Michael Healy

Getting Mark Coker right this time and agreeing with him up to a point


On Tuesday, for the first time in the five years I have been writing this blog, I did a post I would like to take back. (But in the interest of the public record, and because there were several comments of value, I’m leaving it up.) This is the post that I should have written the first time.

Mark Coker, the founder of Smashwords, wrote a Huffington Post piece in which he asserted that indies are now responsible for 15% of the ebook market in dollars and on their way to 50% by 2020. The initial post of mine misread Mark, and assumed that the 15 percent and 50 percent claim were about units, not dollars. Mark set me straight, but, unfortunately, that other post focused on trying to translate what I thought were unit shares into dollar shares. Sorry…

At first I had thought I agreed with Coker’s overall numbers, because I thought an estimate that indie ebooks were 15 percent of the total units was reasonable, rising to 50 percent in six years. But dollars are another story. (Note: Michael Cader’s independent examination of the numbers determined that indie/self-published ebooks were, at most, 11 percent of the ebook dollars and probably less. Cader’s generous calculations put the unit share percentage at about double that, in the low 20s. I believe his logic and numbers would also support my view that it is something less than that, which would put me near to Coker’s dollar estimate for my units estimate: about 15%.)

If indie ebooks were 15 percent in dollars today, then they would be 30 or 40 percent of units because they are priced so much lower than publishers’ ebooks. Is that possible? I suppose it is. I thought in the middle of last year that in the aggregate indies sold the number of units equivalent to one Big Six publisher, but not anything like 30+% of unit sales (even though Howey’s examination of 50,000 Kindle titles led him to assign 27% of the units sold to indies.)

If they are 30 or 40 percent of units, and nobody I know has read any, does that suggest a cohort of people who really prefer indie ebooks and read them in big numbers? And if indie readers form a “separate” market, is it growing or is it static? In other words, do indie ebooks draw on a particular pool of readers, so that we have two separate competitions going on for eyeballs and ebook sales?

We note a piece this morning at Good EReader that calls for the segregation of the self-published titles at ebook stores, because their sheer number interfere with discoverability for publishers’ books. That’s bound to be an unpopular idea in many quarters, but it is something that could happen if any one retailer offers it as a choice to consumers (which is the way to do it: as a filtering choice, not a hard-wired default). If consumers liked it in one place, the practice could spread.

Regardless of whether there is one competition for readers for all books or separate ones for indies and publishers, wouldn’t we expect the flood of titles to make it harder for everybody to make sales? (This is a point that Peter Turner brought up in the comment string to the prior post.) Chances are, yes. And that could mean even more authors will be forced to go indie because publishers are likely to respond to a shrinking market and more challenging discovery by reducing their outputs.

But it is also true that more challenging discovery means more skill doing it and more tools to reach customers have value. So the ability of established publishers to have “better odds”, to get their books to rise above the “noise” of a large title output, should improve (relatively) over time.

Coker did a great service to all of us putting the ebook sales indies achieve into a larger perspective. And, in doing that, he might even have understated the current case for their importance.

What Coker did was point out that the 15% ebook dollar share for indies was within the estimated 30% of the market that is ebooks, 70% still being print. Doing math with his share number, he concludes that self-published ebooks are taking 4.5% of the dollars in the overall market. I’d put them at somewhere between half and two-thirds of that.

But, in fact, the 70% of the market that remains print contains a lot of titles that have very little, even no, ebook sales at all. These are illustrated books or reference books or even kids’ books that have not worked commercially in a digital version. We don’t know how much of the 70% of books that are print are “readerly” books that are equivalent to the 30% that sell in ebooks, but it isn’t nearly all of them. I think it would be conservative to assume that non-readerly books constitute 25% or more of the 70% of the market that is print, which would divide that portion of the market to be 52.5% books that have commercially viable ebooks (the 30%) and 17.5% books that don’t.

