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One thing we try to do at Digital Book World is to present our audiences with useful, relevant, and, when we can, original data. It is a familiar complaint in our industry that we drive blind. Part of that is due to the sheer diversity and granularity of the “book business”. And another part is due to the blistering rate of change. The net result is that we are constantly trying to read tea leaves. We do our best to deliver some useful tea leaves to our DBW audience.

I make no pretension here to telling you all you’ll hear at DBW (which would be bad business even if I were able to do it!) But here is a roster of the data presentations and a small taste of what the DBW audience is going to get from each one.

We’ll start off with James McQuivey of Forrester Research doing a reprise of a high-level survey of publishing executives that they inaugurated at DBW 2011. Forrester got good participation in the survey, including getting fully filled-out responses from at least two of the Big Six executives.

One very interesting fact from the Forrester research is that the consensus for when the trade business will become 50% digital has moved up from 2015 to 2014. When Forrester announced the original number at DBW 2011, it seemed to many to be aggressive. A year later, it is not likely that the new prediction that it will come sooner is going to surprise a lot of people. We are apparently now used to the accelerating pace of change, but perhaps just in time to have to readjust to it slowing down. (More on that to follow.)

The team of the Milan office of A.T.Kearney (the big global consulting firm) and the Italian ebook retailer Bookrepublic have been tracking the spread of digital reading worldwide. They presented research at last year’s IfBookThen conference in Milan and followed it up with additional research presented at the Publishers Launch conference in Frankfurt. They’ve extended their investigation further — about devices, about internet purchasing, about ebook uptake, market-by-market around the world — for this year’s Digital Book World. They have added questions about self-publishing and piracy to the research they did previously and responses to them will be reported at Digital Book World.

One insight they’ve had is extremely provocative. They say, “We should stop thinking of self-publishing simply as a nice way for indie authors to be published. Viewed another way, measuring self-publishing activity calculates the amount of money Amazon (and others) are no longer sharing with publishers. And it’s growing.”

The data that will justify that insight will be part of the presentation we’ll see at Digital Book World.

We decided to take an intensive look at the romance genre because it is often considered to be the consumer segment that has moved most rapidly into the digital future. We were fortunate to enlist the help of the ebook retailer AllRomanceEbooks.com in our investigation. They circulated a survey that got responses from almost six thousand of their customers. The results of that survey will be announced at DBW and will be followed by a panel discussion with special attention to what other genres and segments of trade publishing can learn from what has happened in the romance market.

What caught my eye from the preliminary results was that only 4% of the ebooks All Romance sells have DRM. Since they carry the ebooks of all the major publishers, and all of those have DRM, what this statistic tells us is what a vast business exists in romance publishing outside the realm of the biggest players in the industry. I’ll leave the analysis to the experts we’ll have on stage for this discussion, but I personally wouldn’t leap to the conclusion that DRM-free is the only reason that 96% of the sales were of that category. Those books are undoubtedly cheaper as well. They may score higher on All Romance’s unique “flame” scoring system (which is all about how frequent and explicit the sex scenes are). But I would imagine that any big publisher hearing that statistic would, at the very least, have its curiosity piqued.

It turns out that a big component of All Romance’s sales success is that they took it upon themselves to add sub-categories describing romance — such as that flame index referred to above — that didn’t exist in the industry’s BISAC standard. That’s metadata!

Metadata isn’t ever going to be a “sexy” subject but it is certainly becoming an increasingly popular one. Our early polling of Digital Book World registrants indicates that our breakout session on metadata might be the most heavily-attended of the 30 breakouts on the schedule. (And everybody who goes will be glad they did. We just reviewed the content of the session with presenters Bill Newlin and Fran Toolan; it’s going to be great!)

Having been told for months and years that good metadata enables sales and bad metadata prevents them, I wanted to get some factual confirmation of that. So I asked Jonathan Nowell, the UK-based head of BookScan and the bibliographic source BookData, if he could do some research to connect the two (his being the only organization that has the information to tie metadata to sales data.) Jonathan did a presentation on this subject for Publishers Launch Frankfurt; he’s updating it for Digital Book World.

The most arresting takeaway last October at the Frankfurt presentation was that adding “enhanced metadata” elements to a basket of backlist books not only stopped their normal sales decay, it reversed it and actually made sales of those books rise after the metadata was improved. Everybody will really be able to visualize the importance of metadata after they hear Jonathan’s presentation.

