesday from 8 to 2, ending early to allow our attendees to make other meetings on what is always a busy book fair schedule.

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7 starter principles for digital book marketing learned from Peter McCarthy


Times are changing in publishing and publishers know it. Almost every publisher recognizes that their value to authors, and therefore their future, is dependent on their ability to deliver effective marketing at scale. In this day and age, that means digital marketing, which also has the characteristic of being “data-driven” marketing. And not only is that a science that is really less than 10 years old, it is changing all the time. Ten years ago many of the most important components of digital marketing for books today — Twitter, Facebook, Goodreads — barely existed or hadn’t been born yet. They certainly didn’t matter.

Publishers can’t address their digital marketing challenge by simply spending more because the choices in digital marketing are endless. They have to be smart about what they do. Which means they have to be smart about something for which there is little established wisdom and no deep experience inside of publishing houses.

For a large part of the past year, I have been learning about digital marketing for books from the man whom I will regard as The Master until the day comes when I meet somebody who knows more. He’s Peter McCarthy. Pete started his career with nearly 3 years at The Reader’s Catalog, New York Review of Books, and the Granta family of publications. Reader’s Catalog formed part of the backbone of Bn.com 1.0. Then Pete spent six years at Penguin in the early digital days helping them build a DAM system and put out ebooks for the first time, followed by six years at Random House pioneering their digital marketing efforts.

Pete has made the point repeatedly that much of what he knows, does, and is teaching me is already well understood in the modern world of branding and marketing. The distinctions among psychographics, demographics, and behavior, and their importance in marketing, were new to me but are familiar stuff to people who sell Pepsi or Toyotas. Pete’s really invented something in publishing by looking for comparable products that aren’t other books, but outside publishing they know all about seeking comps that aren’t precisely the same as their own product. The techniques Pete employs to find audiences in people that are like the known audiences for a book are standard tools in consumer marketing outside publishing.

But that doesn’t mean publishers can just hire big digital agencies to help them. It won’t work. Because while publishing can use techniques that sophisticated marketers are using to sell other products in other places, the truly more complex world of books will be hard for them to cope with. And marketing budgets for a title that are rarely five figures, often three figures, and sometimes less than that don’t fit the best agencies’ idea of “workable”, either.

The big agencies would actually have no clue how to deal with thousands of highly differentiated products at the same time, which have some interconnectedness to them (because they’re all books, so Amazon author pages have to be optimized for all of them, for example) but mostly are unrelated. And not knowing that causes lost value two ways:

1. They don’t have techniques to apply mass optimization across hundreds or thousands of highly differentiated “products”, because the work they do doesn’t require it;

2. They don’t have the capacity big publishers need to run hundreds (or maybe even thousands) of campaigns at one time with realtime “budgets” (or “go, no-go” gauges).

So the big agencies wouldn’t know how to deal with a publishing house. The granularity would frustrate them and they’d freight each ISBN (publishing speak for “SKU”) with too much overhead.

That has left most publishers on their own, with service providers delivering some by-title assistance (you can hire somebody to do an author’s tweeting for them), but with the publishers themselves left to sort out how to make maximum use of a book or author’s digital footprint and social media presence to drive sales. And it is not really surprising that Pete McCarthy, having had the opportunity to meet the marketing challenge across thousands of titles and authors and hundreds of genres, topics, and imprints, would have figured out a lot of things that elude the publishers who aren’t digital marketing sophisticates and the digital marketing experts who rarely, if ever, encounter the granularity and product diversity that characterizes book publishing.

I’ve learned a lot from Pete, but I’ll never catch up to him and I won’t even try. He uses more than 100 different digital tools to help him understand followers in various social platforms and who they are. He is using a marketer’s understanding of each individual’s demographics, psychographics, and behavior (and behavior’s subset, intent), to define the groups of people he sees clustering. That, in turn, helps him find groups of people who are similar to the ones who already like the author or the book.

Pete has articulated many principles which make a lot of sense, even to somebody who didn’t know about demographics and psychographics and who has not worked his way through even a handful of “listening” tools, let alone a hundred or more.

1. The digital marketing menu contains nearly an infinite number of items. That results in a tremendous amount of wasted effort spent trying things that a little research would have indicated will never work.

2. The key to making sales is to put the right message in front of the right person at the right time. Research finds the right people; testing finds the right message and the right time.

3. The various tool sets will allow you to profile the “followers” of a book or author in Facebook, Twitter, or LinkedIn (or by securing an email address) and it will enable you to understand for each of them what kind of following they have. This is critical research to do before you invest effort and time in actual marketing.

4. Another key research element is to carefully pick your nomenclature. Tools can also tell you how common various words and terms are in searches made through Google, Amazon, and other venues. This informs the best choices for metadata tagging, of course, but it could also affect a book’s titling.

Understanding the book and author’s digital connections and the right language to describe the book you’re selling are “foundational” elements; everything flows from them.

5. The whole concept of marketing “budgeting” needs to be rethought. While the trap or danger in digital marketing is its infinite number of possibilities, the opportunity is that the results of efforts are visible and measurable. So everything that is tried should be measured and evaluated, continued it if is working and either altered or terminated if it is not.

This reality collides with the historical practices and commercial realities of publishers, particularly big publishers. Editors, who have to sign up the books and keep agents and authors happy, want to tell agents and authors what their marketing budgets and efforts will be. Whether the book is selling or not, agents and authors don’t want to hear that the marketing spending was cancelled because the efforts weren’t adding value. But a house can’t just add to the budget when something is working and not cancel anything that is not, or they’ll go broke.

6. The whole concept of “time” also needs to be rethought, both “time on the clock” (work people do) and “time on the calendar” — not just how long programs run (as above) but also when they take place in relation to the lifecycle of the book. In the digital era, whether books are well-represented in stores at any moment is not necessarily the key determinant of how well they’ll sell, so pushing a backlist book that might be thinly distributed but which is suddenly timely is perfectly sensible (“the calendar”). And it wasn’t that way five or ten years ago when marketing efforts wouldn’t be extended if books weren’t in the stores. It is also true that the external costs of digital marketing could be very low but a campaign could consume a lot of in-house time (“the clock”) with copy creation, design, and posting.

7. The key to successful digital marketing is to do the research that finds the right messages and targets, test the messages to the targets looking for a defined result, measure the impact, and then adjust the messaging and targeting. Pete calls that “rinse and repeat”. The objective is to find replicable actions that provide results with an ROI that can be continued until the ROI stops.

With Peter McCarthy’s help and in conjunction with Digital Book World, Cader’s and my Publishers Launch Conferences has organized a Modern Book Marketing Conference to lay out the core tenets of digital marketing for publishers. (So we can all learn from Pete McCarthy.) 

After Pete opens the day by introducing his basic approach, we’ll have a panel of top publishing strategists — Rick Joyce of Perseus, Angela Tribelli of HarperCollins, Matt Litts from the Smithsonian, and Jeff Dodes of St. Martin’s Press – talk about how they apply digital marketing in their companies. Then Murray Izenwasser of Biztegra, a top digital marketing company, will clarify the core principles of using consumer demographic, psychographic, and behavioral data before Susie Sizoler of Penguin covers how publishers can build powerful customer databases and reader insights. Marketers Matt Schwartz of Random House, Rachel Chou of Open Road Integrated Media, and Brad Thomas Parsons of Houghton Mifflin Harcourt will  talk about how they promote, including a “lightning round” of commentary about how and when to use the most important venues and tools: Amazon author pages, Twitter, Facebook, Goodreads, and many others.

