Digital Book World

I want to make clear at the outset that this post is not about “enhanced ebooks”, making something multiple-media out of a book that started as straight text. That’s a “want to do” problem that I’ve always been skeptical about and which I believe many, if not most, publishers are abandoning as “not commercially viable at this time”. Today’s ruminations are about moving illustrated books from print to digital, which many of today’s book publishers will find a “must solve” problem as the channels to reach consumers effectively with illustrated books — the bookstores — are diminished in number and power by digital change.

Amazon and Barnes & Noble are trading boasts about whose iPad-lite is better than the other guy’s. Kobo’s Vox is joining the party with Kobo now owned by Rakuten, a massive Japanese company that gives the former upstart the means to really compete with all the other players. We can be pretty sure that tablets that can deliver color-illustrated book pages will be in many hands very soon. (That’s in addition to the tens of millions of iPads and many millions of Nook Color devices that have been sold already.)

This is presenting publishers with illustrated books on their list with what seems like an enormous opportunity. But it also presents some equally enormous challenges.

It has been estimated by many that 25% of the print books sold are illustrated books. (I last saw this number in a slide from Michael Tamblyn of Kobo at our eBooks for Everyone Else conference in San Francisco on November 2d.) I am not sure what that means. Trade books only?

And even if I did know what it means, I wouldn’t know enough. Books that are primarily pretty pictures, which don’t require much integration of the pictures and text (the minority of the 25%, one would assume) are a considerably simpler proposition to port to digital than a book with pictures and captions that have to stay with them or text that needs to be on the same page with a picture or a chart.

A lot of work is being done to create new standards called HTML5 and Epub3 that will permit more faithful rendering of a publisher’s intentions through a web browser or an ebook than our current capabilities do. But there are two very big flies in the ointment that persist regardless of the technology.

One: illustrated books are considerably more complex and expensive to deliver to digital devices than straight text books. (Even if HTML5 and Epub3 accomplish everything their creators want and they’re fed by XML-workflows, converting the backlists will cost a multiple on a per-title basis of what straight text costs. And I suspect we’re many years away from relieving publishers of the need to make the decisions necessary to execute multiple versions of each book, new or backlist, as will be made clear further on in this post.)

Two: we really don’t know whether consumers with tablets or tablet-lites will choose to consume illustrated books on those devices. (I’d say we do know that people will happily read straight text on devices; what seems to be true in my experience these days is that most of the people who say they “prefer printed books” have not tried an ereader yet.)

So while many publishers are largely seeing eroding print sales for straight text more than compensated for by ebook sales, there is no guarantee that the same will be true of illustrated books.

The retailers selling the tablets and the publishers of illustrated books are excited about the possibilities. The development of HTML5 and its close cousin, Epub 3, promise to enable features and capabilities that heretofore were only available in apps to be delivered as ebooks. That’s a big deal because the app marketplace has two huge shortcomings: it doesn’t enable book discovery very well and it is loaded with very inexpensive products. Many publishers have come to the conclusion that selling apps isn’t a commercially-viable strategy going forward. They’d much rather have their IP on sale in an ebookstore.

To be fair, others (like Callaway Digital Media) think apps work just fine commercially (although I’d add that Callaway does children’s content primarily, and that’s different…) and there are more and more tools being delivered to make app-building cheaper and more economical than it was before. But I still agree with the doubters.

Getting ready for Digital Book World, we had a conversation in the past couple of weeks with a publisher that does illustrated books almost exclusively. He volunteered what we believe: nobody knows if the customer will buy these yet. And then he pointed to his enormous pain point: screen sizes.

The currently-touted solution for illustrated books on devices is “fixed page layout.” You don’t “reflow” the text, which is the technique used for straight text. Reflowing changes the number of words on the page to suit the screen size and type size. That means you are changing the amount of content that appears on the screen. If you did that for illustrated books, pictures and captions wouldn’t stay together and things you planned to be on the same page might very well not be. So you deliver a “fixed page” to the device, just like you do to a printer.

The dominant color tablet device has been the iPad, which has a 10-inch screen (this is a diagonal measurement). But the new tablet-lites have seven-inch screens. This cuts the viewing area by about 50%. There is really no way to present a “page” that combines text and pictures that works on both screen sizes. If you go from 10-inch to seven, the type will be too small to read. If you go from 7-inch to ten, the white space surrounding the page will be ridiculous, or the type will be ludicrously large.

