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Wondering whether printed books will outlast printed money, or football


When you’re trying to figure out what will happen in the book publishing business in the years to come, any prediction depends on how things work out that are beyond the control of the business, and sometimes well outside it. This will be increasingly the case if the book business, in what has remained a fairly lonely expectation of mine, is increasingly the domain of people who aren’t publishing or selling books as a primary commercial activity, but as an adjunct or complement to some other principal objective.

This past Sunday’s New York Times tackled the question of disruptive change in the world in general with a graphic report created by Claire Cain Miller and Chi Birmingham, based on the predictions of a panel of expert technologists and futurists. They asked four questions:

What far-off technology will be commonplace in a decade? Among the suggestions were that we’d see thousands of drones, chips implantable in humans that would deliver access to all one’s devices, and personalized medicines crafted to your specific DNA.

What industry will tech put out of business next? Among those predicted to meet their demise were higher education, the auto industry from drivers to mechanics, airline pilots, and consumer banking.

What technology will seem antiquated in a decade? The nominees here included email, computer keyboards, chargers, keys, and cash!

What is the next issue to undergo a sea change in social acceptance? Future targets from currently acceptable endeavors include football, factory animal farming, and ubiquitous recording and surveillance.

That’s quite an agenda for the next ten years.

There is logic behind all these predictions and the list of those contributing thoughts is stellar, but I daresay few of them are based on data as much as on insight. There’s no data to predict the end of wired charging or banks, or even to predict that football will become massively scorned. But there are straws in the wind for all of them.

So it is when we think about the future of publishing. There are things we simply can’t know for sure, subjects about which a range of outcomes over the next ten years is certainly possible, that will have a profound effect on what book publishing will look like — as an industry and more broadly as an activity — in ten years.

Here are some of the key questions, to which I’m quite convinced nobody can be sure of the answers, that will affect what publishing will look like ten years from now.

How persistent an activity is immersive long-form reading? There are all sorts of threats to it. Perhaps it is needed more than ever as an escape from the ever-more-intrusive demands of connected daily life, but it is also undermined by the accelerating pace of everything else. It is hard to discern this because each person’s personal reading patterns change over a lifetime. We’ve always sold more books to older people than younger ones, with exceptions for cultural phenomena that sweep through the young (Harry Potter, Hunger Games, Twilight). Long-form reading has always been required in schools, but as humanities increasingly take a back seat to more “practical” education, can we count on that continuing? It seems hard to build a case that long-form reading won’t be reduced per capita because of the ready availability of so much else and an increasing societal tendency toward short attention spans. (And that last is my impression, not one I can defend with data.)

As my generation is replaced with digital natives, a decline in the market for novels would seem to be a very likely consequence. Or, at least, novels as we know them now.

How persistent is the demand for printed books for long-form reading? The ebook revolution is in its seventh year, if dated from the launch of the Kindle, which was when explosive growth began. Over the past year or two, the explosive growth has stopped and there is the belief in some quarters that many consumers are still expressing a preference for printed books for long-form reading over digital ones. That’s probably true. A recent Harris Survey of Internet-connected adults said that 46% exclusively read print books and only 6% only read ebooks. The remaining 48% are pretty evenly divided among those who read more print, those who read more ebooks, and those who read about the same number of each.

My hunch, again offered without the support of meaningful data (because there would be none), is that ebooks will continue to take share from print for long-form reading, in fits and starts, but inexorably. The logic behind that conjecture is simple and two-fold. One side of it is that the print book experience won’t improve and the ebook experience will. With the first blush of fascination with “enhancing” ebooks by the insertion of distractions passing and real enhancements (the static dictionaries improved into author-built glossaries, improved bookmarking and page-flipping navigation, excerpt-sharing enabled) bound to become more common, there will become more and more reasons to prefer the digital version. (Even the killer app of print — the ability to write notes or underline — will ultimately be digitally-enabled in a ubiquitous way.) The other reason is that the proliferation of (mostly ebook) titles in the marketplace, hand in hand with diminishing shelf space for (mostly printed) books in stores, will increasingly drive online purchasing, which favors ebooks over print.

It wouldn’t take a big change year-to-year for the numbers of exclusive print readers and exclusive ebook readers to be reversed over the next decade with half continuing to do some of each. Since each reader shifting her preference from print to digital further undercuts the support for shelf space, you have (depending on your point of view) a virtuous circle driving ebook growth or a vicious cycle working against print. And against stores.

How well do informational illustrated books compete with alternatives? The informational illustrated book business, largely instructional, has not fared well in digital form. While the share of ebooks for immersive reading has generally ranged from 20% to more than 60% depending on the subject or genre, the numbers are a sliver of that for illustrated books. This has put pressure on illustrated book publishers to make the most of stores, to find direct paths to their customers, and to make the most of the global opportunities for print sales. My candidate for a Black Swan here is some industrial-strength attempt to curate the vast amount of video and other Internet-based content into “packaged” competition for books that teach skills. Just as MOOCs are disruptive to colleges and educational publishing (note the prediction in the Times story that higher education would be “put out of business” in the next ten years), the dagger that will prove mortal to much illustrated publishing may already exist.

Visuals and illustrated books and doing the things people use illustrated books to do (knit, garden, decorate a room) are not my personal milieux, as everybody who knows me personally will attest. But I’d suggest there’s a business out there with which I personally promise never to compete — assembling the library and creating the directory of the publicly-available material that would substitute for these books. Somebody’s going to do that in the next ten years. Here’s an example of something that points in the right direction, but I don’t think can solve the problem in the way I’m describing. Other nods to this idea exist in many verticals, albeit most likely in less-cohesive forms — wikiHow, Google searches, YouTube playlists, internet discussion boards and forums — but they really only hint at the solution I’m imagining.

How much of the creation and selling of books spreads beyond the book business? One of the leading Anglo-American CEOs pointed out to me many years ago that the day had passed when he could just call the CEO of his biggest accounts to discuss a problem. Retailing of print books requires Amazon, for whom it might be 10% of their total business and Walmart (is it 1% of theirs?) in the US, supermarkets in the UK. Global retailing of ebooks, with everybody in the publishing business rooting for Barnes & Noble to crack this, is in the hands of four companies — Amazon, Apple, Kobo, and Google — all of which employ book retailing as a strategic component of a larger endeavor.

So far, the publisher side of the value chain has not been affected by the same phenomenon, but I think it will be, in a very different and more disparate way. The concept of “content marketing” hasn’t really discovered the book business yet, but it will. Athough there are a handful of exceptions, today they are just the straws in the wind that indicate the possibilities.