We will have a round of speed-dating, so attendees can meet with key sponsors and expert speakers in small groups and get their individual questions answered. And we’ll conclude the day with Erica Curtis of Random House on best practices for measuring and analyzing your marketing ROI, and two panels. The first, on “how digital marketing changes budgeting and timing”, will feature case histories from Sourcebooks, Running Press, and at least one other publisher. The second on the new collaboration required among authors and marketers, will feature agent Laura Dail, outside marketer Penny Sansevieri, inside marketer Miriam Parker of Hachette, and an editor still to be selected.

This Marketing Conference is co-located with our Publishing Services Expo, which I described in a previous post, and attendees of the Marketing Conference are welcome to sit in on any part of PSE as well. At the breaks, sponsors and many of the speakers from both events will be available to the audiences for both events.

Full disclosure and a teaser “announcement”: Pete McCarthy and I are forming a digital marketing agency to apply his knowledge on behalf of publishers, authors, and agents. We’ll reveal more details, including our starter assignments, over the next few weeks.

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Finding the right digital services is today’s challenge for publishers


The era of digital change in publishing has given rise to a slew of service propositions to help publishers with their new infrastructure needs. This is both essential and also nothing new. It has always been necessary for publishers to execute on core needs by getting help at scale. There was a time when publishers owned their own printing presses or were started by printers. When my father was hired by Doubleday in 1951, his first job there involved oversight of printing facilities they had in Garden City, Long Island. I don’t know when they stopped owning presses, but they certainly did so into the 1970s.

Smaller publishers have leaned heavily on larger publishers or service companies for distribution for several decades. Even before that (and still today), independent commissioned sales reps were available to help publishers too small to have “house reps” get orders from bookstores scattered far and wide across the landscape.

In the era of digital change, there have risen a whole new crop of services. But unlike typesetting, printing, and sales representation, which were services to deliver processes that were relatively stable and well-understood by the publishers who were buying them, even what is needed to accommodate digital change is a constantly-shifting landscape.

And just like the smaller publishers were the ones who needed distribution deals and commissioned reps, it is the publishers below the Big Five level that can gain the biggest benefits from the various service providers solving the problems posed by the digital transition.

Publishing services, aside from marketing, fall into three buckets:

* Digital Asset Distribution: services that “warehouse” a publisher’s digital IP, push it out to customers or intermediaries, and account for the transactions that occur;

* Editorial/Production: services that help publishers and agents organize new digital workflows that make smart use of XML-coding for identification and production, put into electronic form what might now only exist in print, and store and manage “digital assets” so they can be recombined and reused as needed;

* Rights and Royalties: services that help publishers keep clear what rights they own and where they’re licensed, make sure the licensees account properly and pay on time, and provide the necessary data to inform the contractually-interested author of this activity. And digital is making permissions activity explode with publishers having more and more tiny transactions to keep track, both bringing things in and licensing things out.

There is the potential for overlap. Since the “DAD” (provider of digital asset distribution services) is putting IP into a database, some publishers have attempted to use the DAD database as a DAM (digital asset management) system, which we’re suggesting is a core element of the editorial/production function. The DAD might be shipping off a file to complete a rights transaction which could be tracked separately from a “sale”; we see sales as part of what a DAD does and rights as something separate. In an ideal world, which few companies are in yet, these talk to each other seamlessly.

As always in our industry, the lines between functions depend a bit on which publishing company you’re talking about.

Digital Asset Distribution

By this point, most publishers small and large have had to solve the challenge of finding a digital asset distributor. But even somebody who has been distributed for some time will be finding new questions arising constantly.

How does a DAM for your assets work with a DAD pushing out products?
Can you “do it yourself” instead of paying for services? What risks would that entail?
How does your DAD help maximize sales through metadata? Do you need to change metadata for a title over time?
How do you manage metadata across channels?
What metadata do you need for the supply chain, and what metadata makes your products more discoverable and desirable to the marketplace?
How do you future-proof your processes and technology?
How do you make sure you reach international markets?
How hard is it to switch DAD vendors?
What are the challenges to making bulk or individual sales direct?
How can you be sure that you’re getting the broadest possible distribution and reaching new sales channels?
How can you be sure that you’ll be able to manage new digital formats and product types as they arise?

Many houses got started with digital distribution without feeling an immediate need for changing their entire editorial and production workflow. After all, everybody had print workflows in place and probably started making and selling ebooks when they were a small fraction of their total sales, not the big chunk they are now, so changing the print workflow wouldn’t have seemed sensible when they started. But, increasingly, publishers are seeing the value in reconfiguring their whole editorial process, which in turn creates a new set of challenges. It has been about five years since we did our “StartWithXML” conferences and white papers with O’Reilly, but many houses are just getting familiar with XML: a markup language that, if used right, can make outputting both print and digital products faster and cheaper.

Editorial/Production

The service providers for editorial and production have gotten increasingly sophisticated along with the publishers, but even the more experienced publishers face difficult questions as they choose suppliers for these services.

With “born digital” content, how can you be sure to get good XML?
With “born digital” content, what’s the best way to get a print PDF?
What’s the best way to work when you’re starting with the print version?
How do the roles of editor and managing editor change in a digital workflow?
How can you get more mileage out of your investment?
Repurposing? Selling smaller chunks? Combining chunks to create new products?
Can you get more value out of your backlist?
What’s best outsourced? What’s best kept in house?
How can complex, illustrated, and reference content be digitized efficiently and effectively?
How can publishers be sure content works across platforms and devices?
What can trade pubs learn from textbook publishers about digital products?
How do you build the tagging you need into the workflow?
How far should you go with snazzy enhancements like interactivity and multimedia?
What are best practices for storing and managing assets for new format/product creation, reuse, and recombination?

Rights and Royalties

Publishers manage, produce, and distribute an increasingly complex range of products, challenging traditional contracts, permissions, rights licensing, and royalty practices. The management of rights and royalties with a digital database is not something that needed to wait for digital products to begin, and in some places the shift from paper in file cabinets to rights information accessible in the computer was done years ago. But, in most places it was not. And even in the places where it was, the shift in what rights are traded and under what circumstances has been driven by the changing digital marketplace and was often not anticipated, even by publishers far-sighted enough to database their contracts many years ago.

So the rights managers in publishing houses and the literary agents that sell publishers rights have their own questions.

How do you accommodate future rights usages in contracts and metadata?
How do you deal with legacy contracts?
What’s the best way to create a working rights database of legacy rights?
How granular do you get—just title rights, or rights for components (chapters, images)?
What’s the best way to database rights going forward?
What’s best practice for consistency of language in contracts around rights?
What’s the best way to maximize revenue from RROs worldwide?
How do you deal with an explosion of permission requests?
How do you deal with the mushrooming number of permissions you’ve secured to take content in?
How does staffing and training for rights change in a 21st century rights workflow?
What do you do when you don’t have digital rights to things (like images) in books you want to publish digitally?

As complex as all the challenges under each of these three headings are, they all still qualify as “parity” functions. A parity function is something you can’t gain much competitive advantage from doing better than the next guy, but which can really hurt your business if you fail at it. The wisdom about parity functions is that they are almost always best delegated to a specialist that will focus on doing them in a world-class way.

The right answers to these questions are almost never universal. They depend on all sorts of circumstances local to the publishing operation seeking them.

So the challenge for book publishing operators is to understand the particular needs of their operation — different if you do more illustrated books; different if you sell more rights than the average publisher; different if you re-use and repackage material regularly — and to find the supplier combinations that cover their requirements efficiently.

With our partners at Digital Book World, Cader’s and my Publishers Launch Conferences has organized a Publishing Services Expo to take place on September 26 in NYC to address all these challenges. PSE will be three mini-conferences, one on each of the three areas discussed in this piece. We’ll have presentations from experts at publishing houses who are managing these functions addressing all the issues. Then we’ll have speed-dating: an opportunity for attendees to meet sponsoring service providers and the experts in 15-minute roundtable conversations where each attendee can get his or her own particular questions answered. Tickets to PSE are cheap so it will be worth it even if you only need help with one or two of the three service areas we’ll cover.

