Where the Web Is Taking Us: The Inevitable Future and the Publisher's Role In It
Good afternoon. And thank you for the opportunity to give a version of my “End of General Trade Publishing Houses” speech to a room with no big general trade publishing houses in it, unless they sneaked in. That actually allows us to get more practical because this audience starts in a place that is more practical.
The basic premise under which we’re operating here, I’ll summarize for those of you have never heard or read my work before, is that horizontal, format-specific media entities are oh, so 20th century, and won’t work very deep into the 21st. The reason for that is the web, which almost forces vertical organization. Horizontal presentations across subject matter — like CBS, Random House, or The New York Times — were the products of a capital-intensive, limited-distribution universe. CBS came out of an era when there were three national TV networks: they all tried to appeal to the broadest possible audience. Daily newspapers, to support their printing and distribution infrastructure, also had to appeal to just about everybody; the Times could get away without a comic strip page, but that was its only concession to verticality — a more intellectual audience. And book publishers were relying primarily on promotional media — newspapers, radio, and TV — and distribution outlets — bookstores — that were also appealing to people across the board. It didn’t matter what subjects Random House or Harper or Simon & Schuster published; what mattered is that each book have a large enough audience to be worth employing the powerful machine they controlled.
But all that is changing now. The newspaper and network TV audiences are shrinking. Bookstore shelf space is shrinking. Mass appeal is harder to achieve and lasts a shorter amount of time when it is achieved.
What the net is also doing is making “event” publishing, and books and magazines are definitely “events”, instantly outdated and feeling stodgy. Publishing on the web is continuous now. Bloggers write and update all day and all night. RSS feeds keep pinging people’s consciousness regularly. You know everything that is in the morning paper before you read it, probably before they even printed it.
Bookstores are also horizontal, and they are also highly challenged. Estimates of how much of the book business has gone to the Web vary from 15% on up, but that’s not spread evenly across the range of titles. One publisher I know thinks that as much as 50% of non-fiction may be sold through Amazon. The brick-and-mortar bookstore is still a magical place; it is a wonderful thing to be in a large room with 100,000 different book titles displayed in it. But now that bookstore is dealing with the fact that every book of great interest a customer heard and read about since their last visit was probably ordered online and already delivered. And customers can walk in with little hand-held devices that can point at a book’s bar code and instantly tell them what it would cost to get that book at an online bookstore. It might be cheaper. Maybe ordering that way will also save them some sales tax. It will certainly save them from carrying the book home.
And the rise of print-on-demand and the long tail, combined with internet-based retailing, probably means that the proportion of books sold that will have been printed and distributed in advance will decline.
In other words, our whole historical model is declining before our eyes. It isn’t collapsing yet, but it certainly is shrinking.
We know– despite some hysteria — that reading and quests for information and entertainment are not declining. So our audiences have moved. Where have they gone?
To the net, of course. And what’s replacing the horizontal print media of the past are vertically niched web communities in formation. It is early stages on this now, and there is still a lot of opportunity to establish a presence in verticals. But we can see from what happened in professional publishing, where law, financial information, construction information, medical information, and others have consolidated into one or very few web communities, that the web likes to mix content and commerce for the like-minded. And interest groups tend to cluster in a relatively small number of web locations.
The web also has changed information and entertainment exchanges from passive delivery from one (the publisher) to many (the audience), to many-to-many and one-to-one interactions, both of which are on the rise. The brilliant Clay Shirky, who is also present at this BEA, talks about reading, writing, and sharing. I think of it as reading, writing, and rating. There are more writers than ever before but, as Shirky points out, there is also a substantial amount of human bandwidth available with only a slight reduction of historical TV-watching patterns. The audiences are active now; this is part of what makes publishing a continuous exercise, not a series of isolated events.
The idea of somebody packaging something complete up for you in advance is certainly still prevalent: movies and TV shows still do it, along with magazines and books. But the web is beginning to make that idea seem a bit quaint. The record business has felt this in a big way because people can now buy songs rather than albums. In the pop music business, albums were created 50 years ago to make the artist and the record company more money when they had a hit single. The analog in publishing is the book of recipes or knitting patterns or house plans. These aggregates will get harder and harder to sell in the Internet world where I expect to purchase exactly what I want without a lot I didn’t want surrounding it. Or maybe not purchase it; maybe just get it free.