I’m sure that in less than five years every multi-million dollar marketing plan will have an ebook component: sometimes free, sometimes freemium, sometimes paid. Over time the businesses that do this work will learn, probably faster than many book publishers, how to use the online discovery mechanisms to drive the attention of relevant consumers. And part of what could be a tsunami of new competition is driven by another reality: anybody who creates content for any other (usually advertising-supported) audience can carve up or recombine or represent their content as a competitive book product. It takes an organization and much more sophisticated expertise around subscription management and advertising for a book publisher to do online magazines (although it is a reasonable thing to try).

Because of self-publishing authors and public domain title miners, the new titles currently flowing into the marketplace are already coming more from non-traditional publishers than from the establishment, creating an ever-growing challenge around discovery and branded authority. If an ebook publishing program becomes a standard component of branding and corporate and consumer marketing over the next ten years, the new competitors to publishing as we’ve known it will be coming from a flood of well-marketed content whose purveyors may not have to make a profit from it. Imagine what happens to fiction publishing if Hollywood figures out that ebooks and marketing them is a far better development tool for a motion picture or TV show than the fourth rewrite of a script!

Ten years is a long time and a long time allows for some pretty radical predictions. Last week I was on a subway platform with hundreds of people, noticing that virtually all of them were looking down at a device in their hands. I was thinking, “my Dad died in 2002, he never saw this. My Mom died in 2007, she never saw this.” Ten years ago, I think few would have predicted that the number of people on a subway platform looking at devices would outnumber those reading newspapers by 50-to-1 or more. Maybe ten years from now we won’t have keys or cash. And maybe there will be very few people reading paper books.

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The disruption of the disruption is temporary


There’s little doubt that the digital (r)evolution, to the degree it is measured by the shift by consumers from reading on paper to reading on a screen, has plateaued, at least temporarily. The most recent article in PW on the subject spells out that some publishers have even seen their digital sales decline, although always with an explanation. (Houghton Harcourt had strong Hobbit sales the prior year they couldn’t match, just as Random House did with 50 Shades.)

Last week I spent a very pleasant hour reviewing the state of the industry with one of the big company CEOs. This executive seemed to be enjoying the opportunity to take a breath. For several years, s/he reported (no gender hints here; I’m preserving anonymity), there were regular “all hands on deck” conversations about policies that needed to be set. These were very large decisions as rapid shifts in sales took place from the well-understood economics of print to the developing economics of digital: the agency model was put in and then modified by court fiat, new methods of marketing needed to be employed, and the decisions about what to pay for new title acquisitions had to be made within a rapidly-changing revenue context.

I think the notion that the dizzying change we saw take place for several years, starting with the introduction of the Kindle and accelerated by the introduction of iPads and other tablets, is now behind us is probably accurate. Both the CEO I was talking with and PW are right. But that doesn’t mean change is over and it doesn’t mean all of today’s incumbents, many of which among the publishers and indie retailers seem to be riding a rising tide of profitability, can assume stability going forward.

Even though the biggest disruptor of the digital era — the shift of reading from paper to screens — has slowed down to a slow walk (at least temporarily), all of the players in the book business are still dealing with disruptive forces that won’t be as dramatic, but which will continue to be inexorable.

1. Even if the shift away from reading on paper has slowed down, the shift to buying print online probably has not. Since the number of titles continues to grow rapidly and bookstore shelf space has still declined (yes, there are reportedly some thriving independents but Barnes & Noble devotes less and less space to books in each store and closes stores slowly but steadily), the increase in the percentage of books purchased online will continue to rise. That undercuts the power of the big publishers relative to competitors, increases the clout of both Amazon and Barnes & Noble, and ratchets up the importance of digital marketing.

2. The margins for big publishers have appeared to improve in the past few years, probably because they retain a bigger share of their revenue from ebooks than they did for print books. Part of that is because the waste of books printed and not sold (and sometimes picked, packed, shipped, and processed as a return) has been drastically reduced. And some overheads, like warehouse space, have been reduced. But another part of is that author royalty of 25% of revenue is better for publishers than the list-based royalties they pay on print. However, the improved margins will be hard to retain. Amazon and Barnes & Noble hold high cards in their negotiations with publishers since they are dominant paths to the online and store-shopping markets, respectively. And even if the contractual 25 percent royalty is slow to change, the big authors will almost certainly be demanding (and getting) advances based on the total margin expectation, not the 25 percent. And the price of ebooks is going to continue to be driven down, also not a good thing for the publishing establishment.

3. Publishing will continue to favor scale. The Big Five houses will monopolize the big authors and the bestseller lists, as they have, and the lion’s share of authors who are predictably headed for the list will be signed with one of them. But this is not a battle among equals: Penguin Random House is as big as the other four combined. As each author becomes a “free agent” on the expiration of current contracts, PRH will be in a position to use its (already) deeper pockets and its (expected, by me) superior distribution capability to take authors away from the other four. This is a battle in which it is hard to see what weapons the other four have. One of their CEOs pins hopes on authors being more inclined to be number one or two with another house than number 20 with PRH. Another told me their belief is that PRH doesn’t want to wipe everybody else out. Certainly, agents will do what they can to maintain a competitive environment, but more money speaks very loudly and PRH is going to have the ability to offer it more frequently than anybody else. I believe we will start to see “takeovers” that occur one author at a time.

4. The verticalization of publishing will continue to separate the straight text books from all the rest. The Random House part of PRH had largely removed itself from the illustrated books sphere before the merger. One has to guess at the reasons for this, but it would seem logical that the failure of illustrated books to work commercially as ebooks was a factor. It is not clearly apparent whether the other big trade houses are doing the same. At the same time, we see two publishers who do primarily illustrated books — F+W Media and Quarto Publishing — growing and acquiring. What is interesting is that they appear to be pursuing diametrically opposite strategies. F+W is emphasizing community development and, in effect, using its print base as a platform to build a digital business. Quarto is emphasizing expanding its ability to distribute illustrated print books globally. Just as PRH will apply its scale to create competitive advantage against other publishers pursuing books primarily meant to be read, F+W and Quarto will have scale that will make it increasingly difficult for illustrated book publishers to compete with them in the areas where they publish. Since neither of them focuses on art and museum publishing, that also leaves room for Abrams to grow in that area. (It is quite possible that the strategies of both F+W and Quarto will “work”, setting up a mega-merger some years down the line.)