Our session captains: Ted Hill of THA Consulting for Digital Asset Distribution, Bill Kasdorf of Apex for Editorial/Production, and Ashley Mabbitt of Wiley for Rights and Royalties, are among the most knowledgeable operators in our industry. They will summarize the issues, moderate the publishers in conversation, and will be available themselves during the speed-dating sessions to answer questions. If any of the questions in this post are meaningful to you, circle the date, September 26, and come to PSE and get them answered. Register here. (It’s the second option.)

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No book market looks like an English-speaking market yet; might Germany be next?


Although ebooks are seen as the symbol of “disruption” in the trade book marketplace, they’re really just a part of it and they’re the trailing component, not the leading edge. Online sales of print books were making life more challenging for booksellers in the US even before the Kindle debuted in late 2007. And it is the combination of the two — online purchasing of print and the penetration of ebooks among readers — that produces the disruptive effect: shifting the sales of books away from brick-and-mortar stores.

The disruption is evident among booksellers because they, and the shelf space they control, disappear. The disruption is evident among publishers because they are relatively suddenly confronted with a breakdown of the established order: their time-honored techniques for marketing and sales don’t function like they always did. They can’t find shelves on which to put the requisite number of books. They are obliged to find new ways to reach consumers with the message that their books are available because the old promotional avenues, including bookstores shelves, are drying up. Scale doesn’t help them like it used to.

And the disrupted marketplace creates another headache for publishers (and, in some ways, for booksellers too) by presenting authors with ways to reach book buyers without an organization, without much investment, without inventory. This makes old authors harder to sign and encourages thousands of new ones to put competing products into the marketplace. Recent Bowker data suggested that 12% of ebook sales are for titles that were self-published. (And most of those would be essentially unavailable for store sales.)

The marketplace disruption and the roiling of the publishing community is familiar ground in the English-speaking world. In the US and UK, ebooks quite often constitute half or more of the sales of a book. Bookstore chains have closed. Independents (despite some anecdotal reports of success, perhaps — in the US — facilitated by Borders’s disappearance) are threatened. Self-publishing has so many successes that, in the aggregate, it constitutes a new “major” player.

But the disruption, so far, has been confined to English-language publishing. In no other market are publishers and booksellers so obviously questioning the basics of their business models or speculating so openly about whether the publishing business we have known for a century can survive in its present form for another decade.

We keep scanning the horizon looking for the first market that will be disrupted in a similar way. We think we’ve found it. That market is Germany.

Recent reporting put the share for ebooks in Germany in the range of 2-3% of total sales. (This was the top line number reported to us by several people we spoke to; it is the definitely the prevailing understanding. A closer reading of the report, however — hard for us because we don’t know German — gets at some of the larger numbers we found through our investigation.) Nonetheless, we thought a closer examination of what’s going on there might show the potential for disruption. So we decided to put together a panel from the German trade to discuss the question at our Publishers Launch Conference at the Frankfurt Book Fair.

We looked for a real cross-section of knowledge across the German book trade, and I think our panel delivers it.

Steffen Meier is the head of “Online Publishing” (ebooks and ecommerce) at Verlag Eugen Ulmer, a specialist publisher focused on agriculture, horticulture and gardening. In that role he addresses both professional and consumer markets. He is also the spokesman for AKEP, the working group on electronic publishing for the Borsenverein, the German publishing trade association (which, unlike their counterparts in the US and UK, includes publishers and booksellers).

Ronald Schild is the CEO of MVB GmbH, a wholly-owned subsidiary of Borsenverein which provides marketing and publishing products and services that support the book trade. Schild also launched the ebook platform Libreka and formerly worked at Amazon.

Tobias Schmid is the head of ebooks and ecommerce at Osianderesche Buchhandlung, the 8th largest bookstore chain in Germany (and one that dates is founding to 1596!) Osiander operates 30 bookstores in southwest Germany and is the 2nd largest family-owned chain in the country. He is running an ebook program that has been in place since 2009 with over 700,000 titles available.

Anne Stirnweis is the ebooks project manager for Random House Germany and has been in that role since 2011, overseeing the development and expansion of their ebook program. Anne formerly worked at Amazon in content acquisition and vendor management.

In Germany, unlike the US or UK, there are price maintenance laws for books. They help protect bookstores by making it impossible for Amazon, or any other online or store retailer, to accelerate the disruption with heavy discounting. But, as we recruited our German panel, we have discovered that there are signs that the disruption that seemed inevitable to us is starting to take hold.

Among the things we learned recruiting panelists for the Frankfurt session:

Although the overall percentage of ebook sales in the German trade is only 2-3% of the total, on many titles they are reaching 10%, or even 20%, of the total. (This squares with the subsidiary findings of the report, which has German publishers reporting ebook sales percentages closer to 10% than to 2%.)

Free-standing independent stores are feeling the pain and closing, although in some cases their locations are being taken over by regional chains with superior capabilities to compete in the online environment.

Amazon is growing like a weed and is the dominant online bookseller, despite their inability to use price as a club in the competition. One observer told us that Amazon is about 2/3 of the online book sales marketplace. That’s not as much as they have in the US and UK, but let’s remember they’re playing without their pricing weapon.

Online purchasing is efficiency-competitive with shop purchasing because the inventory in shops is thin and many of the sales they make are for “next day” pickup after the store has gotten the book from a wholesaler.

And a fact we’ve learned that made us gasp is that many estimate the sales of print online to now constitute 25% of the total German market. This was also hinted at in a Borsenverein report, but it didn’t seem to strike many of the local players we talked to with the same impact with which it hit us.

Just as overall digital sales are 2-3% but they peak at 5 or 10 times that for some titles, the 25% online purchase of print is also unevenly distributed. So it is likely that there are a lot of titles in the German market now for which half or more of the sales are taking place outside of the shops.

So it would seem that all the ingredients for disruption are firmly in place. Most of the market can be reached without inventory, a warehouse, or sales reps. Amazon has enough of the market so that its author services that enable publication from a Word file constitute a viable commercial proposition for an author. The shops are feeling pressure, not finding that decentralized ecommerce or ebook solutions are particularly effective, and — even with price protection — steadily losing market share. And publishers can’t possibly ignore the changing marketplace. They’re already finding fewer places to put books on sale. Publishers that haven’t yet felt resistance from authors who have new alternatives to reach readers surely will before long.

It would be silly to predict a US- or UK-like course for Germany. There are two big restraining forces that weren’t present when the US and UK were undergoing their transition. One is, as we’ve said, that the publishers have the price-setting power in Germany and they are keeping both print and ebook prices high. (It is true, however, that average ebook prices are being pulled down by self-publishing in the ebook market.) The other is that they’re coming along a bit later, when tablets are cheaper and not much more expensive than dedicated ereaders (when Kindle launched, there were no tablets) and — related — when video, including popular movies and TV shows, are ubiquitously available to compete with ebooks. Nonetheless, the forces of digital change are powerful and increasingly taking hold.

In the course of putting together this panel, we found many participants in the German book trade who found the threat to bookstores and the established order an uncomfortable subject for public discussion. (It was absolutely startling to read in that 16% of German publishers have no plans to deliver ebooks.) Regardless of how uncomfortable it is, I suspect this is a discussion that will be very robust in Germany in the months to come.

There will be further insights into Germany’s digital transition from presentations at PLC Frankfurt from Jonathan Nowell of Nielsen and Russ Grandinetti of Amazon. And we are also featuring presentations from GoodReads, Scribd, and Wattpad — three virtual gathering places for the online reading and writing communities which, because they are emphasizing their global presences, are likely to tell us more about Germany too.