Verso Media is an advertising agency with high digital consciousness and a deep interest in book purchasing and consumption habits. They survey book consumers looking for insights about the digital changeover. The single most startling takeaway for me from the preliminary results I saw from this year’s research is that the number of people who actually resist the idea of reading digitally has gone up from 49% to 51% of respondents. This data point is in line with other tea leaves that suggest that we might have started to hit real resistance to ebooks, slowing down the digital switchover from the rates of the past few years. And that certainly would not have been what I would have predicted. Jack McKeown, who has held senior positions at three major publishing houses, oversees the Verso research and will present it.

At our Publishers Launch “Children’s Books Go Digital” show on Monday, Conference Chair Lorraine Shanley recruited two trend analysts who are offering interesting trend and data observations of their own.

Amy Henry, VP of Youth Beat, observes that parents and kids are sharing personal experiences more than we remember from our youth. More than 2/3 of teenagers listen to music with their parents! The takeaway is that parents can be marketing conduits to their kids; they’re not just gatekeepers you need to sneak your way past, which is how they have often been characterized in the past.

Ira Mayer, Publisher of Youth Market Alerts, delivers data that tells us that two-thirds of the apps Moms get for their kids are either free or under a buck. Fewer than 10% are more than $3. These are sobering facts, but anybody entering the app space to make money better know them!

Kelly Gallagher, Vice-President in charge of research at Bowker, will have important data to share at both shows. His team has been surveying a pool of book purchasers on behalf of BISG for a couple of years and has charted the growth of the ebook market for the industry throughout that time. The data he’ll be reporting from the latest fielding is so fresh that it misses the deadline for this post. But it would seem likely that the data will show that the ebook switchover is finally slowing down after about five years of doubling or more than doubling annually. That would be of meaningful interest to everybody in trade publishing and would tend to confirm Verso’s finding that the point of more determined ebook resistance grows nearer.

Bowker also runs a study of the children’s book market and he will share appropriate data from that research at the Pub Launch show on Monday. Kelly showed me a couple of slides that suggest that young children’s print could be around for a while. Parents like the idea that a book isolates kids from what are otherwise constant digital stimuli. And what attracts kids to digital is portability (having access to more titles) which, broadly speaking, is more important as kids get older. And he’ll reprise that data presentation at Digital Book World on Tuesday, followed by a panel discussion among participating publishers in the study, including Disney, Scholastic, and HarperCollins. That discussion will be moderated by Kristen McLean, founder of Bookigee and former executive director of the Association of Booksellers for Children.

I don’t mean to suggest that data is all we do at our conferences, or even most of what we do. It isn’t. But we see it as part of our job to encourage the development of original information, such as we did in conjunction with All Romance and Nielsen, as well as to deliver information from efforts already underway within the industry, like the reports we’ll get from Bowker.

Digital Book World will also feature main-stage presentations from Amazon, Barnes & Noble, and Kobo which we expect will also be data-rich (as well as one on business model experimentation from Oren Teicher of the American Booksellers Association), helping us all understand what happened this past Christmas. Keeping up with this pace of change is hard enough; doing it without data is impossible.

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This post will discuss a realization I had even before this morning’s news about the developing e-products scene. I’ve always been a skeptic about enhanced ebooks, based on seeing my hunch that they wouldn’t work come true 15 years ago with CD-Roms. But it is increasingly obvious that CD-Rom type thinking will work very well for kids’ books. In fact, I’m beginning to think that enhanced ebook or app-type delivery could overwhelm books as a container-of-choice in a pretty short time. Single digit years.

The reasons that I’m skeptical about enhanced (or enriched, a recent term I’ve heard that might be better) ebooks is because most adult books are written as narrative reading experiences not intended to be interrupted and now being read by people who value the immersive experience. (Not all. But most of the kind we think of as bestsellers or literature.) My guess is that it is going to be hard to shift many of the hours of consumption now devoted to immersive reading to something quite different. And I see that as a qualitatively different challenge than moving immersive reading itself from one delivery mechanism (paper) to another (screens.)

The reason that kids’ material didn’t survive the CD-Rom period 15 years ago was the complexity of the delivery mechanism. You had to be at a computer, which usually meant a desktop computer. You had to load the CD-Rom, which on most computers (because few then were Macs) required additional navigation before they would play. These products just weren’t really accessible to kids, even if the programming they contained was designed for them.

But those reservations just don’t hold for kids’ “books” (if that’s what you call them) migrated to the iPad, a smartphone or, now, the NOOKcolor (which, I think, is how its owners would like us to spell it.)

The degree to which you can immerse yourself in a book is directly proportional to the fluency with which you read. That means that the younger you are, the more likely you are to accept the interrupted reading experience .

And as the devices get cheaper and more ubiquitous, parents and kids will learn fast how entertaining, instructive, and accessible interactive experiences can be.