So the 30% ebooks overall is really more than 35% for the books that are real ebook candidates (and probably nearer 100% for most of the indie ebooks which would have limited or no print sales). In other words, the ebook share for the books that can work as ebooks is already a bit bigger than an overall summary would suggest. But, despite that, indie ebooks are somewhere in the low single digits as a percentage of industry revenue.

I think that’s very important to keep in mind. Indie ebooks are not yet commercially important if we think about consumer dollars. (But, of course, as Hugh Howey and Coker point out, the author keeps a lot more of those dollars.)

There are two big questions going forward.

1. How fast will the indie self-publishing ebook market continue to grow at the expense of publishers who do it for profit? (All of the calculations from Coker and Howey about the benefits to indie authors assume they do it themselves, not through some new-fangled indie-first publisher or aggregator. If they do it through anybody else, new or old, the author share will decline. Every participant takes a cut.)

2. For any individual author, how does the decision of whether to do it themselves or sign with a publisher look?

On the first, I think one key question is whether we now have a bifurcated market: one group of people reading the bulk of indie books and another group reading the bulk of published books. There is certainly reason to believe that we do, although this is something that only the retailers really can know for sure.

I believe we do have two markets. Part of that is genre-driven. Many readers who habitually consume romance, thrillers, and sci-fi have found less expensive digital-first and author-published alternatives perfectly satisfying. They read lots of units. So it is likely that a concentrated cohort of readers is responsible for a big chunk of the indie books.

(There is probably a third market because we know there are also bargain shoppers. Though traditionally-published titles are discounted, there are still price bands where the indies largely own the marketplace.)

If that is the case, then indies compete with indies more than they do with publishers. And since we believe that a big part of indie sales growth will be driven by indie title growth, it could be that the sales will have trouble keeping up with the titles. That would mean the path to success for each individual indie author would get harder.

Note that this would not affect a self-published author who had built a name and a brand by being published first, except to the degree that self-publishing gets handled differently by retailers or that discovery metadata is not as professionally produced. In general, the distinction between authors who had publisher help building their brand before going indie and those who created success from a standing start has not been underscored as much as it should be in these discussions.

And that leads us to the second point. As Coker has pointed out in his piece and in the comment section of my previous post, some authors like to have “control” of their process. As print books become less and less important, those authors have more and more inherent reason to be attracted to a self-publishing model.

I believe that those authors who like “control” are already more ubiquitous in the self-publishing world than in the overall population of commercially-capable writers. It stands to reason that they would be early adopters of the digital self-publishing opportunity. My hunch is that most authors want to write, and to let publishers handle their business. They don’t want to do the administration and marketing work necessary to self-publish. And that’s even before they get to the difference between getting paid in advance for a book and having to spend money to put a book out.

But it is also true that the deals we see today are not necessarily forever. Publishers have held the line on 25% of their revenue as the author ebook share (apparently with some limited exceptions and, of course, situations for big authors where unearned advances effectively deliver higher royalty rates on everything). If they have to raise royalty rates to keep authors, they probably will. E-only publishers and digital-first imprints at traditional houses are already establishing new standards. Amazon just reduced the author take through their Audible subsidiary. Will the day come when they decide to take a bigger share of indie author ebook sales? Why not?

Authors will have a shifting set of commercial propositions to consider, along with their personal preferences for “control” or “help”. And that’s before we get to other things not reflected in any comparison of what they earn from a self-published ebook versus a publisher’s ebook: print revenue, unearned advances, and having somebody else doing a lot of work on your behalf.

So while I largely agree with Coker’s 10 trends that will lead to enormous growth in the number of indie-published ebooks we will see, I think a grain of salt is needed about how economically significant they will be either for the industry at large or for the vast majority of individual authors following that path even though they are bound to grow quickly. It turns out that the previous post started out with a misunderstanding that led me (and therefore my readers) on a wild goose chase but, in the end, the headline message was right. Even over the next few years, the changes we’ll see around how authors get their work to their readers are more about evolution than revolution.