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Capturing and distributing video might be getting cheaper than capturing and distributing words


There has always been a hierarchy of media built around how easy or cheap it was to deliver one versus another. The most simplistic expression of this has always been that words are cheap and moving images are expensive. A writer could create the intellectual core of a book on her own with paper and a writing implement. Making a movie required a number of creative skills and people and coordination.

Two decades ago, before online distribution and consumption, the hierarchy of ease and cost extended to the commercialization. Book publishers had much lower capital barriers to jump to put a product into the market than movie producers. TV producers required access to infrastructure which was controlled by a very limited number of gatekeepers (even after cable TV expanded the number of channels).

Music occupied an in-between position. A singer with a guitar could make an acceptable recording by oneself pretty readily. Recording a band well was more complicated. Recording an orchestra — even getting an orchestra to play — was expensive.

As the Internet evolved, bandwidth limitations confirmed the hierarchy. Text and music required little bandwidth; video required a lot.

The evolution of devices confirmed it as well. Until recently, texting was all phones could really do besides delivering sound. The Kindle, delivering pretty-much text-only with some weak gray-scale illustrations, preceeded the iPhone and iPad. And, in fact, straight text was demonstrably easier to digitally deliver than more complex layouts like charts with columns or recipes with complex graphic design requirement.

So for the first decade-plus of the digital delivery revolution (if you date it from the early or mid-1990s), straight text had built-in advantages. One person could create it. The bandwidth required to download it was ubiquitously available long before broadband was widespread. The devices could display it in a way that was comparable to the legacy print-on-paper.

When devices and bandwidth improved so that delivering video to masses became commercially viable, publishers smelled that consumers would want video and started to “enhance” ebooks, particularly with video. Studios to enable this were built in some big publishing houses. But (as the tech geeks say) “the dogs didn’t eat the dog food” and we’re already in a period of retreat from video as an important component of publisher’s product creation. (Although, clearly, publishers still see value in videos for marketing and promotion.)

But it may be that video’s disruption of print is just beginning. What used to be the hardest and most expensive media form to create and distribute may have become the easiest and cheapest. This is important when you consider that so many aspects of illustrated books are a “compromise”. You show a knitting stitch or a technique for making a piece of jewelry as six still pictures with captions in a printed book because video wasn’t possible. When the IP that serves the same purpose is “born digital”, you’d almost certainly reinvent the definition of a “book”.

Think about it this way. A 4-year old with an iPhone could conceivably shoot a video that could be a big hit on YouTube. (Maybe one already has.) There’s no way a 4-year old could write a story that masses would want to read. With bandwidth and suitable device ubiquity no longer any sort of constraint at all, the great commercial advantage of words on a flat surface is melting away. This is bound to be disruptive to both the book and movie-TV industries in ways that are not evident to us yet.

(Although some of the disruption is already evident.  Online video consumption is eating into TV viewership. An Accenture study suggests that traditional broadcasters are having some success fighting back the trend.

The disruption from YouTube (not to mention the Hulu/Netflix) of movies and TV is pretty evident, and the meme of “fighting for eyeballs/screen time” is ubiquitous, e.g. media companies are increasingly viewing other types of media as competition — books vs games vs online video vs TV vs film. The shift is already raising questions both of how to keep people coming back to books (rather than going off to other media) and of how to use the new technology itself to sell more books.

I saw one example of how the ease of making video could change things profoundly earlier today when serial entrepreneur Susan Danziger showed us her latest invention, a service called Ziggeo. It’s pretty simple but extremely useful. Ziggeo is an environment where webcam videos that can be shot from just about any computer or smartphone can be requested and curated. The “problem being solved” was for people screening job candidates, potential roommates, or potential dates to have a much more articulated impression of the person they were “meeting” than words and a still picture can provide. That’s a real problem that affects a lot of people.

But we readily saw applications for event organizers like us (being able to see an aspiring speaker “in action”, getting our speakers to blurb for promotion) and for book publishing promotion (author pitches, publisher pitches to individual stores). The simple intuitive interface would also put video-making power in authors’ hands. Imagine a non-fiction book with video interviews embedded. You might not actually have to imagine this very much longer. Using Ziggeo, it would be a piece of cake for an author to go back to an interview subject by email with a series of questions and get the person to give them appropriate video to slot into the books. With or without Ziggeo, I think the chances are you’ll be seeing that happen pretty soon. Ziggeo would make it a lot easier.

I’m not the first book business guy to discover this nifty new application. Seth Godin has already blogged about it, focusing on the “interviewing” problem Susan set out to solve in the first place. But Ziggeo is the most current demonstration that the structural advantage that “just words” had among all media is a thing of the past. The cultural implications are profound, as is the potential impact on the book business.

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Business models are changing; trial and error will ensue


The announcement late last week that Random House is starting three digital-first imprints was just the most recent example showing that publishers are exploring new business models. Just days earlier we got news of the partnership between Simon & Schuster and Author Solutions making S&S the third major publisher — preceded by Christian publishing titan Thomas Nelson and dominant romance publisher Harlequin — to put their name to an offering in the “author services” sector.

One might say that S&S is the first of the Big Six to take such a big step in this direction, except that Pearson, Penguin’s parent company, actually bought Author Solutions a couple of months ago and HarperCollins bought Thomas Nelson last year. So, in fact, three of the Big Six are now involved with author services and it is four out of six if you remember the other recent big news, that Penguin and Random House are merging. (And that’s not counting more modest initiatives like HarperCollins’s “Authonomy” or Penguin’s “Book Country”.)

I remember being on a panel in Canada a few years ago with Carolyn Pittis, the very smart digital pioneer from HarperCollins, who referred to the way most publishers did business — buying the right to exploit copyrights and then monetizing them — as one possible business model for a publisher’s organization. She explicitly mentioned “author services” as another one. That was before her company had launched Authonomy, a couple of years before “Book Country”. In other words, big publishers have been thinking for a while about “author-pays” models (just as the professional publishers have).

This really all follows the lead of Amazon, which has made a practice for years of selling a la carte every component of its own value chain. I was just reading an ebook called “The Amazon Economy” published by The Financial Times (an example of a non-book publisher adjusting its own business model to include being a book publisher, about which more on another day) that suggested that Amazon actually makes more money making its infrastructure available to others than it does using it to sell stuff.

In other words, there is potentially profit in deconstructing one’s value chain and selling access to it in pieces.

In a sense, publishers have known this for a long time. They’ve made the part of their operation that handles things after the books exist: warehousing, distribution, credit and collection, and sales available to other publishers for years. Some publishers, like Random House, have built distribution into a significant business with its own management structure within the corporation. Perseus, which as a publisher is itself a roll-up of a number of smaller houses, has built a distribution service that has more than 300 clients. Ingram, whose core wholesaling operation combined with the Lightning subsidiary they built in the 1990s to provide print-on-demand and later digital services, has a comparable publisher distribution offering.

But what Author Solutions — and a host of less robust (and largely cheaper) competitors — has shown is that there is also very widespread demand for the services that precede the actual delivery of books ready for sale.

I have no way except inference to know how Nelson and Harlequin are doing with their author services offering powered by Author Solutions, but the fact that Penguin parent Pearson bought them and S&S has now done this deal certainly suggests that ASI has a good story to tell. Of course, they are market leaders because they make money, and they make money by having good margins. And the prices announced for the services for the Archway initiative — ASI’s project with S&S — are higher than those services could be purchased for elsewhere. That doesn’t mean they won’t sell lots of aspiring authors on using them.

This is all very logical, but also very tricky. Most publishers — at least until very recently — would have thought about the services they sold in a distribution bundle as “commodities”, widely available and highly comparable. It is true that any of the major publishers, many minor ones, and distributors even beyond Ingram and Perseus can deliver the core capabilities: active accounts with all the major retailers, the ability to transact with them and collect the money, and placement of the messages of availability throughout the supply chain. Obviously, they all strive to do these things better than the next guy and to justify charging a point or two more because they’re better at it.