As the content offerings become more granular, the functions of aggregation and filtering, which used to be what the readers depended on the publishers to do for them, become new opportunities for web entrepreneurs. We don’t know how that will work yet; probably lots of different ways. The current vogue is for aggregation and filtering to be “crowd-sourced”; you get your site visitors to point to or upload content, and you also get them to rate it for the next site visitor. Over time, as niches become more defined, it is likely that new trusted brands can become both aggregators and filterers, giving you something more directed to your taste or interest than Google does. Of course, Google is always garnering information to allow them to do that better for you too, but they’re ultimately horizontal. And Google does not offer the social networking component integrated with the content and links that are what a vertical will require. Or at least they don’t do that yet!
The Long Tail has gotten a lot of attention since Chris Anderson introduced the book business to the term a few years ago in a Wired article that, with a lot of web participation, he turned into a bestselling book. Anderson saw that the Web eliminated the constraints of shelf space. Before the web, the biggest bookstores carried about 100,000 titles. Any title that wasn’t on their shelves had big barriers to both discovery and purchase.
But Amazon almost instantly knocked down both those barriers when they launched in July of 1995. They used a database that went beyond books in print, including many books that were OUT of print. So it was possible to discover a multiple of the titles you could find in a bookstore, and with fulfillment from the broad warehouse inventories of Ingram and Baker & Taylor, suddenly many times the 100,000 titles previously “available” could now be purchased.
But it didn’t stop there. Soon the used book networks were wired into another database, and then Ingram started Lightning in 1997. Every day, more and more titles were added to the choice available to any consumer, not just by the publication of new books anymore, but from the addition back into the mix of old ones.
And now everything published remains alive approximately forever.
The data we’ve seen on book sales says they’re flat and revenue increases have resulted from price increases. I have my doubt about that because the Net has tended to drive prices down, but the flat units ring true considering all the new competition from the Net for the reading time of the American public.
What Anderson documented in The Long Tail is that everything has a little market; the number of titles that sell something, even if very little, is just about all of them. And because there are so many of them — literally millions now, not the 100,000 from before — the cumulative effect of those sales is substantial.
So, who wins and who loses? Well, if overall units are flat and sales of books that would formerly have been dead are rising like a cemetary full of zombies, it is pretty obvious that the share of market left for new books is diminishing. But it is worse than that for legacy publishers, because the number of new titles competing for that shrinking market is growing by leaps and bounds as outfits like AuthorHouse and lulu.com, offering an ebook and POD model, obliterate the cash barriers to entry.
So it is not just the imagination of longtime book veterans that the business is getting progressively more difficult. It really is. Every day, the competition for a new book being published is greater than it was for those that came out the day before. And if there’s a way this progression ends, I haven’t been able to figure out what it is.
If that’s the challenge, what can publishers do? If the treadmill moves faster and gets more steeply inclined to the floor every day, and there’s no relief in sight, what’s the new model?
Let’s remember why we have publishers in the first place. The main thing they offer authors that authors can’t get anywhere else is access to the market: distribution, primarily, and marketing. Yes, publishers also shepherd the content development and project-manage the book’s creation, but those services are getting more ubiquitously available for hire. What the author wants from the publisher is the publisher’s ability to get that book on Barnes & Noble’s and Borders’s and every independent store’s front table and on the shelf at the public library. As long as those places occupy relative importance in relation to Amazon sales, and they still do, the author has a reason, aside from financial support. to have a publisher.
But those horizontal mechanisms are diminishing in relative importance. What comes next?
In the future, the eyeballs and audience bandwidth will be reached through rising vertical channels, in a variety of online ways: web sites, social networks, and more exotic communications devices like Twitter and others not yet invented.
Publishers have to learn to live in the vertical world. They have to establish their brands — probably new ones that don’t exist yet — and their presence and their market knowledge in spaces that are still in formation. This will require great changes in the way they think: about their audiences, about how hard to sell, about how they think about competition, and about where and when products must emulate services.
The short summary is this: the opportunity for today’s publisher is to use content as bait to attract communities. And communities, once formed and paying attention to new brands that have credibility in their niche, will be the monetizable asset of the future. And they will be the only means a publisher will have to really deliver distribution of an author’s work.
If making the move to vertical is the answer, and it is the only longterm strategy I can think of that might work, then let’s think about how today’s format-specific book publishers, born and raised in the 20th century, are positioned for the future.
The most challenged are today’s most powerful: the big general trade publishers. All of them have lists assembled with very little attention to niche. Their clout has been used to build a great physical supply chain, from printing contracts that give them speedy service and good prices, to warehouses that ship fast and can manage the requirements of major supply chain partners, and by establishing productive relationships with the biggest intermediaries between them and the book-reading public. Their infustracture machine demands volume because it’s built for scale. So they are attempting a feat akin to changing planes in mid-air. They must keep the old model robust while they figure out what the new model is.