And I haven’t mentioned the fact that the iPhone has a 3-1/2 inch screen. Imagine the fixed page for a 10-inch iPad on that!

Although tools exist that make it relatively quick and easy for a designer to see the page on the right screen size and move things around a bit, that doesn’t really solve the problem. An illustrated book publisher would really have to design and lay out each book at least twice (for the 10-inch and 7-inch screens) and possibly three times (to get the iPhone screen too.) Then those would be three different files, so you couldn’t actually move across your devices and have them auto-synch the way Kindle, Nook, Kobo, and Apple enable you to do now for straight text.

Would you get the files for all three sizes when you made the purchase?

There is a way to create the book for different sized screens with the same number of pages, which would be to use more area for the page than will fit on the screen vertically, and then scroll down to get more. Scrollmotion introduced this technique when they were making simple ebooks as a way to make ebook pages match printed book pages. But even employing that technique wouldn’t really save the illustrated book publisher any work. You’d still have to redesign each page for the particular device, and, anyway, I’m one reader who found I didn’t like ebooks that make you both scroll and turn.

One prominent ebook executive I know told me that there have been about 1000 illustrated ebooks available until a month or two ago but that the conversion houses in India have recently been working overtime to deliver more for the plethora of new tablet and tablet-lite devices hitting the market . Now they’re cranking out approximately 1000 illustrated ebooks a week so that by the end of the year, we might have 10,000 illustrated ebooks to choose from on many of the platforms.

That’s still paltry, compared to a million or more straight text ebooks, but the sudden leap in illustrated ebook titles available and screens to read them on must, one assumes, generate a real sales increase. Maybe we’ll start finding out what works and what doesn’t. This same executive, working for one of the major ecosystems, is trying to help publishers set their priorities for what books to convert. (Much of the conversion expense right now is being borne by the device-maker-retailers, so they get to call some shots.) But meaningful data points are so scarce that they offer very little guidance.

As bookstore shelf space disappears, the urgency of solving this problem grows. The sales of illustrated books have reportedly been going up in the bookstores, which is good news for as long as it lasts. It makes complete sense that retailers would emphasize the things that seeing and touching make you more likely to buy. But I’d be concerned that even the sales of illustrated books will suffer as more and more of the straight text consumers find what they want without visiting a bookstore. And a closed bookstore doesn’t sell any illustrated books at all.

I learned something interesting lately from a travel book publisher with a robust web presence that might be a useful clue. I was told that photo albums are a big new moneymaker for them. People who are traveling to Paris love the opportunity to look through a series of photos of Paris. Each photo is a new screen with new ads on it. That is creating some really easy additional revenue for this publisher’s web sites.

I think that a “500 photographs” series of ebooks could also do very well, particularly with the digital ability to present them in sequences determined by metadata. If 500 Paris pictures were properly tagged, I could see “Eiffel Tower”, “churches”, “19th century architecture”, and “Champs Elysee” pictures grouped together by clicking on a menu.

And that kind of a book, with no associated text necessary (“captions” could be on a jump screen), could be designed once for all size devices.

Of course, whether it would have a commercially-viable print counterpart is yet another question.

I have concerns that converting how-to books to digital success is going to be a very frustrating experience. The ebook will not deliver the printed material well, unless the same care is exercised optimizing the content to each different digital screen as is put into designing a book. And there will be so much more the ebook could do with video and audio and animation and interactivity that would make sense for most subjects that “converting” a book will just leave too much opportunity behind.

But publishers have to try. With millions of devices in consumer hands, some illustrated ebooks are going to sell impressive numbers. We saw what happened with “The Elements” when the iPad came out (even if comparable success hasn’t seemed to happen for any other content-based app product since).

Creating a truly interactive book-type digital experience has been the objective of countless thousands of high-quality person-hours for two decades, since even before the CD-Rom era. Nobody has cracked the code yet, by which I mean nobody has come up with a formula which will repeatedly satisfy consumers so that a publisher can approach the marketplace for digital content with something approximating the confidence that it does with straight text books. As an industry, we’re about to throw a lot more time and money at the problem. Maybe we’ll find an answer. Or maybe there isn’t one.

