Digital Book World

Big focus at DBW 2016 on the tech companies that are shaping the world the book business has to live in

Realities change.

Ever since Amazon arrived in the “book business” 20 years ago, each year the “book business” has become less and less of a stand-alone industry. Of course, the only part that ever really was a stand-alone was the trade business, where the entire ecosystem: authors and their agents, publishers, booksellers, and even — for the most part — the printers lived in a world of mutual dependency but pretty much standing apart from what went on in the rest of the world.

Amazon actually took advantage of that industry insularity. They developed a business model that used books as a customer-recruitment tool but with the intention of making their profits elsewhere. In ways that were not understood at the time, that strategy was both viable (the book publishing world didn’t believe Wall Street would fund a company nearly indefinitely with current losses to build a future position of strength, but they did) and impossible for a book-dependent business to compete with. (Barnes & Noble and Borders had to make money selling books; Amazon didn’t.)

By the latter part of the first decade of this century, a Big Five CEO in the US delivered this observation to me. “I used to be able to get the CEO of my biggest accounts on the phone if there was something to discuss.” That was no longer possible with Amazon. And, in fact, if he could have gotten Jeff Bezos on the phone, there would have been very little to talk about.

When we started Digital Book World in 2010, we were following closely in the footsteps of O’Reilly Media’s Tools of Change conference, which had established itself a few years before and shut down a year or two after we started. The F+W executives who had the vision for DBW thought ToC was not “practical”; they felt that it didn’t give book business attendees “actionable” takeaways. When we agreed to program a competing event, providing “actionable” programming was our prime objective. We achieved that, initially, by eschewing what we saw as the “cover the tech developments and the book business will figure out how to follow” mindset of ToC in favor of a focus on how digital was changing the world of trade publishing. Our intent has been to concentrate on what publishers need to do to adapt to the change.

This year when we met with our Conference Council to plan the next DBW, they told us our business needed to hear more about the big tech companies. That reflected the reality the CEO observed nearly ten years ago. Our world is being shaped by the big tech companies. And that doesn’t just mean the obvious one, Amazon, which is almost every book publisher’s biggest trading partner. It means Facebook and Google, which have become perhaps our primary marketing mechanisms. And, of course, it also means Apple, which has become the second-leading ebook provider to Amazon.

I was proud to see I wrote this (linked to above) back in 2011:

The point most emphatically made by all of this is that the book business is a cork floating on a digital device stream. We don’t control our environment. We must keep adapting to what bigger players, some of which have pretty minimal bandwidth to engage us in a dialogue and pretty minimal interest in what’s best from our point of view, see as the best strategy for them.

Indeed, we have reached a point where every trade publisher needs a strategy for its company’s dealings with the tech giants. And the forces that might affect the growth, stability, or strategies of the big tech companies, including anti-competition actions by and within the European Union, now call for attention and understanding from publishers in the US who could be affected by these changes.

Since the mission of Digital Book World remains to inform and educate book publishers about how digital change will affect them, we took the hint from our Council and have lined up a number of speakers for DBW 2016 who will shed light on the technology companies that are increasingly shaping the ecosystem in which we live.

We intend to make DBW 2016 the indispensable conference for book people who recognize the need to understand the tech companies we interact with every single day.

We’re really proud to be featuring SEO expert, blogger, and Moz founder, Rand Fishkin, at a book publishing conference for the first time. Search Engine Optimization is the single most important new skill publishers are learning to market their books effectively in the digital environment. And Moz is the single most important tool for Search Engine Optimization. Fishkin arguably knows more about the science of search, local, and mobile marketing than anybody else on the planet. He will deliver a talk from the main stage about what everybody needs to know about search now and then he will also be available for a 50-minute Q&A session in a breakout.

Scott Galloway is a Clinical Professor of Marketing at NYU Stern School of Business where he teaches Brand Strategy and Digital Marketing. One of his primary interests is tracking the biggest tech companies. His talk on the “Four Horsemen” (Amazon, Apple, Facebook, and Google) demonstrates the depth of his understanding. We were really pleased to find an academic who has made a specialty of studying the four companies we identify as most influential in the environment publishers must operate in. At DBW, Galloway will talk about these companies with special attention to how their strategies and future growth will affect us in the book business.

Jon Taplin is a Professor at the Annenberg School at the University of Southern California. He is a veteran of the music and movie businesses, having produced concerts for Bob Dylan and The Band and more than a dozen movies, including “Mean Streets” and “The Last Waltz”. He also has stints as an investment banker and a founder of the first Internet video on demand service in the 1990s. Taplin sees the tech-centric and libertarian Silicon Valley values having gradually taken control of the revenues for content away from content creators, a point of view he spells out in a video called “Sleeping Through A Revolution”. In his talk at Digital Book World, Taplin will explain how tech took control away from content creators and spell out what he thinks the content community can do to fight back and start getting paid more fairly for the quality content that he believes drives the success of many tech companies on the Internet.

Virginia Heffernan is a journalist who writes frequently at Medium and in the New York Times Magazine on the intersection of content and technology. Her next book, coming from Simon & Schuster in June, is called “Magic and Loss: The Internet as Art”. Heffernan sees the Internet as a large collective art project. She will look at how the Internet and digital technologies have changed our fundamental relationship with content. Heffernan reminds us that the Grateful Dead probably began our reordering of thinking about how content creators can benefit commercially from their work, being the inventors of the idea of “giving away” the music (encouraging their fans to go ahead and record their concerts and share the tapes), making up for any lost revenue from sales of recordings by selling concert tickets and branded chotchkes. Heffernan will also explore the impact of ebooks on how people read and the value of books as branding assets and calling cards for professionals and experts.

Jonathan Kanter is an antitrust attorney at Cadwalader, Wickersham & Taft and co-head of the firm’s technology group. Jonathan represents both tech companies and content providers. He is totally familiar with the business models of the major tech companies, including Amazon, Apple, Facebook, and Google. This includes both the benefits they provide and concerns that some of these companies use their position in the market to distort competition to the detriment of content providers. At DBW, Kanter will focus on how book publishers interact with the big tech platforms. He will explain the current antitrust actions pending against big tech companies and the potential impact on US-based book publishers.

We’ve also asked Kanter to talk about what remedies might be applicable here in the longer term to preserve the important services that big tech companies offer to consumers while at the same time protecting the rights and businesses of content creators. Could the government impose rigorous but intelligent remedies that address concerns without destroying the value that these tech companies create? Kanter will spell out how things could get worse for the content industries if there are no controls and explore how government agencies could use enforcement action or regulation.

And we’re working on more. There are anti-monopoly legal actions taking place in Europe against the both Amazon and Google. While Kanter will include those in his analysis, we are also talking to our European friends, looking for the right person to bring us a report from the front on these as well.

Until the last two decades — starting with the arrival of Amazon — book publishing only had to understand itself to plot its strategy. That has changed. Without real knowledge of how the tech world is changing its ecosystem and engaging book-readers with other choices for their information and entertainment, highly-predictable changes will be very surprising. Digital Book World 2016 aims to help publishers build that understanding as the next stage of the digital transition unfolds.

Register now for Digital Book World 2016, taking place March 7-9, 2016 at The New York Hilton.

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It is being proven that smaller bookstores can work commercially

Sometimes it takes a decade or more for an insight to be validated, but it is always nice when it happens.

Around the turn of the century, I was developing a business called “Supply Chain Tracker”, which had a nice client base for a few years. What we did was take the data feeds — Excel spreadsheets — provided by publishers’ major accounts and find the nuggets of insight within them that enabled better inventory decisions.

This followed the logic of one of Shatzkin’s Laws, which in this case is “every spreadsheet is one calculation short of useful”. We added some calculations to make meaningful metrics out of raw data. For B&N’s spreadsheets reporting inventory and sales activity to publishers, two of these were calculating the “percentage of store inventory sold” from the “on hand” and “sales this week” columns and “the percentage of total stock in the warehouse” derived from “on-hand in the stores” and “on-hand in the warehouse”.

My first client for this work was Sterling in the final year that they were independently owned before they were bought by B&N, which still owns them. When we showed our first prototype of a Supply Chain Tracker report to Sterling, we sorted by “the percentage of total stock in the warehouse” and two books popped to the top: 5000 copies with 100 percent in the warehouse! When Sterling’s then-Sales VP (later CEO) Charles Nurnberg saw that he said, “those books have been there since October!” This analysis was taking place the following February.

It turns out that B&N at the time had no systematic check of this metric in their workflow. If a B&N buyer bought five thousand copies and didn’t order a “store distribution”, the books would go into the warehouse and just sit there. It was a hole in their system. And since publishers tended to eyeball the spreadsheets in order of “sales”, looking for books that needed to be replenished, they just never caught this.