But further up the value chain the publishers’ pride and belief in a qualitative difference between what they have and what the next guy has is much greater. Publishers generally believe in their editors and marketers more than they believe in their sales forces and warehouses. (Buddies of mine in sales 20 years ago used to say, with conscious irony, that there were two kinds of books: editorial successes and sales and marketing failures.) They see their time and bandwidth as precious. They are far more reluctant to make that time available for rent and, in fact, it would appear that all three of the big publisher deals with Author Solutions rely on ASI to provide those capabilities. They’re not coming from the publishers themselves.

All of this sidesteps another important component of successful publishing: the coordination of all these activities. Successful publishing is the result of a lot of very small decisions: in editing, in presentation (both the book itself and the metadata, like catalog copy and press releases, that support it), and, increasingly, in the SEO tags and signals about “placement” that are included in the book’s digital file or marketing metadata. In the digital age, these things can change over time. Every day’s news — about UN votes or Pentagon sex scandals or anything else — could call for a change in the metadata around a book published a month or a year ago to make it more likely to be shown by the search engine queries being placed today.

(The FT ebook on Amazon, which I recommend, makes it clear that Amazon also sells “coordination” on the retail side as an extremely important, and apparently much-appreciated, value-add.)

Indeed, whether to put more effort into a book or stop paying attention to it is — or should be — based on an analysis of sales and search trends, as well as more old-style measures like the reviews it is getting.

In the old pre-internet days, publishing books was like launching rockets. Most crashed to the earth, some went into orbit. But the publisher’s efforts — most of the time — were limited to the launch. Then the marketing team could move on. This was not a way of doing business that was appealing to authors, but it was consistent with the realities of the marketplace. The big book chains wouldn’t keep a title in stock if its sales appeal wasn’t evident at the cash register within 90 days. Without copies of a title in the stores, there was no point to the publisher pushing it.

That’s something that has changed dramatically in the digital age. With some titles and genres achieving half their sales through ebooks or online bookselling, there is no longer a time limit on marketing effectiveness. In what is a subject we will certainly explore at a future conference, this must be causing traffic jams in publishers’ marketing departments. They can no longer be counting on the older titles making way and clearing marketers’ schedules to work on newer ones.

Open Road is a digital-only publisher that works primarily, but not exclusively, with backlist. (Recently they seem also to be specializing in books brought in from offshore publishers and in helping illustrated book publishers break into ebooks.) What impressed me when I met with them a year ago was that they didn’t distinguish between “frontlist” and “backlist”. They marketed to the calendar and the events and holidays everybody was thinking about, not to the newness of their books. I believe this actually brought increased relevance to their marketing. Obviously, this was also making a virtue of necessity because they didn’t have a flow of “new” books to tout. But it also capitalized on the new situation: that the books don’t suddenly become largely unavailable because retailers throw them off the shelves.

A by-product of the extended sales life of books is that it makes it easier for publishers to cluster them for marketing purposes. Now four books on a similar topic can be pushed in unison, even if they were published months or even years apart. Open Road has made ample use of that reality.

These are challenges and opportunities that compel publishers to rethink the organization of their marketing departments and the deployment of their marketing resources. It is an opportunity for a publisher to extend its value to an author if it pushes an author’s book six months or a year later when a related title hits the marketplace or a news event makes an older book newly relevant. Since authors are increasingly able to do some useful things on their own behalf to capitalize on these opportunities, they will be increasingly impatient with publishers that quit on their books too soon..

There are things the author just can’t do. They can’t adjust the book’s metadata and add tags. They can’t push for or buy promotional screen placement from the retailers when somebody else’s new book makes them suddenly relevant again. Authors also don’t have the benefit of arriving at marketing best practices and rules of thumb by examining performance data across various groupings of titles: large title sets, categorized sets, comparable-selling sets, and others. They’re counting on the publishers to do that.

The publisher’s role in coordinating and managing a myriad of details has always been one of its principal value-adds and it can be even more so in the digital age. But only if they actually do it, and there’s precious little indication that they intend to do it for the titles they’re being paid for.

Jane Friedman (the blogger and expert advisor to writers, not the CEO of Open Road) points out that her alma mater, Writers Digest, and Hay House — the vertical publisher in mind-body-spirit that has done so well interacting with their reading audience — also did ASI deals. She points out that the big successes we all know about among self-published authors — John Locke, Joe Konrath, and Amanda Hocking being the headline names — didn’t go through ASI. Jane takes issue with the ASI promise to help publishers “monetize unpublished manuscripts”. It’s hard to dispute that publishers who are primarily in business to pay authors to publish them could be walking a fine line having a business model right alongside that charges authors for services that are unlikely to lead to them making money.

On the other hand, Random House has made an emphatic statement about the value legitimate publishers can bring with the success of “Fifty Shades of Gray”, originally a self-published story and now, very much thanks to the biggest publisher, the biggest commercial success of all time. No self-published book has come close and it will be a very long time before one does. I see their digital-first imprints (which they are not the first to launch, but seem to be the first promoting aggressively to the self-publishing diaspora) as a step toward a different business model that recognizes the new commercial realities of publishing. It enables lower-investment publishing — the authors in these digital-first imprints are unlikely to receive advances at levels commensurate with most Random House books — and perhaps they’ll get less editing attention too. Marketing is simplified by the fact that print isn’t involved and therefore retail stores aren’t either. So the threshold for profitability is much lower and, as we have learned, they can still decide to give any book in these new imprints the “full treatment” — print copies stacked up in stores — later on if they want to.

It is too early to judge whether the tie-up between publishing houses and author services offers will produce value on all sides. All these publishers now have or will have, at the very least, a stable of self-published authors that are contributing margin to them and in which they have a financial stake (even if they didn’t have to invest to get it). There is definitely inherent conflict between trying to make the most money one can from an author hiring publishing services and recruiting authors and books that will be commercially successful.

But publishers still know how to make books with commercial potential sell better than mere civilians do. Whether ASI and their partner publishers can find the formula that makes the promise inherent in a publisher’s brand productive for authors that hire services under it is a question that will be answered in the months to come.

Having more companies trying to figure it out certainly improves the odds that somebody will (and ASI has every interest in spreading best practices as they emerge). And more and more cheaper services for those aspects of self-publishing that really are commodities means that ASI and all its partners are going to have to demonstrate convincingly that they can add effective marketing to their offering mix if they’re going to be around ten years from now.

Michael Cader and I are doing our first Authors Launch show, in partnership with our friends at Digital Book World, on Friday, January 18, the day after the 2-day DBW 2013 will end. The question of where the line gets drawn between publisher efforts and author efforts is a major topic. We have a great roster of experts to serve as faculty: the aforementioned Jane Friedman, along with Porter Anderson, Jason Allen Ashlock, Dan Blank, ex-Random House marketer Pete McCarthy, co-authors Randy Susan Meyers and M.J. Rose, Meryl Moss, and David Wilk. Among the publishers speaking will be Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Matt Schwartz of Random House. This is a conference really intended for published authors rather than self-published, but it will teach skills and insights for any author willing to invest time and effort to sell their book.

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I came home from the Charleston Conference with a couple of new thoughts


One great benefit of stepping outside your own world — which for me is the world of general trade publishing — is that you can get a jolt of perspective when you do. It really took only a few minutes of listening to Annette Thomas, the global head of professional and college publishing for Macmillan, at the Charleston Conference to underscore an important point. Thomas was talking about how Macmillan had to solve the problem of linking together content that was delivered in journal articles with that delivered in books, a format distinction she correctly saw made no sense to somebody who just wanted the information regardless of the form in which it was initially delivered.