I started writing this post over the weekend because we knew about several entrepreneurial ventures that were focused on developing kids’ material in this way. Then this morning’s Publishers Lunch told us the story of the developments at Callaway, which only underscore that some serious money is betting on this direction.

In short, I have come to the point of view that the juvie book business is going to migrate to enhanced digital products much faster than adult narrative text and that, as a result, the origination and publishing for the various kids’ book marketplaces will be increasingly the province of new companies and less and less the business of book publishers.

The Callaway Digital Arts story as Publishers Lunch reported it today is stunning. Not only did they secure $6 million in financing led by Kleiner Perkins Caufield & Byers’s iFund, they have won a $30 million “Ready to Learn” grant from the Department of Education. With this wind at their backs, Callaway says they plan to be producing 150 apps a year by two years from now. They’re being seen by Apple as a “strategic partner” helping the iPad to “transform education.”

While the Callaway start-up is the most dramatic, they’re hardly alone in focusing on the market for enhanced kids’ content built on books .

Oceanhouse Media is building what seems like a comparable business a completely different way. Rather than going to investors for capital, Oceanhouse managed to self-capitalize by building a network of developers willing to work for a piece of the projects they are developing. They’ve got deals with Hay House (that’s not for kids, primarily), their neighbors in San Diego. And they’ve secured rights to Dr. Seuss and Berenstain Bears. In a conversation with them, it sounded like they’d be delivering new products at the rate Callaway projects even sooner than two years from now.

Trilogy Studios has partners who have run game studios at Electronic Arts, Fox Interactive and Vivendi Universal Games and recently launched their most successful children’s product to date, a casual MMO (that’s a “Massive Multiplayer Online” game) based on a very successful animated feature film. They’ve expanded their portfolio to include interactive storybooks and social games and hired publishing veteran Marc Jaffe (recently of Rodale) to secure rights to some of the most recognizable entertainment and publishing brands for further digital development.

Rick Richter, recently the head of children’s publishing at Simon & Schuster, has his own new entrant in the field called Ruckus Media Group. They’re doing Apple and Android apps, have acquired rights to the Rabbit Ears Library (children’s classics read by celebrities) and are signing authors for original content.

Smashing Ideas is a website, game, and app studio that has been in business for 14 years. They’ve worked with youth-focused brands like Hasbro, Nickelodeon, and Disney for many years. Now they have a deal to develop projects with Random House and they’re also going to town on public domain books with apps out or coming soon for War of the Worlds, The Jungle Book, and The Wizard of Oz. This shouldn’t be a big surprise because Ben Roberts, who now leads their ebook division, helped create Alice for the iPad.

All of this investment and all of this development must be seeing the same thing I’m seeing. Kids are going to be a big market for this kind of product. Straight narrative reading can be immersive to the extent that the act of reading itself is easy and effortless. You can’t lose yourself in the story if you’re looking up words or frequently re-reading sentences to get the meaning.

That means it is a lot harder for a younger person to get immersed in just words on paper. That’s why kids’ books offer so much more than that: pictures, of course, but also pop-ups and various other entertaining three-dimensional devices, to the extent they can be delivered in something which is fundamentally bound paper.

You could say kids have been getting “enhanced books” forever!

The new devices have much better capabilities than CD-Roms did to engage in ways other than with words — ways which those of us who love immersive reading might find distracting or annoying but which kids love. Intuitive touchscreen navigation, a relatively recent development, makes it even easier to engage and interact with an active mind that hasn’t yet learned enough language to work comfortably with written cues.

I don’t live in a child-centric atmosphere, but I’ve been aware for the past couple of years that parents who thought their kids were too young for the connectivity expense of an iPhone would buy them an iPod Touch, which does what an iPhone does except make and receive calls (and, therefore, has no monthly connection fee associated with it.) A friend of mine who is pretty determinedly “old media” was recently asking me what I thought about a Touch for his 7-year old, who wanted to keep up with his friends by having one. These kids aren’t using Google for their homework; they’re playing games that are the leading edge of the new kids’ book business.

The iPad drew these new players into the explicit business of making enhanced ebooks of kids’ books. The NOOKcolor only adds fuel to the fire.

And because the NOOKcolor is half the price or less of an iPad, parents will be more relaxed about having their kids playing with it.

There is anecdotal testimony that kids can become more interested in a paper book after they’ve been exposed to the character and story through an enhanced ebook or app. We’re finding that out because the enhanced ebooks being made today are starting out from books that already exist. This is a totally sensible way into the business. Why add to the creative challenge by starting from scratch when there is a wealth of established brands and characters to license? And as the first great success in this enhanced kids genre, Alice for the iPad, demonstrated and Smashing Ideas has picked up, even the requirement of licensing can be sidestepped by using a public domain text as its basis.