When Sterling showed the problem to the responsible execs at B&N, it bolstered the view of one of them that having the publishers intelligently reviewing inventory was useful support for the chain’s buying activity. They became supporters of our Supply Chain Tracker reporting (which we then extended to other accounts: Borders, Books-A-Million, Amazon, Ingram, and Baker & Taylor). But Barnes & Noble was everybody’s biggest account at the time and they offered the most robust reporting, so they were the primary focus of our work.

Let’s recall that the early years of this century were still the years of superstore expansion. B&N and Borders were proudly featuring stores that had 120,000 titles or more. It was precisely because they stocked so many titles and that the great majority of them turned very slowly that they wanted the additional publisher help in inventory tracking, particularly further down the sales ranks. And no publishers seemed more logical candidates for that help than university presses. B&N wanted to stock them more heavily, but their books were predominantly in the slow-turning majority. Distinguishing the books that would sell a copy or two in a store versus the ones that wouldn’t demanded the deep title knowledge of the publisher combined with the insight of well-structured reporting. Our work seemed to fit, so B&N subsidized our relatively expensive engagements providing our reports and tutorials on how to use them to university presses.

What we found as we started analyzing, though, was disappointing and initially surprising to all of us. But, as we thought about it, it was intuitively logical.

The university press titles had effectively stopped selling, even in B&N stores that were near university campuses. Why? Those sales had all moved to Amazon, which, at the time, was barely more than five years old. This first struck us all as disappointing and surprising. But, then, think about it…

The university professor would hear about a book. S/he’d go down to the local bookshop — could be a B&N or another store, didn’t matter — and look for the book. It would almost always not be there. So s/he’d “special order” it and wait for it. It didn’t take long for this to become an expectation, so ordering online became a very sensible default behavior. By 2002 and 2003, when we were doing this work, the battle to sell the obscure book to an audience that knew it was there and wanted it through a brick-and-mortar store was already lost. When you thought about this, it was intuitive, even though none of us anticipated it when we started doing the work.

Cambridge University Press at the time had a sales representative (since deceased) named Steve Clark. He was one of my most engaged B&N-subsidized clients. As we were doing this work and analysis, Clark told me that Amazon was already a bigger account for CUP than all other US retail outlets combined! That was a “wow”. But it underscored the degree to which Amazon had captured market share from the stores on hard-to-find books.

B&N still operated smaller stores that had been in the B. Dalton chain and Borders had a similar chain called Waldenbooks. While B&N and Borders were building out the 100,000-plus title stores, their mostly-mall chains were 20,000 and 30,000 title stores. They were in the process of shutting them down as leases expired.

With full knowledge of the strategy that governed their activity in those days, I said to my principal contact at B&N, “you guys should be figuring out how to use your infrastructure to make the twenty-thousand title store work”. He said to me, “Mike, we’re thinking about the million title store!” In other words, there was no appetite to take on board what we had all just learned to make a big change to the overall strategy. They had fully absorbed and couldn’t rapidly unlearn the lesson first discovered by my father, Leonard Shatzkin, when he was running Brentano’s in the 1960s: a big selection of books is a huge magnet for customers.

Unfortunately, Amazon had already changed that reality in a few short years after their inception. The huge selection was not as powerful a magnet as the online marketplace when the customer knew exactly what they wanted, particularly if it wasn’t a bestseller.

Now, flash forward to the present day. I’ve been fishing for lessons from retailers around the world that might constitute useful insight for the Digital Book World audience. My friend Lorraine Shanley of Market Partners suggested I talk to Anna Borne Minberger, the CEO of the Pocket Shop chain of stores, owned by the Swedish publisher, Bonniers. I got to meet Minberger for a conversation at the Frankfurt Book Fair in the last fortnight.

And, lo and behold, Pocket Shop has taken the suggestion I made to Barnes & Noble well over a decade ago and made it work at an extreme I didn’t imagine. Their tiny bookstores stock only about TWO thousand titles, but they are a thriving chain in Sweden and Finland now expanding into Germany. Their formula is a very small title selection placed in very-high-traffic locations (of particular interest here in New York City where both our main railroad stations are losing somewhat larger bookstores) with highly knowledgeable and helpful staff. I didn’t get into the details of buying, inventory management, and centralized infrastructure support in our Frankfurt conversation.

But, near as I can tell, Barnes & Noble still needs a solution to grow their book business; the strategy today only seems to be about how to profitably manage shrinking it. Particularly if it continues to work in Germany, a market (unlike Sweden and Finland) where online buying is strong and Amazon is a real presence in the market, one would think that the Pocket Shop formula would be even more effective if supported by the B&N infrastructure and branding in the United States. Of course, making a strategic shift of this nature is probably a heavier lift for B&N now than it would have been when I first suggested it many years ago.

But I don’t discern any other strategy that leads to growth in what B&N is doing now. If they don’t try copying Pocket Shops strategy in the US, maybe somebody else will. One could execute on this leaning on Ingram’s infrastructure rather than creating one’s own supply chain. Who knows? Maybe even Pocket Shops themselves would like to give it a try.


Ebooks change the game for both backlist and export

There are two aspects of the business that ebooks should really change.

One is that ebooks can really enable increases in sales of the backlist.

The other is that ebooks will really enable sales outside the publisher’s home territory.

The second piece of this hardly even requires much effort. At a conference called Camp Coresource hosted by Ingram two weeks ago, Mary Cummings of Diversion Books, which last year launched a romance-only eBookstore app, EverAfter Romance, reported just short of half of EverAfter’s app users are coming from outside the “home” (US) market. Of that 49 percent, only about 6 percent come from the UK and Canada. Of course, Diversion owns world rights on many titles. And the rest of the world has far more than half the people, even far more than half the English speakers, in the world. So the US is still responsible for far more users per capita, but that’s really of secondary importance. Getting half one’s customers from markets that would have been very hard to reach ten years ago — without any extraordinary efforts — is a very new thing.

This global reality comes up in another frequent current discussion. The big publishers are suggesting that ebook sales have plateaued, perhaps even declined. Amazon says “not true”, that ebook sales are still rising. Some analysis, such as what is done by Data Guy for Author Earnings, says that the publishers’ big books are losing ebook share to the indies, primarily relying on data scraped from Amazon to make the case. The most commonly-offered explanations are that publishers’ success forcing higher ebook prices for their titles, combined with a decline in new converts to ebooks (who are inclined to “load up” their devices when they first start reading digitally) account for the apparent trend.

But the comparison can also be skewed. All Amazon sales from outside the US that are not made through a local Amazon store are credited to the US store. And when Amazon distributes indie ebooks, they always (or at least almost always) have global rights. So it could well be the case, and often is, that the publisher-ebooks that are being compared to the indie-ebooks are working on a smaller territorial base for sales. There is an apples-to-oranges problem that makes it difficult to compare Amazon sales of indie ebooks to those from publishers.

The point to capture is that just having ebooks for sale around the globe can bring markets to a customer’s door, wherever the book originated. Any rights management policy that prevents an ebook from being on sale anywhere is likely to be costing some sales.

The backlist challenge is trickier and the results might not be as obvious. Two of the biggest drivers of ebook sales are discovery in response to search and the amplified effect of existing sales momentum in bestseller lists and retailer recommendations. (“People who bought this, bought that.”) A power law distribution seems inherent in ebook sales. Those that sell develop sales momentum; those that don’t remain hidden and buried.

But a lot of that has to do with metadata. Publishers have been getting better and better at writing the descriptive copy that determines whether search engines identity them as an “answer” to the right queries. That means that as you go back in time, the copy is less and less likely to be useful for the purpose.

And there are some realities about budgets and effort allocation in big companies to take into account. The lion’s share, and that means more than 90 percent, of budgets and internal effort allocations for marketing go to the current frontlist. The backlist has many times the number of titles as the frontlist, so a much smaller amount of money and assignable labor is spread over a far larger number of titles. On a per-title basis, there have hardly been any resources available for backlist. And since backlist sales of ebooks have not generally been robust, predicting the ROI necessary to increase those budget allocations requires courage. Or foolhardiness.

Then there are corporate political realities. New books have advocates. There are the editors in the house who signed them and whose careers will be affected by how well they do. There is a publisher for each imprint watching the imprint’s P&L, firm in the belief that very few backlist books can move the needle but that every new title can. And the publishers and editors are also the ones who know the books and tell the marketers what they’re about and (too often) who the audiences are for them.

And, on top of that, publishers often count on backlist sales to be the most profitable precisely because they don’t have to allocate marketing spending or staff time to those books. There sometimes seems to be a fear operating at publishing houses that starting to expend marketing effort on backlist is opening a Pandora’s Box which would compromise the most profitable aspect of their business.

But there are hopeful signs that this is changing.

Carolyn Reidy, the CEO of Simon & Schuster, keynoted the recent annual meeting of the Book Industry Study Group by underscoring how S&S has changed its approach to capture backlist opportunities. Reidy made the point that between print bought online and ebooks, more than 60 percent of the company’s sales came from Internet channels. She said that at S&S’s weekly marketing meeting, which I’m sure was almost exclusively frontlist-oriented until very recently, they are now looking at their books “through a lens of daily opportunities”. That could include noting it if a book is listed for a prize or mentioned on a TV show or in a tweet by a celebrity. The chances that a book will be discovered by somebody searching for the book that way are multiplied if the book’s descriptive copy points the search engines in the right direction.

