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Asking whether Amazon is friend or foe is a simple question that is complicated to answer


I’ve been invited to join a discussion entitled “Amazon: Friend or Foe” (meaning “for publishers”) sponsored by the Digital Media Group of the Worshipful Company of Stationers (only in England!) and taking place in London next month. I think the answer must be “both”, and I suspect that my discussion-mates — Fionnuala Duggan, formerly of Random House and CourseSmart; Michael Ross from Encyclopedia Britannica; and Philip Walters, the moderator for the conversation, will agree. This is a simple question with many complicated answers. I am sure that Fionnuala, Michael, and Philip will introduce some perspectives I’m not addressing here.

The first thoughts the question triggers for me are three ways I think Amazon has profoundly changed the industry.

Although just about every publisher has headaches dealing with Amazon, very few could deny that Amazon is their most profitable account, if they take sales volume, returns, and the cost of servicing into consideration. This fact is almost never acknowledged and therefore qualifies as one of the industry’s dirty little secrets. Because they’ve consolidated the book-buying audience online and deliver to it with extraordinary efficiency, Amazon must feel totally justified in clawing back margin; it wasn’t their idea to be every publisher’s most profitable account! But since they are effectively replacing so many other robust accounts, the profitability they add comes at a big price in the stability and reliability of a publisher’s business, which feels much more comfortable coming from a spread of accounts. Publishers strongly resist Amazon’s demands for more margin, partly because they don’t know where they’ll stop.

It is also true that Amazon just about singlehandedly created the ebook business. Yes, there had been one before Kindle was introduced in November, 2007, but it was paltry. It took the combination that only Amazon could put together to make an ebook marketplace really happen. They made an ereading device with built-in connectivity for direct downloading (which, in that pre-wifi time, required taking the real risk that connection charges would be a margin-killer). They had the clout to persuade publishers to make more books, particularly new titles, available as ebooks. And they had the attention and loyalty of a significant percentage of book readers to make the pitch for ebooks. With all those assets and the willingness to invest in a market that didn’t exist, Amazon created something out of nothing. Everything that has happened since — Nook and Apple and Google and Kobo — might not have worked at all without Amazon having blazed the trail. In fact, they might not have been tried! Steve Jobs was openly dismissive of ebooks as a business before Amazon demonstrated that those were downloads a lot of people would pay for.

The other big change in the industry that is significant but might not have been without Amazon is self-publishing. The success of the Kindle spawned it by making it easy and cheap to reach a significant portion of the book-buying audience with low prices and high margins. Amazon added its skill at creating an easy-to-use interface and efficient self-service. Again, others have followed, including Smashwords. But almost all the self-publishers achieving commercial success have primarily Amazon to thank. It appears that, in the ebook space at least, self-publishers among them move as many units as a Big Five house and, in fiction, they punch even above that weight. Without Amazon, this might not have happened yet.

So, in the three ways Amazon has really changed the industry — consolidating the bulk of online book buyers, creating the ebook business, and enabling commercially-viable self-publishing, publishers would really have to say the first two are much to their benefit (friend) and the last one they could have done without (foe).

The second big heading for this Amazon discussion is around the asymmetry between what Amazon knows about the industry and what the industry knows about Amazon. Data about the publishing industry is notoriously scattered and because of the large number of audiences and commercial models in the “book business”, very hard to interpret intelligently. Amazon, on the other hand, has its own way of making things opaque by not sharing information.

The first indication of this is that Amazon doesn’t employ the industry’s standard ISBN number; they have their own number called an ASIN. So whereas the industry had a total title count through ISBN agencies that required its own degree of interpretation, the titles published exclusively by Amazon, which only have ASINs and not ISBNs, are a total “black hole”. Nobody except Amazon knows how many there are or into what categories they fall.

Another piece of Amazon’s business that has critical relevance to the rest of the industry but is totally concealed from view is their used book business. There is an argument to be made that the used book marketplace Amazon fosters actually helps publishers sell their new books at higher prices by giving consumers a way to get some of their money back. But it is also pretty certain that people are buying used copies of books they otherwise would have bought new, with the cheaper used choice being offered to them from about the first moment a book comes out. One would intuitively assume that the effect becomes increasingly corrosive as a title ages and the supply of used copies keeps rising as the demand for the book is falling, inexorably bringing the price of the used books down. But none of us outside Amazon know anything about this at all, including how large the market is.

And, by the same token, we have no idea how big Amazon’s proprietary book business is: the titles they sell that are published by them exclusively. Beyond not knowing how many there are or what categories they’re in, the rest of us can’t interpret how the sales of Amazon-published titles might affect the prospects for titles a publisher might be signing up. Amazon has that perspective to inform their title acquisition, their merchandising, and to gauge the extent of their leverage in negotiations with publishers.

Going back to the original question, except for the possibility that some new book sales occur because the purchaser is confident of a resale, this is all foe!

In retrospect, it is clear that Amazon’s big advantage was that they always intended to use the book business as a springboard to a larger play; they never saw it as a stand-alone. This was an anticipation of the future that nobody inside the book business grasped when it was happening, nor was it imitated by book business pure players. But it was the key to Amazon’s economics. They didn’t need to make much margin on books; they were focused on “lifetime customer value” and they saw lots of ways to get it. Google and Apple have the same reality: books for them are in service to larger purposes. But they started with the larger purposes and, for that and other reasons, have never gotten as good as Amazon is with books. (One big deficiency of the Google and Apple offers is that they are digital only; they don’t do print books.) And B&N and Waterstone’s never thought beyond books; it appears that Waterstone’s scarcely thought beyond physical stores!

But it could well be that Amazon is approaching its limits in market share in the book business. What they did worked in the English-speaking world — for printed books two decades ago and for ebooks almost a decade ago — because they were first and able to aggregate an enormous customer base before they got any serious challengers. They will not find it as easy to dominate new markets today, particularly those that have rules that make price competition harder to employ. Language differences mean book markets will remain “local” for a long time and strong local players will be hard for Amazon to dislodge.

Amazon has powerful tools to keep their customers locked in. PRIME is the most effective one: once customers have paid a substantial fee for free shipping, they’re disinclined to buy elsewhere. Kindle is another one. The devices and the apps have broad distribution and, because of self-publishing, Kindle remains the ebook retailer with the biggest selection.

The marketplace is changing, of course. Amazon’s big edge is having the biggest selection of printed and digital books in one place. That’s been known for decades to be the best magnet to attract book buyers. But now a lot of book reading is done without the title-by-title shopping in a bookstore that it always used to require. We are at the beginning of an age of “distributed distribution”. Many different tech offerings — Aerbook, Bluefire, De Marque, Page Foundry, and Tizra among them — can make it easy for publishers to sell ebooks directly (and Aerbook enables that and promotion in the social stream). The subscription services Scribd, Oyster, 24Symbols, and Bookmate (as well as Amazon’s own Kindle Unlimited) are pulling customers away from a la carte ebook buying and Finitiv and Impelsys make it easy for any entity to offer digital reading by subscription. All of these sales except Kindle Unlimited come primarily out of Amazon’s hide, since they are the dominant online retailer for books. Publishers mostly see this dispersal of the market as a good thing for them, even though some of the same opacity issues arise and, indeed, the big general subscription services are a new group of potentially disruptive intermediaries now being empowered.