5. We have seen a sea change in author options. Most of the big houses have ridden that out very well. Although many authors in a position to do so reclaimed digital rights to their backlist and self-published those titles, authors by and large have not deserted major houses (and big advances) for alternative publishing means, even when Amazon hired a big publishing CEO to manage their checkbook. But we’re now on the verge of another revolution: entity self-publishing. That means newspapers and magazines and brands of all sorts will be using the infrastructure created for indie authors to make content available for sale. This could be more disruptive to publishers than the indie authors have been. Like indie authors, self-publishing brands will be inclined to drive down retail prices in the marketplace. And they’ll have marketing dollars behind them. As they grow their own little cottage publishing operations, they’ll also be a threat to “steal” a big author from time to time, especially when the print-in-store share drops to a small fraction of the total market, which it will.

6. Being a retailer in this space isn’t going to be a bed of roses either. Amazon already has the right answer: they have always used book retailing as a customer acquisition tool and they have a slew of other ways to boost the lifetime value of any customer they get. But they also have been the beneficiaries of an extremely patient investment community, and it is hard to tell how much it might crimp their style if their stock valuation became more “normal”. (I am not going so far as to say this is happening now, although the share price has taken a tumble in the week or so since their last report.) As readers progress away from dedicated devices for reading, it gets easier for the other major retailers to steal Kindle customers. (It also gets easier for Kindle to steal theirs.) Who knows how disruptive he can be, but Kieron Smith, who created the only previous serious global threat to Amazon as a print retailer (called The Book Depository, which Amazon then bought), is at it again with BestLittleBookshop.com. Barnes & Noble just has to manage decline. It will be no surprise if they have to abandon the digital publishing business (Nook) to save the investment for their stores. And they have to invent something they haven’t yet to give the stores something to become besides “smaller”. But the two of them will cushion whatever difficulties they have in the near term by taking more and more of the consumer’s dollar from the publishers and it will be very hard for the publishers to prevent that from happening.

7. There are definitely some expanding opportunities for publishers. Schools and colleges will be growth markets for trade books, once the roads to the customers for them are paved. They aren’t yet. Both publishers and 3rd party aggregators are building “platforms” that combine the content with teaching and assessment tools. Deals will develop, over time, for trade publishers to license their content through these platforms. Another opportunity for publishers in our world arises because the big global ebook retailers are English-language and North America based. The big publishers here have a natural advantage selling to them, which could suck revenue away from publishers all over the world — both by publishers here taking over distribution for publishers elsewhere and by the more direct route of English-language publishers starting to do their own other-language editions.

In the US, we already have one dominant brick-and-mortar retailer and one dominant online retailer. We may be on our way to one dominant global English-language publisher of books to be read with a competition between two others for dominance of books to be looked at. There will be no shortage of diversity of publishing “voices”, but many of them will be doing it as a function supporting another business, not as a stand-alone commercial proposition. Publishers and others are building vertical communities of interest of all sorts, with many of those likely to become part of the “book publishing” infrastructure of the future, as creators, as publishers, and as retailers. None of this will happen overnight but there is almost certainly more disruption of the 20th century publishing business facing us over the next decade.

As of this posting, there are still a few days left for readers of The Shatzkin Files to help us shape the program for Digital Book World 2015. Go to our survey and fill it out and your opinion will be included in our thinking as we map out the program for next January.

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


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

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

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

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

They named the new conference Digital Book World.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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When an author should self-publish and how that might change


There is a question that every agent and publisher is dealing with, because authors surely are. And that’s this: when should an author self- (or indie-) publish?

The answer is certainly not “never”, and if there is anybody left in a publishing house who thinks it is, they should think a little harder.

For a number of reasons, the belief here is that most of the time for most authors who can get a deal with an established and competent house, their best choice is to take it. It’s good to get an advance that is partially in your pocket before the manuscript is even finished and assured once it is. It’s good to have a team of capable professionals doing marketing work that authors are seldom equipped to do well themselves and which can be expensive to buy freelance, particularly if you don’t know how. It’s good to have a coordinated effort to sell print and ebooks, online and offline, and it’s good to have the supply chain ready for your book, with inventory in place where it can help stimulate sales, when you fire the starting gun for publicity and marketing. And it’s great to have an organization turning your present book into more dollars while you as an author focus on generating the next one, and start pocketing the next advance.

Publishers have heretofore really had only one model for working with authors. They acquire the rights, usually paying an advance-against-royalties, and own and control the entire process of publishing. It is generally understood that all efforts to make the book known can show benefits in all the commercial channels it exploits. So publishers have generally insisted on, and authors have generally accepted, controlling all the rights to a book when they pay that advance. The two pretty standard, time-honored exceptions have been cinematic (Hollywood) rights, which are rarely controlled by the publisher, and foreign territory and language rights, which are only sometimes controlled by the publisher.

Since publishers until very recently effectively monopolized the path to market, they could effectively make the rules about what an author could publish. That usually has meant no more than a book a year. It has also usually eliminated anything that isn’t “book-length” or that needed to reach the market very quickly upon completion of the writing. And in a practice that ultimately has had painful consequences for publishers, it meant backlists went out of circulation when a title wasn’t worth printing in bulk.

And these make up a very good starter list of when even an established author might want to consider an alternative to the conventional publishing arrangement. (It goes without saying that a fledgling author with a completed manuscript might choose self-publishing as a way to start their commercial career in preference to canvassing for an agent and then, if that quest is successful, waiting for the agent to find a publishing deal and the publisher to get the book out. Self-publishing could conceivably speed up the whole process of finding a publisher!)

Although most of the Sturm and Drang around how digital changes the publisher-author relationship have been about the royalty rate — publishers tend to want contracts that specify a royalty of 25 percent of revenue on ebook sales, various upstarts and digital-first publishers pay 50 percent and an author going directly to the retailers can get even more — that is, for most authors, less of a problem than it might first appear. For authors who don’t earn out advances, it isn’t a real number and the effective royalty is higher than what the contract says. And whatever the difference is in dollars, it doesn’t come without the requirement of work and sometimes costs — like a copy-editor or a cover designer or a marketing advisor — that would otherwise be borne by a publisher.

Where royalty rate is most consequential is for authors with a substantial reverted backlist. Since they begin their self-publishing efforts with equity built at least partly on a publisher’s back, they have a decided advantage over a fledgling self-publisher. Several authors have done very well for themselves building out from the platform of personal name recognition and titles somewhat established in the marketplace. The first of the obviously successful self-publishing authors was Joe Konrath several years ago and that’s how he started. Others have followed in his wake. And although the work required to self-publish and market yourself effectively is not trivial even if some readers know you and some of your work, it is also considerably more likely to result in a useful financial reward than trying to self-publish from a standing start. And certain chores, like editorial development and copy-editing, are eliminated by starting with already-published material.