This is an approach we first saw for ourselves at Open Road Digital Media a few years ago. Their “marketing calendar” focused on holidays and predictable events like graduations, not the publication dates of forthcoming books. Of course, Open Road didn’t have any frontlist at that time. All the books they acquired in the early days of the company were backlist for which digital rights were somehow available. They made a virtue of a deficiency. But marketing the backlist in the light of the most current “daily opportunities” is precisely the right thing to do.

It is worth noting that when Reidy spoke at Digital Book World in January 2014, she pointed to the opportunities in global. In the prior year, she noted, S&S had sold ebooks in more than 200 countries.

Recognition of an opportunity is a necessary first step and assigning human and capital resources to pursue it is the second. But the biggest publishers are also going to need digital tools to fully exploit what is now open to them. When we looked at what Open Road was doing, they had about 1000 titles in their shop, all of which had just been acquired by the team in place. They could keep them in their heads. The biggest publishers have tens of thousands of titles in their backlists, many (if not most) of which were acquired and launched by editors and publishers who are no longer in their employ. Many of them have old and out-of-date descriptive copy which is not readily updated because nobody working there now knows the book.

It will soon be seen as necessary to employ technology to monitor the news and social graph and to “bounce” the results of each “daily opportunity” off the possiblities in the backlist. It will for quite a while longer still require humans to do some targeted research into what today’s relevant search terms are and to write the descriptive copy that will respond to them, but technological assistance will multiply the effectiveness of the human efforts.

We should expect the backlists to start increasing their share of every publisher’s annual sales. And we should expect offshore ebook sales to do the same.

There are recent reports from the US and UK that print unit sales are up while ebook unit sales are down. This is being celebrated by some as an indication that book consumers are turning away from digital reading to go back to print. Perhaps because I intuitively find this so unlikely, I can think of caveats.

The presumed reductions and growth are very small and the measurement techniques are pretty crude, so there is an accuracy question. But we also know — as was referred to in the main body of the post above — that new ebook converts tend to “load up” their digital device when they start reading that way. I believe the purchases at first are somewhat “aspirational”, but then settle into a rhythm more like replacement. So ebook purchases are inflated in relation to ebook consumption early in one’s ebook-reading “career”. Fewer new ebook readers each month (which we certainly have) mean fewer people loading up.

Of course, print book sales actually rising, which is the implication from the recent data, is an independent marker that, if borne out over time, requires another explanation and that would be one that I don’t have yet.


The establishment seems very unworried about being toppled by indies, and 5 other learnings

Programming Digital Book World and the kind of consulting we do require that we spend a lot of time in our office trying to figure out what the industry should be thinking more about. On that topic, there was this recent post with my thoughts about what should be top-of-mind for publishers these days  as well as others laying out topics for next March’s Digital Book World.

A recent DBW agenda planning meeting, which had participation from most of the ten biggest trade publishers, some literary agents, and service providers ranging from marketing services to digital distribution providers, yielded a lode of really interesting ideas that we’re going to act on.

1. One thing that came through loud and clear was big publishing’s interest in hearing how books fit in the greater landscape of digital change. They want to hear from curators of other media and online retailers from other businesses about how they learn about their customers, position a variety of products, and work with search and social media.

2. One participant, whose business provides digital sales data and analytics to a variety of clients, posited that there are four “stages” of behavior that we want to watch around consumer interaction with books. His paradigm is that we want to know:

How they find out about the book
How they purchase the book
How they read, or navigate, the book
How they talk about the book

All of these things are visible in the digital world and this was a helpful frame. In a conversation with my Logical Marketing partner Pete McCarthy afterwards, we reckoned this could elide a very important component: how you get from “find” to “purchase”. That’s what Pete would call “middle of the funnel” or “in the funnel” activity.

In fact, a great deal of what is important about understanding and influencing customer behavior occurs in the middle of the funnel. One of the tempting fallacies of analyzing digital purchase behavior is “last click attribution” of sales. That is, just because the cash register rang in a particular place doesn’t prove that the customer was sold on the book there. Publishers want to concentrate marketing efforts where the decision is made, not necessarily where the transaction occurs. And, in fact, we’re figuring that as time goes by, more and more ebook readers will buy on the particular platform they most favor regardless of where they learned about the book. So there is a fifth activity — how they get from knowledge to purchase — which could be called “the consideration phase” which needs to be thought about separately. This was a very helpful paradigm for understanding customers that will find its way to the program.

3. A very smart independent publisher in the room said “we need a new industry conversation about apps”. When the iPad first happened, quite a few publishers lost quite a bit of money trying to build and sell ebooks as apps. The merchandising environment was all wrong, including that so many apps are free or cheap. But apps can do things ebooks cannot, and they provide a method for ongoing communication with a user, if they use the app. So I think that publisher is probably right.

4. I brought up a complaint I had picked up from a major publisher in the UK. This CEO thought that getting publishers to cooperate around marketing an author when they shared the author’s output was very hard. But the gang I had in the room for the DBW meeting didn’t agree. Big publishers felt that marketing cooperation when one publisher had part of an author’s list and another had another part was entirely possible. And that it was being done. With the help of agents, we’re going to look for instances of that and try to get a DBW panel put together on it. It begs a lot of “next questions” about ownership and allocation of marketing efforts on the author’s website and the use of mailing lists that might be developed through those marketing efforts.

5. Another topic that came out of the meeting was sparked by a discussion of TBR (to-be-read) lists. As one publisher put it, that used to be the stack of books on your bedside table. We were well aware for a few years that January was a very hot month for ebook sales because people got new devices (often, their first device for ereading) for Christmas and were “loading up” in January. But with fewer and fewer readers — particularly heavy readers — now getting “new devices”, that phenomenon (which one participant identified as a close cousin to the sales growth publishers saw 20 years ago when new big box bookstores were opening regularly: “filling the pipeline”) has perhaps waned, or even ended. Understanding how much of what ebook readers buy they read, how much they have sitting on their devices, and whether what is “bought and not read” tends to be low-priced, are all things that should be find-outable and worth knowing.

6. I’d be a lousy blogger if I didn’t save best — or most proactive — for last (except in the post titling, of course). I told the assembled group that I wanted to do a panel on “the future for indie- and self-publishing.” There was remarkably little interest in the subject from those in the room. One literary agent said, “four years ago, indie publishing had us quaking in our boots. We really wondered whether our whole business model would be upended. We don’t worry about that anymore.” Another said “we counsel our authors about self-publishing, but there is less interest in it and less of a rush to it than there was a couple of years ago.” The publishers were similarly relaxed about whatever “competition” self-publishing offers.

So, from the perspective of the publishing establishment, the whirlwind of change has slowed down, we are in a “new normal” and there is absolutely no shortage of writers pining to be published for the deals the industry is offering and the output from those willing writers continue to deliver sales that keep big trade companies profitable. If self-publishing is constituting some mortal threat to everybody’s existence, that appears less evident today than it did a few years ago. And, of course, every big publisher is set for the next X years (unknown numbers that might be different for every big publisher, but almost certainly three or more for all of them) with their single biggest intermediary relationship since they’ve all just done deals with Amazon. One big variable in their commercial calculus that had been highly problematic in the recent past is now stable for a while into the future.

I’ve been making the case that the trade publishing establishment is not in any danger of disappearing anytime soon but the indie world still seems to harbor a fervent contrary belief, which is completely evident in the comment string of the linked post.

The question, “is indie publishing an imminent threat to the establishment?” is one where there is great but contradicting certainty on the two sides of the debate. It looks like the establishment side has largely lost interest in the discussion. I’d love to see if we could “prove” something at Digital Book World, but with so much of the relevant data entirely within the walls of Amazon, which has no apparent interest in sharing it (nor can I make the case that they should), that might be very hard to do.

We are still very much interested in feedback from readers about the topics for the DBW Conference. Feel free to chime in here. And if you have thoughts to contribute about the program for Publishers Launch Kids, that survey is here. If it would be easier for you to just email suggestions, send them to [email protected]


Things to discuss

The planning process for the main Digital Book World program — about 40 discrete programming elements using about 150 speakers over two days — has always benefited from a “Conference Council” brainstorming meeting. This year’s iteration is later this week. We’ll have attendees from all of the Big Five, several other publishers, agents, and assorted industry players who can help us understand the concerns and initiatives across the waterfront of industry interest.

Sometime after we started doing this in 2009, we added a pre-meeting survey component, asking our Council members to register their opinion about the topics we knew we wanted to consider. That survey was primarily a tool to guide the very fast-moving conversation we have at the Council meeting.

This year we have added a “public” version of the survey. That turned out to be a really good idea. This post is a list of programming ideas that either came directly from the public survey or were inspired by suggestions made there which are very likely to become important parts of Digital Book World 2016.