For the foreseeable future — years to come — Amazon will remain dominant in most of the world as the central location where one shops online for books a la carte because they have the best service, the biggest selection, and they sell both print and digital books. But they now have their own new challenge dealing with the next round of marketplace changes, as what they dominate becomes a smaller portion of the overall book business in the years to come. Publishers face the same challenge presented a somewhat different way.

The event that gave rise to this post takes place the night before the London Book Fair opens. The entry fee is nominal. If you’ll be at LBF and want to attend, please do! I will, typically, have no real base of operations at LBF, but I’ll be there all three days with some time available to meet old friends and new. Email to [email protected] if you want to set something up. 

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Headliners galore will address Digital Book World 2015


Half of Digital Book World is delivered to the entire audience from the Main Stage. The speakers for 2015 comprise the most illustrious group we have ever had. The headine is definitely that we have managed to corral both Amazon and Apple speakers for our main stage — a feat we don’t believe any other conference in the book business has ever managed to pull off — but I’d be proud of this program even if neither of them were on it! Beyond the retailers, we have three bestselling authors, three leading publishing executives (four if you count that F+W CEO David Nussbaum will deliver a welcoming speech), three data-driven experts, and two leaders from adjacent industries.

The program will kick off with a presentation from best-selling author Walter Isaacson, whose current book is “The Innovators”. Isaacson wrote definitive bios of both Benjamin Franklin and Steve Jobs in recent years, both of whom had their own role to play in the book business. His current book really is about the digital revolution in general, the context in which publishing’s change, DBW’s topic, occurs. Context-setting is always a good way to start, and Isaacson definitely fills the bill.

We discovered ed-tech investor Matthew Greenfield during the course of planning DBW 2015 and we think our audience will agree he was a great “find”. Greenfield’s Rethink Education business invests in start-ups, which for ed-tech he divides into three groups of companies: those that deliver ebook readers and content for school use; those focused on short form reading, like news; and those that are writing-related, which are likely to include leveled collections of reading to help developing writers. Since the ed-tech field is largely about creating new platforms within which the content is consumed in schools and colleges (as well as adding value with context and evaluations), he will explicitly include advice for trade publishers who sell their content for educational use and will increasingly find it necessary to sell through these platforms. Greenfield also has some interesting speculation to offer about where educational technology is going and what we can expect to see from publishing’s biggest disruptor, Amazon.

You can’t be trying to figure out the future of publishing without being aware of the new phenomenon of “content marketing”. So I reached out to the Founder of the Content Marketing Institute, Joe Pulizzi, about imparting some wisdom to book publishers. I started out thinking the content marketing business might make use of some of our content, but he straightened me out pretty fast: that’s not the most likely synergy between what he knows and what we need. In fact, Pulizzi is an expert on how to use content to drive consumer engagement and he does it for organizations and brands that have to pay to create that content. Of course, we in the book business already have lots of content and ready access to more within our existing staffing and networks. In this presentation, Pulizzi will be talking about how we can use content to build consumer engagement and loyal customers to whom we can market repeatedly (vertical thinking). Everything Pulizzi says is likely to suggest questions to publishers, so we’ve also given him a breakout session to allow those who want to hear more and interact more to do so.

The first of our publishing CEOs to take the stage will be Linda Zecher from Houghton Mifflin Harcourt. Zecher runs a company that is very big in education publishing but has a top 10 general trade list as well, so she is really the only CEO managing across those two publishing segments. She’s also the rare publishing executive with a tech background (hers was at Microsoft). This interview with Michael Cader will focus on the lessons learned from the education side which could be harbingers of adjustments trade publishers will also have to make.

Next up will be James Robinson, Director, News Analytics, for The New York Times. Robinson is, effectively, the Times’s techie in the newsroom. He takes the view that writers and editors need to understand who their readers are, and, of course, they are not the same for every story. He also wants to make sure that as many people as possible see each relevant story, whether they would have expected it from The Times or not. If I do say so myself, Robinson has a sterling background. He spent several years working with me at The Idea Logical Company before he went on to get a Masters at NYU studying under thought leader Clay Shirky. The way he thinks about content and audiences for The Times contains lessons for non-fiction book publishers and perhaps for fiction publishers as well.

The first morning of Main Stage presentations will conclude with Cader and me interviewing Russ Grandinetti, SVP, Kindle, at Amazon. Grandinetti is a straightforward and outspoken executive who has been with Amazon since just about the very beginning and who has shepherded Kindle throughout its existence. With Amazon now generally acknowledged as the most powerful and disruptive force in the book business, we will all be interested to hear what he thinks is the future for printed books versus digital, bookstores versus online purchasing, and how much Amazon’s own publishing and subscription programs are likely to grow.

The second morning will begin with Michael Cader interviewing Internet and marketing guru Seth Godin on the subject of “what’s next?” Godin, who saw — and wrote about — the importance of building personal brands and mailing lists at the dawn of the Web era, is a successful book author who has been watching how publishers operate and market for several decades. In this conversation, he will deliver intuitive and logical advice that many can follow. Anybody who listened to Godin talk about “permission marketing” 20 years ago and followed his advice now has a massive emailing list that is a major marketing asset. Just about every publisher will likely come away from this session with some new ideas to apply.

Next up, for an interview with me, will be CEO Brian Murray of HarperCollins. Under Murray’s leadership, HarperCollins has established itself as the number two English-language trade publisher in the world. Two recent acquisitions, Christian publisher Thomas Nelson and romance publisher Harlequin, have given them strong foundations to develop large vertical communities. In addition, Harlequin had a global infrastructure in place that HarperCollins is using as a springboard to build out their own global — and beyond just English — presence. Murray will discuss how these acquisitions position HarperCollins strategically to compete with the substantially larger Penguin Random House and to build their ability to reach readers beyond those they get to through Amazon, Barnes & Noble, and an ever-smaller number of ever-larger retail trading partners.

Over the past several years, ebooks have taken market share from print that is probably in the range of 25 percent across the board. But that’s not distributed evenly by genre or subject or type of book. Jonathan Nowell, the CEO of Nielsen Book, is going to help us understand how the mix of what sells in print has changed as a result of this. Understanding what the evolving print marketplace really looks like willboth publishers and retailers plan for the ever-changing future, in which we will probably see less print overall, but not for everything.

Ken Auletta of The New Yorker has been covering both content and technology businesses for many decades. Nobody understands how the companies in both those industries work — including their cultures — better than he does. Among his five bestsellers is “Googled: The End of the World as We Know It”. Auletta will talk about “Publishing in World of Engineers” and how the smaller content companies cope with their new partners that come from the world of technology. The culture clash between long-established content providers and techies who place high value on “disruption” is a theme we all deal with and about which Auletta can shed real light.

Hilary Mason is a data expert who has honed her talent for analytics during a stint at Bit.ly. Mason has spent years learning about individuals through their online behavior. In this talk, she is going to tell publishers what she’s learned about how to gain insight into individuals and audiences and how to use those insights to garner interest and affect behavior. Like Pulizzi, we anticipate that Mason will raise a lot of points some of our attendees will want to pursue further around their particular interests. So we have also given her a break-out session in the afternoon, where the most interested can explore further how to use data and analytics effectively.

