Politico

Being on the road in London and on my way to Frankfurt, where we have two Publishers Launch Conferences coming up on Monday and Tuesday, I don’t have time for what my British friends would call a “proper” blogpost, with a bit of research (I admit I never do much) and some links. But I’ve been thinking about something over the past month which I ran by a marketing VP at a major house last week. It looks like one of the really big questions facing the major houses in the next couple of years, so it seemed worth airing in the run-up to publishing’s largest global gathering.

Here’s an assumption that is not documentable; it is my own speculation. I think we’re going to see a US market that is 80% digital for narrative text reading in the pretty near future: could be as soon as two years from now but almost certainly within five. We have talked about the cycle that leads to that on this blog before: more digital reading leads to a decline in print purchasing which further thins out the number of bookstores and drives more people to online book purchasing which further fuels digital reading. Repeat. Etcetera.

We’re already at the point where new narrative text units sold are well north of 25% digital (percent of publishers’ revenue is lower than that, of course) and we are still in a period that has lasted about five years (soon to end) where the penetration of digital has doubled or more annually. (I italicized that to emphasize that what I’m talking about doubling is the percentage of sales that are digital, not the absolute number of digital sales. Several people misinterpeted that when I made to it previously.)

Of course, penetration will slow down before it reaches 100%. I’d imagine we get to 80% in 2 to 5 years, then then to 90% in another couple of years, with the last 10% stretching out a long time. How long did it take after the invention of the car before the last person rode their horse to town?

Now here’s a fact which is documentable, and would be documented right here on a day when time wasn’t in such short supply: brands that are not publishing houses are directly publishing their own ebooks with increasing frequency. Magazines and television networks and web sites are recognizing the reality that self-publishing ebooks is something they can do themselves without the complications (or revenue-sharing) that working with a publisher would require.

This is not a surprise to me, but it does really raise a point that major publishers have to consider: can book publishers add enough value to the ebook publishing process to persuade another brand with content credibility, one that has direct contact with the vertical community that is the audience for their books, to do their ebooks through the publisher rather than directly?

This is an existential question for big trade publishers. They have forged partnerships with other brands, even media brands, for many years based on their unique ability to deliver printed books competently and to put them on bookstore shelves. Those are things that a magazine, a broadcast network, a movie studio, or a packaged goods company couldn’t do for themselves.

Which leads to the conversation I had this past week with the marketing VP. We were discussing marketing topics suitable for Digital Book World this January. This house is doing some very important things that wouldn’t have been on their radar a few years ago: SEO, of course, but also developing vertical communities and organizing a corporation-wide effort to gather names and data and direct contact with readers (handicapped by the fact that they almost never actually consummate the transaction). I raised the question: “will publishers be able to persuade these non-publisher brands that it is worth giving up margin and some control to work with publishers in the years to come?”

“That’s a very tall order,” he said.

Random House has apparently succeeded in doing this a couple of times recently. They have made deals with two political web sites (Politico and Real Clear Politics) to do ebooks related to the 2012 presidential election. This is a big deal. It wouldn’t be a big deal if the principal output were print; Politico and RCP can’t do print. But they could do ebooks without Random House; literary agents all over town (among others) are lining up to offer the tools to enable that.

And the profound danger to the big publishers is that if outfits like Politico and RCP start by doing their own ebooks, who is to say they’d stop there? It would be a natural extension to start publishing other people’s ebooks themselves once they had built up a network and infrastructure to sell these files successfully. The thing for trade publishers to fear is that they would lose their role in the value chain, vertical by vertical.

Developing skills and capabilities that make their ebook-publishing ability superior to vertical brands is going to be essential for publishers’ survival as the skills and capabilities to do print publishing become less important commercially over time, as they will. Even if you disagree with my aggessive expectations for ebook market penetration, I think you’ll be able to substitute your own and come up with pretty much the same conclusion.

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In the Internet world, brands will be more important than they’ve ever been before.

Why?

Because as the number of choices available to anybody seeking anything proliferate, brand is the shortcut that allows choices to be made quickly and reliably. And the Internet does nothing better than presenting us with more choices for any quest than anybody can possibly consider carefully.

In the next 20 years or so, the brands that will dominate for a very long time will be created.

Why?