In professional and academic publishing, it is pretty much a requirement to understand the context of all content. Any observation, discovery, or opinion needs to be connected to the other knowledge and information that relates to it to have validity. Scholarship and professional knowledge all live in a world where the total body of relevant information is the key to understanding the value of any new contribution. (And, indeed, the creators of any new contribution are carefully placing their work in the context of all that came before it.)

This is not true for trade publishing, where — more often than not — each book being read is judged and appreciated for what exists between its own covers.

This brings me to two observations about how publishing is changing and how trade publishers need to think differently that are relevant and have not been said to death (if, in fact, they’ve been said by anybody else at all.)

We often observe that book publishing is many businesses, by which we usually mean that academic or professional or college textbook publishing has little to do with “trade”. But it is also true that trade publishing is many businesses. Even within fiction, the publishing skills and markets for genres like romance and science fiction are quite different than for literary fiction.

But non-fiction is even more diverse. And some of it has a lot to learn from professional publishing.

What the top professional publishers will tell you is that the challenge for them is to deliver content within the workflow. That means that accountants or construction engineers are trying to get particular things done and what they look to publishers to do is to help them accomplish their tasks. That means software. And the content they need should be provided within that workflow so they have the knowledge they’re looking for when they want to apply it.

Well, some consumer publishing also addresses content needs that arise in a workflow. Consumers of gardening books, knitting books, and cookbooks are all using the knowledge they present within a workflow context.

What that means to me is that we’re not far away from these tasks being addressed by workflow tools: apps. Your gardening app, for example, will help define your challenge. It will ask you questions. How big is your front yard? How big is your back yard? How much sun do they get? How much time do you have to spend with this? Do you want flowers, shrubs, or vegetables?

Then the app will tell you, “Mike, it’s March 15, dig a hole.” “Mike it’s April 10, drop a seed in the hole.” “Mike it’s April 28 and we see it hasn’t rained in your neighborhood for a week. Water your garden.” Etcetera.

When that day comes, the publisher with the really terrific gardening book better hope they’ve made a good licensing deal with the owner of the app. Power will have shifted.

(One example of what the future may bring a lot more of are the Audubon Mobile Field Guides, which were done by Green Mountain Digital. These are region-specific species guides that contain reference content, maps, bird calls, etc. and provide real time access to bird sightings. Brendan Cahill of Green Mountain will speak on a “new business models” panel at Digital Book World.)

If I were a publisher of books that address a challenge that is actually handled through a workflow, I’d start now trying to be the licensor, not the licensee.

And that brings me to the second observation.

When you read self-published books (and I do: some of the big bestsellers anyway), you become aware by omission of what a publishers would do to improve them. The lack of copy-editing and proofreading is often what is most apparent, but more acute readers also see the deficiencies in development that good editors correct before a book goes to press.

Because major publishers tend to spend a fair amount of money acquiring most of the titles they do and — correctly or not — see it is a major expense (drain on overheads) to publish each and every title, they tend to be careful about making sure each book is really ready for prime time before they print it. That means there is almost always some editorial input from somebody with commercial responsibility (the acquiring editor or somebody who works for the AE) but there is also certainly professional copy-editing and proofreading of every single book. My highly anecdotal view of self-published books is that for them there is no such guarantee.

I have advocated previously that big publishers should see the value of branding their work as “professional”, which I believe argues for minimizing the number of brands they ask consumers to remember. Nuanced brands make sense in a B2B world (for buyers and reviewers) but are likely to just confuse or be ignored by consumers. But as more and more self-published material makes its way to the public and even onto bestseller lists, the reading public (at least those of us who care about grammar, syntax, and punctuation) might be well served by branding that says, in effect, “this book has been edited, copy-edited, and proofread by professionals”.

But now I’m seeing that thinking isn’t granular enough. If a publisher adopted that suggestion, they’d be locking themselves into maintaining those high quality standards across everything they do. In the long run, is that the right idea?

I’m beginning to think it isn’t. As we see increasingly that self-published material can reach extremely large audiences, it will probably become important before long for the established publishers to be able to test titles in the marketplace without doing the full editorial job on them. In fact, if Sourcebook’s “agile publishing model” (by which a non-fiction book by my friend and client, futurist David Houle, is being released in ebook chunks for audience feedback before being assembled into a “final” published version that will also be printed) were to gain traction and be used more broadly, it would almost certainly mean that parts of the editing job should be bumped back to the end (or else would have to be done twice).

When the big publishers float through the looking glass and realize that they are really wasting their clout and resources if they don’t crank up to do many more titles than they do now (which they haven’t yet, but I believe they will; and I think Penguin’s acquisition of Author Solutions is the first sign of recognition of that reality by a major house), they’ll see that not all the books they’ll want to publish in the future can get the same full-on treatment that they give to all the books they publish now. They’ll want to be able to publish an author’s short non-fiction ebook about the topic of their novel — because the author wants them to — without giving it thousands of dollars worth of editorial development its revenue forecasts wouldn’t justify. The solution might be to create secondary brands, or it might be about “badging” each book with the amount of editorial attention it actually got. But one signal of quality might not fit all books.

One remarkable facet of my Charleston trip was something I’m quite sure would never happen to me in New York. I had the same cab driver coming in from the airport on Wednesday and then going back out again on Thursday! I also managed to take off from LaGuardia before the nor’easter hit and come back the following evening after it had come through. I saw a little evidence of what was reported to me was “a blizzard” that I’m not sorry I missed.

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More thoughts on libraries and ebook lending


On Thursday of this week, I’ll be at the Charleston Conference appearing in a conversation organized by Anthony Watkinson that includes me and Peter Brantley. Brantley and Watkinson both have extensive backgrounds in the library and academic worlds, which are the milieux of most attendees at this conference. I don’t. I am being brought in as a representative of the trade publishing community. Watkinson believes that “the changes in the consumer area will break through into academic publishing and librarianship.” I am not so sure of that.

I am imagining that what creates interest, and concern, among all librarians about trade publishing has been the well-publicized tentativeness of trade publishers to serve the public libraries with ebooks in the relaxed and unconcerned manner with which they have historically been happy to sell them printed books. Big publishers have expressed their discomfort with ebook library lending in a variety of ways. Macmillan and Simon & Schuster, up to this writing, have declined to make ebooks available to libraries at all. HarperCollins instituted a 26-loan limit for ebooks with libraries a little over a year ago. They received apparently widespread — certainly loud — criticism when they announced the policy, but it seems now to have been accepted. Penguin and Hachette delivered ebooks for lending and then stopped. Now both are putting toes back in the water with experiments. And Random House raised their prices substantially for ebooks delivered to libraries for lending.

So, six for six, the major publishers have struggled publicly to establish a policy for ebook availability in libraries.

The concern, as I’m sure my conversation-mate Peter Brantley will point out, extends to what rights libraries have when they obtain ebooks. I’ve expressed my belief before that all ebook transactions are actually use-licenses for a transfer of computer code, not “sales” in the sense that we buy physical books. When Random House declared the opposite in the last fortnight — that they believed they sold their ebooks to libraries — it only took Brantley a wee bit of investigation to find that Random House’s definition of “sale” didn’t line up with his.

Of course, his doesn’t line up with mine. I believe (he’ll correct me on stage in Charleston, if not in the comments section here, if I’m wrong) Brantley accepts the one-file-transferred, one-loan-at-a-time limitation that has been part of the standard terms for libraries since OverDrive pioneered this distribution over a decade ago. That control enabled ebook practices to imitate print practices (except for the “books wear out” part, which Harper was addressing with its cap on loans). Without it, one ebook file transfer would be all that a library — or worse, a library system — would need of any ebook to satisfy any level of demand. The acceptance on all sides of that limitation says clearly to me, without resort to any other information or logic, that there is an agreement — a license — that the library recipient of an ebook file accepts in order to obtain it.