I’m excited about the idea of doing an entire track on “Making Investments Pay Off”, which is a persistent concern in the world we live in where new business models and new initiatives are being tested all the time. After years with basically the same business model and workflow, publishers are trying new things all the time now without knowing exactly how to make them commercially beneficial. We can see at least four areas where publishers are putting in a lot of effort, but could probably benefit from a discussion about how to measure, monetize, and manage their efforts.

End-user databases (collecting names)
Digital marketing campaigns (publishers are hiring the talent; now, how to make effective use of it)
Building author brands (aligning interests; knowing what you want; making it pay)
Research (it is cheaper and more effective than ever, but how does it pay off)

With all the discussion that persistently takes place around how much of a threat self-publishing does or doesn’t constitute to the establishment (a conversation into which I waded last week), we should host a discussion on the future of self-publishing. I know I’d want Amazon on such a panel, if they’d join. Some other players who could shed light on self-publishing’s future are Kobo, Smashwords, Ingram, a literary agent, and a self-published authors. (This panel has Jane Friedman’s name written all over it as the moderator!)

We’ve never convened a panel of Human Resources people to discuss how what they look for has changed across job functions. That would be an interesting discussion.

With all the new topics, ideas, and startups that seem to arrive on a daily basis, big companies must exercise discipline around what to spend time on and what to avoid. That’s another topic that could be a very important one, if we can find executives willing to speak to it. What are the rabbit holes? What are the things a company should not spend time discussing or exploring in the current environment?

As publishers adjust to a commercial environment where intermediaries are more problematic (partly because they become fewer in number and partly because those that remain become increasingly powerful) but direct sales opportunities become easier to develop and manage, new things are possible. Publishers can now develop online courses and proprietary subscriptions, if they have the right content for them. Tools — like — are being put in place for them to sell digital content or hard goods direct with minimal investments in tech. Two publishers, Sourcebooks with “Put Me In the Story”, and Quarto with “This is Your Cookbook”, have recently created custom book lines — using technology to personalize existing content —  that are largely made possible by direct selling. Direct selling is a leading edge of change that enables product types and customer relationships that would never have been possible in the past. More and more publishers will want to know what’s being done and how it might apply to them.

And as the far-flung world becomes reachable from anywhere, English-language publishers in each English territory have unprecedented capability to sell to all the other territories. Getting the Most out of the English-Speaking World — what you need to do, or do differently, to optimize sales in US, UK, Australia, S Africa, India, etc. — is now a topic that just about every English-language publisher can benefit from.

All my readers are invited to participate in the DBW topic survey. Thanks to all of you who have already contributed your thoughts and ideas. As you can see, we’re paying attention.

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Considering the very wide range of digital change topics that should be candidates for discussion at DBW 2016

The challenge for the book business for the past decade has been rapid and less-than-predictable changes in the ecosystem because of digital. There are two underlying shifts that fundamentally alter the ecosystem: people substituting ebook consumption for print book consumption and people substituting online purchase of printed books for buying them in stores.

These two shifts, and a host of corollaries around product type, product creation, and marketing, are what people come to Digital Book World to be enlightened about and to discuss. Our job for the past seven years has been planning the program and booking all the speakers for that 3-day conference. The whole process takes months; there are about 35 or 40 discrete “sessions” and as many as 150 speakers and moderators involved.

Creating a timely and relevant program when we’re leading the target by several months — deciding on topics and recruiting speakers starting now for an event that will take place March 7-9, 2016 — is a challenge. More perspectives on the task add real value; we structure things so we can get a lot of help. We recruit a “Conference Council” — volunteers from publishing companies and their service providers and trading partners — to help advise me in shaping the event. This year we’re going to broaden the outreach for opinions about this and anybody reading this blog can be involved.

Here are the main topic headings we’re considering with a brief description of what we see as the current issues around each. The Survey linked to again at the end of this post allows you to express yourself on how important you think each topic will be to the publishing community next March when we hold the conference.

1. Data. This is a wide-ranging topic. We look for original data about what’s going on in the ecosystem wherever we can find it and we have done sessions in the past (and could again) about “Big Data” and what publishers need to understand about it. With pricing of ebooks becoming an increasingly important financial consideration for publishers and data being such a crucial component of doing that well, this is bound to remain a top-of-mind subject.

2. Global. Publishers used to be pretty much limited to their home market for marketing and sales. That’s why there is a robust international business in territorial and language rights. In the digital world, that limitation is not nearly as confining. US and UK publishers are learning there are big markets for their books all over the world, and global ebook distribution and print-on-demand make it possible for them to work those markets far more effectively than ever before from their offices, wherever they are.

3 Marketing and discovery. This is the topic that cuts across books regardless of topic or format. For fiction or art books or anything in between, whether delivered in print or as ebooks, publishers are embarked on a long journey of learning about how discovery and SEO works in the most complicated consumer product marketplace imaginable. There are a variety of topics that we entertain under this heading and, you could tell from my own checklist in my last post, I could probably build the whole conference around discovery and figure the audience was getting a large percentage of what is most important.

4. Authors and self-publishing. Authors didn’t used to have much alternative to publishers; now they do. As a result, authors have developed marketing capabilities and support services have grown up to help them. This all raises a host of issues for publishers. They have to learn how to capitalize effectively on what authors can do on their own, but they also need to provide great marketing support to authors and be seen as collaborative and as adding real marketing value.

5. M&A and investment. Most publishers, and all big publishers, are looking to acquiring smaller publishers with complementary lists (and, of course, there are different ideas about what that means). And there are a host of start-ups with capabilities publishers want to see available which are also tempting investments. Quite aside from publishing, we live in a moment with a lot of investment capital available for start-ups and acquisition and publishers certainly need to stay aware of investment flows.

6. Is the book morphing into something else? With each new cycle of Moore’s law and each new delivery mechanism — whether hardware or platform — the question of what the “product” should be gets called for reconsideration again. The history of ebooks has been commercially discouraging for those who want see the book concept rethought from the ground up, but the topic never dies and never will as long as capabilities to present stories and information and to interact with content in new ways are put in front of publishers.

7. Managing and exploiting rights. The rights marketplace for books has changed dramatically in the past two decades. In the 20th century, book clubs and paperbacks were the big-revenue rights opportunities, with serialization to print periodicals also very important. Those markets are all dramatically diminished and the rights action today mostly is about foreign languages and territories. Now, even those rights are being rethought as we see the beginings of publishers thinking about controlling multiple languages for the books they acquire themselves.

8. Agents and editors, how they relate in a mutually-supportive way. They share ownership of each author’s personal loyalty, they both might shape the book editorially, and they both will hear the author’s career ambitions and influence him or her about self-publishing and their publishers’ efforts. If publishers are going to start collaborating meaningfully with authors about marketing, that suggests agents and editors are going to be working together differently.

9. Libraries. Aside from being important customers for publishers, libraries are increasingly being seen as a venue for discovery and perhaps even for book retailing. Whatever they will be in the future, it is likely their role will be different than what Andrew Carnegie envisioned a century ago.

10. Bookstores. Since the collapse of Borders, Barnes & Noble has continued to shrink and independent bookstores have appeared to grow. Books-a-Million and Walmart have become mainstays of the US trade, but they don’t replace Borders. The UK bookstore picture is even less diverse. The ebook market seems to be consolidating in the US with Amazon and Apple leading the pack and independents not really in the ebook game at all, at least at the moment. The key skill set of a publisher is to manage a diverse system of retail intermediaries that gets their books to customers. How the intermediary ecosystem will change in the months and years to come is therefore of existential importance to publishers.

11. Standards. There are evolving tech standards around content that live outside the book business. The question for publishers, particularly big publishers, is how much effort they should expend on standards-creation efforts which are, mostly, the domain of other media and tech interests. Can they let industry bodies like IDPF and BISG handle this, or do publishers have to involve themselves in these issues?

12. Outsiders coming in. We are seeing publishing coming from non-publishers and we see non-book retailers starting to peddle books online. These are trends that industry incumbents need to monitor and understand.

13. Millennials. Some believe that the human propensity to be a book reader is changing in fundamental ways as people born into the internet age become an increasing part of the market. There are other data points suggesting that the millennials aren’t so different from their predecessors. How should publishers approach marketing differently to different age groups?

14. Digital production tech and operations. Is there already a “new normal” for integrated print and digital publishing? Do publishers need to continue thinking about investing in technology for creation and delivery?

15. Audio. Audio publishing has gone all-downloads much faster than print. An even bigger technological disruptor may be coming as TTS (text-to-speech) technology gets better and better. What the linkage will be between audiobooks and ebooks in the future is something else every publisher needs to consider.

16. Publishing automation. From content management to product generation, automation has been part of every publisher’s life for the past several years. It might be fruitful to explore how people in publishing houses feel about the automation that has taken place — has it helped? — and get a sense of what needs to be automated in the future.

