Carolyn Pittis

“Scale” is a theme everybody in publishing needs to be thinking about, so we’ve made it the focus of our next Publishers Launch Conference


The overarching theme of our upcoming Publishers Launch Conference at BookExpo America on May 29 is “scale”. I thank my PLC partner, Michael Cader, for urging that we label that as a core concern worthy of being the centerpiece for a day’s discussion. (With that nudge, I identified “scale”, along with “verticalization” and “atomization”, as one of the three big forces driving publishing change in the current era of transition.)

We’re covering “scale” from many angles on May 29.

The program will kick off with a presentation from Pete McCarthy, formerly a digital marketing strategist at Random House, about moving beyond our standard understanding of “industry data” — what we learn about the industry in the aggregate from BookStats and Bowker and others — to mining and analyzing the massive amounts of public data about readers: who they are and where they are. The data we care about, and that can really help us, isn’t labeled “book publishing data” but is far more useful and actionable than much of what we try to decipher meaning from that is tagged that way.

The requirements of scale threaten to really change the business of literary agents. Since the rise of agents as intermediaries between publishers and authors in the 1950s and 1960s, it has always been possible for agents to operate as very tiny operations. Single-agent offices have never been terribly unusual, and agents could run a successful business with a handful of prosperous clients, or even just one! The unusual convention in publishing by which the buyer (the publisher) customarily pays for the lunch at which the seller (the agent) learns about the buyer’s likes and priorities has been a symbol of the viability of this highly decentralized world.

But those times are changing. The opportunities for self-publishing and the requirements for authors to be self-promoters have placed new demands on literary agency offices. It is often no longer sufficient to have knowledge of acquiring editors and what they want and a network of foreign co-agents who can help place projects in other languages and territories. Agencies large and small are adding self-publishing services, which can include capabilities as mundane as getting cover art designed and as sophisticated as distribution to a global network of ebook retailers. This adds the potential for “conflict” for the agents. In some cases, agencies have chosen a course that might present a choice for an author between a publisher’s deal and their agent’s deal.

These changes and the challenges they present will be discussed by three agents — Brian DeFiore of DeFiore and Company, Robert Gottlieb of Trident Media Group, and Scott Hoffman of Folio Literary Management — in a conversation that will be moderated by Michael Cader.

We will have presentations from three publishers about how they are employing scale. David Nussbaum of F+W Media (owners of our Digital Book World partners) will talk about how they support a variety of vertical businesses with central services providing ecommerce and event management that make it possible for all their communities to benefit from a wider variety of offerings and capabilities. Ken Michaels of Hachette will describe some of his company’s solutions to knotty challenges like digital marketing and metadata quality that they are then making available industry-wide as SaaS offerings. And Jeff Abraham of Random House will be talking about their efforts to utilize scale in a new publishing environment, to drive efficiency and reach in the supply chain and to reach consumers more effectively via their marketing programs.

Ben Evans of Enders Analysis studies big companies that operate at scale far beyond our industry but whose activities very much affect us: namely Amazon, Apple, Facebook, Google, and Microsoft. His presentation will focus on how their strategies and activities influence the environment for the publishing industry, with insights as to how publishers can surf the waves of these giants’ activities rather than be overwhelmed by them.

As publishers have rethought their organizations in the past several years, the words “business development” have popped up in publishing job titles, which they never had before. We’ll have four publishers talking about what “business development” means to them: Peter Balis of John Wiley, Andrea Fleck-Nisbet of Workman, Adam Silverman of HarperCollins, and Doug Stambaugh of Simon & Schuster, in a panel conversation moderated by Lorraine Shanley of Market Partners International.

Brian Napack was President of Macmillan for several years; he’s now an investor at Providence Equity Partners. In a conversation with Michael Cader, Napack will discuss how he views the importance of scale as an investor and how his views have evolved since he was an operator in one of the large companies that might be challenged by the scale of even larger competitors.

The changes in publishing and the provision of services have also enabled publishing with less organization or investment and by the application of scale created outside publishing to new publishing enterprises. A panel of new publishers with roots outside the industry: Jennifer Day of the Chicago Tribune, Steve Kobrin of Wharton Digital Press, Alison Uncles of the Toronto Star/Star Dispatches, and David Wilk of Frederator Books will talk about how their organizations publish in ways that wouldn’t have been possible or even conceivable a few short years ago on a panel that will be moderated by longtime Harper executive and digital pioneer Carolyn Pittis.

Dan Lubart of Iobyte Solutions has been tracking ebook sales data for years and has been providing the data and analysis behind the Digital Book World ebook bestseller list. Lubart will present insights from “behind” the bestseller list data, including a deeper dive into the trends relating to ebook pricing. The ebook bestseller lists have been the evidence of strong challenges to the publishers who operate with scale on their side, as an increasing number of self-published authors have seen their work rise to the very top of the charts.

Our conference will also tackle the special problems facing illustrated book publishing. The success of ebooks has been pretty much confined to narrative reading made reflowable on devices of any screen size. No formula or format has yet proven to work commercially for illustrated books. We’ll address that question from two angles.

Ron Martinez of Aerbook is the best thinker we know around the question of making creative complex ebooks and apps more efficiently. His company has developed its own tool, Aerbook Maker, to address that challenge. But Ron is also knowledgeable about and respectful of other efforts, including tools from Apple and Inkling, that reduce the cost of experimentation for illustrated book publishers looking for ways to deliver an appealing and commercially viable digital version of their content. He will kick off our discussion of the challenges for illustrated book publishing by reviewing the tools and best practices for lower-cost experimentation. And in his quest to improve the margins for illustrated book publishers delivering virtual versions, he has also worked out what might be a marketing and distribution tool that can improve the equation from the revenue side.