Judith Curr is President and Publisher of Simon & Schuster’s Atria imprint. She has always had an admiration for entrepreneurship and indie authors have looked attractive to her as a publisher for a long time. (She points out that Vince Flynn started out as a self-published author.) So Curr did some brainstorming and tried to figure out how to make her imprint a place that an indie author would want to be. In this talk, other publishers who see the importance of appealing to authors who want to market themselves, manage their careers, and publish faster (or shorter) than the conventional process, can learn from her thinking, insight, and experience.

Our main stage activity will conclude with an interview by Michael Cader with Keith Moerer, who runs Apple’s iBooks Store. iBooks Store has established itself as the second leading global seller of ebooks and has ambitious plans for continued growth. We’ve never had the good fortune to have them on the DBW program before. We are thrilled to be able to close our main stage day with Amazon and our second with Apple, giving publishers a chance to hear from the two biggest retailers in the world for their ebooks.

Not covered in this post or my prior post about the DBW breakout sessions is the sterling Launch Kids program organized by our friend and frequent collaborator, Lorraine Shanley of Market Partners International. The world of juvie and YA publishing will probably change the most of all publishing segments and there are legions of players outside what we think of the book business working on it. Lorraine has corralled a number of them — familiar names like Google, Alloy, Wattpad, and NewsCorp’s Amplify and innovators such as Kickstarter, Speakaboos, Paper Lantern Lit, I See Me, and Sourcebooks’s new smash success, Put Me In The Story. If publishing for young people is on your radar, you’ll want to plan for three days with us and start with Launch Kids the day before DBW 2015 begins.

Through the comments section of this blog, I got to know Rick Chapman, who is the self-published author of books on software (and, now, also some fiction.) Chapman’s comments on the blog were so insightful that I recruited him to speak on a panel at DBW (covered in the last post). Yesterday, Rick published this piece challenging the conventional wisdom that Amazon is the indie author’s best friend. He has even started a survey of indie authors to gather data for his DBW appearance. Whatever position one takes on Amazon, Chapman’s post is thought-provoking and entertaining. If you read this, you’re likely to want to see him when he speaks on a panel at DBW.

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The Digital Book World program this year covers the waterfront of the digital transition for book publishing


(This is a longer-than-usual Shatzkin Files post reviewing the topics and speakers for the 26 breakout sessions at DBW 2015. It serves as a checklist of “things to think about right now” for book publishers living through the experience of digital change. The entire program is here. We decided not to link to each and every speaker.)

The main stage speakers get most of the promotional attention leading up to Digital Book World. That’s just good marketing because there are many important names. Some have written big books (in addition to many other things they’ve done) like Ken Auletta, Seth Godin, and Walter Isaacson. We have a number of CEOs on the main stage as well, including Brian Murray of HarperCollins, who has just been named PW’s “Person of the Year”.

But half of Digital Book World is the six breakout session slots, at which attendees select from several choices. I take some pride in saying that we’re requiring some of the toughest decisions our attendees will have to make in 2015 very early in the year when they decide for each slot which session to attend and which ones they have to skip.

What we tried to do was to schedule things so that our “tracks” — two or more sessions on marketing, data, global, transformation, kids/education, technology, and new business models — are set up to allow people to attend all the sessions in that track. But there is overlap, of course.

“Marketing” is definitely the marquee subject for DBW 2015. We have seven sessions under that heading. On the first day we have a conversation about the skill sets required for marketing today, chaired by my Logical Marketing partner Pete McCarthy and featuring Jeff Dodes of Macmillan, Angela Tribelli of HarperCollins, Rick Joyce of Perseus, and Hannah Harlow of Houghton Mifflin Harcourt. Since two of the panelists are recent imports from outside publishing, presumably hired precisely because they had skill sets that publishing training wouldn’t have produced, this group is bound to help all publishing marketers identify what they need to bring on board.

That will be followed by a session on Smarter Video Marketing, which will be chaired by Intelligent Television founder Peter Kaufman, leading a discussion among video marketers Scott Mebus of Fast Company, Sue Fleming of Simon & Schuster,  Heidi Vincent of National Geographic Books, and John Clinton of Penguin Random House. In a world where authors are making their own videos and YouTube is the second leading search engine, this is a topic that suddenly needs to be on everybody’s radar.

The third marketing track session on Day One is on mobile marketing. Since tracking data is now showing that people now do more searching on mobile devices than on PCs, making sure books are optimized for mobile discovery has rapidly become essential. Thad McIlroy, a consultant with a long history in publishing, did a report on mobile for Digital Book World and will present some of his findings to kick off the session. Then he will lead a discussion including Nathan Maharaj of Kobo, Kristin Fassler of Penguin Random House, and CJ Alvarado of Snippet, a reading app that has been specializing in creating mobile reading experiences for branded authors/musicians /personalities, to detail how publishers and retailers are responding to this new reality.

Also related to marketing and also running on Monday, we’ve set up a break-out session for Joe Pulizzi, head of the Content Marketing Institute, who will have done a presentation on the main stage. Content marketing is something publishers need to learn from. Certainly all the techniques that are employed by non-publishers to market themselves with content created for a marketing purpose should be employed by publishers who have tons of content available for marketing. Pulizzi knows all the tricks and will have talked about many of them from the main stage. The breakout session will give attendees that want to learn more, and ask questions, an opportunity to do that.

The marketing track continues on DBW’s second day. One session, being moderated by my Idea Logical colleague, Jess Johns, will examine case studies of successful marketing campaigns. We’re featuring representatives from two of the platforms publishers can work with for marketing: Ashleigh Gardner of content platform Wattpad and Alex White from marketing data aggregator Next Big Book. They’ll each be joined by a publisher who has worked with them (about to be announced). Wattpad and Next Big Book, along with their publisher partner, will walk through what they’ve done in marketing that would have been impossible to imagine a couple of years ago.

Also on Day 2, we’ll be examining the new world of digital paid media. This has been a big challenge for publishers. Digital media is apparently cheap; you can do marketing that matters for hundreds of dollars in “media” cost, it doesn’t require thousands. But there’s also a lot of work and management involved to using digital media right. We were glad to get digital marketers from three leading publishers, Alyson Forbes from Hachette, Caitlin Friedman from Scholastic and Christine Hung from Penguin Random House as well as Tom Thompson from Verso Advertising. This session will be moderated by Heather Myers of Spark No. 9.

A marketing topic that has become top-of-mind for many publishing marketers is “price promotion”. A business has been built around it for the ebook business called BookBub, and its founder and CEO Josh Schanker will be on our panel discussing it. He’ll be joined by Matthew Cavnar of Vook, Rachel Chou of Open Road, and Nathan Maharaj of Kobo. We went for three retailers and service providers here because publisher experience with price promotion is still pretty limited, although the ebook pioneers at Open Road are an exception. Laura Hazard Owen of GigaOm will moderate this session.