17. Mobile. Because of mobile, there are shifts in consumption and an impact on search and discovery and where the transactions take place. Many publishers have worked to optimize their websites for mobile use but there’s a lot more to know about the mobile shift that could affect what they publish and how they market it.

18. Video. This topic runs a gamut. Publishers can be tempted by YouTube stars with big audiences as potential bestselling authors. But how reliably can those audience be converted to buy books or ebooks? What do publishers need to know about video production? Do videos really help with book marketing?

19. Privacy. Should publishers or booksellers be doing anything to address potential compromises to reader privacy in the digital age?

And then we have six questions for all publishers that could inform or suggest additional topics.

* What growth opportunities do you see for today’s publishers?

* What potential change in the landscape are you most worried about?

* What “problems” are you trying to solve?

* Where are you investing your capital?

* When you hire today, what skills are you looking for that you might not have ten years ago?

* Can you tell us any topic you think is important that isn’t mentioned here?

This link to our survey is intended to allow you to participate in helping us decide what’s important for DBW to cover. Even a program as extensive as ours has to make choices and your input will help us do that more wisely. In case you’re interested, here is my personal list of what publishers should be thinking about, which is a very-much-abridged version of this post.

Under the direction of our Conference Chair, Lorraine Shanley, and co-Chair Jess Johns, we are following a parallel process for our Publishers Launch Kids show which will kick of DBW on March 7. If you are kids book publishing interests you, the survey for that show is here and you’re welcome to participate in that one as well.


My personal list of what should be top-of-mind for publishers around digital change today

What are the most important digital change issues publishers face?

To prepare for DBW 2016, we need to decide what publishers need to be thinking about and learning about next March, when the seventh annual DBW will take place. It would be extremely limiting for that selection to be based on my thoughts and opinions alone, and we have a process in place to make sure that it isn’t. (More on that to come in the next post here.) But if we were relying on me alone, here’s what we’d be focused on.

1. Ebook pricing. Publishers get anywhere from 50-to-70 percent of the retail price from most ebook retailers. Unlike the print world, where price-setting must take place before the book comes out and is, because the price is printed on the book, very hard to adjust, ebook prices can be changed quickly and frequently.

Pricing variation has historically been the province of the retailer. In the physical world, markdowns were almost never shared: the retailer voluntarily gave away part of their margin to gain market share or to build customer loyalty.

In the agency world that four of the Big Five have now created (with Penguin Random House almost certain to follow on), pricing is not only mostly controlled by publishers, they are the direct beneficiaries of higher prices and lose margin if prices are lowered.

It is true — and the indie authors who like it better when Amazon is in control rather than the publishers often point this out — that publishers have almost no experience with pricing and the impact of changes. But it is also true that the retailers, who do have more experience with it, have different objectives than publishers. Retailers want a competitive advantage against other retailers and, as part of that, they want to build customer loyalty. Publishers want to maximize revenue for each SKU, build awareness of authors, and use one book by an author or in a series to sell other titles under the same brand.

Publishers are starting very near zero on knowledge. How does discounting one title in a series affect the audience’s likelihood of getting started with it and then buying other titles at higher prices? If a book is in the news, is the right strategy to raise the price (to maximize revenue) or to lower the price (to get better market penetration on the back of the news). And is the strategy the same if the story is about the book, rather than the book being about the story? Do pricing strategies need seasonality rules, and how is that different across genres or topics?

All of these are things publishers will have to learn by a combination of experimentation, archiving of information, and analysis. A complicating aspect of this is that the market itself is still changing: a person’s ebook purchasing habits today, when they’re new to it, may change over the next couple of years, as they become more sophisticated consumers. This is a moving target but a very important one. And there is one person who stands out as having looked at this more closely than anyone: Dan Lubart, who owns Iobyte Solutions, and who previously worked for HarperCollins and now is at Hachette.

2. Building direct customer knowledge. What is knowable about audiences through listening and analytical tools today is stunning. It is critical to do audience research on a constant and ongoing basis. Publishers need to keep formulating theses about who their audiences are, then doing research to find where they hang out online and what words they use when they talk about the things the publisher wants to engage them about.

The customer knowledge is essential to do first-class search engine optimization, but it is even more important for a publisher that wants to do any kind of “campaign”. Buying keyword exposure is an exercise in constant experimentation, measurement, and management no matter what you do, but starting a campaign without doing the core audience research is simply wasteful. And what is true of ad campaigns is also true of earned media and traditional marketing campaigns. This is the marketing equivalent of “measure twice, cut once”. Don’t waste time, money, and effort doing something that research could have told you in advance wouldn’t work.

3. Building direct customer contact. Near as we can tell, the big publishers have been building email lists for years. There’s a Shatzkin Files post from the Fall of 2011 citing’s having mailed to hundreds of thousands of people the month before, with a very high open rate and getting an extraordinary percentage of those to “take an action”.

But building lists and managing them for maximum effectiveness are two quite different things. And even more complicated is a next-generation challenge: getting publisher lists and author lists working in tandem. It would seem like a win all around for publishers to organize authors whose audiences are similar to email across their lists to everybody’s benefit. But it is easy to see why authors (or their agents or business advisors) would be reluctant to dive into something like that, or to want some control over their use in ways that effectively forestalls collective action.

Even for lists publishers entirely own and control, there is enormous work to do segment them properly and test, test, test to find the most effective ways to use them. And engagement with customers also includes branding and interaction with them in social media and targeted web sites or landing pages that can engage potential customers (and, of course, capture their email addresses as well).

4. New protocols for author collaboration around marketing. We’ve made the point in this space before that the author’s digital presence is an important component of any book’s SEO. A publisher extending its own efforts to make its books discoverable that is not including the author web sites in their analysis is missing a component essential to the success of their efforts.

This is a complicated question that will ultimately back right up to the author’s contract, but where each publisher needs to start is with an understanding of what they want from an author’s digital presence and web site. There needs to be a best practice “ask” and there needs to be analysis of what exists to pinpoint the ways it should be improved. One very alert Big Five house we know has at least an executive or two at a high level who sees the virtue in our suggestion that a graded analysis of an author’s online presence, together with specific recommendations for improvement, should be both a standard and promoted feature for authors of being published by that house. It is hard to imagine that this won’t be normal operating procedure in a couple of years but the time to start working on it, for everybody, is now.

5. Maximizing global sales: distribution and discovery. Publishers, coaxed by global ebook distributors like Ingram, Vearsa, and others, are increasingly aware that English-language ebooks have a global market. But maximizing those sales requires both having distribution to the retailers serving each market and optimizing the title description metadata so that search “works” at many places around the world.

Part of what is required there is — say it again — more research. The search terms that work best for any book may well be different in India or Australia than they are in the US. But the challenges in getting differentiated copy posted correctly in the right places are not trivial, and things don’t work the same in Amazon and Google, let alone in local retailers in each market. We figure that the sophistication of the global ebook distributors will be increasingly useful here, but it will also be necessary for each global publisher to understand their most important markets and retailers for their books to sell most effectively.

6. Building a company-wide understanding of SEO (editorial, marketing, and sales). The understanding of SEO at most publishing houses, from our experience, is both insufficient among the most knowledgeable in the house and grasped at all by far too few people. For the most part, SEO is the province of the “marketers”, but, in fact, it might even be as important that editors and salespeople understand it. The S in SEO stands for “search” but it might as well stand for “sales” or “shelved”.

Editors who don’t understand SEO lack an important tool to direct authors, particularly of non-fiction books, to address what the audience wants. Without SEO understanding, they can’t instantly tell a “bad” title (one that won’t work for SEO) from a useful one.

Salespeople, whether they are covering brick stores or online ones, need that understanding too.

The key to optimizing for search is knowing how the audience searches. This can only be accomplished by research, and it changes with time so the research for a similar book on last season’s list can’t reliably be re-used. That will become clear as we consider the next point.

7. Allocating effort across a large backlist. The biggest opportunity and the biggest challenge for publishers, as they have historically operated and as they are currently structured, is maximizing their opportunities across their backlists. The big houses are dealing with many tens of thousands of titles. We advocate techniques that require some human application so scale techniques have to be used to pinpoint the titles worth an effort.

Although we are developing tools to help digest the external cues that might affect where the focus should be — cues from the news and social graph — each publisher has to start with a combination of knowledge of the list, intuition, and a sense that sales can be improved to pick those titles worth reviewing for better audience understanding and descriptive copy improvement. Almost certainly, titles that are more than a couple of years old will need work for several reasons: the house knew so little about SEO when copy was written; time will have changed the search terms that matter; and reviews and awards and other things from the book’s experience in the marketplace might need to be incorporated.

8. Make sure you ignore what is not important. My Logical Marketing partner Pete McCarthy has worked inside big companies and he urged me to add this eighth point. No company has the people or bandwidth or resources to spend time on things that are not very important. Whether you use this list of mine or make your own, be very wary of expending any energy or capital or bandwidth on anything else.