Ron will be followed by a panel of illustrated book publishers talking about how they plan to thrive in an environment where the virtual solution hasn’t arrived and the store environment is becoming more challenging. Joseph Craven of the Quarto Group, Tim Greco of Dorling Kindersley, Lindy Humphreys of Abrams, and Mary Ann Naples of Rodale will discuss these issues in a panel moderated by Lauren Shakely, who faced these challenges herself as the longtime publisher at Crown Illustrated.

Our normal practice at Publishers Launch Conferences, which this review of our planned show spells out, is to put the smartest and most articulate players really dealing with the challenges of digital change in the spotlight to talk about what they’re doing and what they’re facing. This has the virtue of showcasing real solutions to real problems.

Frankly, our view is that very few of the outside disruptors, often tech- and private equity-centric start-ups providing “solutions” to the problems as they perceive them, have gained much traction or added much value. We’ll get more perspective on that from our “business development” panel, who are the ones in their companies charged with interacting with the aspirants, but we stick to the belief that there is more to be gained by watching what the established publishing players and the biggest companies in technology are doing than in tracking the theories spawned by industry outsiders who think their insights will change our world.

But we recognize a weakness to our approach. There are some things the established players just can’t discuss. We can’t expect Random House and Penguin — or their biggest competitors — to talk about what the merger of the two biggest publishers will mean to the marketplace. We can’t expect publishers who must trade with Amazon and Barnes & Noble to discuss the impact of their unique marketplace power — one in online sales and one in brick-and-mortar — on publishers’ margins. We can’t expect agents and publishers to talk candidly about when and whether established authors might be willing to eschew their bookstore sales in favor of higher margins on their online sales through a direct tie to Amazon.

But Michael Cader and I have informed opinions on these subjects and neither of us is looking for a job in the industry beyond the one we already have, which is, from our different perches and platforms, to call them as we see them. So we’re going to engage in a 30-minute 1-on-1 discussion of the topics we think it would be hard for the speakers we recruit to discuss as candidly as we will.

I think our discussion will be a highlight of what will be a stimulating day. Frankly, I’m looking forward to all of it. Join us if you possibly can.

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Business models are changing; trial and error will ensue


The announcement late last week that Random House is starting three digital-first imprints was just the most recent example showing that publishers are exploring new business models. Just days earlier we got news of the partnership between Simon & Schuster and Author Solutions making S&S the third major publisher — preceded by Christian publishing titan Thomas Nelson and dominant romance publisher Harlequin — to put their name to an offering in the “author services” sector.

One might say that S&S is the first of the Big Six to take such a big step in this direction, except that Pearson, Penguin’s parent company, actually bought Author Solutions a couple of months ago and HarperCollins bought Thomas Nelson last year. So, in fact, three of the Big Six are now involved with author services and it is four out of six if you remember the other recent big news, that Penguin and Random House are merging. (And that’s not counting more modest initiatives like HarperCollins’s “Authonomy” or Penguin’s “Book Country”.)

I remember being on a panel in Canada a few years ago with Carolyn Pittis, the very smart digital pioneer from HarperCollins, who referred to the way most publishers did business — buying the right to exploit copyrights and then monetizing them — as one possible business model for a publisher’s organization. She explicitly mentioned “author services” as another one. That was before her company had launched Authonomy, a couple of years before “Book Country”. In other words, big publishers have been thinking for a while about “author-pays” models (just as the professional publishers have).

This really all follows the lead of Amazon, which has made a practice for years of selling a la carte every component of its own value chain. I was just reading an ebook called “The Amazon Economy” published by The Financial Times (an example of a non-book publisher adjusting its own business model to include being a book publisher, about which more on another day) that suggested that Amazon actually makes more money making its infrastructure available to others than it does using it to sell stuff.

In other words, there is potentially profit in deconstructing one’s value chain and selling access to it in pieces.

In a sense, publishers have known this for a long time. They’ve made the part of their operation that handles things after the books exist: warehousing, distribution, credit and collection, and sales available to other publishers for years. Some publishers, like Random House, have built distribution into a significant business with its own management structure within the corporation. Perseus, which as a publisher is itself a roll-up of a number of smaller houses, has built a distribution service that has more than 300 clients. Ingram, whose core wholesaling operation combined with the Lightning subsidiary they built in the 1990s to provide print-on-demand and later digital services, has a comparable publisher distribution offering.

But what Author Solutions — and a host of less robust (and largely cheaper) competitors — has shown is that there is also very widespread demand for the services that precede the actual delivery of books ready for sale.

I have no way except inference to know how Nelson and Harlequin are doing with their author services offering powered by Author Solutions, but the fact that Penguin parent Pearson bought them and S&S has now done this deal certainly suggests that ASI has a good story to tell. Of course, they are market leaders because they make money, and they make money by having good margins. And the prices announced for the services for the Archway initiative — ASI’s project with S&S — are higher than those services could be purchased for elsewhere. That doesn’t mean they won’t sell lots of aspiring authors on using them.