Our data conversation begins on the main stage on the second morning of DBW with data scientist Hilary Mason, the CEO and Founder of Fast Forward labs. She started looking at Big Data at Bit.ly, the link-shortening and -tracking service. Mason is going to look at data across a content set that is the only one more granular than books: the content on the web. Her presentation will help us all understand how to interpret audiences for very small portions of the available content. Because we expect her presentation, like Pulizzi’s on Day One, to generate lots of questions, we also gave her a breakout session to facilitate questions and further explanations. DBW sponsor LibreDigital, which has a new offering to help their client publishers turn data into business intelligence, will help Hilary manage the Q&A.

Our panel on “Authors Facing the Industry” will be prefaced by two presentations.. Judith Curr, president and publisher of Simon & Schuster’s Atria Publishing Group, will have done a main stage presentation on the choice “self-publish or be published” that authors face. Then the breakout session will begin with a short presentation from Queens College Professor Dana Beth Weinberg of DBW’s annual “author survey”, giving a data-grounded underpinning to the panel discussion that will follow. Bianca D’Arc, an extremely successful writer of paranormal sci-fi and fantasy romance (and a former chemist), will be joined by two non-fiction writers for this conversation. Both David Vinjamuri, a marketing professor, and Rick Chapman, a computer programmer, have marketed their books themselves because they make more money doing it that way to their highly-targeted audiences. The panel will be moderated by Jane Friedman, one of the industry’s thought leaders about self-publishing.

The data we’ve never had before that is just beginning to be appreciated is the subject of our “How People Read” panel. It has become obvious that the platform owners know more about how consumers “behave in the wild” around reading than publishers do. Multiple device use, response to free samples, whether people read more than one book at a time, and how fast they read various books are all clear to those who serve up the ebooks, as well as differences in behavior that are geographically based, including uptake of English-language ebook reading. In a panel which will be moderated by Chris Kennealley of Copyright Clearance Center, Micah Bowers of Bluefire, Michael Tamblyn of Kobo, Jared Friedman of Scribd, and David Burleigh of Overdrive will share data insights their companies have gained by seeing many consumers of many genres in many contexts. Evan Schnittman, who had senior executive positions with Oxford and Bloomsbury and most recently with Hachette, will be moderating.

Of course, that last session is not just about “data”, it is also about “global”, which is another track at DBW 2015 with two sessions on Day Two.

The first of these, moderated by BISG Executive Director Len Vlahos, is on “Global Publishing Tactics”, designed to help publishers know what to do to sell outside their home territory. Speakers from three companies that provide global ebook distribution — Gareth Cuddy of ePub Direct, Marcus Woodburn of Ingram, and Amanda Edmonds of Google — will talk about what it takes to make your ebooks discoverable and get them purchased outside your home market. All of these entities distribute to just about every market in the world on behalf of a wide variety of publishers large and small. They see what works in metadata, pricing, and marketing, and they know what doesn’t. They are in a unique position to help publishers hoping to expand their global sales know what it will take to do that.

Our other dedicated global track session is the “Global Market Spotlight”, which will help our US- and English-centric audience understand the opportunities in four of the biggest emerging digital markets. It will feature local experts Carlo Carrenho from Brazil, Thomas Minkus of the Frankfurt Book Fair speaking about Germany, Marcello Vena from Italy, and Simon Dunlop of Bookmate, the ebook subscription service from Russia. Following a general introduction about how to look at new markets from Gareth Cuddy of ePub Direct, each of them will talk about how both online and ebooks are taking hold in their market, what local competitors are doing (and there is a very interesting ebook competitor coming from Germany), and what the prospects are for English-language sales in their market. This session will give very directed advice to publishers trying to get sales in four of the most promising new digital territories in the world.

Education is a subject on the agenda for trade publishers because how their books will get to students is undergoing dramatic change they’ll need to understand.

College textbook publishing has been remade in the past decade. In a panel moderated by veteran industry executive Joe Esposito, we will have the four giants of college textbook publishing talk about what that has meant in each of their shops. Simon Allen of Macmillan, Ken Brooks of McGraw-Hill, Clancy Marshall of Pearson, and Paul Labay of Wiley will discuss how their businesses have changed over the past few years, and why. Each of the biggest college publishers has changed their organizational structure, their workflows, and even their products themselves in the past decade, sometimes responding to and sometimes anticipating the changes taking place in the market. All of them have essentially switched from selling textbooks to selling learning platforms. Publishers that sell content into the college market will want to understand the new platforms these players have created and how outside content will now make its way to this market.

The school market is also undergoing extreme change. Partly spurred by the new Common Core standards but also by the fact that digital devices are increasingly integrated into the lives of today’s youth, the classroom experience is being changed dramatically. Neal Goff, who has had senior executive positions in several companies, most recently My Weekly Reader, and who is currently consulting with Highlights, will moderate the discussion about the changing K-12 environment. Three companies with very different perspectives on the market will participate. Chris Palma of Google will describe the operating system that works on the district, building, and classroom level that Google is making available free to school systems, achieving remarkable penetration very quickly. Of course, Google also provides hardware (Chromebooks) and content (through Google Play). Neil Jaffe is the CEO of Booksource, which has been providing print and digital content to schools for many years and sees a continuing need to provide both in the future. And Erica Lazzaro speaks for Overdrive, the company that has dominated the ebook library lending business and is making its way in the school market through its penetration of school libraries. They each have a unique view of how this market is changing. Publishers who sell books read by K-12 students will find this session invaluable.

It is becoming increasingly understood that “gamification” is a way to engage a lot of people who might choose non-reading content, particularly potential readers among the young. Our panel on this subject includes two publishers that are using gamifying to create more engaged “readers”. Keith Fretz will speak for Scholastic, which has made this work more than once already, most notably with “39 Clues”. He is being joined by Greg Ferguson of Full Fathom Five, a collaboration created by James Frey among HarperCollins, Fox, and Google’s Niantic Labs. Another way to employ gamification to engage younger readers is being employed by panelist Thomas Leliveld of Blloon, a subscription ebook service that uses “virtual money” both to reward its users and for them to use to pay for what they read. Also on the panel will be Sara Ittelson, Director of Business Development at Knewton, an adaptive learning company that has developed a platform to personalize educational content and which has lots of data showing how students engage with educational content across ages. This session is moderated by publishing attorney Dev Chatillon.

You could call it “education” or you could call it “tech” (another one of our tracks), but either way DBW attendees will learn about some important new propositions on our Publishers Launchpad session on ed-tech. Our Launchpad sessions are moderated by Robin Warner, a tech investor through her role as Managing Director of Dasilva & Phillips. Launchpad seeks to feature companies that many won’t yet have heard about, but we think they should. Johnjoe Farragher, CEO and Founder of Defined Learning has a new approach to mapping skills to curriculum for the K-12 market. Neal Shenoy, CEO of Speakaboos, will explain his subscription platform for digital picture books which is pedagogically designed to promote education. And Jason Singer, CEO of Curriculet, will explain how his company provides a rental model combined with enabling teachers to annotate and structure the student experience. All of these companies effectively become “gatekeepers” for trade content in schools, making their models very important for publishers who want their books delivered to K-12 students to understand.