In these cases, the loss of inventory-in-place at stores is less of a handicap to discovery than it would be for a new book and the additional margin on ebook sales could well leave the author making much more money, even without a promotional print sale.

But, for many authors, the frustration with publishing the conventional way might not be about money at all. Writers often write just because they have something to say, or a story to tell, and they want both to express it and have people read and react to it. That’s where the “shorter than a normal printed book” or “must get this published in weeks, if not days” barriers publishers have always presented become mere annoyances that anybody with a modicum of initiative would simply brush aside.

All of these motivations — monetizing previously dead backlist and getting to the public with material even a successful author would have difficulty getting a publisher to do — are behind the fact that the big literary agencies are staffing themselves to help authors navigate the digital world. In different ways, we have seen this emerge at Writers House, Trident, and Curtis Brown, among others. And another way this can work is demonstrated by the Waxman-Leavell Agency, which has spawned a new ebook publisher called Diversion. Diversion followed a path blazed more than a decade before when agent Richard Curtis started EReads (recently sold to Open Road) and lawyer-agent Arthur Klebanoff founded the still-operating Rosetta Books.

In other words, the gap between pure self-publishing and traditional publisher-author deals grew wide enough that the agents saw the need to fill it.

The strength of the traditional publishers and the traditional deals is directly related to the amount of the market that is served by inventory in stores. When that proportion was “nearly all”, the power allocation was “nearly all” to the traditional publishers. During the period when this was shifting quickly and the online share was rapidly depleting the in-store share — a few years ending a year or two ago — there was what felt like a rush to self-publishing combined with the growth of digital-first publishers, the reigning giant among them being Open Road.

The traditional publishers are starting digital-first imprints now that can do deals with different splits and handle both shorter books and faster publishing than the classic model. The upstarts like Open Road, Rosetta, and Diversion have built lists and businesses on the gap — in business jargon, “the delta” — between the traditional deal and pure self-publishing. The hunch here is that gap is going to get progressively smaller. The big guys will figure out commercial models to do shorter books and get to market faster. They’ll raise royalties (or unearned advances, which amounts to the same thing) to keep proven writers in the fold. Eventually, houses will give their acquisition editors the suite of deal templates they need to keep diminishing the incentive for an author to step away from the house to get something done.

And while there will always be an opportunity for a known author to make a bit more per copy if s/he takes on many of the functions of publishing her/himself, the amount of backlist available to be capitalized on in that way will shrink inexorably over time.

Self-publishing and new-style digital-first publishing can grow more to the extent that the book-in-store share of the market shrinks more. But while that’s happening, the big publishers are also adding to their capabilities: building their databases and understanding of individual consumers (something that all the big houses are doing and which the upstarts seem not to believe is happening, or at least not happening effectively), distributing and marketing with increasing effectiveness in offshore markets, and controlling more and more of the global delivery in all languages of the books in which they invest.

It will compound the pressure on the alternative players if Amazon continues to grow its global market share for ebooks. The bigger the percentage of the market that can be reached by self-publishers with one stop at Amazon, the less interest they’ll have in picking up smaller chunks of the market with additional deals and the more powerful will be any incentives Amazon cares to offer for making the title exclusive to them.

There has always been — and will always be — a great diversity of publishers. But the commercial concentration will continue to be in a small number of big English-language houses for many years to come even if the number of self-publishers appears to continue to grow.

We are really excited at the enthusiastic response we’ve been getting to our new Logical Marketing Agency business. If you have anything to do with marketing books (or brands) online, you’ll want to know about what we’re offering.

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Some things I will be looking to learn more about at London Book Fair


The London Book Fair is an every-second-or-third-year thing for me, going back many decades. From an English-centric perspective, it is like a mini-Frankfurt. All the UK players are there and a lot of US senior executives. But because it is so accessible to the Continent, you can get a taste of how things look to the rest of the world.

In the US, we look to me to be in a period when two dominant giants — Amazon for online bookselling and Penguin Random House for general trade publishing — are consolidating their positions. Amazon’s enormous market share is growing, both for print and ebooks. It is too early to draw the same conclusion about PRH, but my guess is that a year or two from now we’ll have seen them taking share from their biggest competitors just like Amazon is from theirs.

(Dominant giants will be part of a conversation I’ll be taking part in on a stage in London. I’ve been asked to participate in The Great Debate, where this year the proposition is “It’s all about size. Bigger is always better.” I’m arguing the affirmative with Ken Brooks of McGraw-Hill Education as my teammate. We’re opposed by Stephen Page, the CEO of Faber, and Scott Waxman, who is both an experienced literary agent and the entrepreneur behind Diversion Books, a digital-first publisher. It should be fun. And friendly. We’re all nice guys.)

The dominant US brick-and-mortar retailer, Barnes & Noble, appears to be fairly healthy in its traditional business. It is shrinking, but the store operations are still profitable and well run. They appear to have benefited from the demise of its erstwhile competitor, Borders (as have the independents). From across the Pond, one does not get the same impression about UK’s Waterstones chain. However, in the UK, there are forces we don’t have in the US: not just the ubiquitous newsstand-type WHSmith stores, but also two supermarket chains, Sainsbury’s and Tesco, which are each ambitiously trying to build a book business and their own ebook channel. One thing I’ll be asking everybody about is the impact these retailers have in the book marketplace, particularly when we get beyond the top sellers. Perhaps if they’re doing well, it would encourage Walmart to get serious about bookselling. Certainly Walmart would like to do anything they can to poke Amazon in the eye.

Without serious competition from new players who are well-funded, like the UK supermarkets, it is hard to see what stands in the way of the global ebook giants: Amazon and Apple and, to a lesser degree, Google and Kobo. Perhaps I can get a sense in London of how Barnes & Noble’s multi-territory expansion for Nook is faring. But, however they do, there is a so-far little-noted effect beginning to become evident that could tilt the global book business to the English-language marketplace, and to the US in particular.

In a recent conversation, an executive at a Big Five company told me of a recent development. His company had licensed a few titles for Russian language rights to a publisher in Moscow. But by which retailers would most of those ebooks be sold? The answer is Amazon, Apple, Google, Kobo and Barnes & Noble! And the Russian publisher, really just breaking into the ebook business, has far more limited access to these retailing giants than the US publisher which had licensed them the rights.

So the US publisher, in a suggestion that seemed in everybody’s interests, offered to be the “distributor” of those Russian ebooks to the major accounts. The deal was made and it worked. I said to the executive who explained this to me, “You could be helpful in distributing all their books, not just the ones you licensed them.” “Exactly,” he said.