This is all very logical, but also very tricky. Most publishers — at least until very recently — would have thought about the services they sold in a distribution bundle as “commodities”, widely available and highly comparable. It is true that any of the major publishers, many minor ones, and distributors even beyond Ingram and Perseus can deliver the core capabilities: active accounts with all the major retailers, the ability to transact with them and collect the money, and placement of the messages of availability throughout the supply chain. Obviously, they all strive to do these things better than the next guy and to justify charging a point or two more because they’re better at it.

But further up the value chain the publishers’ pride and belief in a qualitative difference between what they have and what the next guy has is much greater. Publishers generally believe in their editors and marketers more than they believe in their sales forces and warehouses. (Buddies of mine in sales 20 years ago used to say, with conscious irony, that there were two kinds of books: editorial successes and sales and marketing failures.) They see their time and bandwidth as precious. They are far more reluctant to make that time available for rent and, in fact, it would appear that all three of the big publisher deals with Author Solutions rely on ASI to provide those capabilities. They’re not coming from the publishers themselves.

All of this sidesteps another important component of successful publishing: the coordination of all these activities. Successful publishing is the result of a lot of very small decisions: in editing, in presentation (both the book itself and the metadata, like catalog copy and press releases, that support it), and, increasingly, in the SEO tags and signals about “placement” that are included in the book’s digital file or marketing metadata. In the digital age, these things can change over time. Every day’s news — about UN votes or Pentagon sex scandals or anything else — could call for a change in the metadata around a book published a month or a year ago to make it more likely to be shown by the search engine queries being placed today.

(The FT ebook on Amazon, which I recommend, makes it clear that Amazon also sells “coordination” on the retail side as an extremely important, and apparently much-appreciated, value-add.)

Indeed, whether to put more effort into a book or stop paying attention to it is — or should be — based on an analysis of sales and search trends, as well as more old-style measures like the reviews it is getting.

In the old pre-internet days, publishing books was like launching rockets. Most crashed to the earth, some went into orbit. But the publisher’s efforts — most of the time — were limited to the launch. Then the marketing team could move on. This was not a way of doing business that was appealing to authors, but it was consistent with the realities of the marketplace. The big book chains wouldn’t keep a title in stock if its sales appeal wasn’t evident at the cash register within 90 days. Without copies of a title in the stores, there was no point to the publisher pushing it.

That’s something that has changed dramatically in the digital age. With some titles and genres achieving half their sales through ebooks or online bookselling, there is no longer a time limit on marketing effectiveness. In what is a subject we will certainly explore at a future conference, this must be causing traffic jams in publishers’ marketing departments. They can no longer be counting on the older titles making way and clearing marketers’ schedules to work on newer ones.

Open Road is a digital-only publisher that works primarily, but not exclusively, with backlist. (Recently they seem also to be specializing in books brought in from offshore publishers and in helping illustrated book publishers break into ebooks.) What impressed me when I met with them a year ago was that they didn’t distinguish between “frontlist” and “backlist”. They marketed to the calendar and the events and holidays everybody was thinking about, not to the newness of their books. I believe this actually brought increased relevance to their marketing. Obviously, this was also making a virtue of necessity because they didn’t have a flow of “new” books to tout. But it also capitalized on the new situation: that the books don’t suddenly become largely unavailable because retailers throw them off the shelves.

A by-product of the extended sales life of books is that it makes it easier for publishers to cluster them for marketing purposes. Now four books on a similar topic can be pushed in unison, even if they were published months or even years apart. Open Road has made ample use of that reality.

These are challenges and opportunities that compel publishers to rethink the organization of their marketing departments and the deployment of their marketing resources. It is an opportunity for a publisher to extend its value to an author if it pushes an author’s book six months or a year later when a related title hits the marketplace or a news event makes an older book newly relevant. Since authors are increasingly able to do some useful things on their own behalf to capitalize on these opportunities, they will be increasingly impatient with publishers that quit on their books too soon..

There are things the author just can’t do. They can’t adjust the book’s metadata and add tags. They can’t push for or buy promotional screen placement from the retailers when somebody else’s new book makes them suddenly relevant again. Authors also don’t have the benefit of arriving at marketing best practices and rules of thumb by examining performance data across various groupings of titles: large title sets, categorized sets, comparable-selling sets, and others. They’re counting on the publishers to do that.

The publisher’s role in coordinating and managing a myriad of details has always been one of its principal value-adds and it can be even more so in the digital age. But only if they actually do it, and there’s precious little indication that they intend to do it for the titles they’re being paid for.

Jane Friedman (the blogger and expert advisor to writers, not the CEO of Open Road) points out that her alma mater, Writers Digest, and Hay House — the vertical publisher in mind-body-spirit that has done so well interacting with their reading audience — also did ASI deals. She points out that the big successes we all know about among self-published authors — John Locke, Joe Konrath, and Amanda Hocking being the headline names — didn’t go through ASI. Jane takes issue with the ASI promise to help publishers “monetize unpublished manuscripts”. It’s hard to dispute that publishers who are primarily in business to pay authors to publish them could be walking a fine line having a business model right alongside that charges authors for services that are unlikely to lead to them making money.