The other Launchpad session, also moderated by Robin Warner, is more clearly “tech”-centric. Kevin Franco, the CEO of Enthrill, will talk about how his company “makes ebooks physical” by the use of cards with codes, which is now being trialed in Wal-mart in Canada. Peter Hudson of BitLit enables publishers to provide a free or discounted ebook to people who own a print copy and, along the way, has also developed a really nifty technology that will identify the books on anybody’s shelf from a picture (which they call a “shelfie”). Andrew Dorward of BookGenie451, will explain how his company uses semantic search to make books more discoverable. Beni Rachmanov of DBW sponsor iShook, which has a social ebook reading platform for readers, authors, and publishers, will also present at this session.

Following the Launchpad session, we have our techiest session, moderated by my personal “go-to” guy for understanding tech development in book publishing, Bill Kasdorf, Vice-President at Apex Content Solutions. Bill’s panel’s topic is what might be thought of publishing tech’s “magic bullet”: HTML 5, a format that enables the nirvana of “write-once, use-many-ways” content creation. With the need to manage both print and digital formats and with digital now being rendered on what seems like an infinite variety of screens, the need for publishers to make use of this technology has never been greater. The panelists will include Bill McCoy, head of the International Digital Publishing Forum, and publisher practitioners Phil Madans and Dave Cramer of Hachette Book Group USA, Paul Belfanti of Pearson, and Sanders Kleinfeld of O’Reilly.

Because DBW is relentlessly “practical”, we don’t program much that is far from the current commercial mainstream. An exception this year is our “Blue Sky in the eBook World” panel, which will feature three perspectives that are clearly pushing the envelope beyond where we are today. Chris Kubica and Ashley Gordon have been convening a lot of industry thinkers around the invention of a new kind of bookstore, the publishers’ “dream” to compete with Amazon. They’ll be describing what they and their co-brainstormers have come up with. Peter Meyers, until recently at Citia, is author of “Breaking the Page” and the industry’s leading thinker about how straight-text ebooks can be improved. He’ll put forth his thoughts on that. Paul Cameron is the CEO of Booktracks, a company which puts sound tracks to ebooks and has evidence that the music along with the text improves recall and comprehension. All of these propositions are not (yet) commercially employed, but for DBW attendees who might be looking for the big things AFTER the next big thing, this is the session that will talk about those possibilities. This session is moderated by Professor John B. Thompson, author of “Books in the Digital Age” and “Merchants of Culture”.

Although what the educational publishers are doing might also qualify, we have a track dedicated to “transformation” that has three distinct groups of panelists, each demonstrating how radical change can occur in different ways.

The session on “building the trade publisher of the future” focuses on companies that are remaking themselves from what they were before. Carolyn Pittis, now Managing Director of Welman Digital and formerly on the cutting edge of change management with HarperCollins for over two decades, will moderate. We are proud to be the first industry event to host Daniel Houghton, the new CEO of Lonely Planet, a several-decades old travel book publisher, founded as an upstart, and now rethinking its publishing role in a very challenging travel book market. Lucas Wittman is at ReganArts, Judith Regan’s start-up venture which has an entirely different literary character than the art book publisher she’s working within, Phaidon. Andrea Fleck-Nisbet of Workman is in a company that has just reorganized to be better positioned for change. And Sara Domville, President of F+W (owners of Digital Book World), will describe the experience of turning a “book and magazine publisher” into a “content and commerce company” with a diminishing footprint in print and a growing dependence on ecommerce.

We aren’t neglecting publishing start-ups that are really entirely new propositions as well. Lorraine Shanley of Market Partners will moderate a session bringing together a few of them. Liz Pelletier is the publisher of Entangled, a publisher with new economics that rewards the service providers that support authors as partners in the projects they work on. Georgia McBride is the proprietor of Georgia McBride Media Group, a lean publishing start-up that is developing its properties for multiple media, not just books, taking advantage of her background in music and Hollywood. Jason Pinter of Polis Books is a bestselling thriller writer and has worked for a number of publishers (St. Martin’s, RH, Grove Atlantic, Warner Books) before he founded this digital-first genre book publisher with high author royalties (beginning at 40% of net) against advances. And Atria executive Peter Borland heads up an in-house start-up, Keywords Press, which seeks to leverage YouTube fame into bestsellers with the nurturing of an experienced publishing team.

But it isn’t just book publishers and entrepreneurs who are capitalizing on the digital transition. Former DBW.com editor Jeremy Greenfield, now with The Street, will moderate a session of media companies using digital as an opportunity to change their business models. Sometimes ebooks are very important to this effort and sometimes not so much so. The speakers in this session are Mike Perlis, the President of Forbes, Lynda Hammes, the publisher of Foreign Affairs magazine, Jay Lauf, President and Publisher, Quartz (The Atlantic), and Kerry Dyer, Publisher and Chief Advertising Officer of U.S. News & World Report. The tactics being employed by these three media companies to take advantage of their content and their audiences are harbingers of what all non-book media will be thinking about and doing in the years to come. Publishers can find new collaborators in their ranks, or they’ll be facing these entities as new competitors.

The sessions in the track we call “transformation” are also really about “new business models”. But we have two sessions that are more strictly about publishers exploring new business models.

One of these is on “publishers selling direct”, something that made very little sense for any but the nichiest publishers before the digital era. Dominique Raccah, the founder and CEO of Sourcebooks, pointed out to me that I needed that session (she surely was right!) and will appear on it. She’ll be joined by Eve Bridge from F+W Media, Mary Cummings of Diversion, and Chantal Restivo-Alessi of HarperCollins, the biggest of the publishers to aggressively pursue the direct sales option. The panel will be moderated by industry consultant David Wilk.

Publishers are also exploring new business models with their attention to “verticals”, audience-centric marketing that sticks to a topic in ways that might ultimately allow selling things other than books. This is also a big subject for DBW’s owner, F+W Media, and Phil Sexton, who runs their Writer’s Digest community, will speak about it. Mary Ann Naples, SVP and Publisher at Rodale, Adrian Norman, VP Marketing and New Products at Simon & Schuster, and Eric Shanfelt, Senior VP, eMedia, of HarperCollins Christian Publishing, show us that both specialist and general trade publishers are investing in building these enduring audience connections. Ed Nowatka of Publishing Perspectives moderates this conversation.

There are two panels that will be among the best-attended of all, but which don’t fit comfortably under any of the track headings.

Probably the two most-discussed digital change issues in 2014 have been subscriptions for ebooks and Amazon. We’re pleased to have breakout sessions on each that should really shed some new light on topics that have already been the subject of much conversation.

The subscription conversation will be moderated by Ted Hill, who co-authored a White Paper on subscription for Book Industry Study Group early in 2014 which has looked increasingly prescient as the year has gone along. The session will begin with a brief presentation by Jonathan Stolper of Nielsen Bookscan, who will deliver data from Nielsen’s recent research into subscription sales. Hill will be joined by the two biggest players in ebook subscription, Matt Shatz of Oyster and Andrew Weinstein of Scribd, to describe how their companies have fared building this new model in 2014. He will also have two publishers with books in those services, Doug Stambaugh of Simon & Schuster and Steve Zacharius of Kensington, to talk about how it is going from the publishers’ point of view. As a bonus, Zacharius also has real sales experience with Amazon’s new subscription service, Kindle Unlimited. This will be most people’s first opportunity to get a wide-ranging view of how the subscription model is really working in the marketplace for the subscription services and the publishers themselves.