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In a conversation earlier this week I learned that the big Hollywood talent agencies have come to the recognition that “audience aggregation”, a component of what I have been calling a “vertical” strategy, needs to be incorporated into their thinking going forward. This was signaled very strongly recently when longtime publisher Steve Ross took his fledgling business offering self-publishing advice to authors with him to the Abrams Artists Agency where he set up a new department for them to represent authors rights to publishers.

What does that mean? It means that the celebrities will start increasingly try to “own” their audiences: to gather them in networks, bind them with various content offers like newsletters or other material from the person they “know”, and sell them stuff. The people managing the careers of movie stars are seeing the writing on the wall. The intermediary structure that connected the stars to their public — studios, producers, theatrical distribution — is suffering the pain of all media: declining prices for content because of the increase in supply and consumption habits changing because of more and more quality screens and digital delivery.

Many authors, of course, are trying to do the same thing. They have web pages; they collect the names of those who want to keep in touch with them; and they are, increasingly, selling them stuff. Sometimes the stuff is content (with a way blazed by Joe Konrath and his successful conversion from published author to self-publishing author, so far almost exclusively through Amazon) and now, thanks to Open Sky, they could be selling anything at all.

So the authors and the movie stars are getting ready for the day when they have to bring real live customer contact to the party if they want to be invited. But the big publishers are lagging behind here. Why? One reason is that the big accounts appear to have intimidated them from selling direct to consumers.

This is the kind of thing you don’t know for sure from the outside. Conversations between publishers and their top accounts, like conversations between publishers and the agents for their top authors, are private and closely guarded. But it has been anecdotally reported in the past that Barnes & Noble is not happy if publishers sell to consumers. And I’ve also heard that Amazon has told publishers that if they charge any price lower than the suggested retail in a direct sale, Amazon will consider that lower price to be the basis of their discounts, not the suggested retail.

That threat effectively prevents any publisher from selling direct unless they operate on the agency model and have eliminated price competition in the marketplace. (Of course, under the agency model, all sales are considered sales by the publisher, except, of course, that they don’t have the names or the customer relationship!)

In a business that is built on the leverage of intermediary trading partners who aggregate customers, which trade publishing is, very few are in a position to gratuitously annoy the two most powerful levers they have.

So the publishers have been reluctant to be seen to be selling direct. This concern also applies, for the same reason, to the wholesalers Ingram and Baker & Taylor. Both depend on bookstore business for their survival and it is, perhaps, an enlightened position not to compete with their core customers so neither company sells directly. But it is very constraining. Baker & Taylor really needs a full-line store to sell their BLIO ebook platform, but they can’t do it themselves. And Ingram — our client but we have not discussed this question with them at all — serves publisher clients as a DAD and as an ebook wholesaler who could use a retailing capability; but it is a very longstanding Ingram policy not to compete with their bookseller customers.

That’s the context in which LibreDigital announced their new SkyShelf service last week. SkyShelf is a direct-to-consumer ebook sales capability for the publishers LibreDigital serves as a digital distributor, but it gives them a certain amount of “deniability” or distance from it.

In my opinion, the big publishers must face some very critical questions fraught with customer relationship management challenges.

On the one hand, publishers — all publishers — must start forming direct relationships with end users. They have no choice. Authors are doing it. The retailers are doing it. The Hollywood stars and politicians and ballplayers they want to write books for them are doing it. Part of what the publisher wants to get paid for is marketing. When the most important marketing asset for any book is the number of likely-interested people who can be emailed about its publication, publishers without any names to offer will have a harder time selling their value.

Publishers who do have names on file — from Digital Book World owners F+W Media to Hay House to Harlequin and including others that grow in number every day — are already benefiting. They’re selling more copies expending less marketing money and they’ve got something important to offer authors looking for a publisher.

But it is hard to collect names and build a relationship with an audience if you don’t sell things to them. That’s one place that big publishers are really stuck at the moment. That’s why LibreDigital built SkyShelf to help them out. At the same time they put their competitor Ingram in a ticklish spot because it is hard for them to offer a similar service for the same reason that publishers need the help!