But then we took the conversation a little further. This house is wondering whether, in an ebook-dominant world, it wouldn’t make more sense for them to publish books themselves in Spanish, Mandarin, and French (the first three languages they are thinking about). After all, the translations are done by freelancers. Anybody can hire them no matter where they are. And if most of the books sold are ebooks, and if the publishers of English, especially those in the US, have multiple daily contacts with the big ebook retailers and others don’t, then what is the point to licensing away those rights?

That approach would mean that publishers in at least some non-English territories would, at best, be able to license the print rights for the local geography they really cover. And it would mean that the biggest publishers with the biggest checkbooks to sign the biggest authors and titles will be able to benefit from an even larger share of the book’s global market while paying the author more than they could earn with a local publisher sharing in the other-language rights.

If this is more than one company’s inspiration right now, I should be able to find evidence of that at the London Book Fair.

The other thing for me to learn, of course, is how digital marketing of books looks from the UK. In our fledgling new business with Peter McCarthy (take a look at his new post) we have already done some title optimization work for two UK-based publishers, one large and one medium-sized. So we’ve learned how to do the work using UK-based Google and Amazon and putting BIC codes rather than BISAC codes into the metadata. We’ll be formally announcing the new business and opening our web site the day before the London Book Fair opens. I expect to find a lot of interest in what we can offer, just as we have in the US. There is no doubt that the London Book Fair presents the best possible opportunity to find out very quickly what our own opportunity is outside the US as the need for sophisticated marketing naturally follows the growth and increasing complexity of the overall digital environment.

One person I will be sad not to see at London Book Fair is my longtime friend Bruce Robertson, a founder of the pioneering packagers The Diagram Group, who died a little over a week ago at the age of 79. Bruce was sui generis: a brilliant man with a unique gift for visualization that was the guiding spirit behind dozens of global bestselling illustrated books. Forty years ago, I had the opportunity to sell three of Diagram’s greatest books, “Rules of the Game”, “The Way to Play”, and “Man’s Body” when Bruce’s publisher at that time, Paddington Press, was distributed in the US by my family’s distribution company, Two Continents. I always enjoyed seeing him and hearing his witty, insightful, and often cutting take on the people and practices in our business. Fortunately, there were many opportunities to see Bruce and his endlessly good-natured wife, Pat, over the years, at industry events or when he was in NY or I was in London. We are all one of a kind, but some of us are more obviously so than the rest of us. Bruce was like nobody else. He’ll be missed by many friends from all over the world.

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


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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Taking book marketing where the book readers are likely to be


Digital marketers who want to sell books are increasingly turning to the virtual places where readers cluster. This includes marketing through the major social networks (Facebook, Twitter, Pinterest, etc.), using the data mining tools available to target within those networks, as well as marketing in niches and online communities of readers (in some cases publishers are even building vertical communities themselves). Publishers are also increasingly turning to book- and reading-focused social sites to get the word out about their books. These vehicles carry an additional bonus in the digital age: they’re global and give publishers a one-stop opportunity to reach markets beyond their natural national audiences.

Goodreads, recently acquired by Amazon, has built a network of book-oriented conversation. Now with 19 million members, they have been for the past few years trying to show publishers how to use the platform as a marketing tool. This was, of course, their original reason for being. They have overtly built a site around books and conversation about books. Since the book business routinely deals in “comps” — books that are like the book I’m trying to sell you — Goodreads has a firm foundation from which to sell publishers marketing services. They’ve been doing that for some time.

What is not clear is whether that business will be reined in by their new corporate owners in any way. Amazon’s prior history doesn’t demonstrate great interest in marketing that isn’t Amazon-centric. And we know that big publishers are generically nervous about Amazon and not inclined to spend any more promotional money than an already aggressive large account with lots of coop buckets already squeezes out of them.

Whatever the extent to which Goodreads maintains its mission as a marketing vehicle for publishers to reach book audiences regardless of where they shop (and, as of this writing, the B&N link is actually above the Amazon link in their drop-down menu of “online stores”), publishers are bound to be looking for alternatives to work with as well. We think we see two of them emerging, although neither of them started out in life aimed at being a marketer of books available to publishers.

Wattpad is a Canada-based startup that is a reading and writing community. It preceded Penguin’s “Book Country” , started with social reading of public domain titles, and doesn’t have Book Country’s overtly commercial focus, nor its stated emphasis on genre fiction (although, perhaps inevitably, Wattpad’s strongest areas are YA, paranormal, romance, and fantasy), but the sites are similar in that they give aspiring writers the opportunity to have their work commented upon by a community of other aspiring writers. Wattpad has grown to over 10 million users. And it is a very active and engaged community. They publish stats suggesting that that users spend an extraordinary amount of time on their site, something like half-an-hour, twice-a day. And they have attracted such luminaries as Margaret Atwood to post content on the site.

There are already several examples of aspiring authors who have published on Wattpad, built audiences, developed their stories, and gotten a book deal including Beth ReeksAbigail Gibbs, and Brittany Geragotelis. And PW just did a piece on up-and-comer Nikki Kelly.

With its large number of highly-engaged readers and a track record of being successful promoters for undiscovered talent, Wattpad has recently started to call attention to the opportunity for publishers to market to its audience. It is now encouraging publishers to connect with its audience by posting teaser or attention-getting content in advance of the launch of a book. Random House, Scholastic, and Macmillan (for Amanda Hocking) have already taken advantage of this.

A similar opportunity is now also being seen by Scribd. Scribd is a repository of documents. It is often used as a “convenience”: a place to post court decisions or company reports or anything somebody wants to make accessible to a broad audience. In its early days, Scribd was seen as a pirate-enabler, but it has aggressively worked with publishers to make sure unauthorized copyrighted content is taken down. Meanwhile, it has built a vast treasure-trove of documents from 200 countries in 70 languages and is getting 10 million unique visitors a month.

That’s a lot of people looking at a lot of documents, giving Scribd a lot of knowledge about who they are and what else they might like to read.

Our view is that the marketing opportunities through all three of these companies should be understood by publishers. It is early days for all three of them, really, but as marketing entities Wattpad and Scribd are really just getting started. Some things have been “proven” to work at Goodreads, but, really, all three of them are like jungles still being hacked through with superhighway travel still in the forseeable future, but not around the corner.

There’s quite a bit of marketing activity by US-based publishers on Goodreads; it’s beginning to happen on Wattpad and it is a gleam in the eye at Scribd. But they all have big numbers of readers paying attention to their site and they’re all looking for ways to make themselves more valuable. It looks like Wattpad and Scribd are seeing the possibility that marketing for publishers could be a very significant revenue-generator, if not their principal one. (Goodreads started out with that hope.)