And, finally, we’ll have an Amazon conversation that is extremely timely against the backdrop of a year when contentious relationships between Amazon and their publisher-suppliers became a matter of public record. Our discussion is on the subject “Can Amazon Be Constrained? And Should They Be?” and it is moderated by Ken Auletta of The New Yorker, a journalist with several decades of experience tracking both media and tech. (Auletta will be appearing earlier that day on the main stage.) He will be talking with Barry Lynn, a scholar at the New America Foundation, who has recently proposed that Amazon be investigated for anti-trust; journalist Annie Lowrey of New York Magazine, who has expressed skepticism about whether the anti-trust rubric fits; and Amazon and indie author Barry Eisler, who has been a full-throated supporter of Amazon’s position against the major publishers. No conference has ever presented such a balanced and provocative conversation about Amazon before; we’re proud it is taking place on the DBW stage.

So there’s a lot to choose from at DBW 2015. We probably won’t settle all the questions around where book publishing is going in the future, but we’re certainly providing engaged conversation about the issues that matter most. And remember after you read this: the highest-profile speakers are mostly not mentioned. We’ll talk about them in a later post about what’s taking place on the main stage.

PS: The last Early Bird discount for Digital Book World expires on Monday, December 15. Save money by registering now!

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Frankfurt is still vast, but it seems to be getting smaller


I’ve spent more than half-a-year of my life in Frankfurt, one week at a time. My first Fair was 1976 so this would have been my 39th if I attended them all. I think I missed two, so that’s 37. I love it and I get enormous commercial benefit from it. I can’t understand people who are in our business who don’t; it attracts the top executives from just about every publishing company in the world.

But, like just about everything in our business, it is affected by the digital revolution.

It stands to reason that gatherings of publishing people (or any other kind, really) that require travel time and expense should diminish in a world where email and Skype and Google Hangouts are a normal part of everyday life. But the venerable events just keep going on. It was more than five years ago that I wondered how long BEA could last. They have an extreme challenge because BEA’s DNA is that it is for publishers to show their wares to bookstores, and the number of bookstores has dropped precipitously for years. And London Book Fair, despite venue issues over the years which have them moving again next year, seemed from my visit last April still to be going strong.

The concerns I expressed five years ago that BEA might disappear have, so far, proven unfounded. Good show management that has brought in other players ranging from bloggers to meetings of BISG and IDPF, digital publishing’s trade association, have, at the very least, postponed what seemed to me to be inevitable. Of course, they have their own venue change to navigate and it will be a tougher one because they’re leaving NYC for Chicago in 2016. That is going to be extremely disruptive.

Frankfurt is an entirely different beast. It is really two mega-events that stretch over five exhibit days: Wednesday through Sunday. Set-up day is Tuesday, so it is really a week-long commitment. For the global book trade, and specifically for those of us in the English-speaking world that are the dominant players in worldwide publishing, it is a unique opportunity to trade rights face-to-face, on metaphorical steroids. Books published in English can have anywhere from zero to a dozen or more foreign language editions which, cumulatively, can bring in very significant revenues. What Frankfurt has done for us for years is provide an efficient venue for those deals to get made.

For German publishers, however, Frankfurt is also an opportunity to meet the public. For the non-German exhibitors and attendees, this is mostly a nuisance but a minor one because the English-language hall has been as far as is geographically possible in the Messegelende (which is about a dozen Javits- or McCormick Place-sized buildings on a vast campus connected by buses and moving walkways; 5-7 minute walks from one meeting to the next can be minimized by experienced fairgoers’ planning, but are unavoidable) from the hall which houses the Germans. (Art book, sci-tech, and other language publishers are a lot closer.)

Global companies use Frankfurt as an opportunity to hold global meetings. I could see on the meeting signboard at my hotel that Hachette and Quarto had meeting rooms booked for the day before the Fair opened from 9 to 5. These are senior management meetings that bring the heads of various regions into the same room; the rights directors and acquiring editors who will be working hard at the Fair aren’t necessarily part of those conversations. This is built into the travel rhythms of the big global companies. And the CEOs are often not fully occupied at the Fair itself. I don’t know if it is part of Frankfurt’s marketing plan to help facilitate these global meetings, but it should be. It cements the commitment of the biggest companies to that spot on the calendar.

(By the way, the global meetings combined with the long-in-advance planning publishers do for Frankfurt make it particularly challenging to run a successful conference ahead of the Fair. Michael Cader and I had a Publishers Launch event for three years — we didn’t do it this year — and both recruiting speakers and gathering an audience was harder than it has been for any other event we’ve done. People schedule their Frankfurt time tightly, and in advance, so you have to have powerful programming posted well before the event to compel people to plan to take a full day of Frankfurt time to attend.)

But it was really obvious this year that Frankfurt — at least that part of it which is about English-language publishers buying and selling with non-English markets — is shrinking.

I stay at the (now Meridien) ParkHotel, which has the Casablanca Bar off the lobby. It has, for years, been the main hangout for the Brits at Frankfurt and, in years past, you could hardly get through the lobby to your room on Tuesday night, Wednesday night, or Thursday night. This year, the crowd hardly spilled out of the bar at all.

But what was really stark was the empty Halle 8 (this year for the last time, the English-language hall) on Friday. Up until about ten years ago, Frankfurt ran through Monday morning and Sunday was the last “real” day of action. My pal Charlie Nurnberg of Sterling was always the last big US executive there working; he always made deals there on Sunday. The biggest big shots had all gone home, and Charlie made himself accessible to lots of smaller players, who were delighted to sell to (or buy from) Sterling. The important point is that there were people for him to meet that day to do business with. Powerful people went home early, but lots of business was still being done.

People hated staying through Monday so the Fair in one recent year relented and eliminated the Monday, and Sunday became the last day. Pretty rapidly, Sunday became a desolate day. This was so much the case that in the past couple of years I’ve managed to persuade Gwyn Headley of fotoLibra, my British pal with whom I share a stand and then — most years — drive back to London, that we could leave on Saturday afternoon and get back to London on Sunday evening, rather than doing it all 24 hours later.

Doing this requires some arranging. The story is that you get “fined” if you abandon your stand early. (I have seen lots of deserted stands over the years and I haven’t actually met anybody who admitted to having been fined. But I have friends who work for the Frankfurt Book Fair, I have partnered with them on conferences — I know them — and they all insist to me that it is true, so I take it seriously. I never yet left not wanting to have my stand again next year so I figure they can enforce the fine.) To avoid that problem, you hire a local young person to sit at your stand. They can’t do any business for you, of course, but they prevent you from being fined. This year doing that cost me 180 Euros. It’s worth it to get back to London a day earlier.