Of course, DBW itself won’t be relying just on me to make the choices of what to cover and what to ignore. I have already created a much longer list of topics than this for our Conference Council to review. We have them express themselves on how useful each potential topic is in a Survey Monkey poll. We will give our readers the opportunity to take that same poll when we describe the larger list of topics in our next post.


Pete McCarthy shows how audience research can be done quickly and efficiently

I keep learning about “marketing today” from Peter McCarthy. There are two first principles about descriptive copy (a part of what is referred to as “metadata”, but a tricky part because, unlike trim size or price, it isn’t always obviously “right” or “wrong”) that all publishers need to take on board and adjust their workflows to accommodate. As far as I can tell, none of any substantial size have.

1. Descriptive copy has always been written by somebody who really knows the book, which often meant an editor (sometimes a marketer) involved with it well before publication. Now the copy needs to be written with knowledge gained through research into the audience. That takes both time and capability that hasn’t previously been required.

2. Descriptive copy has overwhelmingly been intended for a B2B purpose — catalogs and title-information-sheets for accounts — and now all copy, whatever its original intent, is likely to end up being seen by the consumer and, more importantly, it will be influencing the search engines that respond to consumer queries.

This is a change that is difficult for a big company to cope with because of their size. But it is hard for everybody because of the uniqueness of each book compared to others. The research methodologies have to scale on one hand but also be right-sized and tweaked for each book, author, and brand. Books aren’t soap. Knowledge of the book itself is generally limited to the editor(s) involved until they push it out to the rest of the company. So it is natural for editors or their assistants to draft descriptive copy. But these people may not have either the time or the skills for audience research.

But if the audience research is seen as a separate activity that should “feed” the copy-drafting, then the challenges are to figure out who on the team should do it, how they acquire the skills and knowledge of the tools to execute, and — trickiest of all — how to budget for the additional time and effort required (which across a large list is substantial).

And then there’s the problem of making sure the copy is consumer- and search-engine-friendly, which is another set of skills that haven’t been resident at publishers but that must be employed today.

This morning, Pete has a post at the DBW blog which really tackles the first part of the challenge, spelling out a set of starter tools and techniques are necessary to do a quick-and-dirty assessment of a book’s audience(s). He describes a step-by-step exercise in audience research that can be done in an hour, once the array of tools he describes are mastered.

We used to say 10 and 20 years ago “the Internet changes everything”. I think that is now thoroughly grasped. Today publishers need to accept that “search and the multitude of other means of digital discovery, both observable and dark, change everything about how we create copy”.


Better book marketing in the future depends a bit on unlearning the best practices of the past

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A few years ago, publishers invented the position of Chief Digital Officer and many of the big houses hired one. The creation of a position with that title, reporting to the CEO, explicitly acknowledged the need to address digital change at the highest levels of the company.

Now we’re seeing new hires being put in charge of “audiences” or “audience development”. I don’t know exactly what that means (a good topic for Digital Book World 2016), but some conversations in the past couple of weeks are making clearer to me what marketing and content development in book publishing is going to have to look like. And audiences are, indeed, at the heart of it.

I’ve written before about Pete McCarthy’s conviction that unique research is needed into the audiences for every book and every author and that the flow of data about a book that’s in the marketplace provides continuing opportunities to sharpen the understandings of how to sell to those audiences. Applying this philosophy bumps up against two realities so long-standing in the trade book business that they’re very hard to change:

How the book descriptions which are the basis for all marketing copy get written
A generic lack of by-title attention to the backlist

The new skill set that is needed to address both of these is, indeed, the capability to do research, act on it, and, as Pete says, rinse and repeat. Research, analysis, action, observation. Rinse and repeat.

I had a conversation over lunch last week with an imprint-level executive at a Big House. S/he got my attention by expressing doubt about the value of “landing pages”, which are (I’ve learned through my work with Logical Marketing; I wouldn’t have known this a year ago) one of the most useful tools to improve discovery for books and authors. I have related one particularly persuasive anecdote about that here. This was a demonstration to me of how much basic knowledge about discovery and SEO is lacking in publishing. (The case for how widespread the ignorance of SEO in publishing has been made persuasively in an ebook by British marketer Chris McVeigh of Fourfiftyone, a marketing consultancy in the UK that seems to share a lot of the philosophy we employ at Logical Marketing.)

But then, my lunch companion made an important operational point. I was advocating research as a tool to decide what to acquire, or what projects might work. “But I could never get money to do research on a book we hadn’t signed,” s/he said, “except perhaps to use going after a big author who is with another house.” (Indeed, we’ve done extensive audits at Logical Marketing for big publishers who had exactly that purpose in mind.) “But, routinely? impossible!”

The team Pete leads can do what would constitute useful research which would really inform an acquisition decision, for $1000 a title. If the capability to do what we do — which probably requires the command of about two dozen analytical tools — were inhouse, it would cost much less than that.

Park that thought.

I also had an exchange last week with Hugh Howey, my friend the incredibly successful indie author with whom I generally agree on very little concerning big publishers and their value to authors. But Hugh made a point that is absolutely fundamental, one which I learned and absorbed so long ago that I haven’t dusted it off for the modern era. And it is profoundly important.

Hugh says there are new authors he’s encountering every day who are achieving success after publishers failed with them. It is when he described the sales curve of the successful indie — “steadily growing sales” — that a penny dropped for me. An old penny.

We recognize in our business that “word of mouth” is the most effective means of growing the market for a book. If that were the way things really worked, books would tend to have a sales curve that was a relatively gentle upward slope to a peak and then a relatively gentle downward slope.

Of course, very few books have ever had that sales curve. Nothing about the way big publishers routinely market and sell would enable it to happen. Everything publishers do tries to impose a different sales curve on their books.

A gentle upward slope followed by a gentle downward slope would, in the physical world, require a broad and very shallow distribution with rapid replenishment where the first copy or two put at an outlet had sold. But widespread coordination of rapid replenishment of this kind for books selling at low volumes at any particular outlet (let alone most outlets) is, for the most part, a practical impossibility in the world of distributed retail.

In fact, distributed retail demands a completely out-of-synch sales curve. It wants a big sale the first week a book is out to give it the best chance of making the bestseller list and, even failing that, the best chance of being worthy of continuing attention by a publisher’s sales staff, and therefore, the marketing team. Books in retail distribution are seen as failures if they don’t catch on pretty quickly, if not in days or weeks, certainly within a couple of months. And if a store sells two copies, say, of a new book in the first three months, it probably doesn’t make the cut as a book to be retained. If they bought two, they’re glad they’re gone and not likely to re-order without some push by the publisher or attention-grabbing other circumstance. If they bought ten, they’ll want to get their dollars back by making returns so they can invest in the next potentially big thing.

But that’s not the case online, where there is no need for distributed inventory (especially of ebooks!) If the first copies sold lead to word of mouth recommendations, the book will still be available to the online shopper. And there will be nothing in the way it is presented — it won’t have a torn cover hidden and be hidden in the back of the store, say — to indicate it isn’t successful. People can buy it and the chain can continue, building over time. Three months later, six months later, it really doesn’t matter; the book can keep selling. And, by the way, this will be true at any online retailer with an open account at Ingram (including for print-on-demand books), not just at Amazon.

But, in the brick and mortar world, the book will effectively be dead if it doesn’t catch on in the first three months. And the reality of staffing, focus, and the sales philosophy of most publishers means it won’t be getting any attention from the house’s digital marketers either.

If you live in the world of indie success like Hugh Howey does, you are repeatedly seeing authors breaking through months after a book’s publication, at a time when an experienced author knows a house would have given up on them.

Now park that.

I also had a chat last week with a former colleague of mine now at a periodical. He was explaining that one major conceptual challenge for his publication in the digital age was to see their readership as many pretty small and discrete audiences, not one big one at the level of the “subscriber”. No story in his publication is intended for “everybody”; what is important is for a newspaper or magazine to know whether particular stories are satisfying the needs of the particular niche of their audience that wants that topic, that kind of story. Talking to this former colleague about digital marketing and publishing was a variation on the themes that are topics with Pete.

One thing I learned in this conversation made another penny drop. Let’s say you have a story on any particular topic, from theater to rugby, my friend posited. Your total “theoretical market” within the publication’s readership is every person who ever read a single story on that subject. But your “core market” is every person who has read two stories on it. If a high percentage of those read it, the story succeeded. If not, the story failed.

And a further implication of this analysis is that seeing your audiences that way, and growing them that way, will also ultimately allow monetizing them more effectively. This wouldn’t be advertising-led, so much as harvesting the benefits of audience-informed content creation, but it is totally outside the way editorial creation at newspapers and magazines has always occurred.

And now park that.

We had a meeting two weeks ago with a fledgling publisher whose owner has a great deal of direct marketing expertise. As he heard Pete explaining what he did, looking for search terms that suggested opportunity (lots of use of the term and relatively few particularly good answers), he wondered if we could tell him through research what book to write. We’ve gotten some publishers in some circumstances to do marketing research early enough to influence titling and sub-titling. McVeigh in his ebook makes the same point under the rubric that SEO should be employed before titling any book.