At the same time, the big retailers are pushing their way up the value chain into the publishers’ territory. Amazon has had self-publishing capability that is aimed at authors for a long time. Barnes & Noble invested in iUniverse, one of the first self-publishing start-ups (now part of Author Solutions), over a decade ago. Now B&N has delivered a suite of services called “PubIt” to compete with Amazon’s offering for authors.

Amazon has such a large share of the online print and ebook businesses that, with the publisher disintermediated and the author able to take a much larger share, they can credibly make the argument that a branded author — or one that otherwise does her own promotion and marketing — can make as much money through them alone as through a publisher serving the entire market.

It is more difficult and expensive for Barnes & Noble to leverage their store shelves for self-published authors but, to the extent they can, it will be a very attractive lure. I’d be very surprised if they’re not thinking about how to do that. Borders did a deal with self-publisher Lulu a couple of years and a couple of management changes ago. How long will it be before they revitalize that arrangement and add more competition for the authors’ attention?

The names of people potentially interested in a book who can be contacted for free will be the most important coin of the publishing realm in a short time; in some cases, it is already. There are publishers who are emailing to millions of names every month right now, but none of them are the biggest publishers. If gathering names is not a major priority at any publishing house, it surely should be. It’s mission-critical; it’s about survival. Seen in that light, it must certainly be worth some tough negotiating with major accounts if that’s what publishers have to do to make it happen.

This post was provoked by new information, about what the Hollywood agents are doing and about the launch of SkyShelf. But we’ve been pounding this drum of direct contact for some time. We did a pair of posts (here and here) with the help of direct response expert Neal Goff a few weeks ago trying to push publishers in this same direction. Those posts were about how. This one is about why.

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I showed up Tuesday morning at the gorgeous Cipriani restaurant and ballroom on 42nd Street for The Future of Publishing Summit, not knowing what to expect. I had been invited to attend this in an email last month which promised an interesting program (lots of big tech companies plus a book publishing “track” led by the always-interesting Carolyn Pittis of HarperCollins) at an all-day conference. I was invited because of my status as a “thought leader”; an all-day event like this with no fee is not unheard of, but it also isn’t common. I accepted.

Then when I heard from my friend Evan Schnittman of OUP over the weekend that he’d be going, I decided I should look at “what is this” more carefully. So I went to the web site for it and I found it almost impossible to figure out who was staging this thing and what they hoped to get out of it. My prior experience with free events — many I helped organize that were run by VISTA Computer Services (now renamed Publishing Technology) in the 1990s and several since hosted by MarkLogic — tended to have the organizer highly branded and visible. This one was opaque. “About us” on the “The Future of Publishing” web site described the conference, the agenda, and the goal of “setting the agenda for publishing’s new business model amid digital disruption”, and it led to a link listing the sponsoring companies. But nowhere did it say, “I’m the organizer of this event and this is why I want you there.”

When I got to Cipriani in the morning, I started to see some people I knew: Evan, David Young and Maja Thomas from Hachette, Peter Balis from Wiley, Dominique Raccah from Sourcebooks. “What is this about?”, I asked them. “Who is behind this?” Nobody really seemed to know.

As the day developed, it seemed that the two parties in charge were Tim Bajarin, President of Creative Strategies and Colin Crawford, former EVP Digital at IDG Communications, Inc. Bajarin kicked off the session recalling a critical meeting at UCLA in 1990 that really charted the course for CD-Rom development.

Uh oh, I thought. I wonder if these guys know what “CD-Rom” calls up in the mind of anybody in the room who was in trade publishing the 1990s.

What I had walked into took me back to the early 1990s when I went to a conference sponsored very openly sponsored by Microsoft for book publishers. The message then was, “here are the amazing things we are going to be able to do with CD-Roms in the very near future. To realize the true value of this technology, we need content. We’re not sure exactly how you make money from the content, but, hey, guys, get creative.” And, in fact, that was the message that the five key sponsors of this Summit — Sony, Adobe, Marvell, Qualcomm, and HP — had for their publishing audience.

This was the takeaway. Consumers are going to be navigating their content on faster, smarter, lighter, and cheaper devices that will open up more flexible and robust content delivery and consumption models. Publishers should take advantage of this! But “taking advantage” in this case often meant “more sound, more pictures, more video”. And that recalls the veritable disaster of CD-Rom development for book publishers: largely uncontrolled spending in development of new kinds of products, ostensibly but loosely rooted in books, that had no established market and never found one. The iPad had already unleashed several sparks of enthusiasm for enhanced ebooks; this conference wanted to pour fuel on those sparks and start a real fire burning.