As it happens, The Great Debate at the London Book Fair is about whether big publishers or small publishers will “win” over time. Ken Brooks of McGraw Hill Education and I have the “big” side; Stephen Page of Faber and Scott Waxman, who is both a literary agent and owner of an ebook publishing house called Diversion, tout the “small”. Michael Healy of CCC moderates. If you’ll be at LBF, check this out.

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Innovators and circumstances: the Frankfurt Publishers Launch show


In some ways, I think this year’s Publishers Launch Frankfurt show kicks off the next era of digital change in global publishing. The US and other English-speaking markets have established clearly that immersive reading — fiction and narrative non-fiction — is easily ported to screens for most people. In the past 18 months, changes in the UK book market have begun to resemble what we saw in the US, including Amazon’s dominance and bookstore shelf space shrinking.

While there are still many unanswered questions about how the English-speaking trade book world will look in a few years, I think the story of the next 12 months could well be more dramatic in non-English markets. The Frankfurt show is our most international; Americans are in the minority as attendees at this event.

We have packed 18 panels and presentations into our one-day Publishers Launch Frankfurt. (I like to keep things moving.) In keeping with the way digital change has taught us to think about the book business, we have two themes that are actually analogs for “content” and “context”.

Providing the “content” will be nine “Innovators”. The presenting innovators are publishing executives who are doing things inside their companies that are hard (or impossible) to find being done anywhere else. Yet.

Creating the “context” are a number of presentations on “Circumstances”. The context of the digital revolution differs by country, by language, and by time. What happened in the United States over the past five years offers clues, but not definitive answers, about what to expect in other countries over the next five years. We are exploring a wide range of circumstances that are defining the environment for publishing around the world in the future.

Both sets of presentations are extremely diverse.

We’re starting off the day with what I think will be one of the most impactful of the “circumstances” descriptions. Benedict Evans of Enders Analysis tracks the strategy of the five big tech companies whose activities are most likely to have an impact on publishing: Amazon, Apple, Facebook, Google, and Microsoft. He’ll describe the overarching objectives of each company and examine how book publishing fits into their thinking. The point will be to help publishers see how to take advantage of opportunities that will be created and avoid the pitfalls that will come along with the opportunities.

Jim Hilt, Theresa Horner, and new International Managing Director Patrick Rouvillois of Barnes & Noble will be talking about their company’s recent first move outside the US, launching the NOOK in the UK with local retailer partnerships. The UK will therefore become the first market outside the US to experience an initiative from the one company which, inside the US, has made a meaningful run at Amazon. If they can do it in Britain, then perhaps they can do it elsewhere as well. This is a “circumstance” everybody in the business will be watching.

Michael Tamblyn of Kobo will also speak. Kobo has opened in six major markets in the past year. They’re bringing an independent — but complete with devices, including new ones just announced — ebook retailing presence into many markets. The spread of the digital delivery infrastructure is definitely one of the changing circumstances that all publishers need to stay aware of and these two retailers are an important part of it.

The decline of print bookstores has been taking place for some time in the US, an effect not yet evident in much of the rest of the world. Peter Hildick-Smith of The Codex Group has been studying that, surveying book consumers about their purchasing decisions for a decade. He has data spelling out what the impact on sales and discovery is as bookstore shelf space contracts, which he’ll be reviewing for publishers to consider as they do their own forecasting about how fast bookstores will decline in their own markets. Hildick-Smith also has data about the reading habits of consumers on tablets as opposed to ebook readers which will be of great interest because so much more of ebook uptake outside the English-speaking world will take place on tablets.

We will have panels looking at two sets of emerging markets.

The BRIC countries — Brazil, Russia, India, and China — are watched by economists for emerging trends and we’re going to do the same. All of them are in the earliest stages of ebook uptake, but the beginnings are there in all four markets. We’ll have local representatives from each — publishers and retailers — to fill us in on the prospects and expectations in each of these countries.  The panelists will be Carlo Carrenho (PublishNews) from Brazil, Alexander Gavrilov (Book Institute) from Russia, Ananth Padmanabhan (Penguin) from India, and Lisa Liping Zhang (Cloudary Corporation from China.