The companies best positioned to move to vertical and format-agnostic publishing are those who have already done it. Companies like Wiley and McGraw-Hill and, of course, O’Reilly, and bigger university presses have been in professional and academic markets that have already gone both vertical and to digital publishing. They have had the opportunity to build and monetize community. They have been forced to develop “StartwithXML” workflows where their editors develop taxonomies and learn to tag content in development to aid future discovery. And they have experimented with new business models like rental and subscription and even advertising-based in their non-trade divisions. Porting the lessons over from one side of the company to consumer trade books isn’t a trivial undertaking, but at least a lot of the knowledge exists in-house. And these are big companies, so they can support the investments that new businesses require.
Small companies that are dedicated to niches have the basic tools to make the transition. In some ways, not having big pots of money to finance change can deliver an unintended advantage, because it will require them to partner with other players in the niches they choose. Partnership, particularly with non-publishers and non-BOOK-publishers, will be an important feature of successful community building anyway. Having slender financial resources can compel a company to do the right thing.
What simply is not going to work anymore is the small general trade publisher. With all due respect to the founder’s brilliance, I can’t see a company like Workman being built today the way it was 30 or so years ago. Small companies always had a better chance if they stuck to their knitting, once they figured out what their knitting was. Trying to be a small general publisher not only doesn’t enable modern community-building on the web, it also frustrates special sales efforts. It is hard to imagine a small publisher being successful today on the book trade alone
I’ve been explaining the switch from horizontal format-specific to vertical format-agnostic for well over a year now, much longer than that in a less clearly-articulated way. And a common response, particularly from big general trade houses and those others who, for one reason or another, are attached to traditional publishing, has been “what about fiction and poetry and belles lettres?” In other words, what about the stuff we make our money on?
I used to respond by saying poetry is a niche and fiction has many niches. And we all know there are web communities like LibraryThing and Shelfari and many others trying to get big readers of narrative writing to talk to each other about it. But that’s putting lipstick on a pig, as they say on Wall Street. I think the important thing to understand is this: it’s a pig! Here’s why.
The book business we’ve always known is a “critical mass” business. If you can’t sell enough, you can’t print the book economically. If you don’t run enough volume through your operation, you can’t support your sales rep or your warehouse or your office rent. And, most important to remember, if the bookstore can’t drive enough volume, it can’t stay open. Store volume may go down 10% because of market erosion, but then drop to zero because the store has to close.
The “writerly” books we all love to talk about and read are not the sole support of any brick-and-mortar retailer. The store keeps its doors open selling many other things: reference, compendia of various information, how-to books, kids’ books, joke books, travel books, and gardening books. If sales of those books, even just sales of those books through brick-and-mortar locations, suffer a severe decline, that will cause stores to close. The publisher of fiction and poetry may not like to think about it this way, but there won’t be much of a bookstore infrastructure for fiction and poetry alone. That is, we may not have a choice about whether to find additional ways to get those books to their market.
There was a recent article in The New York Times about Hay House. They don’t do fiction: the mind, body, spirit books they do are not so dissimilar. They are books to be read and discussed, for the most part. Some of them will “chunk” and some of them won’t. Hay House has learned how to build a coherent community from their audience, sticking to a niche that is comprehensible to them and to their readers. And, having built the community, they have learned to monetize it through events which become profit-generating marketing for their list. That’s the right idea, and a poetry publisher could learn from it.
Some of the outlines of the future world of publishing are taking shape.
Ebooks, after years of high expectations from people like me that were not met, are finally getting some traction. Amazon’s Kindle was a catalyst, but the anecdotal evidence is that sales in all formats are growing. Most ebooks to date have been sold in Adobe format and probably were read on laptop or desktop computers. We’ll be watching for handheld devices to start taking much more of the business, which will more fully capitalize on one of the big advantages of ebooks: easier portability for what would be heavy stacks of paper.
As ebooks grow in importance, it gives publishers and their authors a chance to start becoming more continuous. It’s much easier to add a chapter or a new forward or even an updating paragraph to an ebook than it is to a printed book.
The big social networks — namely MySpace and Facebook — defy this analysis because they are horizontal. They niche internally by subject, but they built themselves on social connections, not niche presentations. It wouldn’t surprise me if they start to yield ground now to more vertical plays. There’s a site called ning.com which allows entities to create their own social network. Social networks actually integrated into the verticals is where things are likely to go.
