Orbit

The fact that Publishers Launch Conferences will stage half-a-dozen or more events before our next big multi-day Digital Book World blowout next January doesn’t change the DBW calendar. Now is the time of year when we have to start thinking about what the big issues will be at the turn of the year so we can start planning the program. As we did last year, we’ll be calling a meeting of our Conference Council (the 2012 group is currently in formation) at the end of June to brainstorm the topics and our approach to covering them.

It’s my job to anticipate now where we’ll be in nine months. What aspects of digital change will be most important to us when we convene again at the New York Sheraton and have a couple dozen sessions to explore the issues? This post exposes the current state of my thinking on the subject; I am shamelessly using the opportunity to engage the very smart audience gathered here to help me refine these thoughts and point out what I may have missed. I count 15 discrete subjects here (some of which can certainly be combined) which have made my list so far. (I’ve italicized them so you can count along with me; they don’t all get their own paragraph.)

The biggest subject of all, of course, is “global.” The reality that every publisher anywhere is now able to reach any reader everywhere with no local presence, no inventory barriers, and many of the same intermediaries that deliver content to local customers is an industry-changer that will take a long time to deliver its full effects. Territorial rights allocation is only one of the many long-time conventions of publishing that will be challenged by the reality of global. It looks like the biggest publishers — those with local organizations in many countries — have the biggest challenge to adjust to the new global reality. We see this now as we’re putting together panels for our BEA and London events on the first biggest opportunity of global: the new ease of selling books in any language and of any origin to the biggest ebook market developed so far: ours in the United States.

Perhaps the second biggest subject is one we’ve discussed in this space for a long time: “vertical.” Even the most avowedly “general” of the big “general trade” houses are beginning to recognize the urgency of direct contact with individual customers. Once that becomes an objective, it quickly becomes apparent that audiences cluster around subjects or genres: verticals. We anticipate some dramatic reorganizing of the imprint, publishing, and marketing structures of the major houses as they develop their audience-centricity. There might even be enough development along those lines to warrant conversation about it at DBW 2012.

Two more categories of change will be in the “sales models” and “product models” publishers will employ, neither of which have had anything but the most minor adjustments since the mass-market paperback became a force just after World War II. We’d expect somebody big to try a subscription model, a la O’Reilly’s Safari or what we get with cable TV, for the consumer market sometime soon, maybe before next January. (In fact, a James Patterson Book Club, which is a sort-of new subscription model, was announced just today!) And the new Amazon Singles program for shorter-than-book-length content is accelerating the awareness of publishers and authors that the length requirements for printed books do not extend to digital ones.

All of this will lead inexorably to more “ebook first” imprints, divisions, and initiatives. I’d guess that by January, several (if not all) of the major houses will have “programs” offering content for sale which is too brief to be delivered as a bound book. We first reported on a program of this kind from Harlequin at BISG’s Making Information Pay conference several years ago. It was an outlier then. It’s more of a pioneer now. This week we heard that Hachette has a short fiction program in its Orbit imprint. Last week in London we talked with friends at Pan Macmillan about a short ebook program they created at the end of last year to capitalize on the many Kindles and iPads that were delivered as presents for Christmas. (Of course, we’re putting that on the program for our London conference; the coordination challenges within an established operation to pull off something like this are not trivial.)

Part and parcel of verticality is direct audience contact and retention. When we wrote a couple of posts last summer about direct marketing techniques publishers had to make part of their standard operations, we were a bit early to get the true trade publishers’ attention. By next January, every publisher’s consumer emailing list will be a component of its marketing effort. A part of this work, of course, is effective use of social media, a subject publishers keep learning more about and which we’ll certainly try to cover — in our way, which is looking for scale and replicability — in January.

Metadata is a subject that just doesn’t go away. It is disappointing to hear from industry bodies and retailers that many publishers haven’t gotten the core metadata totally under control yet. We covered the basics at Digital Book World 2011; in 2012 I hope we’ll be talking about things like rationalizing the BIC (British) and BISG (US) subject codes, which have developed separately to address each market’s idiosyncrasies but which need to be harmonized to enable the full potential of globalization.

Over the next two years, I’m expecting the most disruptive change to take place in children’s book publishing and illustrated book publishing. When the catalyst for ereading was the Amazon Kindle, as it was starting in late 2007, straight text worked but not much else did. Now that Barnes & Noble’s Color Nook and the iPad are devices of choice for millions of people, illustrated material and rich color can be delivered as well as text. In the children’s book area, there have been a slew of new entrants, probably led by big publishing veteran Rick Richter’s Ruckus Media. The illustrated book business hasn’t really surfaced in a big way yet, but it almost certainly will by next January’s Digital Book World. I’d expect it to be a major topic of conversation since illustrated books are far more complex to “convert” and present the opportunity to enhance in ways that may soon become requirements.

The recent news from O’Reilly that they are using Ingram’s services to be able to deliver printed books without holding stock signals another new topic that will be of widespread interest: building a virtual inventory infrastructure. This topic also came up in a discussion at London Book Fair with Sara Lloyd and James Long of Pan Macmillan, one company we’ve found that is very consciously preparing for a 50% ebook world. Decentralizing their print production to reduce inventory and manufacture closer to the point of delivery is very much on their radar screen. (In fact, the whole question of how publishers have to adjust their organizations and overheads to cope with a 50% or more digital book marketplace is one we’re featuring at our Publishers Launch show in London.)

As I write this, it has been nearly a month since we’ve had a lot of conversation about authors doing their own publishing, but we got very familiar with the names Amanda Hocking, John Locke, and Barry Eisler in recent weeks because they’re doing just that. That trend can do nothing but accelerate between now and next January.