We will also have a panel of leading Spanish-language publishing executives, chaired by Patricia Arancibia of Barnes & Noble, to discuss how digital change is playing out in the Spanish-language market. Spanish, like English, is the local language for many countries — more than 20 in the case of Spanish — and also has a very large market within the US. Digitization has been slow and there are unique issues having to do with the fact that control of copyrights is often housed in Spain, despite the fact that the biggest markets are in Latin America. Patricia and her panelists (including Arantza Larrauri of Libranda and Santos Palazzi of Planeta) will explore how fast that will change and when we should expect to see ebooks rising beyond the sliver of the market they have captured so far.

Michael Healy of Copyright Clearance Center is going to do a presentation on changes to copyright law and practice that may not be taking place where you live and publish but which could affect you where you do.

Noah Genner, their CEO, will report on the first fielding of a BookNet Canada survey of Canadian book consumers, the beginnings of a project that is planned to take place over the next couple of years. This may be the first intensive study of digital reading habits outside the United States so we thought it was worthy of a report to our global audience.

And a circumstance on every big company’s mind in publishing is how they will be regarded by the investment community as they navigate the digital transition. Brian Napack is now at Providence Equity Partners. Last year at this time he was President of Macmillan USA. Nobody is in a better position to discuss this topic than Brian and he’ll present on it at our event.

The innovative executives who will be navigating these shifting circumstances constitute the other half of our program. These speakers will be talking about initiatives that are often unique but are always pioneering. Our bet is that they are introducing a lot of practices that will be common in a couple of years.

Two of our innovators work from outside the English-speaking world but part of their story is that they’re not letting that cut them off from the biggest book-buying language.

Helmut Pesch leads the team that provides the internal ebook support for the German publisher Lubbe. But he’s using that position to pioneer. He’s teamed with a TV production entity to deliver a multi-media novel as a serial, launched an ebook first imprint, and is publishing original work in both English and Mandarin Chinese!

Marcello Vena oversees digital initiatives for the Italian holding company RCS Libri, which owns the book publishers Rizzoli, Bompiani and Fabbri Editori. Vena has started two ebook first genre imprints (thrillers for Rizzoli and romance for Fabbri) and is delivering those files DRM-free. He’s created a couple of very successful illustrated ebooks (this in a market where digital has barely cracked 2% of sales) and he also is trying out English-language publishing.

Stephen Page of Faber and Faber in the UK is building publisher- and author-services businesses while he innovates in his own publishing house. As an example of that, Faber has produced delivered two compelling apps for classic poetry: one on T S Eliot’s “The Waste Land” and one just released on Shakespeare’s Sonnets. And he’s building author communities that include live events and writing courses.

Rick Joyce, the Chief Marketing Officer for Perseus and their digital Constellation service, is exploring “social listening” tools, but with a twist. Joyce points out that working with these tools isn’t easy but he also is skeptical of the value which can be derived as they are often used: tracking the impact of social media efforts by a publisher. Joyce and his team are exploring whether the tools can be used to find the right marketing venues and approaches, down to the level of what blog comment streams to join and what nomenclature to use when they’re being worked. He will explain the tricky balance between being terribly specific in your search (like using the book title) which yields far too few opportunities and being so broad that the targeting is ineffective.

Anthony Forbes Watson is Managing Director of Pan Macmillan in the UK, part of the newly reorganized global trade division of Macmillan. Watson’s house is distinctly smaller than the four biggest UK trade houses (Random House, HarperCollins, Hachette, and Penguin) but much larger than any other player. Watson has reorganized his shop to get closer to both the authors and the markets. The evidence so far is that Pan Macmillan is proportionately outselling its competitors in digital; Watson will lay out the ways in which internal structural changes can lead to competitive advantage.

