Tata Consulting Services

One of the key building blocks of my career was the six years I spent working on a program called “Publishing in the 21st Century” with Mark Bide and a team at Vista Computer Services (now Publishing Technologies) led by then-Chairman Denis Bennett, John Wicker (now at Tata Consulting Services), and Martyn Daniels (now at Value-Chain International). Every year we picked a digital change theme: organizational structure, content to context, etc., and did some research around it. Then we’d present our findings in a White Paper and conferences.

I think it was Martyn who observed that our exercise was like “looking into the same house through different windows.” That is, the subject was really always the same — digital change in publishing — but taking a different slant on it each time would deliver different observations and insights.

And so it continues. The subject of digital change in publishing continues to prove an endlessly fascinating one for observation, analysis, and speculation. And each time you think about it from a different point of view, you learn something new seeing what you have seen before.

This entire experience was critical to my own intellectual development for two reasons: it gave me subsidized (paid-for) time explicitly devoted to thinking about the future and it gave me a lot of smart people, inside Vista and among publishers and other stakeholders whom we interviewed in our research, to discuss with and learn from.

The topic of digital change outside the English-speaking world was placed on my radar in 2008 when I was invited to speak in Copenhagen to Danish booksellers and publishers. It was already the case that a large percentage of the books sold in Denmark were in English. (I have recently heard it said anecdotally that sales of English-language books in Denmark have climbed to 25% of the total!) I observed at the time that digital disruption, which would make books more ubiquitously available outside their home territories, would result in increased intrusion by books in English. It seemed to me, at first, that booksellers would be better able to adapt to this change than publishers because booksellers are not nearly as tethered to their language as publishers are.

I got another chance to focus on how things look outside the US and the English-speaking world when I spoke at the Sao Paolo Book Fair last August. What slapped me in the face there (a sort of “d’uh, I shoulda known that” moment) was the paucity of titles available in epub format in Portuguese. That meant that Portuguese-language ebooks were PDFs, which are not reflowable and very clumsy to read on a device. What is obvious immediately is that holds back the ebook market in Brazil. What is obvious on second thought is that those Brazilians who want to read on devices and who can read in English will find much more of what they want to read in our language than in their own.

Now, with the US having reached a point that ebook sales are substantial, providing meaningful revenue, threatening mortal damage to the print book distribution infrastructure, and upsetting the publishing value chain we’ve known for a century, more or less, the rest of the world knows it is going to follow suit. The UK, frankly as much because they operate in English as for any other reason, is beginning to catch up noticeably. The rest of the world isn’t so noticeably yet, but we all expect they will begin to very soon. And that means disruptive change is coming to the book businesses of the world and they’re looking to the US experience to understand the nature of that change and what to do to prepare for it.

It is clear already that 2011 is going to be a year for me to be discussing the US experience and trying to discern its global implications with publishers and booksellers and agents all over the world. Some of the plans in that regard aren’t quite ready to be announced (although they will be very shortly) but the first such opportunity will be at the IfBookThen conference in Milan where I’ll be speaking on February 3.

I got an insight (another “d’uh” moment) talking to a French sales executive about the local French ebook market a couple of months ago. He said he’d be urging French ebook retailers to make sure to carry titles in English. Why? Because Amazon, Apple, and Google (and he didn’t mention Kobo, but he could have) would all be serving titles in all languages to French consumers. If the local retailers don’t compete that way, they’ll quickly be bypassed by consumers.

So the reality that everybody in the world has to deal with is that English-language title availability in epub dwarfs that of all other languages and that we’re also exporting a developed infrastructure that can make those titles available everywhere and very quickly.

All of these players (and Kobo, Canada-based with a worldwide base of investors) are sourcing titles in all languages, have multi-device platforms, and are each developing a separate and siloed content-focused app market. Standing on the sidelines (internationally; they’re a US-only play at the moment) with many of the same capabilities is Barnes & Noble, who could decide at any moment to be a global player and would have a big infrastructure and title base from which to do it. Copia, which has been our client, Baker & Taylor’s Blio, and Sony also have many of the necessary components in place.

And all of them have designs on getting some content exclusively if they can.

What I’ll tell the conference-goers at IfBookThen in Milan is what the local booksellers and publishers should be thinking about as digital change in their neck of the woods accelerates.