On the other hand, Random House has made an emphatic statement about the value legitimate publishers can bring with the success of “Fifty Shades of Gray”, originally a self-published story and now, very much thanks to the biggest publisher, the biggest commercial success of all time. No self-published book has come close and it will be a very long time before one does. I see their digital-first imprints (which they are not the first to launch, but seem to be the first promoting aggressively to the self-publishing diaspora) as a step toward a different business model that recognizes the new commercial realities of publishing. It enables lower-investment publishing — the authors in these digital-first imprints are unlikely to receive advances at levels commensurate with most Random House books — and perhaps they’ll get less editing attention too. Marketing is simplified by the fact that print isn’t involved and therefore retail stores aren’t either. So the threshold for profitability is much lower and, as we have learned, they can still decide to give any book in these new imprints the “full treatment” — print copies stacked up in stores — later on if they want to.

It is too early to judge whether the tie-up between publishing houses and author services offers will produce value on all sides. All these publishers now have or will have, at the very least, a stable of self-published authors that are contributing margin to them and in which they have a financial stake (even if they didn’t have to invest to get it). There is definitely inherent conflict between trying to make the most money one can from an author hiring publishing services and recruiting authors and books that will be commercially successful.

But publishers still know how to make books with commercial potential sell better than mere civilians do. Whether ASI and their partner publishers can find the formula that makes the promise inherent in a publisher’s brand productive for authors that hire services under it is a question that will be answered in the months to come.

Having more companies trying to figure it out certainly improves the odds that somebody will (and ASI has every interest in spreading best practices as they emerge). And more and more cheaper services for those aspects of self-publishing that really are commodities means that ASI and all its partners are going to have to demonstrate convincingly that they can add effective marketing to their offering mix if they’re going to be around ten years from now.

Michael Cader and I are doing our first Authors Launch show, in partnership with our friends at Digital Book World, on Friday, January 18, the day after the 2-day DBW 2013 will end. The question of where the line gets drawn between publisher efforts and author efforts is a major topic. We have a great roster of experts to serve as faculty: the aforementioned Jane Friedman, along with Porter Anderson, Jason Allen Ashlock, Dan Blank, ex-Random House marketer Pete McCarthy, co-authors Randy Susan Meyers and M.J. Rose, Meryl Moss, and David Wilk. Among the publishers speaking will be Matt Baldacci of Macmillan, Rachel Chou of Open Road, Rick Joyce of Perseus, and Matt Schwartz of Random House. This is a conference really intended for published authors rather than self-published, but it will teach skills and insights for any author willing to invest time and effort to sell their book.

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Publishers Launch conference at BEA will cover a wide range of digital change issues


What are the important topics to discuss today concerning publishing and digital change? I think we’ve got most of them covered at Publishers Launch BEA, the one-day conference we’ll stage at the Javits Center next Monday, June 4.

Our all-day event has sixteen distinct presentations and panels. There may be a topic of interest to somebody somewhere that we won’t cover, but we’re definitely not missing much.

The day will begin with a review of recent industry developments from Publishers Launch co-founder Michael Cader. As I write this, the news of the moment is “Waterstones will sell Kindles”. That event, and others that may follow between now and then, will be put into context by the man who prepares our daily Publishers Lunch. Michael likes to point out the topics we spend more time discussing than they’re worth. Those observations are always amusing and insightful.

We’ve noticed that cloud solutions — commonly called SaaS, “software as a service” — are becoming increasingly important in the operations at publishing houses. We think the topic is so important, in fact, that we’ve scheduled an all day conference called “Book Publishing in the Cloud” for July 26 in New York. Ken Michaels, the COO of Hachette Book Group USA, is a big proponent of SaaS and believes it could change the way we work, together and separately, as an industry. He’ll kick off our conference describing what he sees as the opportunity for publishers represented by cloud solutions.

Then a panel of four publishers will talk about a very much related subject: how publishing houses are remaking their processes and workflows to respond to the demands of the digital age. Publishing veteran David Wilk will chair that panel, which will include Chris Bauerle of Sourcebooks, Sara Domville of F+W Media, Joe Mangan of Perseus, and Carolyn Pittis of HarperCollins. All of these companies are doing some very basic things quite differently than they did only a couple of years ago and these executives will discuss how things have changed, how hard it was to change, and what benefits have come to them because they did change.

We like to feature short conversations with industry players who have a unique view. One of these is Molly Barton, who is the global digital director for Penguin. Molly is the only digital head I know today who started out inside the publishing house as an acquiring editor. Now she has a view of digital change around the world from the top of one of the world’s biggest book publishing empires and within an even larger publishing company that has many digital irons in the fire. I’ll have an onstage conversation with Molly, and we’ll cover a wide range of topics from DRM to enhancement to whatever might have arisen earlier that morning.

After Molly, we’ll move to a new feature of Publishers Launch Conferences: the Publishers Launchpad sessions. Launchpad is our slot for introducing new products and services. When we debuted it at Digital Book World last January, we were pleased to recruit a consulting client of my Idea Logical Company, Linda Holliday of Semi-Linear, to moderate the sessions. On June 4, Linda’s own new product will be the kickoff Launchpad subject.

And Linda’s new product, Citia, has as its objective nothing less than reinventing the presentation of high-concept non-fiction in the digital age. It is a shamelessly ambitious undertaking, literally deconstructing and then reconstructing the ideas in a book. The debut Citia title will be “What Technology Wants” by Kevin Kelly, from Penguin, the house of the previous speaker, Molly Barton. Barton is one of the biggest fans of the new Citia presentation of material. Michael Cader will interview Linda and they’ll show you how the complex ideas we previously could only access through narrative text and illustrations can be rethought and made clearer with what I call, for simplicity, “Cliff’s Notes for the Digital Age” but which is really much more than that.