Because the organization and delivery of stuff — including information — is being realigned into verticals; that is: subjects. The requirements of physical delivery required aggregation across interests that the Internet does not. So enduring horizontal brands of content like newspapers or book publishers but also outside content, among retailers, for example, that thrived across interest groups will find themselves challenged by new brands that are narrower and deeper. Being narrower and deeper permits a much more involved engagement with the audience. It strengthens the brand.

That’s how entities like Politico and Fivethirtyeight.com for political news suddenly challenged The New York Times and the Washington Post. That’s how Ravelry and Etsy arose out of nothing to become brands with real power in the crafts space, or how The Food Network or Epicurious became dominant in the web conversation about food.

The owners of the brands that matter will control access to the audiences that matter in the future. Content creators’ fates will be in the brands’ hands.

Publishers can compete in this environment, but only if they recognize the realities and try!

I am not an expert on brands (and I don’t even play one on TV.) But I have been paying attention this concept for about 15 years, since Mark Bide introduced me to it during our work together on the Publishing in the 21st Century program in the 1990s. There are a few simple truths that I believe are clear to anybody who spends any real time thinking about this.

1. For a brand to succeed, its message (often called its “promise” among the Brandanista) must be crystal clear and unconfused. You wouldn’t put the same brand name on toothpaste and tomato sauce. And if Ravelry wants to expand into gardening, they almost certainly should invent another brand.

2. Publishers particularly need to distinguish between B2B (business-to-business) and B2C (business-to-consumer) brands. So a company’s name might be an acceptable B2B brand, communicating things about commerciality, quality, and its marketing effort to bookstore buyers, librarians, and reviewers who will be interested in its offerings across subject matters. But consumers require brands that are consistent as to subject matter, or as to the problems the content offerings solve (which is what makes “Dummies” work.)

3. Healthy brands reduce marketing costs. If you want to sell a romance book, you have to find the audience. In Harlequin’s case, the audience finds them! Yes, Harlequin is one of the exceptions to the rule that a publisher’s name is not a B2C brand. Why? Because they have a consistent product offering. If they decided to expand into mysteries or thrillers, they’d need another brand. Even within romances, Harlequin has sub-brands to give their readers shortcuts to the particular lengths and types of books they want to buy.

4. Precisely the same product with precisely the same marketing expenditure will sell better under some brands than it will under others, which is a corrolary to point 3 above.

5. We all well know that not all brand promises are about content. “Community” (interaction among the interested) and “service” (solving problems or providing help, which is what the content in Dummies books do) are important components of brand as well. My paradigm is to use content as bait to attract eyeballs, but then to use community and service to strengthen the hold of the brand on its adherents.

The overall vision presented in the Shift speech is that vertical communities are forming and that the stakes being planted in the virtual ground are analogous to the land claims made by settlers when Oklahoma was opened up. Each of those claims will ultimately be branded and many of those brands will endure for a very long time. Will important gardening brands be owned by publishers or seed and fertilizer companies? Will important cooking brands be owned by publishers or a food manufacturer or a restaurant chain? Will important travel brands be owned by publishers or a hotel or an airline? It depends on who delivers the combination of content, community, and service that pulls together the interested and then leverages that interest into an enduring brand.

Publishers have great tools to compete but they can only succeed if they know what the game is. Establishing enduring brands is the great opportunity of our time and book publishers are very well-positioned to win. If they play. Understanding content and how to deliver it to markets is a great start, but that’s all it is.

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Michael Wolff has written in Vanity Fair about Politico, which demonstrates many of the priciples of verticalization that I have written about often on this blog. He begins with a summary of a startlingly prescient piece Michael Crichton wrote in the fourth issue of Wired Magazine. Wolff writes:

“In the fourth issue of Wired magazine, in the fall of 1993, just as the Internet was entering public consciousness, Michael Crichton, the author of The Andromeda Strain and Jurassic Park, wrote an essay arguing that newspapers were doomed because they were too dumb. As information became cheaper, more plentiful, and easier to get, consumers, he argued, would become ever more immersed in their specific interests and understand that their more generally oriented paper—at least in the matter of a reader’s special interest, but also by inference everything else—had no idea what it was talking about.”

As for Politico:

They are narrow and deep.

They have established a brand that trumps, or soon will trump, the formerly established brands in their niche.

They built an “Internet-first” model, but they have a “spinoff” print product that is a major contributor to their revenue.

They’re (apparently) profitable.

And if you publish a book on politics. I guarantee you’ll be knocking at their virtual door.

Have a great 4th of July weekend!

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