People who spend a lot of time with libraries and library patrons are quite certain that the patrons who borrow books and ebooks often also buy books and ebooks. (Library Journal offers patron data that supports that idea.) Although library services are many-faceted and not primarily designed to serve as marketing arms for publishers, the libraries themselves see the ways in which they aid discovery by their patrons.

And they also see the patrons that couldn’t afford to buy the books or ebooks they borrow and therefore wouldn’t and couldn’t read them if they weren’t available in the library. Since these patrons become part of a book’s word-of-mouth network by virtue of being able to read it, it looks like this behavior by publishers is not only anti-poor and anti-public, but also counter to the interests of the author and the publisher itself. (In fact, most publishers acknowledge the importance of libraries to the viability and marketing of the midlist although that, until very recently, was adequately addressed with print alone.)

And, the libraries point out, the one-book, one-loan limitation means that all the hot books have long waiting lists anyway, so many patrons just cut to the chase and buy the ebook rather than wait. (In fact, schemes by which the libraries themselves can sell the ebook are beginning to develop as well.)

The view from the publishers’ perspective (and, it is important to add, from the perspective of the agents of many highly-compensated authors, who have enormous influence over publishers’ thinking) is quite different. Libraries, which can be the core market for many books published by academic and professional publishers, are more likely to be around 10 percent or less of an adult trade book’s sale. So the risk-reward calculation starts with a sharp limitation on what is the expected “reward”.

The risks are harder to quantify because they are much more complicated than just trying to figure out how many of the loans of an ebook licensed to a library cost the publisher a sale of that ebook through retail channels.

The big publishers are acutely aware that the ecosystem of bookstores they’ve depended on for a century is giving way to something new, which appears to be a mix of retail ebook platforms, community book information sites like GoodReads, author-based marketing, and, of course, publisher efforts to reach potential book buyers through community- and list-building, SEO, and collaboration with other websites.

Consumers will, of necessity, be changing their shopping habits as they migrate from reading print books to reading ebooks. Right now, as ex-Random House marketer Peter McCarthy points out, the key decision is which retailing platform they use. If you buy a Kindle, NOOK, Apple, or Kobo device, you’d be inclined to buy from their platform. It would definitely be easiest and on a Kindle, Nook, or Kobo device, it is really the only practical choice.

But on an Apple device or a tablet computer (or a laptop or desktop, for that matter, although fewer and fewer people will read ebooks on them), the consumer is actually free to use any of the ecosytem apps and, if they want to, choose by price. McCarthy makes the case that doing that on a title-by-title basis will become increasingly unusual. He’s probably right.

But we’re nowhere near the final stage of ebook development. It is going to get easier and it is going to become more widespread. Ultimately what concerns publishers is a vast reservoir of ebook content available on one website (your local library’s, or even a not-so-local library’s) for free while the merchants are trying to make you pay. That’s why such programs as KOLL (Kindle Owners Lending Library) have not gained favor with big publishers.

It really isn’t hard to imagine that in a pretty short time, libraries and KOLL (and some fledglings like the recently-announced “maybe we’re the Spotify of ebooks, or maybe we’re not” Oyster subscription service or Spain-based 24 Symbols) have robust selections available for free (libraries), as part of a broader offering (KOLL), or for very cheap (Oyster’s and 24 Symbols’ aspiration). If that happened, how many customers could be drawn away from the ebook retailer sites and effectively removed from the market for title-by-title purchasing of new books?

How many? Well, we don’t know how many. That’s precisely the concern.

Another thing we really don’t know is what is the future of public libraries. As the relative utility of a building full of printed books declines, libraries correctly point out that they serve many other functions. One that is often cited today, but which I think will be more dated than the printed books aggregation ten years from now, is that libraries provide hardware and Internet access for people who otherwise wouldn’t have it. As devices and bandwidth get cheaper, and the social and commercial benefit of having everybody connected grow and become universally acknowledged and appreciated, that deficiency is likely to be cured by other means.

What is an ongoing need that is not likely to go away is the need for librarianship. The more sources of information there are and the more sophisticated people become about demanding the right information for any task or need, the more that professional help navigating the choices has value. But how will that help be delivered? Online, I reckon, not in a building that you go to and seek out the help. I don’t know the business model yet, but I do know that communities are going to be sorely tempted in the years to come to devote the cash they now spend on public libraries with books and computers in them to providing wider access to more materials through the Internet and providing the information experts, the librarians, outside the confines of a building full of the materials. The materials — with a variety of access and payment models — will be virtual and the librarian will help you get what you need at the price you want to pay for access.

And all of that sounds, and seems, a lot like what booksellers do today (except a lot more complicated).

Which brings us back to publishers and their concerns. Right now, the biggest publishers’ biggest worry is that they will end up in a world where Amazon is the only path to a majority of their potential customers. (Right now, for trade publishers, that number is probably more like 20-30 percent.) That’s why three of the biggest publishers (one being Penguin, so ultimately, this could involve Random House as well) are continuing to struggle to launch Bookish, a strategy that looks increasingly dubious to me. It is why they were so eager to help Apple launch the iBookstore and why they root from the sidelines for NOOK and Kobo and Google to be successful competitors.

Anything that takes business away from the ebook retailing network might be depriving one of Amazon’s competitors of the oxygen they need to compete. (That’s one of the reasons Bookish is looking like a bad idea.) But, more important, with the Internet now making it pretty easy to deliver a selection of reading material larger than anybody will ever plow through at rock-bottom prices, having libraries offer and promote free ebook availability could foster habits that will cost authors and publishers customers in the future.

Of course, all of this is speculative. The library community’s belief that making ebooks available through them will stimulate sales of those books is speculative. But so is the fear of the commercial authors and publishers that libraries in the digital age will have a significantly different impact on reading and purchasing habits than they did for print.

When the problem is lack of information, one of the best antidotes is to enable flexibility and experimentation. That’s why I’m very pleased to be working with Recorded Books on a new ebooks-for-libraries program that will give publishers enormous flexibility in how they structure the license for each book: with granular, title-by-title control of availability, price, a number of loan limit, or a time limit. This requires RB to also give libraries the information and dashboards necessary to manage their ebook collections in ways their print book collections never required. The flexibility will mean that publishers can experiment with a variety of models. The multiplicity of models will be a nuisance for libraries — although RB can do a lot to mitigate it — but it will make a lot more ebook titles available by giving each publisher the ability to control the risks as they see fit. Recorded Books expects to put the program in beta early in 2013 and roll it out by Q3.

It is my hope and belief that the various models offered and the libraries’ reaction to them (agreeing to the licenses or not) will lead to some consensus-forming around particular formulas for these deals. Of course, everything is temporary because everything is changing. And that will continue to be true for quite some time.

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Trying to explain publishing, or understand it, often remains a great challenge


I went to the In Re Books conference at New York Law School last Friday and Saturday in hopes of curing some of my ignorance about the law and publishing. I learned some things, including the facts about a very interesting case involving a book publisher, the associations of publishers and booksellers, and a large general retailer that took place over a century ago and anticipated a lot of what we’re seeing today as the other players in the industry battle the power of Amazon.

But I’m afraid my major takeaway was, once again, that the legal experts applying their antitrust theories to the industry don’t understand what they’re monkeying with or what the consequences will be of what they see as their progressive thinking. Steamrollering those luddite denizens of legacy publishing, who just provoke eye-rolling disdain by suggesting there is anything “special” about the ecosystem they’re part of and are trying to preserve, is just part of a clear-eyed understanding of the transitions caused by technology.

So perhaps we have symmetrical ignorance and will never understand each other.