Then Linda will bring on two other new propositions as part of the Launchpad session. Both of them are new SaaS services to make ebooks.

The simpler proposition is from Hugh McGuire and is called Pressbooks. It is a free XML ebook-making tool built on WordPress that enables users to produce epub and PDF files on the web.

The other tool is called Aerbook Maker, created by Ron Martinez of Invention Arts. Aerbook makes enhanced ebooks and both HTLM5 and native apps. It is a tool that allows mixing in audio and video and interactive elements without advanced programming skills.

Then, before lunch (aren’t you hungry already?), we’ll have our agents panel. Laura Hazard Owen of paidContent will moderate a great agent group that includes Laura Dail of Laura Daily Literary Agency, Tim Knowlton of Curtis Brown, Simon Lipskar of Writers House, and Jennifer Weltz of The Jean V. Naggar Agency. They’ll be discussing both the changes in the business of agenting and the dynamic negotiating climate with the publishers. We’ll learn what they’re thinking about managing their digital backlist and what new skill sets they think their authors will be demanding of them.

Kelly Gallagher of Bowker will kick things off after lunch with with the latest report from their new Global eBook Monitor (GeM), a global look at ebook uptake around the world. Gallagher will feature “country level data” to a degree that hasn’t previously been revealed. We’re looking forward to it.

One key premise about digital change is that the world is getting smaller and publishers will find it easier to sell books, particularly ebooks, in territories other than their own. Our panel called “Sales Across the Borders — Import” will look at the increased penetration of ebooks from abroad, particularly in languages other than English. I’ll moderate a group of three panelists: Patricia Arancibia, Editorial Director, International Digital Content, for Barnes & Noble, consultant Javier Celaya from Spain, and Spanish publisher Blanca Rosa Roca of Roca Editorial. Blanca Rosa is doing some very innovative things to get her books into the US market in both Spanish and English. (She’s just created an English language ebook publisher called Barcelona eBooks and forged a partnership with Open Road for marketing and distribution.) Javier consults to companies throughout Europe and will report on how publishers, particularly in Spain, Italy, and France, are viewing this opportunity. And Patricia wrangles content for B&N to sell from all over the world. There are very few people, if indeed there is anybody, who knows more about this subject than she does. One wrinkle on this topic is that other-language publishers are now translating their own books into English to hit the English-speaking ebook market. One thing we’ll want to learn from our panelists is how commonplace they expect to see that practice become.

The complementary panel, which will be moderated by longtime sales executive Jack Perry, is “Sales Across the Borders — Export”. For this one we’ve gathered three experienced export sales executives: Chris Dufault of Random House, David Wolfson of HarperCollins, and Dan Vidra, who has just this month left Simon & Schuster to work for the new German-based (but global and multi-language) ebook platform, textr. They’ll be joined by David Cully, the President Retail Markets/EVP Merchandising for Baker & Taylor, the US wholesaler that has long been a global leader helping US publishers sell their books abroad. This panel will tell us what markets are showing the most promise for US publishers, how the sales growth of ebooks is affecting the sales of print, and how the growth of export might be impacting the related business of selling foreign translation rights. (We’ll be able to cross-check what they say with what the agents will have told us a couple of hours before.)

Michael Tamblyn of Kobo is always a popular speaker at publishing events because he shares interesting data. This time we’ve asked Michael to focus on what Kobo has learned from its recent experience in new markets, particularly the UK and France where Kobo tied up with major retailers. What we’ll want to know for non-English markets particularly is how powerful the draw of wide title selection in English is. Will ebookstores in other countries really expand the sale of our books in English around the world? Tamblyn will certainly get us started on answering that question.

Our final chunk of programming in the afternoon is all about change.

Fritz Foy is Macmillan’s EVP for digital. Macmillan made news a couple of weeks ago when they announced that they would be going DRM-free with their Tom Doherty Associates imprints including Tor, Forge and other related sci fi and fantasy imprints. We immediately called him and got him to agree to talk about that on the program. Foy is going to do a presentation that recaps Macmillan’s thinking about this question, which he says goes back several years. Thanks to Cory Doctorow, the anti-DRM crusader who is one of Tor’s key authors, Macmillan had already experimented with it. Foy promises us there will be surprises and at least one news announcement coming from his presentation. We’ll be surprised right along with you when we find out what it is.

Phil Ollila of Ingram Content Group accepted our challenge to comb their sales data for clues about how bookstores and other retailers have been changing their stocking decisions in recent years. The short summary of Ollila’s findings, which are summarized in an article he did for our conference book (all Publishers Launch Conferences have a printed conference book!), suggest that fiction is down, some surprising categories are up, and that what publishers can expect is more titles in more different stores with fewer sales per store per title.

We’ll have a bit of a change of pace with a presentation by David Steinberger, the one who is Founder and CEO of the Comixology platform. (There is another David Steinberger, of course, who is the CEO of Perseus.) Comics constitute a very big global business that operates in silos by language and by country. Will it stay that way? Will the rights and cultural issues that have kept the market from globalizing continue to do so in the digital age? As the creator of the most successful comics-selling platform in the US and a man with an eye for the world stage, Steinberger is in a unique position to speculate on the answers. And perhaps we’ll get some insight about how other highly-illustrated genres with strong localized content — travel and food come to mind — might change because of the digital transition.