The guess from here is that publishers — or whoever owns the rights — will have a nice business for a while licensing books and characters to enhanced ebook developers called “digital studios” who will make very successful products. In time — and not too much time — those studios will become the originators of the new characters and franchises and the book will become the “subsidiary right.” How soon? Not long. Three to five years?

Any publisher that wants to be serving the kids’ market in the middle of this decade better buy one of those studios, or start one.

This idea jumped into my head about a month ago; it had to get past my prejudice against annoying interruptions which is how I view most enhanced ebooks meant for grown-ups. So of course, we started to put together a panel on the subject for the Digital Book World Conference immediately. That got me talking to a lot of these companies. We haven’t made the final call on which three or four will be discussing what they’re up to at the show on January 25-26, but it will certainly be a conversation about juvie publishing’s near-term future.

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I have found a way to describe the difference between the Digital Book World conference we organize for F+W Media and the O’Reilly conference Tools of Change which I believe is accurate and is certainly not intended to be a pejorative description of  Tools of Change. I go to TOC and I find it very valuable, but different from what we’re trying to do.

Tools of Change explores developments in technology that have impact or can have impact on publishing (in general) and helps publishers (of all kinds) understand how to apply them. Digital Book World explores business challenges to trade publishing (defined as book publishers who work primarily through the retail network, or “the trade”) generated by digital change and helps publishers address them. So if I were organizing Tools of Change, I’d want to scan the horizon for technologies that could have an impact and ask “how?” Because I’m organizing Digital Book World, I’m looking at trade publishing’s commercial environment and operations for the impact of technology and asking “what should we do?”

The next Digital Book World Conference is set for January 25-26, 2011. That obliges us to ask: what will the hot digital change questions be eight months from now? What should we be planning to discuss then that will be immediate and relevant to the attendees we’re targeting: the editorial, marketing, sales, and digital strategy people in trade book publishing houses?

To help us figure that out, we’re in the process of recruiting the DBW 2011 Conference Council. That group of about 30 people — CEOs, digital strategists, and marketers from publishing houses large and small, agents, retailers, and independent industry thought leaders — will help us define the panels and choose the speakers that can enlighten and inspire. I’ll introduce you to that group in a future post; the team is in formation at the moment.

Today’s blog is to recruit the readers of The Shatzkin Files to help too. I hope you will.

Here are 15 topics, or speculations, we’ve identified to start building an agenda for discussion next January. Do you have any thoughts on any of these to refine our thinking? Some of these are ideas looking for examples: do you know particular people or companies doing things suggested here (or not suggested here) we should be highlighting? And, most important, what are we missing?

1. What’s going to be in an ebook? We’re definitely moving past the stage where the ebook is a “straight lift” from the print: half-titles, blank pages, and all. As ebook sales are rising, publishers are paying more attention to presentation and quality control. And there have been a few experiments with “enhanced ebooks” that contain added content and features, some of which are presenting books as “apps” to increase the functionality that can be offered. Where will we be drawing the line between “standard” new ebook features — dictionaries and linked notes, for example — and enhancements that might be worth extra money? And what enhancements will we see working in the sense that consumers see them to be worth paying for?

2. What will ebook sales channels look like eight months from now? In addition to the main ones we have today — Kindle, iBooks and the App Store, Nook and B&N, Sony, Ingram Digital and Content Reserve — will we be seeing substantial sales through Google and the Android marketplace, B&T’s Blio, and Copia as well? Will the mobile phone service providers be creating retail outlets that matter too? Will the retailers newly in the ereader game — Walmart and Costco and Best Buy — also be motivated to create a branded outlet of their own to sell ebooks?

3. To what extent will publishers view single-title marketing as a practical endeavor? We’ve maintained that title-by-title marketing is the Achilles heel of general trade publishing and that the steady erosion of book-format-oriented marketing opportunities (book review pages in newspapers, radio and TV talk shows) and verticalization call for different marketing strategies. Where will publishers’ thinking be next January on the challenge of launching each new title into the marketplace?

4. How much progress will publishers be making on establishing direct-to-customer contact? What has characterized trade publishing is its dependence on intermediaries to reach the market. And what has made trade publishing possible is the leverage provided by those intermediaries, allowing publishers to reach millions of readers through mere thousands of touch points. But all publishers today acknowledge that the intermediary structure is breaking down and direct contact with end users is necessary. How is that working out? We may need two panels to answer that question: one of niche publishers that will find it pretty natural to do and one of general trade publishers who will undoubtedly find it very hard and complicated.