Rebecca Smart is the Chief Executive Officer of Osprey, a global publisher whose first vertical audience was military history. Since then, Osprey has executed acquisitions to put them into other verticals: science fiction, mind body spirit, food, and health. Her company is global and focused on audiences and she is building a multi-vertical publisher that will work with very diverse set of customers with a consistent approach and central services when possible.

Ken Michaels is the COO of Hachette Book Group USA. He’s also a big believer in SaaS: software as a service and he’s been rethinking and rebuilding Hachette’s internal technology structure in light of that belief. Hachette has also created some solutions themselves — among them, a capability to track metadata and ranks of books at ebook retailers and a tool for sharing content on Facebook — that they are making available as SaaS services themselves.

Charlie Redmayne is the CEO of Pottermore. He believes they’re building the digital publisher of the future and that a key element of that is to go where the audiences are: every device or channel that commands eyeballs is in his sights. Of course, Pottermore was built on the back of one writer’s amazing fictional brand and world. Redmayne believes what they’ve built might be applicable to other worlds from other authors. And that part of his presentation might get a lot of publishers and agents in the audience thinking what they have that might apply.

Dominique Raccah is the founder and CEO of Sourcebooks. Dominique is an indefatigable experimenter. She’s developed a poetry vertical. She’s experimented with “agile book creation” which invites the author’s audience to participate in creating the book. Dominique does more experiments before breakfast than most publishers do in a year. I put her on this program “on faith” because she told me she’s got 2-1/2 experiments to discuss that support her conviction that publishers have to completely rethink their businesses. (Today on a listserv she mentioned that she has “five startups” taking place internally!) Maybe I’ll find out exactly what she’s going to talk about at the conference before we get there, but I haven’t found out yet. But I’ve never been disappointed by Dominique and she says she’s more excited about what she’ll discuss at Publishers Launch Frankfurt than she has ever been about anything she’s done before. I am confident that we’ll be glad to hear what she has to say and all the other innovators will feel they are in very good company.

As we usually do at Publishers Launch events, Michael Cader and I will be opening the show with stage-setting remarks and doing a quick wrap-up at the end as well as popping up during the day whenever we think we can be helpful.

We got Peter Hildick-Smith, Rick Joyce, and Marcello Vena to do a webinar with us previewing what they’re doing at the event. Check it out! And our friends at the Frankfurt Book Fair did a little session with me talking about the conference as well. Take a look.

 

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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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Things learned and thoughts provoked by London Book Fair 2012


This post contains a batch of observations from this year’s London Book Fair. Some of it recalled an experience from about 20 years ago. We’ll begin there.

In the early 1990s, Microsoft was on a mission to get computer hardware manufacturers to install CD-Rom drives in new machines. Microsoft had a very simple motivation. Software then was sold as hard goods. One CD-Rom could hold the data that required many, many diskettes. So if the storage and transfer medium were changed, the cost of goods for Microsoft would drop sharply. Since the value customers were buying was the code, not the package, Microsoft figured (correctly) that they’d be able to keep the price of software the same and simply make more profit if their customers could handle the CD-Roms. (Please note this logic applies very nicely to any discussion of what ebooks should cost in relation to print.)

But, of course, most people don’t load that much software, so the CD-Rom argument would be strengthened if content were also available on them. That inspired Microsoft to stage a half-day conference to “educate” the trade publishing community about the “opportunity.” (Of course, areas of technical and professional publishing, which had opportunities in delivering very large amounts of data, had already started to move in that direction; the value of CD-Roms was real and obvious to them. They also had vertical audiences of professionals that were perfectly able to hook up a CD-Rom drive to their existing machines, and did.)

At the conference, Microsoft basically showed all the “cool” things the computer could do: delivering sound and images (not video so much in those days) and hyperlinks. They basically said, “we don’t know how you’re going to make money on this; you’re the content experts. But we’re giving you this great new canvas to create on. Create!!!”