The format of the day was that each of the primary sponsors got a half-hour to present their technology, following 30 minutes from Tom Turvey of Google on the forthcoming Google Editions. (Turvey joked about the fact that he had given the presentation to just about everybody in the room before in their office or his.) I’d say that most of the 30 minute presentations packed at least 5 minutes of useful information into them. There were definitely people buzzing about the fact that Adobe has a workaround to enable Flash-like content on the iPhone, which doesn’t support Flash. We all got the message that connectivity will be more robust and more routine; that both LCD color and e-ink (and before long, color e-ink) will be available in a staggering number of devices (or “form factors.”)

With all that capability in your hand, you can pull up just about any content you want. “Why would you read a plain old book” was certainly part of the message.

Then after a really terrific lunch, about half to two-thirds of the audience (I’d reckon; couldn’t really see because we were broken into three groups in different rooms for books, magazines, and newspapers and no more than a fourth of the audience was there for the final part of the program after the breakouts) remained to hear the content-based presentations. The intention here was “the tech guys will explain what’s coming in the morning; the publishing guys will explain where they are in the early afternoon; and then our experts will ‘pull it all together’ at the end of the day, allowing us to leave with a new plan for publishing.” The “experts”were additional sponsors, of course, and creators of tools or platforms for products or presentation: Zinio, Notion Ink, ScrollMotion, Vook, and Skiff. These are all very worthy companies with substantial propositions that have made real inroads working with established media.

But are they qualified to chart a commercial course forward for complex publishing enterprises? Frankly, I don’t think so.

Cader said privately on Monday that he had joined Conferences Anonymous. He wasn’t going. Admittedly, these guys had a rough row to hoe trying to tell people something new following on the heels of Digital Book World in January, Tools of Change in February, Pub Business Conference and Expo earlier in March, and an ABA meeting on digital change in between. People who are really junkies for this stuff were out at SXSW, which apparently also didn’t seem as revelatory to some savvy book practioners as it did last year (or so said my buddy from the Microsoft conference two decades ago, Lorraine Shanley.)

My sense of this one was “nice try”, but it didn’t work. The superficial logic of putting the tech and publishing people together, laying out the picture from each side and then coming up with “answers” within a single stimulating day is appealing, but it is ultimately impractical. Book publishers (and, I suspect, other publishers as well) aren’t going to do much today based on what they see tech might deliver two or four years from now. And book publishing isn’t one business anyhow. As Turvey of Google, who understands the publishing business better than any other tech company representative I know and, frankly, better than most publishers, spelled out in the beginning: “book publishing is about five different businesses that don’t have much to do with each other.” We in publishing know that very well. Tech companies that want to get our attention need to make clear that they know that too.

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Back in 1993 or so, my friend Lorraine Shanley of Market Partners International and I went to a free half-day conference sponsored by Microsoft. At the time, Microsoft was really pushing the computer manufacturers to install CD-Rom drivers into new computers. They had a definite selfish interest, which was to reduce the cost of goods for their software, which was being delivered on multiple floppy disks. One CD-Rom could hold what a dozen or more floppies would hold and would cost Microsoft considerably less. Since the consumer was paying for what ended up in their computer, not the manufacturing cost of the shrink-wrapped product that got it there, Microsoft knew that making the delivery mechanism cheaper wouldn’t oblige them to cut the cost of their software; they’d just make more money.

So on this particular day, they were hosting the publishing community to tell them what CD-Roms could mean to them. This was the first time that I was aware (although perhaps it had happened before) that the mainstream tech community was talking to the consumer trade publishing community and saying “have we got something for you!”

What Microsoft tried to demonstrate was that many things could be done with all the data that could be packed on a CD-Rom. They were in the process of creating their own CD-Rom encyclopedia, Encarta, and they wanted all publishers to get on the CD-Rom bandwagon. The message essentially was: “you’re the creative people; you’re the content guys. Look at all this cool stuff that CD-Roms can do. Now we don’t know what the product should be exactly and we don’t have a business model for you, but, don’t be Luddites, get off your duffs and start making some CD-Roms!”