Of course, we don’t sell that kind of help very often or we haven’t so far. It would require getting marketing money invoked early to pay for research like that. But we know it is useful.

And all of this together brings into sharper focus for me where trade publishing has to go, and how the marketing function, indeed, the whole publishing enterprise, needs to be about a constant process of audience segmentation, research, tweaks, analysis, and repeat. A persistently enhanced understanding of multiple audiences can productively inform title selection and creation. And systems and workflows need to be built to systematically apply what is being learned every day to every title which might benefit. Audience segmentation and constant research are really at the heart of the successful trade publishing enterprise of the future, even if we are only lurching toward them now with a primitive understanding of SEO, the occasional A-B test for a Facebook ad, and the gathering of some odd web traffic and email lists that don’t relate to any overall plan.

A publisher operating at scale ought to have the ability to provide those authors that want to build their audiences one reader at a time better analysis and tools than they would have to do it on their own.  Publishers have always depended on the energy of authors to sell their books; the techniques just have to change. Instead of footing the bill for expensive and wasteful author tours, publishers should be providing tools, data, and helpful coaching to be force multipliers for the efforts authors are happy to extend on their own behalf. The publisher’s goal should be have their authors saying “I don’t know how I could possibly be so effective without the help I get from my publisher.”

Publishers should also be doing the necessary research to examine the market for each book they might do before they bid on it. They should have audience groups with whom they’re in constant contact, and they also need the ability to quickly segment and analyze audiences “in the wild”. The dedicated research capabilities need to be applied to the opportunities surfaced by constant monitoring of both the sales of and the chatter about the backlist.

Size, scale, and a large number of titles about which a lot is known should give any publisher advantages over both indie authors and dominant retailers in building the biggest possible audience for the books it publishes. But getting there will require both learning the techniques of the future and unlearning the concepts and freeing themselves of the discipline of “pub date” timing that have always driven effective trade publishing.

The publishers creating new management positions with the word “audience” in the title would seem to be very much on the right track. It is worth recalling that my father, Leonard Shatzkin, carried the title of Director of Research at Doubleday in the 1950s. Research would be another function to glorify with a title and a budget assigned and monitored from the top of each company. Note to the CEOs: a budget for “research” for marketing and to inform acquisition should be explicit and it should be the job of somebody extremely capable to make sure it is productively invested.


No, the Big Five are not a cartel and it really ignores reality to label them as one

One of the best-attended breakout sessions of Digital Book World 2015 was the discussion called “Should Amazon Be Constrained, and Can they Be?” which shared the very last slot on the two day program. That conversation was moderated by veteran New Yorker journalist Ken Auletta, and included Annie Lowrey of New York Magazine, thriller author Barry Eisler, and Barry Lynn of the New America Foundation.

It turns out that the two Barrys, who have pretty much diametrically opposed positions on Amazon (Lynn wants them investigated by the DoJ as a competition-stifling monopoly; Eisler casts them, for the most part, as the heroes of the book business’s digital transition) have a common position on the Big Five publishers. They refer to them as a “cartel”. Eisler is sneeringly dismissive of “New York”, which he refers to the way Republicans of the 1980s referred to “Moscow”, as an obvious pejorative. He appears befuddled by how anybody interested in the well-being of authors and the reading public could take the side of these publishers who maintain high prices for books, contract with authors to pay them smaller percentages of sales than Amazon does (either through Amazon’s own publishing operations or through their self-publishing options), and notoriously reject a very high percentage of the authors who come to them for deals.

Perhaps because the focus was Amazon, perhaps because Eisler was both emphatic and entertaining in his roasting of the publishing establishment, and perhaps because the facts to defend them are not well known, neither moderator Auletta nor panelist Lowrey challenged the big publisher baiting from Eisler with which Lynn mostly agreed.

It was just as well that I wasn’t on the panel. I am not certain that Amazon can or should be constrained, but I am damn sure that the Big Five publishers are not villains, and they are certainly not a cartel. They do seem to be extremely poor defenders of their own virtue but they are doing yeoman work maintaining the value in the old publishing model — for themselves and for authors — while adjusting to changes in their ecosystem that require that they develop strong B2C capabilities while maintaining their traditional B2B model, the death of which has been greatly exaggerated. If I’d been on that stage, the discussion of Amazon would have been diverted when the trashing of the big publishers began.

I took the step of confirming in an email exchange my recollection of the counts in Eisler’s very entertaining, persuasive, and unchallenged indictment of the big publishers.

1. Their basic contract terms are all the same, which it felt at the time he was suggesting demonstrated collusion, but which in our subsequent exchange he clarified he interprets as evidence of “asymmetrical market power and a lack of meaningful competition”;

2. They pay too low royalties on ebooks, which he also attributes to their “asymmetrical power” and “an implicit recognition that publishers come out ahead if they don’t compete on digital royalties”;

3. They only pay royalties twice a year, rather than more frequently or more promptly, which Eisler also attributes to a lack of competition;

4. The term of big publisher contracts is normally “life of copyright”, which Eisler calls “forever terms”, and;

5. They reject a lot of authors. Here Eisler clarifies that this is not an “indictment, just an axiom”. I agree when he applauds self-publishing for creating a better world where “readers have more to choose from”. But we quickly part company again because he characterizes self-publishing as freeing us from a world where “an incestuous cartel” makes “virtually all the decisions about what tiny fraction of books readers will every have a meaningful opportunity to learn of and read”.

In our exchange, Eisler expressed the belief that “the only reason people have been okay with this is that the Big Five are ‘my people'”. So they get a pass which he likens to what conservatives gave George Bush or liberals give Barack Obama. (In another point of disagreement between us, Eisler seems to find very little difference between the Democratic and Republican parties. I guess that is some people’s way of saying “nonpartisan”. What it says to me is “not discerning”.) And Eisler finds it “interesting” that the publishing revolution has “people decry” Amazon for “doing, or often only for potentially one day doing, the very things that are the definition of the Big Five.” (I have problems with this too, because none of the big publishers have a dominant market share selling books online and ebooks. In other words, Amazon and the publishers really aren’t comparable. Check back with me if any of the big publishers builds — or buys — a market-leading retailer.)

I’m going to plead “no contest” to the charge that the Big Five are “my people”, which I hope won’t discredit my arguments any more than the fact that Eisler is an Amazon-published author discredits his. But the cartoon picture of publishing in Eisler’s reviled “New York”, where some small group of extremely like-minded people apply their narrow views to effectively restrict what people read is a massive distortion of reality. Let me try to set the record straight about this world so many of my friends inhabit and with which I’ve been interacting for the better part of five decades.

First of all, the Big Five have plenty of competition: from each other, as well as from smaller niche publishers who may but be “big” but certainly aren’t “small”. (That is why the big ones so often buy the smaller ones — they add scale and simultaneously bring heterogeneous talent in-house). They are all quite aware of the authors housed elsewhere among them who might be wooable. In fact, since we have started doing our Logical Marketing work, we have done several jobs which were big author audits commissioned by publishers who wanted to steal the author, not by the one which presently has them signed. Eisler explicitly resisted accusing the publishers of “collusion”, but he does accuse them of “not competing” with each other. That is an accusation that is simply not supported by the facts. Nobody who has spent any time talking to people who work in big houses could possibly get the impression that they don’t compete.

(In fact, a friend of mine just moved from one big house to another. He is explicitly persona non grata at his prior employer. Now, in this case, I think the house that lost him is behaving childishly, but it certainly underscores the fact that they believe they are in intense competition and now this one-time colleague has gone over to “the other side”.)

But the big flaw in Eisler’s logic is the same one that dooms Hugh Howey’s “Author Earnings” project to irrelevance: the assumption that the per-copy royalty terms and rights splits are the most important element of publishing contracts. In fact, they’re not. Actually, those terms matter in 20 percent or fewer of the agented author contracts with the Big Five. Why? Because the agents get the publishers to pay advances that don’t earn out!

In fact, I have been told by three different big houses what they calculated the percentage of their revenues paid to authors amounted to. We could call that the true royalty rate. The three numbers were 36, 40, and 42 percent. That includes what they paid for sales of paperbacks, all of which carry “stipulated” royalties of well less than 10 percent of the cover price (and therefore below 20 percent of revenue).

Take that on board. Big publishers are paying 40 percent of their revenue to authors! That leaves them 60 percent to pay everything else: overheads, manufacturing, and profits! Compare that to the margin Amazon has even if they pay a 35 percent digital royalty, or compare it to what anybody else has in any other business after paying to acquire the raw material for what they sell. If there were really an “asymmetrical” power equation favoring publishers, you’d think they could acquire the author contracts for a bit less, wouldn’t you?