The excitement Microsoft and others were able to generate led to a burst of activity by publishers to create CD-Roms. Very few people found this new packaging of content particularly appealing at any price, and they actually were listed at very high prices. In other words, the techies had no clue about the content business and their advice to it was self-serving.
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Last Monday in London, Susan Danziger of Publishing Point hosted The Great Debate. The proposition being debated was that the new tech companies would ultimately deliver a “knockout blow” to the conventional publishing establishment. Michael Healy of Copyright Clearance Center moderated.

Speaking for the new tech companies were two stunningly successful new technology entrepreneurs: Bob Young of Lulu and Allen Lau of Wattpad, both of which take anybody’s content and put it into circulation. Lulu’s core mission is seamlessly turning content into printed books and Wattpad’s is about organizing it for crowd-sourced consumption and discussion.

Opposing them were two publishing veterans (and, I’m happy to reveal, good friends): Evan Schnittman and Fionnuala Duggan. Schnittman is about to move from a global sales and marketing position at Bloomsbury to become Hachette Book Group USA’s head of sales, marketing, and digital. Duggan came from the music business, spent several years heading up digital at Random House UK, and is now Managing Director for International Course Smart, the digital platform created by a consortium of college textbook companies.

There is no ambiguity about what happened in this “debate”. The format required each of the approximately 250 attendees to register their opinions as to which side they favored on the way in and then again after the speakers had presented. The “establishment” side — the Schittman and Duggan side — picked up about 100 votes with their arguments from where the audience was when it came in. The incoming audience favored the proposition that the knockout blow was coming by a wide margin. After the debate, the margin was as wide in the opposite direction. (Some were undecided; so don’t drive yourself nuts trying to work out the math.) It is hard to imagine a more decisive outcome.

Of course, Duggan and Schnittman know quite a bit about technology. But neither Young nor Lau seemed to know anything about the content business. That shouldn’t be a surprise. Both of them have gotten rich in businesses that are ostensibly content businesses, but they aren’t. Their financial success is not dependent on the quality of content, the skill in developing or marketing it, or its inherent appeal. In fact, Lau kept touting the volume of what he hosted and claiming that technology would handle the curation perfectly adequately in the future. This was “proof by assertion.” It was the ultimate declaration of faith. The audience didn’t buy it.
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On the day before, Schnittman had hosted the Digital Minds conference. One of the keynote speakers was an old friend of his, Andrew Steele, who is the creative director of the very successful web site, Funny or Die. Steele told us the story of that business, which is instructive.

The original concept of Funny or Die was to crowd-source user-generated content, like YouTube. They’d build up traffic and monetize it. But there was a problem. Most of the amateur stuff they got just wasn’t funny. As Steele points out, we go to YouTube when somebody sends us a link for something good. We don’t go to YouTube and browse all the amateur content. There’s a reason for that. Most of it is crap. And most of what Funny or Die was getting from the crowd was crap. They weren’t getting page views. They weren’t going to succeed.

So they tried something new. (That’s called pivoting, for those of you who don’t spend enough time talking to the tech-and-finance community.) They got professionals to create content. Things changed quickly. By allowing their professionally-produced content to go off the site while it maintained the “Funny or Die” branding, they soon built a large audience. It now keeps growing and growing. Success is assured. But the lesson Steele emphasized was that professionally-created and -curated content succeeds where amateurs fail. He sees no reason why it should be any different in our world.
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I got a chance to visit with Charlie Redmayne of Pottermore. He was a bit bleary-eyed at the Digital Minds event on Sunday because the site had opened to the public that weekend. When I saw him on the show floor during the week he had just benefited from a full seven hours of zzzs, and he was enjoying his status as a game-changer.

The key to Charlie’s disruption was his willingness to substitute watermarking for DRM. He said it definitely made him nervous to do it, but he couldn’t see any other way to achieve what he wanted for Pottermore. He had to be able to sell to any device; he wanted to be able to allow any purchaser complete interoperability. There was no way to do that and maintain DRM.