There is a growing consensus in the industry around two points that would have been controversial only two or three years ago. One is that bookstores are declining rapidly and will, unfortunately and in the not-too-distant future, atrophy to the point that they are a subsidiary channel for book sales, not the primary one. The other point is that the marketing exposure that books get in retail stores is a critical component of their early exposure, leading to the “discovery” by consumers that is the key to getting commercial traction. Our last two sessions of the day will focus on that challenge.

Peter Hildick-Smith of Codex has been conducting studies of book purchasers for a decade, including careful tracking of how they learned about the books they bought and read. Peter is one of the greatest champions of the bookstore’s role in discovery, and perhaps the leading skeptic that search engine optimization and social network marketing can be an adequate substitute. In this presentation, Peter will make his case thoroughly backed with data from the years of research his company has done.

Then Peter will join our final panel of the day, one focused on “The Future of Book Discovery.” Two publishers that are doing a lot of work in this area, Amanda Close of Random House and Rick Joyce of Perseus, and Scott Stein, who heads up the book coverage for USA Today, will be part of that discussion, which will be moderated by Michael Healy of Copyright Clearance Center. One of Hildick-Smith’s key points is that there is a Catch-22: if you don’t know something about a book, you’re not likely to search for it. And unless somebody gets the ball rolling for a book, there’s nobody to comment on Facebook or Twitter to get you started that way. The publishers on the panel and the overseer of one of America’s most widely read book pages will talk about their efforts to build something new that will tell us about books the way window displays and stacks and face-out displays have for years.

After that, Cader and I will wrap up the day. Very briefly. We’ll all be very happily exhausted!

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Tech companies need to look like they understand publishing, which they don’t always do


I showed up Tuesday morning at the gorgeous Cipriani restaurant and ballroom on 42nd Street for The Future of Publishing Summit, not knowing what to expect. I had been invited to attend this in an email last month which promised an interesting program (lots of big tech companies plus a book publishing “track” led by the always-interesting Carolyn Pittis of HarperCollins) at an all-day conference. I was invited because of my status as a “thought leader”; an all-day event like this with no fee is not unheard of, but it also isn’t common. I accepted.

Then when I heard from my friend Evan Schnittman of OUP over the weekend that he’d be going, I decided I should look at “what is this” more carefully. So I went to the web site for it and I found it almost impossible to figure out who was staging this thing and what they hoped to get out of it. My prior experience with free events — many I helped organize that were run by VISTA Computer Services (now renamed Publishing Technology) in the 1990s and several since hosted by MarkLogic — tended to have the organizer highly branded and visible. This one was opaque. “About us” on the “The Future of Publishing” web site described the conference, the agenda, and the goal of “setting the agenda for publishing’s new business model amid digital disruption”, and it led to a link listing the sponsoring companies. But nowhere did it say, “I’m the organizer of this event and this is why I want you there.”

When I got to Cipriani in the morning, I started to see some people I knew: Evan, David Young and Maja Thomas from Hachette, Peter Balis from Wiley, Dominique Raccah from Sourcebooks. “What is this about?”, I asked them. “Who is behind this?” Nobody really seemed to know.

As the day developed, it seemed that the two parties in charge were Tim Bajarin, President of Creative Strategies and Colin Crawford, former EVP Digital at IDG Communications, Inc. Bajarin kicked off the session recalling a critical meeting at UCLA in 1990 that really charted the course for CD-Rom development.

Uh oh, I thought. I wonder if these guys know what “CD-Rom” calls up in the mind of anybody in the room who was in trade publishing the 1990s.

What I had walked into took me back to the early 1990s when I went to a conference sponsored very openly sponsored by Microsoft for book publishers. The message then was, “here are the amazing things we are going to be able to do with CD-Roms in the very near future. To realize the true value of this technology, we need content. We’re not sure exactly how you make money from the content, but, hey, guys, get creative.” And, in fact, that was the message that the five key sponsors of this Summit — Sony, Adobe, Marvell, Qualcomm, and HP — had for their publishing audience.

This was the takeaway. Consumers are going to be navigating their content on faster, smarter, lighter, and cheaper devices that will open up more flexible and robust content delivery and consumption models. Publishers should take advantage of this! But “taking advantage” in this case often meant “more sound, more pictures, more video”. And that recalls the veritable disaster of CD-Rom development for book publishers: largely uncontrolled spending in development of new kinds of products, ostensibly but loosely rooted in books, that had no established market and never found one. The iPad had already unleashed several sparks of enthusiasm for enhanced ebooks; this conference wanted to pour fuel on those sparks and start a real fire burning.

The format of the day was that each of the primary sponsors got a half-hour to present their technology, following 30 minutes from Tom Turvey of Google on the forthcoming Google Editions. (Turvey joked about the fact that he had given the presentation to just about everybody in the room before in their office or his.) I’d say that most of the 30 minute presentations packed at least 5 minutes of useful information into them. There were definitely people buzzing about the fact that Adobe has a workaround to enable Flash-like content on the iPhone, which doesn’t support Flash. We all got the message that connectivity will be more robust and more routine; that both LCD color and e-ink (and before long, color e-ink) will be available in a staggering number of devices (or “form factors.”)

With all that capability in your hand, you can pull up just about any content you want. “Why would you read a plain old book” was certainly part of the message.