Not only were the authors’ collective royalty rates much higher than contracts stipulated, the authors got most of that money in advance, eliminating the authors’ risk. The only contracts on which the royalty terms matter are those that do earn out (and, arguably, those that are close). For all the others, most of Eisler’s list of complaints is irrelevant. And, for the record, I have never heard an author complain about that show of confidence, the work that follows in helping him or her reach an audience (which benefits all involved), nor the cash upfront.

More frequent accounting doesn’t matter if you aren’t owed any money. And if the solution to “forever” contracts were that you could buy your way out by paying back what you got in advances that your book didn’t “earn”, how many authors would do that?

But, in fact, agented authors don’t have forever contracts; agents have been negotiating performance clauses for publishers to keep rights for years. And, on top of that, no author in the US can possibly have a “forever” contract because the copyright law of 1978 requires the publisher to revert rights to the copyright holder after 35 years on request. Agents tell me this is has been resulting in additional “advances” for re-upped books for the past couple of years. Note: this is the law. No publisher disputes it. But the “forever contract” argument ignores it.

But, even beyond that, the negative characterization of Big Five New York publishing is terribly unfair.

First of all, the standard terms in big house contracts are almost always more generous than the terms in smaller publisher contracts. Few — if any — of the smaller ones pay a hardcover royalty as high as 15 percent of list. Although higher digital royalties can sometimes be found, usually those are from publishers who have little capacity to deliver print sales, so digital royalties is all you’re going to get. (That might be okay for a romance novel where a big majority of sales could be digital. It would be disaster for the author of just about anything except genre fiction.) And some smaller publishers actually pay less than 25 percent for digital royalties.

So the Big Five terms are generally better and they routinely pay agented authors advances that no other publisher would attempt to match.

But, beyond that, the idea that they are a “cartel” (a characterization enthusiastically seconded by Amazon critic Barry Lynn after it was introduced by Amazon supporter Eisler), is really preposterous. In fact, the Big Five are, to varying degrees, federations of imprints that even compete internally for books, sometimes to the extent that they will bid against each other when an agent conducts an auction. And it would appear from Eisler’s pre-Amazon publishing history that he himself has, in fact, been the beneficiary of bidding competition among major houses.

The internal-to-the-house competition occurs because of the way big publishers are organized. It has been understood for decades that some aspects of a publisher’s operation benefit from scale and size and other functions must remain small. In general, publishers deliver accounting, manufacturing, and sales as centralized functions and editorial acquisition and development, packaging and design, and marketing as localized capabilities housed within the imprints. The power of imprints, which are individual editorial units, varies, but it is generally the case that they have autonomy over their acquisitions and must “compete” internally for the centralized services.

The digital transition is definitely straining that organizational structure. Having the by-title P&L responsibilities distributed makes it more difficult for houses to organize cross-imprint initiatives for everything from direct sales to audience-centric (vertical- or subject-oriented) marketing. Having multiple imprints that all contain “general” lists is probably an anachronism in an age when we want brands (which imprints are) to make sense to consumers. Publishing imprint brands were always B2B, meant more to inform such trading partners as libraries and bookstores and reviewers, not the general public.

But the big houses reap large benefits from the power of their central services. They get rock-bottom prices for printing and lightning-fast service for reprints. They have daily contact with the biggest accounts, which matters for getting reorders onto suddenly-empty shelves or to execute a short-lived price promotion for an ebook. They have teams of people staying abreast of every promotional opportunity at every account or service like BookBub. They are increasingly developing teams and tools to keep their marketing metadata fresh and relevant, to monitor the online world for marketing opportunities, or to build or advise authors on creating effective web presences.

Although authors can certainly be found who felt they were signed and then ignored, most houses sweat all the details: editing the book, packaging it for sale, and following rigorous pre-publication routines to get endorsements. They all have special sales departments that are regularly working catalogs and specialty retailers for the books appropriate to their audiences. Smaller houses don’t have all these capabilities. To suggest to an author with no publishing background that s/he can do all this themselves, even with an unlimited budget to buy outside services, is really setting a novice up for frustration and failure, or at the very least near-certain dissatisfaction.

I asked Eisler about the competition among the big houses that doesn’t seem to enter his calculus. Here’s what he told me:

As for competition among the Big Five, I call it kabuki competition. Competition that results in decades of zero innovation and the same antediluvian lockstep contractual terms is by definition meaningless. It’s managed competition, agreed-upon competition. A lack of industry innovation is like the dog that didn’t bark: the absence is itself evidence, because in the presence of meaningful competitive pressure, industry players innovate. To argue otherwise, you’d have to argue there has never been room for real innovation in publishing practices. I think that would be a hard argument to make.

To put it another way, what the Big Five cooperate on is far more significant than what they compete on. By it’s [sic] nature, competition is more noticeable than cooperation, so a little bit of competition obscures a lot of cooperation.

Unfortunately, this doesn’t tell me much. I don’t know what the Big Five “cooperate” on. And though the argument that there “has never been room for real innovation in publishing practices” would, indeed, be nonsense, so is the claim that there has been no innovation. A “failure to innovate” doesn’t describe the last five years that I’ve been living through. All the Big Five houses have continuously reorganized, brought in outside-of-publishing digital talent at a high level to up their game, and introduced digital-first operations and contracts, all at the same time that they have had to manage down fixed investments in plant (warehouses) and change manufacturing-and-inventory processes to take advantage of improved digital printing capabilities.

It is now often forgotten that, while it is true that Amazon “made” the ebook market really happen, publishers had for a very long time before Kindle been creating editorially magnificent products and were far ahead of Amazon in seeking to publish in ebook formats, only partly because of better economics. (At the time all costs were additive and the market was tiny.) They published them because readers seemed to want them and big publishers, whatever their bashers might think, feel a responsibility to assure maximum distribution of a writer’s work.

In fact, the big houses all are comprised of competing imprints. Among them they employ hundreds of acquiring editors who are each trying to build their own successful lists (competing with each other). They are shamelessly commercial: a book with the potential to sell only a few thousand copies won’t get their attention. But, beyond that and those things that are far outside prevailing public morals and sensibilities, I can’t see any restrictions on what they’ll publish.

The Big Five houses have negotiated the digital transition that has occurred so far with startling success. The self-publishing business has grown, fueled by investment from Amazon and other big players, but big houses have hardly lost any authors. They are facing down dominant retailers in their two biggest channels — brick bookstores and online — and managing to maintain their margins and profitability. They are all moving on a variety of initiatives to build vertical (audience-centric) capabilities and extend their global marketing and sales reach.

But even if one assumes the “worst” of the big publishers, it is a total canard to say, as Eisler did to me, that “in the absence of meaningful competition, the Big Five has exercised incredible power over what books are published and what people are functionally permitted to read.” In fact, the argument that authors can reach their audiences successfully through self-publishing (which on other days, Eisler and his fellow musketeers Hugh Howey and Joe Konrath make with gusto) explicitly contradicts that contention. But so do Harry Potter, published by Scholastic, and “Fifty Shades of Gray”, picked up by Knopf after a self-published start, to name two sales phenomena of relatively recent times. There are a number of very capable publishers just a bit smaller than the Big Five (Houghton Mifflin Harcourt has the Lord of the Rings books, for example) and there are legions of specialty publishers who do books the Big Five would generally not even consider.

Sometimes the Big Five acquire those publishers to add diverse author and publishing talent to their rosters to compete in niche markets. Harpercollins’s acquisitions of Thomas Nelson and Harlequin fit that description. How much a big house can publish is one thing; what they can publish is also a function of the talent onboard and the audience development that has already taken place.

The Big Five are actually specialists of a different sort: they do the books with the biggest commercial potential. I’d argue that having five very large companies all capable of making a book a mammoth commercial success is a pretty big number, not a small one. If those companies were broken into more of their component parts and we had 15 or 25 large-ish publishers rather than five giant ones, it is not at all obvious that author advances or sales would be higher. There would probably be more manufacturing and sales staff per title (and less investment in tech to support either) than there is now, but those salaries would be subtractions from the company’s margins, and would therefore likely increase book prices. That’s not going to produce more value for either authors or readers. So I actually think author advances — which one must always remember is the metric that matters most in determining how well authors are getting paid — would be lower.

During our on-stage conversation at Digital Book World 2015, Brian Murray, the CEO of HarperCollins, took great pains to express his view that self-publishing capabilities are good for authors and for readers. On the same morning, Judith Curr, who is the President of S&S’s Atria imprint, explained how her house specifically targets successful indie authors to bring them in. Every big house has some respectful variation on those themes. The animus between big publishers and some components of the self-publishing community is really a one-way street. In a prior post of mine about the illogical publisher-bashing, the comment string taught me that the mostly rhetorical and histrionic arguments from the self-publishing side against the big houses constituted an emotional, not a rational, reaction.

A dispassionate examination of the facts and an understanding of how things really work make it clear that big publishers — both goaded and constrained by powerful agents — are very good for authors. That doesn’t mean self-publishing isn’t good for them too but, then, no big publisher I know is saying that it isn’t!