The local retailers must, as the French sales executive said, endeavor to carry titles in all languages, particularly English. (There are tools from the US infrastructure available to enable that too, particularly from our clients at Ingram and our longtime friends at Overdrive.) They have to deliver multi-device functionality: an easy ability to shop and consume ebook product on all of the most popular devices. They have to keep up with features like lending and notes and internal dictionaries. They have to deliver impeccable customer service. And for those retailers that have brick-and-mortar stores, they should learn the lesson from Barnes & Noble’s delivery of Nook that retail locations are very effective places to introduce readers to ereading devices.

Retailers based locally have some other advantages to employ against the global players. They can provide local propositions for content and marketing of use to libraries and institutions. They can be better partners for local authors and local brands. They can maximize their knowledge of local content silos, such as IP that is developed by governments and local corporations and not-for-profits. And, presuming they are more successful than the global players at harvesting content in their local language, they can garner important revenue by selling to their own-language customers globally.

The challenges and opportunites are somewhat different for publishers. I am looking forward to discussing those, as well as going into more detail about the American experience and what lessons can be drawn from it, when I get to Milan in ten days.

In the meantime, next Tuesday and Wednesday we’ll be looking at this from the other end of the telescope at Digital Book World. We’ll have a conversation with a European member of the IDPF board, Cristina Mussinelli, about the emerging market for English-language ebooks in Europe. We’ll have a session moderated by agent Cullen Stanley with an American, a French, and a British publisher talking about how rights carve-ups might be changing going forward. We’ll have presentations from both Amazon and Google. And, perhaps most important of all, we’ll have separate sessions on core and enhanced metadata moderated by Scott Lubeck of BISG, along with a conversation between Lubeck and consultant Michael Cairns about ebook identifiers. Metadata that is accurate and robust is the key foundation for publishers with digital ambitions anywhere in the world.

All publishers are global now. All book retailers are global now. The publishers and retailers who embrace that reality soonest will have the best chance to be around the longest.

Share this post

The very nice people of Tata Consulting Services entertained a group of publishing executives at Yankee Stadium on Friday night in a luxury box behind first base. This was an ideal way to see an historic evening at the ballpark on a very hot night (the box is air conditioned and opening the big window in it actually leaked cold air on the two rows of great seats below) but it also gave rise to some very stimulating conversation with some smart and knowledgable publishers.

Because this was a private evening (and because this is not a muckraking blog; we traffic in insight here, not news), nobody gets identified and no quotes are attributed. But that doesn’t mean that very interesting observations about where publishing is and where it is going have to be kept secret.

There were a variety of publishers and industry leaders in the group. One of the most interesting between-innings conversations picked up from the post on this blog last week about the threat that the rapid uptake of ereading poses to brick-and-mortar stores.

One big publisher observed that he saw clearly that display in bookstores moved the needle on ebook sales. His fear, and a thought we didn’t cover in the post, is that the decline in brick-and-mortar exposure will lead to a decline in the overall sales for many titles. The several of us involved who were in this dialogue agreed that brick-and-mortar simply presented more opportunities to grab impulse sales; you can’t “promote” as many titles in the real estate available on a screen than you can in a well-merchandised physical surrounding. The online advantage is targeting, of course; the store can’t customize its impulse presentations to each individual customer, and that opportunity exists online. But except for the opening screen, we couldn’t think of any online retailer that really takes advantage of that.

Another big publisher  wondered if there might be a plateau point below which the print book erosion won’t go. “Will it level off at 50-50, say, or maybe at 70-30?” It does seem intuitively correct that there’s a hard core of paper book readers that could keep print alive.

But, of course, keeping print alive for any number of people is only half the equation for bookstores. Print can be bought online. In our post on the threat to brick-and-mortar, we posited a 2/3 drop in store sales from current levels will have occurred when we reach 50% ebooks and 50% of the print being sold online. There is a vicious cycle at work here: fewer store purchases lead to fewer stores, which will further fuel online purchasing for those readers who don’t want to give up print. And that still leaves a big problem for the remaining stores.