In fact, social networking “tools” — for tagging, sharing, rating, posting — are now being integrated into all sorts of sites. And tools are also developing to pull contacts and posts from across horizontal networks on an individual or subject-niche basis. There is obvious reluctance on the part of the current crop of winners to poke holes in the walls surrounding their gardens, but they recognize that they have to so they do. In time, this will allow new, more logical and more granular, aggregates to grow out of the old.
A new technology called “Twitter” has popped up in the past few months. It enables its users to send out “tweets” — very short bursts of information. If I sent one now it would be “I’m talking to an audience at PMA Academy.” And that would, presumeably, be of interest to somebody somewhere and they’d then know it.
I’ll admit that the attraction of something like this takes a while to dawn on a 60-year old like me, who is hardly looking for more detailed information about the daily lives of my friends and acquaintances. But the magic of the net, we keep learning, is that a very large database can generate small pieces that have great value to some people. Twitter was recently used to help “cover” the North Carolina Democratic primary. Tweets from polling places all over the state presented a useful picture in the aggregate. If enough people start sending tweets and enough people start monitoring them, it creates a whole new always-on monitoring of the world. And it is easy enough to grab attention outside the immediate network if something important, like an earthquake or a terrorist attack or a major traffic accident, is first covered by tweets.
One other trend that is becoming clear is a move away from laptops and desktops as the principal means of accessing the net. The iPhone and Blackberry are the game-changers here. A world where most people have internet access most of the time is going to be almost as different from what we’ve known as what we’ve known is to the pre-internet world. And we can see now that the iPhone internet world is upon us and that ubiquity is just around the corner.
It was recently pointed out to me that Asia, and to a lesser extent, Europe, developed a cell phone based internet culture because expensive PCs were not as ubiquitous in homes and neither were broadband connections. That might be a clue about where to look for future leadership we become untethered from our big screens and all-finger keyboards.
We’ll turn now from the historical, analytical, and theoretical and try to get practical. Exactly what should you DO?
First of all, you have to understand how your publishing program fits in the web world.
Map YOUR web. Title by title, figure out what sites and community subsets — groups within social networks, for example — are important to you. Ideally, you would perform the exercise of making that list for every title whose content you control, in or out of print. (And why, in the age of POD, would you let anything be out of print?)
After you’ve done that exercise by title, you will have created points of reference to roll it up by niche. Where the important communities overlap, a niche is certainly suggested.
You will probably see by what works for each title that the name of your publishing house or imprints or even your series don’t necessarily resonate across the same web communities. That’s a hint to you that the branding you’ve been using to navigate the B2B brick-and-mortar horizontal media world is not going to deliver for you in the evolving niche world. As this analysis starts letting you see the niches and your places in them, it should also start telling you where there are new branding opportunities. Being highly relevant to smaller audiences will serve you better in the long run than being known generally to larger ones.
Once you’ve done this exercise, you are ready to start thinking in niches that will be relevant going forward, at least for a while. Change will be more common than permanence. With the niches defined, they should become a critical organizing principle for your business. You have the opportunity to think in terms of them as you decide on each title you publish. You should try to stay within them, making sure that you’re building content with common markets that will ultimately build brand and reduce per-title marketing expense. You should be thinking about your investment and your profit by niche, as well as by title and by old-style measures like imprint.
What you should also be mapping is the other entities — publishers and non-publishers — that are in your niches. The book publishers particularly might be your competitors, but they also might be important collaborators. The community-building exercise is a long haul; as the recent emergence of Twitter makes clear, we don’t have nearly all the tools in place yet. You must at least entertain collaborating with book publisher competitors to work in this new vertical way. If you’re trying to be of service to a community, it’s a bad start to try to cut them off from content they’d care about. This is a touchy area that will require a lot of rethinking.
If publishers don’t find ways to collaborate, the niches will necessarily be built by third parties who will get upstream beyond all the publishers. Rather than being an aggregator, you will become aggregated.
The non-publishers in your spaces — like merchants of goods and services, academic entities, and hard-blogging interested citizens — are potential critical partners. For a while longer, at least, they are susceptible to seduction by book publishers. Whether you buy web sites or communities or whether you just ally with them, there is still a window for you to trade what you do anyway for what they do anyway in ways that are mutually productive and which raise barriers to entry for your competitors.
The suggestions we?e just talked about are long-term. These are “right now.”