Painful aspects of the digital transition — the diminution of bookstore shelf space and the reduction of room for book marketing in the established press — are just beginning to bite in markets outside the English-speaking world. With all three of these communities teeming with non-English-speaking members, they all become tools publishers around the world will need to know about.

And that’s why we have them all speaking at our Publishers Launch Conference at Frankfurt, focused on what meaningful marketing reach they can offer to publishers outside the US. As conference programmers, we look for those win-win situations where what the presenter wants the audience to know is information they will find immediately useful. For our Frankfurt conference audience, which last year had c-level executives from 25 countries, this would appear to be a bull’s-eye.

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How the ebook evolution might get started in other places


The organizers of the Buenos Aires Book Fair, which will run for the next few weeks, invited me to speak at an opening session of their event last Friday. They left the topic completely up to me. What I offered to do, which the organizers liked, was to review the history of the past 20 years of digital change in the US and in the English language which has brought us to this point. The presumption is that understanding how it happened to us will help them understand what is going to happen in their market, in other Spanish-speaking markets, and in other countries and other languages.

The underlying premise of my talk, which was delivered formally at a Book Fair opening event last Friday and informally to other gatherings they scheduled for me — of students, of young editors, and of some publishing executives — and in a meeting consulting with about 20 employees of one publishing house, was that what happened in the US and then elsewhere in English was unique and would not be replicated in the same way in other languages and territories. What I had identified as the unique characteristics of the US market were:

Three hundred million people with one language, one currency, one commercial set of rules.

A powerful player (Amazon) able to change both publisher behavior (twisting arms to have them provide more titles as ebooks) and consumer habits (getting them to consider what started as an expensive device — a $400 Kindle) with their marketplace power.

Indeed, no other market has those two elements. In fact, in many markets, including all of the players I talked to in Latin America, Amazon is not seen as a really signficant factor.

In addition to the conditions that made the US market unique, I stated two additional assumptions which drew little objection from my audiences in Buenos Aires.

At some point — whether it is five years from now or 20 years from now — the world’s book publishing markets will look very similar. That is, the effects we see in the US — patterns of ebook uptake and the consequently devastating effects on bookstores — will somehow be replicated in other markets.

Both because the unique market characteristics of the US don’t exist elsewhere and because the market already made in the US has created global players and infrastructure that weren’t here when the ebook revolution caught hold, we need to expect that it will be a different path to the future in other places from what we saw in the US. The markets will not be made by the inherent marketplace scale and by Amazon, as ours was.

I thought some things we’ve seen constituted “universal” lessons worth taking on board. We’ve seen ebooks consistently work commercially for narrative reading and not for any other kinds of books. We haven’t seen “enhancements”, like video or interactivity, pay off in bigger sales or in making it easier to command higher prices. I suggested they should expect the same, and the people I spoke with agreed. They should also expect that the product competition from outside the commercial publishing community, which we’ve seen so far primarily from self-published authors, will drive down the prices for books from established authors as it has in our market.

But the more I probed, looking for what would make the market, the more I ended up in blind alleys. There is no online purchasing market anywhere in Latin America to compare with ours. That’s why Amazon hasn’t gained a strong foothold. Kobo’s strategy of working through local booksellers — an alliance has been formed in Brazil and they are clearly looking for partners elsewhere — apparently hasn’t made much of a dent either. One publisher said Apple sales were “promising”, but they’re still “insignificant”.

The reality underlying all this futility is the relative dearth of credit card use. In the US, we have had about three generations of ubiquitous credit card use. They are second nature to us. And the online purchasing world — Amazon in particular — would never have achieved the position they have if that weren’t true.

Well, it isn’t true in Latin America.

There is no way to make an ebook market, which must be an online market, without a payment mechanism. And the one we have in the US isn’t set up to work in Argentina, Brazil, or the rest of Latin America (or, for that matter, in many other parts of the world).

Of course, the cell phone carriers, who do send a bill and collect money from the masses in all these countries where credit card use is limited, had figured that out a long time ago. Nokia and others have been dancing around this opportunity for years. Txtr, a Germany-based ebook play, targets the cell phone companies as its path to the market. Txtr is building an inventory of titles and has come up with an ultra-low-cost ereading device called beagle to jumpstart their market. In doing that, they show that they learned something from Google’s experience, where ebook sales only started to grow when the Nexus7 tablet, which is tied to Google, made its way into the market.

All the conversation led me to come up with my own version of an “answer”; I don’t know if anybody else has made this suggestion but the small bit of conversation I was able to have between having this thought and leaving Buenos Aires didn’t uncover evidence that anybody else had.

It takes three components to make an ebook market:

1. A device to read the ebooks on. That could be a laptop or desktop computer or dedicated ereading device, but it is most likely to be a smart phone or a tablet.

2. A store: a merchandised selection of ebooks that can be shopped through browsing and searching that is compatible with the device.

3. A payment mechanism.

In the US, we really didn’t think about the payment mechanism. For many other places in the world, that’s a very tricky part.

Txtr is trying to deliver the missing pieces to the solution to the telcos, right down to delivering a very inexpensive device that can be the reader if the cell phone is not.

What occurred to me, and I’m wondering whether it is being developed by anybody else, is what I think would be an even better — as in more likely to build a market quickly — solution. What I’m imagining is that a device manufacturer (or more than one, but if one, preferably one that makes both smart phones and tablets) teams up with a cell phone company (to do the billing) and persuades the ebook retailers — Amazon, Google, B&N, Kobo — to accept payment through the phone company. Then that hardware manufacturer has a fabulous value proposition to help them sell their devices and the ebook market has a choice of the best retailers with the best selections of ebooks already aggregated.

Actually, persuading one retailer will persuade them all. If Samsung were pushing a tablet and smartphone and got any of the major ebook retailers to go for the proposition, the others would surely have to follow. And, in fact, it would make sense for either Apple or Google to do this when they sell apps in credit-card-challenged markets as well.

Another complication in some places — particularly Brazil and Argentina at the moment — is created by complex regulations that make the sale of hardware manufactured outside their country either impossible to get or extremely expensive. Although that’s a problem that extends beyond the book business, it is much more likely to be solved by a multi-function device-maker than for one dedicated only to ebook consumption.

It is interesting to think about Apple’s position here. The other big ebook retailing operations already provide apps for both iOS and Android devices as a matter of course. The iBookstore, however, is a Mac-only play. If the solution I’m envisioning were to roll out around the world — and one can imagine a company like Samsung making such a thing happen — would that continue to be the wisest play for the Apple-owned ebook retailer? I think not, but one can only imagine how intense the internal discussions around that point could be.