One publisher had some interesting observations about “ebook first” publishing, a term I think we’re going to hear more and more. To me, “ebook first” means two things. First, it means that the ebook is the primary product being considered as the project is put together. And second it means that the ebook hits the market before the print book. That second point is tactical and practical, not strategic. It takes time to print and bind and ship books, so the presumption is that, when the book development is completed, it is just faster to get the ebook into the marketplace. That wouldn’t be true if you had a “print book first” workflow and had to then do an ebook conversion from your print PDF, but “ebook first”, ending up with an XML document that will deliver all your formats, should eliminate the need to do that.

But a publisher in our group at the game who is working with a blog on publishing reported “it ain’t necessarily so.” The final QA steps with an ebook, particularly if there is any complexity at all to the design or layout, can take longer than delivering the print from the PDF. That’s not theory; that’s this publisher’s actual experience. There is nearly 100% certainty that the PDF will print what you want when you deliver it. But the epub file you deliver might not give you what you want through every ebook delivery system and for every display environment without some further tweaking.

One conversation that made me really want to learn more was a discussion of what big publishers do to prepare for the erosion of brick-and-mortar. Executives from two big trade houses agreed with the point we’ve made here that harvesting consumer names is a key. If most of the market is available online and can be reached without deploying a large-scale organization, publishers will need to raise the switching costs for major authors beyond the cash flow shuffle that the author would suffer if they lost their advance. At the game, I heard two major houses agreeing that emailable names that the house owns will be a key author retention tool going forward; one wonders if there is a sophisticated consumer name gathering and managing process taking place in the big houses that is beneath the radar; or, at least, beneath my radar! Of course, getting into the details of “what exactly do you do” would not have been an appropriate question with a curious competitor listening in so it will have to wait for some other time.

Thinking about the Digital Book World Conference program I’m planning for January, though, this seems like a really important topic. And it also seems like one agents ought to know a lot about. Gathering the names of an author’s fans is a place for publishers and agents both to cooperate and to look for a negotiating advantage. It is very tricky ground.

Several of us also had a bit of conversation about Google and Apple as retailers. One of the publishers expressed skepticism about how well Google Editions would sell ebooks. “Google has never sold things successfully,” he said. I pointed out that “never” for Google was not a very long time; the company is barely more than a decade old. But it is true that whether Google sells three times as many ebooks as they expect or one-third as many, it won’t move the needle for them financially. (More than 95% of Google’s revenue is from advertising.) The same is true of Apple, which seems to put only the most minimal effort into merchandising at the iBooks store.

One TCS executive, with a strong background in the telecom industry, was pretty sure the publishers are underestimating the speed with which the online component of their business will grow. He says the coming G4 installations — the next generation of cell phone signal technology — will mean a four-fold increase in bandwidth and speed. The new “free wifi” offer from Starbucks is a leading indicator, he said. Free wifi will be just about everywhere very soon.

I had been thinking that the only significant advantage of an app store app on the iPhone versus a web-based app was that the “true” app would hold content resident in the phone that would require connectivity to be delivered through the web. But that’s a distinction without much of a difference if wifi is ubiquitously available (or if the app itself has to access an online database to be effective.) And delivering a web app steers clear of the whole Apple approval and vetting process and is, at least today, a lot cheaper to develop. The new Google Android app tool kit apparently presents another cheaper alternative to deliver value than delivering through the Apple app framework. TCS has been responsible for a large number of the apps developed for the iPad but, nonetheless, my new friend from TCS agreed with my observation. “When do apps make commercial sense” is another topic we’ll have to explore at Digital Book World.

As a serious fan, I can assure you that my involvement in all these conversations was between pitches and between innings. There was a helluva ballgame going on. The evening began with tributes to Yankee owner George Steinbrenner and longtime public address announcer Bob Sheppard, both of whom died in the past week. The Yankees’ new primary rival, the Tampa Bay Rays, took an early 3-0 lead, but the Yanks came back with a couple of home runs in the 6th inning to tie the game. The Rays broke the tie in the 7th but the Yankees answered with another solo homer in the 8th. After the greatest player of the Steinbrenner era, relief pitcher Mariano Rivera, preserved the tie in the top of the 9th, the Yankees won in the bottom half on a 2-out single by Nick Swisher. The TCS box exploded with cheers along with the rest of the Stadium. It was a perfect night at the ballpark.

Share this post