His technical infrastructure is awesome. It stood up even though the average length of engagement by each user was three or four times what they had projected and the traffic exceeded expectations as well. But the most startling early news was what he reported about piracy.

Apparently, Potter ebook files started showing up on file-sharing sites pretty much right away after they opened. But before they could serve any takedown notices, Charlie says the community of sharers reacted. They said “C’mon now. Here we have a publisher doing what we’ve been asking for: delivering content DRM-free, across devices, at a reasonable price. And, by the way, don’t you know your file up there on the sharing site is watermarked? They know who you are!” And then the pirated content started being taken down by the community, before Pottermore could react. And very quickly, there were fewer pirated copies out there than before.
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I heard a rumor from a very reliable source that two of the Big Six are considering going to DRM-free very soon. The rumor is from the UK side, but it is hard to see a global company doing this in a market silo. Another industry listener I know was hearing similar rumors from different sources.

Could we see another crack in this wall sometime soon, maybe this year?

This is one lecture the techies have been delivering to the content folks that might have been on the money. I’ve always been skeptical that DRM prevents piracy, but I’ll admit that I was more concerned in the past than I am now that it would cost sales.
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At the Digital Minds conference, there was a panel on children’s content publishing. Sara Lloyd, head of digital for Pan Macmillan, moderated a group that included Belinda Rasmussen from her own company, Eric Huang from Penguin, Jeff Gomez of Starlight Runner Entertainment, and Kate Wilson of Nosy Crow, which is a new children’s “book publisher” that seems much more focused on apps.

I have trouble seeing a future for book publishers in the kids’ content world. Everybody seemed to agree about what the apps of the future required (interactivity, game elements, animation) and that the parents of five years from now will be much more likely to hand their kids in the back seat an iPad than a book. So I asked them, as books diminish, what will publishers have to offer here? Wouldn’t this business belong to people who know gaming and animation, not books?

Kate seized the question from the stage and answered in a way that seemed to confirm my conjecture. “We don’t hire people with book experience,” she said. When I checked in with her later, she agreed that books were a revenue-generating convenience to get her company started. She sees the day when they won’t be part of her business anymore. What excited her (and well it should) was that they’d just made their fifth app and had created all the software tools they needed to build it while making the first four. The cost of creating their apps is plummeting because they’ve built the toolkit.

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The news about the DoJ’s charges against five publishers and Apple and their settlement with three publishers broke just before LBF. It was a topic of much discussion, of course. Most people in the industry are horrified by the lawsuit and the settlement and there is really widespread fear about the consequences of ending the agency model. (The settlement doesn’t do that, but having three big publishers pushed to allow discounting for the next two years at least certainly cripples it.)

On Publishers Lunch, Michael Cader rounded up an impressive set of links to media around the country who are just as horrified as publishers, retailers, and agents at LBF were. Here are the stories from the New York Times, the Wall Street Journal (behind a pay wall, unfortunately), Slate, and the Los Angeles Times.

We understand that an amendment to the Tunney Act obliges the DoJ to take note and report to the court any opinions expressed in writing by the citizenry about a settlement that takes place in a case still being litigated. Cader notes that the law has usually been used to expand a judge’s ability to exercise oversight when the court believes DoJ hasn’t been tough enough. In this case, we’ll be asking them to pare back a settlement, which is apparently a less common use of the law. But the law allows us 60 days from the settlement to get those letters in and it is what we in the community can do to help fight this battle.

As I wrote in my summary of the impact of this settlement, it is one where Amazon and the cost-conscious ebook consumer win, but everybody else (and that means authors, publishers, retailers, and the public that wants good books, as I explained on NPR) lose. The low-price side of this is easy to understand. The publishing business side isn’t. (If this were a GOP DoJ, I’ll admit that I would have inserted a snide remark here about what this shows about their IQ.)