Today (April 30) is the last day to get the Early Bird pricing for our next Publishers Launch Conference, which will be at BEA on May 29. The theme for this event is “scale”, a fairly obvious topic of great importance that we don’t believe has been a central focus for a digital change event before. We’ll have agents talking about it as well as presentations from three publishers — F+W Media, Hachette, and Random House — who are applying it in very different ways. We’ll have Brian Napack presenting the investor’s view of its importance. We’ll have a presentation on the current state of more complex ebook- and app-making from Ron Martinez, followed by a panel of publishers considering the future of the illustrated book. And Michael Cader and I will discuss the topic of scale in circumstances that most executives won’t (or can’t) in public, like how it is applied by Amazon and how it might be used by the new Penguin Random House.

 
See pricing information and registration options on the PLC site for more details. You may register either through our dedicated Launch BEA registration link, or via the main BEA registration page where you can sign up for BEA itself and other events at the same time.

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Seven-and-a-half days of conference programming coming up during 4 days in January


Blog posts have been scarcer for the past couple of months because I’ve been so engaged with a major responsibility: putting together what amounts to 7-1/2 days of conference programming that will be presented on four days next month in New York City.

As most readers of this blog probably know, we’re responsible for the programming of the two-day extravaganza that is Digital Book World. DBW 2013 — taking place on January 16 and 17 at the Hilton New York Hotel — will be the fourth iteration of the event, which aims to explore the commercial challenges facing trade publishing in the digital transition. DBW is not about technology per se; it is about the business problems publishers must cope with in an age of technological change.

DBW’s main two days are divided between morning plenary programming — all 1500+ people in one big room — and afternoon breakouts. We’ll have up to five simultaneous breakout sessions in each of three slots each day. So we have what amounts to 4-1/2 days of programming in the breakouts plus one on the main stage.

Because people really do come from all over the world to attend DBW, we were delighted to agree when they asked us at Publishers Launch Conferences (the conference business I own with Michael Cader) to add a show on each side of theirs to build out a week of programming. (The team at DBW itself are also putting together some pre-conference workshops that will run on Tuesday.)

So on Tuesday, January 15, we’ll do our second annual “Children’s Publishing Goes Digital” conference at the McGraw-Hill Auditorium (put together with the invaluable assistance of our Conference Chair and close friend, Lorraine Shanley of Market Partners). And on Friday, January 18, we’re presenting (in conjunction with the DBW team) a new program called “Authors Launch“, a full day of marketing advice for publisher-published authors. (Self-published authors are welcome and will learn a lot, but the program is framed for authors who are working with publishers, not looking for ways to avoid them.)

Programming the “Children’s Publishing Goes Digital” show revealed what we think will be the most important theme in the children’s book space for the next few years: the development of  digital “platforms” that, like subscription offerings (which some, but not all of them, clearly are), will “capture” consumers and make them much less likely to get ebooks and other digital media from outside of it. The list of platform aspirants in this space is long and varied: Storia from Scholastic; RRKidz from Reading Rainbow (the TV show brand); Poptropica from Pearson (which launched Wimpy Kid before it was a book); Magic Town; Disney; Capstone; and Brain Hive. All of them are presenting, as well as NOOK, which, like Amazon Kindle, has announced parental controls on its platform that encourage parents to manage their kids’ reading experience there.

There are other big issues in children’s publishing, particularly the creation of original IP by publishers so they can better exploit the licensing opportunities that follow in the wake of successful kids’ books. We’ll have data presentations from Bowker and from Peter Hildick-Smith of Codex to help our audience understand how kids books are found and selected outside the bookstore in today’s environment.

But we know that the digital discovery and purchase routines will be markedly affected by the platforms as they establish themselves. Publishers are faced with an interesting conundrum. They can’t reach the audiences that are loyal to a platform without going through the platform. But it is the presence of many publishers’ books that strengthens the attraction of the platform and, once it gains critical mass, the value of the content to it (and probably what it will be willing to pay for the content) is reduced. So publishers licensing content to these platforms may be strengthening beasts that will ultimately eat them. I think the roundtable conversation Lorraine and I will lead at the end of the day, which will include publishers Karen Lotz of Candlewick, Barbara Marcus of Random House, and Kate Wilson of Nosy Crow, will have interesting things to say about that paradox.

We’ve developed some “traditions” in the four years we’ve been doing Digital Book World. As we’ve done the past two years, the plenary sessions will open on Tuesday with the “CEOs’ view of the future” panel organized and moderated by David Nussbaum, the CEO of DBW’s owner F+W Media and the man who really dreamed up the idea of this conference. David will be joined this year by Marcus Leaver of Quarto, Karen Lotz of Candlewick, and Gary Gentel of Houghton Mifflin Harcourt. And Michael Cader and I will — as we have every year at DBW — moderate a panel to close the plenaries, “looking back and looking forward” with agent Simon Lipskar of Writers House; Harper’s new Chief Digital Officer, Chantal Restivo-Alessi, and Osprey CEO Rebecca Smart.

Among the presenters on the main stage who will be unlike what our audiences usually hear at a digital publishing conference will be Teddy Goff, the digital director for the Obama campaign, who will talk about targeting and marketing techniques that might serve us well in the publishing world; Ben Evans of Enders Analysis in London, who will tell us how publishing fits into the strategies of the big tech companies (Amazon, Apple, Facebook, Google, and Microsoft) that he tracks regularly*; ex-Macmillan president and now private equity investor Brian Napack, talking with Michael Cader about the investment climate in publishing; and Michael D. Smith, Professor of Information Technology and Marketing from Carnegie-Mellon, talking about a study he and his colleagues have done on the real commercial impact of piracy.

(We’ve also scheduled a breakout session for Teddy Goff so he can talk more about the Obama campaign for those in attendance who want to learn more of its lessons to apply.)

We’re also delighted to have gotten Robert Oeste, Senior Programmer and Analyst from Johns Hopkins University Press, to deliver his wonderfully insightful, entertaining, and informative presentation on XML, the subject so many of us in publishing need to understand better than we do. And we will after he’s done. (We’re also giving Oeste a break-out slot to talk about metadata which I’ll bet a lot of our audience will choose to attend after they’ve heard him on XML.)

(*Late edit: Ben Evans had to cancel.)