5. How important is the mobile phone market? How fast is it growing? What kind of books work best on it? And what do publishers have to do differently to please that market than what they do for larger-screen PCs, tablets, and ereaders?

6. How are publishers tackling the shrinking marketplace for printed books? Are they shedding warehouse space or considering consolidation with other players? Are they renegotiating printing contracts, reconsidering what constitutes a “minimum run” or acceptable print book margins? Are they developing new short-run and POD models to complement their prior pressrun models? Are they launching any new books with a no-pressrun strategy?

7. How much progress are publishers making toward changing their workflow, so that we have “ebook first” editorial processes? Since the beginning of ebooks over a decade ago, the standard technique has been to make them after the print book has been completed, and for the editor and author to focus their efforts on making the best possible print product. There is an increasingly widespread belief that this is backwards, and more complex ebooks help make a compelling argument for reversing the order of things. How far will we have moved in that direction by next January?

8. Does the growth of ebook sales change the thinking of publishers and agents about the efficacy of dividing up the territories for single languages? Do publishers start to see a growth in offshore sales facilitated by ebooks? Anecdotal reporting by O’Reilly, which owns global rights in all its titles, suggests that they’re seeing big sales growth in digital from markets that are hard-to-reach with print.

9. Do non-US publishers start to establish more of a sales presence in the US exclusively through virtual means? We’ve been suggesting on this blog that the growth of online sales — print books and digital books — will soon enable reaching a majority of the US sales potential without inventory, which means without the need for a warehouse or a distributor. That should lead to greater penetration of our market by offshore publishers, in all languages. Will we see enough signs of this by January 2011 to build a discussion around it?

10. How does the future look for the brick-and-mortar bookstore marketplace? On this blog (and elsewhere), concerns have been expressed about the impact on bookstores of the increasing shift to online purchasing for both print and ebooks. Christmas 2010 is being viewed in the consumer electronics industry as the “ebook Christmas”. When we’ve had a chance to digest the sales numbers of new devices and we combine that with what we know about the impact devices have on a consumer’s print book purchases, how do we see the future of bookstores when next January rolls around?

11. Is “profitable self-publishing” an idea gaining credibility or is it a pipedream? In 2009, author J.A. Konrath made a bit of a splash when he blogged about the substantial revenues he was earning putting his short stories and out-of-print backlist on Kindle without a publisher. Will there be more stories like this by January? Will this look like a viable option for established authors?

12. What’s the best approach to ebook distribution for small and mid-sized publishers? Will the original DADs (digital asset distributors) like Ingram Digital and LibreDigital provide the full service suite and sales effort that smaller publishers need? Or will the publishers-as-distributors model — notably including O’Reilly, who went into the business last February, as well as trade publishers and trade distributors like Perseus and NBN and Ingram Publisher Services, be the better option? How much is effective ebook distribution dependent on technical competence and how much of it requires sales competence?

13. After many years of discussion, are we yet beginning to see some new revenue models with any impact, like subscriptions (Disney has tried it now, in addition to O’Reilly’s Safari), selling books by the slice, or new models to compensate for library lending? We know that publishers need metadata-labeled fragments of their books for marketing purposes, but, for trade publishers, is there yet any indication that there’s a real payoff for that kind of tagging in sales revenue?

14. How much of the print backlist is still locked up by rights issues and what impact can different royalty offers have in clearing it up?Jane Friedman’s Open Road has had some success signing up established backlist for higher ebook royalties than the majors want to pay. Is the reservoir of candidates for this treatment substantial? How are agents and big publishers going to resolve these issues?

15. Is the notion of publishers building vertical presences on the web, so often expressed and promoted on this blog, gaining any significant traction in the real world? How are Poetry Speaks and Oxford Bibliographies Online and the forthcoming Pixiq from Sterling doing at establishing a new publishing model? What other examples are emerging or will emerge of publishers using delivering vertical solutions to create new business models?

At the Digital Book World conference, we want to be strategic and we want to be practical. And we want to be focused on the real-world problems digital change is forcing trade publishers to face. Have we left out any of yours?

I have finished this but not posted it yet and am already thinking of things I left out. A substantial publisher I spoke to last week learned from having his trip to the London Book Fair cancelled that he doesn’t need to go there anymore. This company has already given up its BEA floor space in favor of a meeting room. And this CEO himself is no longer going to go to Frankfurt and can see the day not far off when his company will no longer take space there either. Are trade shows  an anachronism in the age of digital communication? I have a feeling you readers and the Conference Council will think of a lot more.

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