Lorraine and I walked out of that meeting thinking, “this isn’t very helpful” to the content publishers who were our client base. So our two companies joined forces with another consulting company owned by Dan McNamee, got PW as a sponsor, and staged a full-day conference called “Electronic Publishing and Rights” (which turned out to be the first of two.) We had a plenary session in the morning, and then the afternoon proceeded on three tracks: consumer, education, and professional. (When we did the second show, we made it five tracks: consumer, school, college, sci-tech, and legal/accounting.) Both shows were sellouts and what I learned putting them together really pushed me, before the Web, before Amazon, and before ebooks had anything more than a 4-line display on an early Sony device, into the business of thinking about what the impact of digital delivery of content would be on consumer trade publishing.

Before long, the conferences we did led to the “Publishing in the 21st Century” program I described last week and the regular reminders that book publishing is many  businesses with quite different characteristics, not just one (which we had acknowledged at our EP&R shows with our afternoon tracks.)

And that leads us to Digital Book World, the new conference on digital change for consumer trade publishers that was announced yesterday. We’re now having conversations that go beyond our very illustrious Advisory Board about speakers and topics. What comes back to us over and over again is how important the trade book focus is.

For example, earlier this week we spent the day working with a client — a large aggregator — that wanted a little “ebook seminar” for their team to be part of our visit. In order to really focus the conversation, I asked for a list of questions and concerns. It became evident very quickly that this company needed information about sci-tech, college, and school ebooks and, of course, what I know best is trade. But I knew enough about the others to know that they are quite different, so I checked in with two smart industry colleagues (both of whom are members of our Advisory Board, as it happens) who know both the trade and non-trade spaces. We came up with a list of distinctions, but one really stood out to me.

In the trade space, one of the big ebook topics (which we plan to explore in depth at DBW) is “pricing.” What should ebooks cost the consumer? The convention among trade publishers has been to peg ebook retail prices to the least-expensive edition available in print. So if there is a cloth edition and a paperback edition, the publisher would be guided on ebook pricing by the paperback (usually setting at or slightly below the print book price.)

But in academic publishing, hardcover and paperback editions are often published simultaneously. The publisher figures that the paperbacks are for the students; the hardcovers are for the libraries. Since ebooks in the academic space are considered primarily library items, and because they have often become part of larger searchable databases, the academic publishers would set their ebook prices based on the hardcover, the more expensive print book available. He also said that sometimes they are even more expensive than the hardcover, because of the additional functionality they have, like links and embedded video.

This was important information for our client, who works across publishing segments. But if presented without a clear contextual frame, it could well be confusing information to a consumer trade publisher (or an academic publisher) trying to figure out a pricing strategy. Because we are tightly focused on consumer trade publishing, our panel(s) at DBW might not mention a tie-to-hardcover pricing, but if we did, we’d pose the model and talk about why it made sense in some other context, but not in ours. We’ll be talking about lots of other things that affect price: discounts, retailer strategies and control, the impact of the publisher selling direct to the consumer, and the extent to which there is enrichment or enhancement, for example. All of those things, as well, are somewhat different in the consumer space than in the others, where aggregation and value-added capabilities are critical components of ebook development.

Now that DBW has been announced, we’re engaged in conversations to refine the topics list and speaker suggestions we’ve gotten from our Advisory Board. We’ll be announcing speakers and panels as they are nailed down. We’re striving for a show that will scream “this is for me!” to consumer trade publishers. While we’re not doing a “call” for topics and panels (we did that ourselves, internally and with our Advisory Board, already), we certainly will happily entertain suggestions. If you have any you want us to consider, better to email my colleague Sophie Shepherd (at sshepherd@idealog.com) than to post them here (though you can also do both.)

This post and my last post last week and many you will see in the weeks to come will be making the distinction between “general trade publishing” and other book publishing. That distinction is a remarkably important one, but it is also going to be a disappearing one. In fact, the distinction between “book publishing” and “publishing” is going to be a disappearing one over the next couple of decades; we have talked before about the fact that format-agnosticism will increasingly characterize all media, not just publishing, as will verticality. While that means that there is a real need for Digital Book World, which emphasizes that distinction, it also means there is a place and need for the more tech-centric and publishing-type-agnostic program presented at O’Reilly’s Tools of Change. Personally, I’m planning to attend both.

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