Then after a really terrific lunch, about half to two-thirds of the audience (I’d reckon; couldn’t really see because we were broken into three groups in different rooms for books, magazines, and newspapers and no more than a fourth of the audience was there for the final part of the program after the breakouts) remained to hear the content-based presentations. The intention here was “the tech guys will explain what’s coming in the morning; the publishing guys will explain where they are in the early afternoon; and then our experts will ‘pull it all together’ at the end of the day, allowing us to leave with a new plan for publishing.” The “experts”were additional sponsors, of course, and creators of tools or platforms for products or presentation: Zinio, Notion Ink, ScrollMotion, Vook, and Skiff. These are all very worthy companies with substantial propositions that have made real inroads working with established media.

But are they qualified to chart a commercial course forward for complex publishing enterprises? Frankly, I don’t think so.

Cader said privately on Monday that he had joined Conferences Anonymous. He wasn’t going. Admittedly, these guys had a rough row to hoe trying to tell people something new following on the heels of Digital Book World in January, Tools of Change in February, Pub Business Conference and Expo earlier in March, and an ABA meeting on digital change in between. People who are really junkies for this stuff were out at SXSW, which apparently also didn’t seem as revelatory to some savvy book practioners as it did last year (or so said my buddy from the Microsoft conference two decades ago, Lorraine Shanley.)

My sense of this one was “nice try”, but it didn’t work. The superficial logic of putting the tech and publishing people together, laying out the picture from each side and then coming up with “answers” within a single stimulating day is appealing, but it is ultimately impractical. Book publishers (and, I suspect, other publishers as well) aren’t going to do much today based on what they see tech might deliver two or four years from now. And book publishing isn’t one business anyhow. As Turvey of Google, who understands the publishing business better than any other tech company representative I know and, frankly, better than most publishers, spelled out in the beginning: “book publishing is about five different businesses that don’t have much to do with each other.” We in publishing know that very well. Tech companies that want to get our attention need to make clear that they know that too.

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The evolving role of agents


Because of a couple of panels I spoke on last spring and because of the development of FiledBy, I have had more and more conversations lately with agents. They are part of the General Trade Publishing ecosystem. So their lives are getting more difficult and more complicated, like everybody else’s in Book Valley.

The agents’ concern is frequently expressed as “what do I tell my authors?”  Publishers are increasingly insistent that a prospective author have an internet platform to build on before they sign a book. Editors always wanted credentials to back up a writer’s authority on any subject; now they’d like to see that the writer has a following on that subject as well.

But agents are also concerned about themselves. The two most innovative imprint initiatives in recent memory — Bob Miller’s HarperStudio inside HarperCollins and Roger Cooper’s Vanguard inside Perseus — are built on the idea of reducing risk, paying the author a lower advance. Yes, they also promise a higher reward (higher royalty), but experienced agents know most books don’t earn anything beyond the advance.

Miller and Cooper are smart guys and it could well be that their imprints will have a higher percentage of earnouts than most. But, as smart guys, they wouldn’t be willing to pay more on the high side if they didn’t believe they were saving at least that much on the risk side.

The advance pool is probably shrinking. John Sargent, Macmillan’s CEO, said as much at a gathering of agents a couple of months ago when he explained that the de-leveraging that is taking place throughout the economy is also taking place in publishing. Big houses just won’t have the cash available to them that they used to, and that means less money for advances, less money for printing, and less money for promoting.

But in addition to shrinking, publishing advances are taking on much more of a power law configuration, with concentration at the top and a long tail of books getting less and less (and extended by mushrooming self-publishing where the “advance” is actually negative; it’s a cost!)

This is already having an effect. I have heard from people who know that larger agencies are now shopping among the smaller ones to buy them out. It takes more agents working to pay the same rent than it used to. And the smaller agents are finding it harder and harder to make a living so they’re ready to sell out a bit of their upside to get some stability. The small number of agents that have clients at the power end of a power law distribution are doing great; those who have traditionally made a living on making lots of second level deals are really suffering.

Compounding the problem for agents is the changing nature of publishing opportunity. While the sales and royalty potential of the book through the publisher is declining, other opportunities are opening up. There is a multiplicity of ebook channels that in the aggregate do not replace the revenue that print used to provide and doesn’t anymore. Chunks of books and material too short to be published as a book can be sold through them. Agents have for years been trying to split off audio rights to sell to Audible or Brilliance or Tantor Media. The opportunity to sell content to web sites seems to be emerging. But all of these deals require conceiving, pitching, closing, negotiating, and contract reviewing. For fifteen percent of what?

And further comlicating things is the ubiquitous self-publishing option. As self-publishing becomes part of the strategic approach to getting a “real” publisher (and it is), it adds a further complication to the business relationship between agent and writer. Is it fair for an agent to work with a writer on developing a proposal or a manuscript and then, when it fails to sell to a publisher, see that writer self-publish what amounts to a collaborative effort without owing anything to the agent? I think most agents would say, “NO!”

An agent for a book writer carries the same title as the agent for an actor or the agent for a performing musician but that’s a bit misleading. A book writer’s agent is really a business partner, more like the managerof an actor or musician. I see the writer and agent as two halves of a business: the writer creates the product and the agent handles the B2B relationships necessary to turn it into money.

When the book agent’s job, most of the time, was to find the biggest possible up-front payment for an author’s work, a straight commission deal made complete sense. With writer-pays options becoming not only more common and accessible, but more sensible as a commercial choice and, indeed, becoming part of the step-ladder to commercial success, it increasingly will not.