In the past few years since Monday was eliminated, Saturday became quieter but Friday continued to be kinetic and active. It was well known that the top execs, particularly the British ones, left after Thursday, but top editors and marketers were there in force through Friday. Not this year. Friday was the new Saturday. My Logical Marketing partner Pete McCarthy and I had a dozen meetings or more each day on Wednesday and Thursday. I had three on Friday. I had none on Saturday. We made a wisely efficient decision having Pete go home on Friday morning. (Frankly, his time is much more valuable than mine.)

You could have rolled a bowling ball down just about any aisle in Halle 8 on Friday and not broken any legs.

This is not really surprising. Global rights trading used to be an annual event, particularly for illustrated book packagers and publishers who had bulky samples and boards that needed to be seen for decisions to get made. Now it is a continuous effort with PDFs easily moved around the world in milliseconds. And that’s on top of the fact that there are fewer and fewer illustrated books and a consequent reduction in illustrated book packagers and publishers.

Next year the English-language publishers move from Halle 8 to Halle 6. On one hand, this takes us closer to the rest of the Fair and we do a lot of business with Europeans who will be more proximate as a result. It moves the English-language publishing world closer to the kids’ books publishing world (and they overlap, of course) and that’s good. But it also takes us from a hall where we’re all on one floor to one with a smaller footprint where we have to navigate three floors. Going up and down escalators only might pad time between meetings by three minutes or five, but when you’re scheduling a sit-down every 30 minutes (as many of us do, at least on Wednesday and Thursday), that can mean reducing the productive time by 15 percent or more.

And while it puts us considerably closer to the tram stop that can take us into the Fair, it also puts the German public which uses that same tram that much closer to us as well. This is going to be particularly disruptive to the b-to-b trade business on Saturday and Sunday.

The Frankfurt Book Fair will remain an indispensable stop for the global publishing community, but it might have a real battle on its hands trying to remain a five-day event. I don’t have 37 more Frankfurts to go, but I think I’ll see more changes in publisher behavior around it before I’m done than I’ve seen since I started attending.

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Export sales is one of the few areas of predictable growth for book publishers


For a client meeting last week, I was shown a chart that came from Bookstats of channel revenue for publishers. Bookstats is the recent (and now no longer) partnership between the AAP and BISG collecting book publisher shipment information. It has four years of data, which were arrayed in a neat bar chart.

Since the chart showed publisher shipments, it was an imprecise gauge of sales. The third largest channel was “jobbers/wholesalers”, and those books went somewhere else (if they got re-sold and not returned), but we don’t know where. Basically all the other channels got those books eventually.

But it is noteworthy that of the eight channels enumerated (one of which is “other”), only two showed increased sales from 2010 to 2013: online retail and export sales.

Indeed, export sales are one of the real growth opportunities for publishers, and particularly English-language publishers, in the future.

The reasons for this aren’t hard to understand. English is the most important second language in most countries that are not English-speaking. And, obviously, ebooks create no-inventory and little-friction distribution opportunities that make it easy for a publisher in New York or London (or Sydney or Toronto) to deliver to a customer separated by any distance or number of oceans.

In addition, the search engines are global so “discovery” can take place anywhere as well which can increase the demand for printed books as well as digital ones, even though the printed books present a more complex delivery challenge.

The opportunity brings along its challenges. One is that rights conventions need to change. Publishers often have their rights to distribute in some parts of the globe limited by contract. But even when rights aren’t an issue, marketing — including both customizing the metadata and the pricing to a very large number of local territories — can be.

This opportunity has grown rather recently at the same time that many publishers have been preoccupied with overcoming obstacles in their home markets. Both the US and UK markets have been roiled by the relatively sudden emergence of a strong ebook market and the concurrent (and related) weakening of the brick-and-mortar infrastructure for print. Publishers have been scurrying to change many of their practices: licensing differently, learning to do SEO well and employing other digital marketing techniques, shifting their internal structures and workflows, and grappling with the opportunities presented by social media. Many have expended effort on apps and enhanced ebooks which were time and money traps in markets that briefly looked promising but then didn’t pan out.

But in a more settled marketplace, which we have now (perhaps temporarily), the opportunities for growing revenue through export sales is going to get increasing attention from all publishers, who will be happy to know that entrepreneurial companies — some new but some quite established and familiar — have been building out the capabilities to help them.

There are three panels at Digital Book World that will really inform publishers that want to work harder to exploit this opportunity.

The mostly obviously relevant one is called “Global Publishing Tactics: understanding distribution, metadata, pricing, and marketing to maximize sales in different markets”. Two of the panelists are Marcus Woodburn of Ingram and Gareth Cuddy of ePub Direct — we have other conversations pending — and moderated by Len Vlahos, the executive director of Book Industry Study Group. Marcus and Gareth and the panelist(s) who will join them have experience selling around the world on behalf of many publishers. Their insight and advice will be gold for publishers looking to expand their export sales.

We also have a panel discussion “Global Market Spotlights: reports from markets around the world”. The four markets we’ll discuss are Germany, Italy, Brazil, and Russia. The panel will be moderated by Thomas Minkus of Frankfurt Book Fair. Our panelists — all of whom are local players — will talk about the switch to digital reading and online sales in those markets, but will also give specific insight into the market for English-language books.

Another discussion which is a bit more tangential, but will still be informative for publishers trying to grow ebook exports, is one on “How People Read”. What we’re trying to get at here is to use the knowledge that ebook platform providers have about the granular detail of reading consumption: about devices, how far people go in various kinds of books, whether they read more than one book at a time, and how they respond to pricing changes. All of our panelists — Micah Bowers of Bluefire, Michael Tamblyn of Kobo, David Burleigh of Overdrive, and Andrew Weinstein of Scribd — are superintending global platforms. Another aspect of what they’ll reveal is how these consumption patterns vary across markets, including how much English is read in various export markets. Chris Kenneally of Copyright Clearance Center, which also has an increasing international focus, will moderate.

We could well also learn more about global opportunities from the keynote talk we’ll hear from Brian Murray, the CEO of HarperCollins, and Michael Cader and I will certainly be asking Russ Grandinetti of Amazon about how publishers can maximize their export sales through them.

So if export sales is on your current agenda, a visit to DBW on Jan 14-15 also should be. And, in that case, sign up before the end of the day on Monday and save yourself some dough. Early bird pricing ends on Monday night.

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This is a teamwork play that could really give Amazon a headache if they got together


I will admit that I have long been among those who believe that Amazon has what amounts to an enduring stranglehold on the book business. They have achieved a market share — which could be in the neighborhood of half the trade books sold if you combine print and digital versions — that is unprecedented in book business history. This is a smaller share than the two giant bookstore chains — Barnes & Noble and the now-defunct Borders — had combined at the peak of their marketplace power.

Lately, I have seen that point of view challenged. Jake Kerr wrote a very thoughtful piece making the point that Amazon’s desire to take margin out of the ebook business is a good defensive move that diminishes the appetite of their mega-company ebook competitors — Apple, Google, and, less so, Microsoft — to invest in beating them back. Suw Charman-Anderson picked up on the theme that Amazon is being defensive, “looking tired”, and found others who seemed to think the same way. Both of them express doubts about Amazon’s continuing hegemony without even using one powerful argument I think is important. Amazon is protected from ebook competition by the inability of competitors to put DRMed content onto dedicated Kindle ereader devices. (Another barrier is that so many early ebook adopters did so via a Kindle account, so their content and login credentials are in the Amazon platform along with a lot of other shopping data that raises the switching hurdle.) But the share controlled by dedicated devices is diminishing and anybody reading on a multi-function device can choose from a range of ebook retailers. (And that’s not to mention that somebody might invent a way to place protected content on Kindles without Amazon’s help; rumors have it that somebody already has!)