This is requiring agents to reconsider their own business models. We’re at the dawn of an era where agents will be publishers themselves and business advisors, not wholly dependent for their revenue on their ability to get advances and royalties from publishers. The first Digital Book World conference in 2010 was the first digital publishing conference to feature agents prominently in the conversation and we talked then about how business models might change. This January I expect we’ll be able to stage some conversation about how new models are working out for those who have tried them. (One of the agents we’ve put on the program at DBW is Scott Waxman, and his Diversion division doing ebooks has 20 books in the market and 10 more about to hit.)

And the last two subjects that we almost certainly should be discussing at DBW 2012 are the still-critical but diminishing segments of a publisher’s marketplace for printed books: brick-and-mortar retail locations, particularly bookstores and mass-merchants and the place so many people have discovered and acquired their reading material, the public library.

The decline of bookstores has been duly noted in The Shatzkin Files and, of course, the bankruptcy of Borders has everybody’s attention. Less well-publicized has been the decline of book sales in the mass merchants. (Tactics for arresting that slide will be the topic of a presentation by Tara Catogge of Charles Levy at BISG’s Making Information Pay conference, another one we get our hands dirty on, taking place on May 5.) As the brick channel for printed books continues its inevitable decline into insignificance, the state of play and the tactics to adjust to the loss of sales and, perhaps more important, merchandising exposure, will be a topic we’ll discuss again, as we did with independent bookstores and heads of sales departments last January.

And how to deal with libraries in the ebook world is a question vexing many publishers. Two of the Big Six just don’t sell them ebooks at all; one company has tried a number-of-loans limitation. We are intrigued by a solution pioneered by Bloomsbury in the UK — a “shelf” of books the library licenses a year at a time for online reading only. We aren’t covering it in our London show because we think most of the UK market is familiar with it but we’ll be putting it on the agenda for Digital Book World next January.

Next week I’ll give you a preview of the first two Publishers Launch Conferences programs: for international visitors to BEA and the Americans who work with them (on May 25) and, with the Publishers Association, our program for UK publishers (on June 21.)

Share this post

As the reality of the shrinking marketing opportunities for general trade books and the continuing verticalization of audiences through the Internet takes hold, we can expect to see some unusual changes (by historical standards) in trade publishing over the next few years.

It seems inevitable that retail shelf space for books is going to be diminishing. This, in and of itself, doesn’t have to mean a reduction in title exposure to the public; Indigo in Canada has said that they’ve cut store inventory but increased title selection by going to more frequent replenishment. That’s a good strategy. The problem in this country is that Barnes & Noble has already been employing it for years, so they don’t have the same opportunity to create further improvement by doing it going forward. They already replenish every store from their DCs every day! And since B&N’s share of the retail book shelf space is likely to be growing since their competition is more challenged than they are, in the US we must expect a declining opportunity to promote books through bookstores.

This is a major problem for the Big Six (in alpha order: Hachette, HarperCollins, Macmillan, Penguin, Random House, and Simon & Schuster) because they require, and plan for, continued sales growth. If overall industry sales of books in stores is going to go down, and it is, then all of the Big Six can’t see their sales go up.

That signals consolidation going forward. We should expect to see at least one get sold to another in the next two or three years. But the traditional method of consolidation — one company acquiring another — will probably not be the only way these companies respond to the increasingly difficult market conditions they’ll face.

Two types of commercial transaction that have been almost unknown in consumer publishing will be pretty common by the middle of the next decade, both of them coming under the overall heading of “publishing portfolio rationalization” which I think all the big houses will engage in.

These changes I’m expecting will start when trade publishers recognize that marketing effectiveness and controlling marketing costs are both dependent on niche focus. Costs which have been traditionally associated with “imprints” will increasingly be seen to be sensitive to subject niches. As marketing activity shifts increasingly to the web, it becomes more and more expensive to market a book that is directed to a different audience than previous books the company has published.

So what happens then? Publishers figure out how to “trade lists.” Look at the situation now with a number of players in the sci-fi arena. Macmillan (Tor) and Hachette (Orbit) are trying hard to build online communities; Macmillan just took the heretofore unusual step of setting up to sell the sci-fi books of all publishers to its audience.

The history of the online world suggests that one of these communities will “win”. In fact, the likelihood is that we’ll see the day when the leading sci-fi site has twice as much traffic as the one in second place, which will in turn have twice as much traffic as the one in third place. Why would the one in third or fourth place keep trying then? Their books would sell better and be marketed more effectively through a competitor’s site. So why wouldn’t they sell off their list to the competitor in that case? I think they would.

Perhaps there will be symmetry and the publisher in first place with sci-fi will be in third place with romance, so they’ll be a buyer in one genre and a seller in the other.

The bottom line is that we can expect to see reshuffling as publishers trade off areas they can’t afford to market to for others where they’re going to expend the marketing effort and want to have the most possible content to dominate the niche and from which to extract a payoff for their efforts.

The second kind of reshuffle we’ll see will involve smaller publishers or third party aggregators taking content off the Big Six’s hands. Each of the big publishers has a few titles in niches such as interior design, health and nutrition, or gardening that they don’t have the critical mass or bandwidth to do anything significant with. Many will be in niche areas that others, often smaller publishers, are developing aggressively. Since the Big Six are going to be financially challenged in the new environment and looking for ways to become more “focused”, selling off clusters of a dozen or two dozen titles will seem sensible. And from the niche players’ point of view, they’ll see the opportunity to sell copies to their growing web communities, or to use the content to make those communities grow even faster.

Horizontal lists that were built for the 20th century publishing ecosystem will not prove to be the right mix for the marketing machines for content that will be evolving in the 21st.

Share this post