At a conference on “Giving It Away” in Toronto at which I spoke two weeks ago, Carolyn Pittis of HarperCollins was explicit that the publisher buying content and making money by selling it was “one model”, and she pointed out that there is a “fee for services” model as well. The inference I drew was “that’s not what we’re doing today, but every option is on the table for tomorrow.” Why not? Don’t we have to believe that one of the exit strategies for the investors in Author Solutions, the biggest rollup of self-publishing service companies, might be to sell to one of the Big Six who, despairing of the future of their publishing model, tries to buy their way into a new one?

I am old enough to remember that agent’s fees, now standard at 15% of revenue, once were 10% (like the agents in other businesses I referred to at the top.) When that change happened — was Scott Meredith the first? — many of the 10 percenters sneered at the change as exploitation. But eventually they all went that way. About 10 years ago, agent Richard Curtis started EReads, an ebook publishing company which gave his authors, and others, another choice besides throwing the ebook rights in for print publishers who, at that time, seldom exploited them. Curtis was also excoriated in some circles for generating a conflict of interest, which, indeed, it would have been if he steered his authors away from better ebook options with their publishers. (He doesn’t do that.) It would be like a doctor owning a medical testing business, for crying out loud! (And they do do that…)

A friend of mine in the financial business wrote a book 20 years ago and wanted to get an agent to sell it. He knew the advance would be low, but he also knew the book would add credibility to his business. He wanted it sold. An agent told him that the agency only handled books on which they thought the advance would be $25,000 or more, yielding a commission of $3,750 at the normal 15%. This friend told the agent, take the first $3,750. The agent took the book, sold it for $6,000, and everybody was happy. This kind of arrangement, as well as others where the agent actually charges a fee for helping an author manage self-publishing options, are going to have to become more common in the future. Let’s not be too judgmental about the pioneering agents who change the paradigm.

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The need for critical mass is why verticalization is a process


I had the good fortune to spend a couple of days last week in Toronto to speak at a conference on “Giving it Away”, how the culture of “free” is affecting the book business. My workshop sessions were called “Giving It Away with a Purpose”, by which I meant using content as “bait” to build community.

Since this was a workshop, most of the 90 minutes in each session was spent hearing from my audience about their publishing and marketing challenges and trying to help them see how the concepts of vertical and community applied to their particular examples. One of the many pieces of wisdom I’ve picked up from Mark Bide over the years is that we often “learn what we think by saying it”; questions from the audience force me to articulate things that might have been lurking in the back of my mind but had been left unsaid, even internally.

And what I learned that I already knew from these exchanges has to do with “critical mass” and its role in the shift from horizontal to vertical.

I read a piece about a month ago (who knows where, but I think I was originally steered to it by the ReadWriteWeb daily email) about the “X of Y found this review helpful” found on Amazon. What the article explained is why you don’t, and won’t see this employed effectively on any other bookseller’s site. Of all the people who buy books on Amazon, only a small percentage of them write reviews. (Many books don’t have reviews on Amazon; you are often invited to be the “first” to review a book.) Then of all the people who read the reviews, only a small percentage of those will comment as to whether the review was helpful. And a small percentage of a small percentage is an tiny, tiny percentage.

So only when you start out with the number of book customers Amazon has, which is a multiple of BN.com’s customer base (which is, presumably, in second place), can you get enough reviews and enough ratings of the value of the reviews to get a meaningful “Y” for “X of Y found this useful.”

And that was not what we talked about in Toronto.

In the course of my presentation, I talked about FiledBy.com, the new venture offering authors free web sites of which I am a co-founder. Carolyn Pittis of HarperCollins, a very acute thinker about digital strategy, pointed out from the audience that FiledBy is totally horizontal: it’s about book authors of all kinds. She wondered if my own new venture might contradict my own theory about verticals.

Temporarily, it might, although the initial “vertical” of FiledBy is book creators (there are sites there not just for authors, but also for illustrators, editors, and others who are credited with creative contributions to books that have ISBNs.) But the creators of FiledBy are very aware that as the number of authors registered with us grows, we will be able to put authors together by interest, creating sub-communities of mystery authors or history authors or knitting authors. And we intend to do that.

Earlier in the presentation, I had expressed the thought that Facebook and Twitter are like AOL for Internet 2.0. AOL (and Compuserve and Prodigy) made the online world, and then the internet, easy for everybody to use. As the internet itself got easier to use, the on-ramp wasn’t necessary anymore and, in fact, the parts of AOL that are healthy today are the verticals they created in the early part of the 21st century when they (belatedly) saw this coming. Soon we will see social networking and short messaging tools everywhere and we will be more likely to employ them in verticals, among people of similar interests, than in the world at large, which is what the horizontal communities are.

Communities require critical mass. It’s great be able throw out a question for the community to answer, but if nobody’s there, it is ineffective. If only 20 editors and 10 agents were on PublishersMarketplace, the deal database wouldn’t be worth much.  By the same token, growth in a community enables niching to get more and more narrow and deep.

Soon, publishers are going to see that they that they require critical mass by vertical in order to do cost-effective marketing. That is going to lead to a reshuffling of publishing portfolios, which will be the topic of a subsequent post.

Another big piece of ebook news landed this morning. ScrollMotion has announced that one million titles are on their way to them from LibreDigital! One always presumes that publishers want every title they have on every possible platform so that similar announcements will come from other ebook players soon, but this is another huge stride forward for the ebook business. And for ScrollMotion.

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