Contemplating Amazon’s weaknesses is new thinking for me. What I see is Amazon’s power over the book business, which is great. Amazon has achieved this position through smart and efficient operations and brilliant tactics like Amazon Prime that build customer loyalty, as well as being beneficiaries of the natural migration of sales from brick stores to online. But, most of all, Amazon benefits from its broad business base. They don’t have to support their business exclusively, or even substantially, from their book sales margin. And, on top of that, they don’t have to finance the building and maintenance of a global operation strictly from what they earn in the United States.

So they trump everybody. Barnes & Noble, their only competitor selling both print and digital books, seems to have stalled in its bid to build a rival global empire with the Nook device as the leading edge. Their lack of stores outside the US robs them of the main tool they used to build Nook from a standing start to what seemed for a while to be a serious threat to Kindle and the consequent lack of global scale is hobbling their Nook business. The US stores are still profitable as print-sellers, but very few are those who maintain that print-in-stores is anything but a declining market. (As for BN.com, the less said the better. Of the four principal components of B&N’s business: bookstores, college stores, Nook ebooks, and their online retailing operation, the most dramatic and persistent failure has been BN.com.)

Kobo, Apple, and Google are all ebook purveyors only with no print book complement. Kobo has nominally tried to deliver a combined offering, and claimed some store support to sell their devices, by making alliances with leading local booksellers in many markets. Apple, a company primarily interested in selling its hardware and the ecosystems it builds around them, has no apparent interest in print. Google appears to have hit on a broader variation of the Kobo strategy, making alliances with physical retailers by offering a combination of its power in search and a same-day delivery capability called Google Shopping Express — competing with Amazon Prime — that retailers in a single vertical couldn’t deliver for themselves.

Under that rubric, Google is now allied with Barnes & Noble. But I see this as an initiative with the accent on the wrong syllable. The combined companies’ offering is only of real value applied to the small number of book purchases for which same day delivery adds substantial utility (and for which the digital version — always delivered instantly — doesn’t constitute an adequate solution for the need for speed). They are further limited by the books available in the particular B&N store plugged into the program in each locality and each store carries far fewer titles than the chain does as a whole. So the number of books customers will need delivered with that alacrity will be further reduced by the imperfect match between the demand and what’s available. Even if this program steals a high percentage of the same-day demand sales from Amazon, I’m not sure how much it would shift market shares. And with Amazon also offering rapid delivery and probably around a greater number of titles, it is not a given that the new offering from Google and B&N will steal much market share at all.

That doesn’t make it a bad move. The sales and visibility are incremental pluses for Barnes & Noble. Google’s new Google Shopping Express has a business model into which B&N fits very nicely. Books are a nice-to-have additional product line to offer within that service, designed to compete with Amazon’s growing same-day goods delivery. This is a fight between two behemoths that is much larger than the book business (as it has to be to interest them). B&N has a role to play, but it is a supporting position, not a lead.

From where I sit, this offering from Google and B&N doesn’t look like a game-charger for the book business. Nothing about it would seem to threaten Amazon’s overall (and still growing) hegemony in book retail. The migration of sales from print to digital and from stores to online has clearly slowed down, perhaps even plateaued, in the past year or two but few are those who believe those trends are permanently over.

Google is on a right track with Google Shopping Express; people who buy physical goods use Google search to find them and see Google ads when they do. But going after the smallest corner of the print book business — those books on which 6-hour delivery presents a very big advantage over 24-hour delivery — is not going to bend the curve much on Amazon’s future, even if it provides some marginal benefit to B&N and Google.

But there is a different combination that could give Amazon a real headache. There are two companies that together could deliver print and digital, just about anywhere in the world with competitive delivery speed, with discovery capability that would rival Amazon’s as well. Between them, they really have almost all the capabilities and infrastructure required already in place.

One of those companies is, of course, Google.

The other is Ingram, the book business’s biggest US wholesaler and, through its present activities already providing global digital and print distribution as well as print-on-demand. Ingram is positioned to deliver any book in any form anywhere extremely efficiently. They also have a robust and accurate database of book metadata which, if combined with Google’s data and search mastery (and capabilities that match Amazon’s “Search Inside” offering as well), could challenge Amazon effectively as a “best first place to look” for any information about books.

What Google needs to take on board to make the strategic leap to explore a partnership like this is that most book consumers read both print and digital and probably will for some time to come. It will get harder and harder to compete with Amazon without a print-and-digital offering; you can’t be fully effective with either one unless you do both.

And it would help if Google saw the book business as distinctly different from the other media businesses that with books constitute Google Play. The differences play to and can enhance Google’s core strength. Book marketing is almost infinitely granular, because the number of possible motivations to buy a book are so great in number. Rarely do you buy music or video because of where your next vacation will be or because you want to put a new roof on your house or change careers. Associating specific book suggestions to discerned interests and motivations is the key to effective book marketing in the digital environment. And the insights about any individual by analyzing their book search also can tell you what else they may be looking for. Nobody does those things better than Google. They have limited impact on the ability to suggest music or movies, but enormous value in selecting what books to feature to any particular customer at any particular time and what else they can be sold after they’ve bought a book.

A Google-Ingram partnership would not only start with every capability necessary to compete with Amazon as a global bookseller, they would have some additional Secret Sauce as well. Google and Ingram wouldn’t actually have to make money on the combined retailing component because they make money other ways that are associated with it. Google would be adding incremental search and ad placement opportunities. Ingram would be benefiting as a wholesaler providing all the print books and many of the ebooks the new “store” sells. They could make nearly nothing from the new retailing operation, just like Amazon does with its book retailing operation, and still have the enterprise return a profit for their engagement.

A joint digital retailing enterprise to sell books and ebooks from Google and Ingram is the only possibility I can see on the horizon that would save the legacy publishing business from being entirely subject to Amazon’s inexorably growing marketplace power. It is almost certain that Ingram — part of the book business Amazon is so successfully disrupting — sees this very clearly. (Full disclosure seldom necessary in this space: Ingram has been a client of The Idea Logical Company for many years.) Being a hero to the book business may be a less immediate objective for Google, but making life a bit more difficult for Amazon almost certainly is. Nothing they could do would create more challenges for Amazon than a partnership with Ingram to create an all-media store that sells both physical and digital versions of everything, including and especially books.

Since I posted my last piece, triggered by Amazon’s invoking of Orwell and Streitfeld’s accusation that they got him wrong, two conflicting posts have arisen. I’m indebted to Hugh Howey for pointing out that apparently Orwell really did want to destroy cheap paperbacks but Orwell’s estate takes a different view. In fact, I don’t think which side got it right is particularly germane to the arguments I was making. The Orwell connection made a cute hook, but it is not really an essential part of either side’s story.

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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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