The conference was lively and well organized. The speakers were articulate and well prepared. There were two panels I wish had taken place in a different order.

On the first day, the In Re Bookstores panel had an antitrust lawyer who fully supported the Justice Department’s case against the publishers, although he seemed to be attacking the Agency model itself, rather than the collusion which, as I understand it, was the core of the government’s case.

But it was only on the very last panel of the conference, on the second day, that two speakers created some meaningful context for the whole discussion. Author James Gleick made a clear and cogent case for the agency model. (Essentially: because there is no investment in inventory or shelf space by the retailers, it is more sensible to consider them “agents” of the publishers than retailing intermediaries equivalent to what we have for print, where substantial investments are required and are at risk.) And Professor John B. Thompson of Cambridge, author of “Merchants of Culture” who is, as far as I know, the single person who has spent the most time and effort learning about trade publishing and synthesizing a coherent view of it, made it clear that Anglo-American trade publishing has challenges which make it unlike other endeavors, even other book publishing endeavors.

So that gives me three things to elaborate on: the blatant misunderstandings about the industry and its concerns about the DoJ case which came from the bookstore panel; the old publishing case that is so resonant with current circumstances; and a reprise of Thompson’s cogent analysis.

The lawyers speaking on the bookselling panel (and lawyers were dominant on just about all the panels; this was, after all, an event staged by New York Law School) were dismissive of the argument that any special treatment for publishing was called for because of the nature of our business. Then they proceeded to get two things startlingly wrong:

1. They dismissed the idea that any “predatory pricing”, i.e. sales of books below cost, ever took place. There was a wee bit of wiggle room there, where they might have meant “in the aggregate” as opposed to “title-by-title”. But they never made that distinction clear and, if that’s what they meant, there was further explanation called for. One is left with the impression that they simply didn’t understand that Amazon was paying publishers $12 or $15 for ebooks they were selling for $9.99. (And, in fact, there were far more dramatic examples of loss-leading than that!)

2. They seemed to think that the concern on the part of those opposing the DoJ was that Amazon would only lower prices to gain market share and would then exercise predatory behavior by raising prices to a captured market. That, actually is not the concern. Or at least it isn’t mine.

As I tried to spell out in a talk in Washington last July, what is concerning is that Amazon will restructure the pricing of books so that the profit for publishers is squeezed out, robbing us of a publishing ecosystem that invests in unwritten books tens of thousands of times a year. My argument and fear is that a restructured ecosystem will deny us books like Walter Isaacson’s Steve Jobs biography or Ron Chernow’s George Washington. Books that take years to write and require hundreds of thousands of dollars of financing to be written will never see the light of day if publishers can’t earn a profit by investing in their creation.

This is an argument and a concern which the attorneys on the platform at this conference made explicitly clear they never entertained. I don’t think the ones in the DoJ did either. Perhaps this has no bearing on the law, but I wish they’d stop trying to tell us the concerns of the industry are just the same old crap coming from a different source when they haven’t taken on board what we’re actually saying.

I tried to inject some of these facts and thoughts from the floor, as did a woman from a Big Six house who was similarly frustrated by the twisting of the reality to fit the antitrust narrative. The moderator cut me off from pressing the argument (which was appropriate; I hate it when people use the rubric of q&a to make their case from the floor at my conferences too!) But for the rest of the conference, at every break people from publishing houses kept thanking me for making the attempt to inject reality about our business into the discussion.

The old publishing case was Bobbs-Merrill versus Straus from the first decade of the 20th century. It seems that Macy’s, the department store that sold just about everything, also sold books at at discount. Bobbs-Merrill posted a notice in its books that the retail price was set at one dollar and that selling below that price constituted a violation of copyright. The Straus brothers, who owned Macy’s, insisted on selling these books for eighty-nine cents.

Both the trade association of publishers and the trade association of booksellers supported Bobbs-Merrill’s position, but the courts did not. There was a “horizontal” as opposed to “vertical” price-fixing angle explained from the stage that I didn’t fully grasp, but we can all appreciate both the irony and distinctions between this case and our present conversations.

Clearly, Macy’s was the Amazon of the time. They saw books as commodities — nothing special — and they simply extended their business model of offering lower prices to cover books. From the perspective of publishers, they were cheapening the perceived value of the intellectual property. From the booksellers’ point of view, they were subsidizing book sales with their ability to sell other things and clearly constituting a threat to what was then a very tiny bookselling network. So the entire publishing community of the time opposed the price reductions being offered by an interloper. In that way, they were creating the same price-fixing “problem” DoJ was “solving” with their lawsuit against Apple and the publishers.

But the difference, as explained by James Gleick a day later, was that the bookstores and Macy’s were, indeed, buying these books from the publishers (and, at that time, they might not have had a returns convention to cushion them from bad buying decisions) risking — or at least tying up — capital to provide stock to the public. In the case of ebooks, that isn’t true. No capital or shelf space (which also costs money) is tied up; all the retailer does is accept and display metadata and pay for the “goods” at some point after the customer pays for them. So the justification for the price-setting in the two cases is quite different.

Still, it was interesting seeing that history was — in a way — repeating itself 100 years later.

And now to Professor Thompson. He interviewed me a few years ago for his book “Merchants of Culture”, which has been out for a few years but which I’m just starting now to read. (Shame on me.) Thompson provided two absolutely fundamental pieces of information which could have been infinitely more helpful to the audience if they had come as the first thing on the program rather than the last.

1. The trade book business is quite different from other segments of the book business and has little in common, as a business, with school or college text or academic or professional publishing. Thompson made it clear that knowing one segment doesn’t mean you know another. After two days of hearing librarians complain that publishers were dissing their “biggest customers” because of the big houses’ concerns and restrictions on ebook sales to libraries, it was good to have somebody explain that publishers were different. In fact, libraries — relatively speaking — are not very large customers for general trade book publishers.

2. Thompson also emphasized — and this was critical insight coming, as it did, from the single speaker most knowledgeable about the transition trade publishing is making from print to digital reading — that nobody knows the future course of ebook adoption. Will it remain, as it is, in the 20% range for general trade reading? Will it go to 30%? 50%? The fact that nobody knows the answer to that question means that publishers’ policies have to accommodate uncertainty about a critical component of the publishers’ future commercial reality.

A couple of other points Thompson made bear repeating. One is that he sees big Anglo-American publishers fighting off threats to their margins. But he thinks the main source of margin erosion for American publishers is the agents, who exercise their power to drive up the cost of acquisition for the most desireable books; whereas for British publishers the source of the biggest problems are the big book retailers, particularly the supermarkets. It is ironic that America’s Robinson-Patman Act, which by requiring manufacturers to offer the same terms to like customers aims to protect small merchants, is actually the shield which protects American publishers from facing ever-escalating demands for margin from their largest accounts.

And Thompson showed a chart tracking the percentage of sales that were ebooks for trade publishers, year by year. The numbers were:

2006 0.1%
2007 0.5%
2008 1%
2009 3%
2010 8%
2011 20%

So the multiple from prior year sales is:

2006-07 5x
2007-08 2x
2008-09 3x
2009-10 2.7x
2010-11 2.5x

The indications are that when we get the report on 2012, it will be about 30%, or 0.5x.

No wonder Thompson makes it plain that we don’t know what’s ahead of us. Did you think that the rate of switchover would drop by 80% this year over last? I didn’t.

The big news of the past few days, of course, is the proposed new Penguin Random House entity. I think the only surprise here is that it has taken so long for a Big Six merger to occur since the last one (which was when Bertelsmann, owners of Bantam Doubleday Dell, bought Random House in 1999). My back-of-the-envelope arithmetic says that PRH is bigger than the other four of the formerly Big Six combined. So I’d expect to see further mergers, but the title of “biggest trade publisher in the world” is secure for the foreseeable future.

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