Some authors have had remarkable success without help from publishers in the past year, but few or none more than Hugh Howey, the author of “Wool”, who has just signed a groundbreaking print-only deal for the US with Simon & Schuster. His dystopian futurist novel has sold hundreds of thousands of self-published ebook copies and rights all over the world and to Hollywood. We’ll have a chat with Howey about how he did it and we’ll be joined by his agent, Kristin Nelson, for that dialogue. Kristin will stick around to join a panel of other agents (Jay Mandel of William Morris Endeavor, Steve Axelrod, and Jane Dystel from Dystel & Goderich) to talk about “Straddling the Models”: authors who work with publishers but are also doing some things on their own.

We will have several panels addressing the challenges of discovery and discoverability from different angles. One called “Closing the New Book Discovery Gap” teams Patrick Brown of Goodreads with three publishing marketers — Matt Baldacci of Macmillan, Angela Tribelli of HarperCollins, and Rachel Chou of Open Road — and is chaired by Peter Hildick-Smith. That will focus on what publishers can do with metadata and digital marketing to make it more likely their titles will get “found”. Barbara Genco of Library Journal will share data on library patron behaviors and then helm a panel discussion with Baker & Taylor, 3M, Darien Public Library, and Random House exploring the role of libraries in driving book discovery and sales. Another session called “Making Content Searchable, Findable, and Shareable” introduces three new propositions from Matt MacInnis of Inkling, Linda Holliday of Citia, and Patricia Payton of Bowker, along with SEO expert Gary Price of INFODocket. Publishing veteran Neal Goff (who is also the proud father of Obama’s digital director) will moderate that one. MacInnis, Holliday, and Payton offer services that will help publishers improve the search for their books. Price will talk knowledgeably about how the search engines will react to these stimuli.

We’re covering new business model experimentation (with Evan Ratliff of The Atavist, Brendan Cahill of Nature Share, Todd McGarity of Hachette, and Chris Bauerle of Sourcebooks) where publishers discuss ways to generate revenue that are not the old-fashioned ones. We’ll underscore the point that we’re about changes caused by technology rather than being about technology with our “Changing Retail Marketplace” panel, featuring publishers and wholesalers talking about the growth of special sales (through retailers that aren’t bookstores and other non-retail channels).

The future for illustrated books will be discussed by a panel with a big stake in how it goes: John Donatich of Yale University Press, Michael Jacobs of Abrams, Marcus Leaver of Quarto, and JP Leventhal of Black Dog & Leventhal. Two publishers who have invested in Hollywood — Brendan Dineen of Macmillan and Pete Harris of Penguin — will talk about the synergies between publishing and the movies with consultant Swanna McNair of Creative Conduit.

We will have major US publishers and Ingram talking about exports: developments in the export market for books — print and digital. And we’ll have some non-US publishers joining Tina Pohlman of Open Road and Patricia Arancibia of Barnes & Noble talking about imports: non-US publishers using the digital transition to get a foothold in the US market.

One session I think has been needed but never done before is called “Clearing the Path” and it is about eliminating the obstacles to global ebook sales. That one will start with a presentation by Nathan Maharaj and Ashleigh Gardner of Kobo where they will enumerate all the contractual and procedural reasons why ebooks are just not available for sale in markets they could reach. And then Kobo will join a panel conversation with Joe Mangan of Perseus and agent Brian Defiore to talk about why those barriers exist and what might be done in the future to remove them.

Oh, yes, there’s much much more: audience-centric (what I call “vertical”) publishing; the changing role of editors; the evolving author-publisher relationship; and a conversation about the “gamification” of children’s books. David Houle, the futurist and Sourcebook author who wowed the DBW 2012 audience, will return with his Sourcebooks editor, Stephanie Bowen, to discuss their version of “agile” publishing: getting audience feedback to chunks before publishing a whole book.

We will also do some stuff that is more purely “tech”. We have a panel on “Evolving Standards and Formats” discussing the costs and benefits of EPUB3 adoption, which will be moderated by Bill McCoy of IDPF. Our frequent collaborator Ted Hill will lead a discussion about “The New Publishing IT Department”. Bill Kasdorf of Apex will moderate a discussion about “Cross-Platform Challenges and Opportunities” which is about delivering content to new channels.

But purely tech is the exception at Digital Book World, not the rule.

And purely tech won’t show up at all at Authors Launch on Friday, January 18, the day after Digital Book World.

Authors Launch is what we think is the first all-day marketing seminar aimed squarely at authors with a publisher, not authors trying to work without one. It is pretty universally taken as a given that authors can do more than they ever have before to promote themselves and their books and that publishers should expect and encourage them to do that. But, beyond that, there is very little consensus. What should the publisher do and what should the author do? That question is going to be addressed, in many different ways, throughout the day.

The Authors Launch program covers developing an author brand, author involvement and support for their book’s launch, basic information about keyword search and SEO, use of metrics and analysis, a primer on media training, when and how to hire a publicist or other help, and a special session on making the best use of Goodreads. We’ll cover “audience-centric” marketing, teaching authors to think about their “vertical” — their market — and understand it.

The faculty for Authors Launch includes the most talented marketers and publicists helping authors today: Dan Blank, co-authors MJ Rose and Randy Susan Meyers, journalist Porter Anderson, David Wilk, Meryl Moss, Lucinda Blumenfeld, agent Jason Allen Ashlock, and former Random House digital marketer Pete McCarthy.

We have assembled a group of publishers and an agent to discuss how an author should select the best places to invest their time from the staggering array of choices. (Facebook, Twitter, YouTube, Pinterest, etcetera.) That panel will include agent Jennifer Weltz of The Naggar Agency as well as Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Kate Stark of Penguin. Matt Schwartz, VP, Director of Digital Marketing and Strategy for the Random House Publishing Group, will conduct the session on metrics.

A feature of both our Kids show on Tuesday and the Author show on Friday are opportunities for the audience to interact with the presenters in smaller groups so each person can get his or her own questions answered. At Kids we’ll do that at lunchtime, seating many of our presenters at tables with a sign carrying their name so our attendees can sit with them and engage. At Authors Launch, we’ll be conducting rounds of workshops, crafted so that the authors can get help in their own vertical (genre fiction, literary fiction, topical non-fiction, juvies, and so forth), and on the topics of greatest need for them.

We are sure the week of January 15-18 will prove to be an energizing and stimulating one for all of us living in the book publishing world. We hope you’ll join us.

Digital Book World Week | January 15-18, 2013

Children’s Publishing Goes Digital | Tuesday, January 15, McGraw-Hill Auditorium
DBW Pre-Conference Workshops | Tuesday, January 15, Hilton New York Hotel
Digital Book World Conference + Expo | January 16-17, Hilton New York Hotel
Authors Launch | Friday, January 18, Hilton New York Hotel

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