First of all, you need to dedicate some of your marketing budget to community development. I was impressed to learn that one niche publisher, Berrett-Koehler, has already appointed somebody with that charge in their job title. What this means to me is responding to the right blog posts, being a good and public citizen of the right communities, and contributing content to the communities’ conversations. It also means not spamming with your press releases or making every post or remark a commercial for somebody to buy a book.
You also want to start capturing what are vast amounts of intellectual property that publishers routinely throw away. When editors compare one book they’re considering buying to two others in the marketplace in a memo, archive it! When you cut good material out of a book because it disrupts the narrative flow or is not quite worth printing additional pages for, don’t throw it away! Encourage your authors to give you 10-page bios if they have them; they can live online and in ebooks. Don’t lose any testimonials or critiques that come in at any stage. All of this constitutes content that can be useful when you aren’t paying by the sheet of paper to deliver it.
Start finding ways to be “continuous.” That’s about blogging, of course. It is also about adding material from time to time to ebooks. It is about creating a web page for every book that has updated information on it from the author or publisher. THAT is the URL that should go on a book’s jacket, not the one for the publisher’s generic home page.
Start finding ways to use community content. That could be within a web context yet to be developed, of course. But it also makes a lot of sense to think creatively about how community content could be turned into books, or parts of books. You’ll flatter your community and get commercial intellectual property at the same time.
We haven’t dwelt on the fact that “format-agnostic” is another big part of the vertical 21st century publisher. Once you’re distributing files rather than printed paper, you can just as easily be distributing audio, video, animation, games, or software as material meant to be read or looked at. It is going to become routine that the author videos go on YouTube before the book comes out. The long tail that is going to crowd audiobook sales is going to be author- and publisher-generated podcasts that people listen to on their way to work instead of the radio or instead of the latest novel. You need to be in that flow; you need to possess those skills. If you haven’t started already, don’t wait any longer.
The last item on this list is certainly the hardest. Until the most recent times, publishers did their production secure in the knowledge that there was one end product: a book. Sometimes it was slightly more complicated because they’d want to plan for a paperback in a slightly different, or even radically different, format. But now we don’t know WHAT format is next: some kind of ebook, or an iPhone, or a widget? The cost of content agility, which will certainly be a requirement for successful publishers very soon if it isn’t already, drops sharply if the publisher has the discipline of a digital workflow that starts with XML-structured documents from the very begining. And that kind of workflow also enables the author’s and editor’s inputs, such as those we mentioned earlier, and the attendant rights information, to “travel with” the content as it changes forms in development and in its commercial life.
Creating a “StartwithXML” workflow is a difficult process change. Taking advantage of it requires all kinds of work: creating design templates, agreeing on the taxonomies of different niches you publish in, and deciding what to tag and how to tag it consistently. Perhaps this challenge is so large that it belongs on the “strategy” page rather than the “tactics” page, but, either way, it is not too soon to start learning all you can about what it means to your company.
We know the world is changing, but we don’t know how fast change will come. The checklists of strategic and tactical items are important for you to start working on now while you can still make profits on old models.
Books are still very important. They are useful, ubiquitous, and revered. We are still in a world where distributing them requires organization, relationships, and knowhow. You have it; others don’t. That’s leverage now.
But the leverage diminishes as online sales grow. Online sales don’t eliminate the value of publishers; the sales are still driven to Amazon by the efforts of publishers. Even the sales coming to Amazon from affiliate web sites could have been influenced by publishers who called the attention of those web sites to their books. But when the day comes — not next year, but maybe ten years from now — when online sales are the dog and brick-and-mortar sales are the tail, owners of content will think very hard about whether they need the help of a publisher to get what they have to the public.
There’s an opportunity for the people in this room with verticals because the biggest players in today’s world are horizontal. You can out-compete the big guys in their niches, even if they have more content than you do; even if they have better content than you do. In fact, you will probably find them happy to help you own a niche with their content if you help them sell their book. They are product-centric and that’s your opportunity. Remember that the owner of the community is the winner in the end.
Ebooks and POD are tools you should use as well. They allow continuous publishing; they allow involvement with the community. They allow you to start businesses in new niches at lower risk. Harlequin, a very big niche publisher, has built a whole new list of short erotic fiction by starting as ebook only. They’re selling stories shorter than what would make sense in print for prices lower than would make sense in print. And they’re finding new audiences and new authors at the same time. What Harlequin has done there is a replicable example.
Thanks very much for your generous attention today. This slide shows you how to fine me. If I can give you a quick answer to a quick question, I’m always happy to do it. Best of luck navigating to success in the inevitable future.