One point to note here, which didn’t occur to me at first, is that the three settling publishers are about to game the two fighting publishers (and, perhaps, Random House) the same way Random House gamed them when they stayed out of agency at first. Whether or not they stick with agency, they are now enabling discounting, so they might get the same benefit of the retailer discounting their goods while they retain their revenue that Random House got for the first year of agency.

In other words, more weight on the shoulders of the two companies, Macmillan and Penguin, who are carrying the fight for the whole industry. And that means more reason for the rest of us to try to help.

I am working on my letter to DoJ now, and I’ll publish it in a future post. I hope all my readers who understand what’s at stake here will also write to Justice. Address your letters to

John Read
Chief Litigation III Section
Antitrust Division
U.S. Department of Justice
450 5th Street, NW, Suite 4000
Washington, DC 20530

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Should trade publishers start ditching their B2B imprints for a B2C world?


I spent last Friday at the On Copyright 2012 conference staged by my clients at Copyright Clearance Center. CCC is an organization dedicated to generating revenue for content creators from what is referred to as “secondary” licensing, or uses that are not core to the publisher’s revenue stream and which are often impossible to manage from an individual publisher’s point of view. CCC has the interests of copyright-holders at heart and at the core of their enterprise, but they also live on the cutting edge of digital content consumption where mash-ups, fair use, and the reality that piracy often happens because rights are too difficult to license can’t be avoided.

I’ll admit that discussions of the nuances of copyright itself leave me mostly befogged. Fortunately, this event was much more about the practicalities of the marketplace than about the theories of the law.

The most engaging and interesting speaker of the day was Robert Levine, author of “Free Ride”, an analysis of content and the Internet that deeply questions the increasingly ingrained notion that getting paid for content is inherently contradictory with the growth of digital media. Levine is smart and open-minded about content models and DRM and piracy and enforcement. Indeed, one of the noteworthy features of the entire day was its willingness to entertain notions that might be considered heretical by copyright and old model zealots.

In fact, Maja Thomas, the chief digital thinker and strategist for Hachette Book Group USA, opened the door just a bit to the idea that DRM on ebooks might be counterproductive (at worst) or futile (at best). Maja’s background is extensive in audiobooks. She told the conference that she had been assigned to monitor the destruction of her audio business when DRM was removed from those products a few years ago. And, in fact, there was no destruction!

When the program ended, I dashed down to the front to introduce myself to Levine. He knew me before I said my name and “reminded” me that he had interviewed me during his research for his book. (Somebody else later told me, “oh yes, you’re in there.” I’ll have to read it…) I don’t know whether to blame the fact that my memory for these details is a sieve or that I do an interview or two a week with somebody about something and am seldom called upon to remember them later.

What triggered further thoughts for me (and, ultimately, the point to this post) was a discussion in that last panel, chaired by Michael Healy and including Levine and Thomas, about branding. There was a reprise of the frequent (and mostly accurate) meme that author brands are the ones that matter to consumers, not publisher names, with rare exceptions such as Harlequin.

I think that could be changing. Certainly the circumstances around it are. As publishers are challenged to think about and articulate the value they bring to the process, they often cite curation (publishing just the good stuff and filtering out all the inferior stuff) and editorial development (helping the author improve the work before it is published) as significant contributions. Thomas seemed to suggest that a lot of thinking is going into articulating a publisher’s value at her shop.

I have said for some time that the core value proposition for a trade publisher is “we put books on shelves.” That’s looking at it from the author’s point of view. From the consumer perspective, the curation function is seen to be performed by the bookstore and the hurdles that stores create to getting on those shelves assure that only well-conceived and well-edited books make it there. (There have always been exceptions, of course.) As the shelves for print books diminish and are replaced by virtual shelves that are not nearly so limited, books that might not have made the selection grade in a physical world are sharing space with the carefully (and expensively) selected and edited works of major houses.

And that brings us back to branding. Brands are shortcuts for their users, telling them in a name what they can expect from a product or service they haven’t sampled yet.

Publishing brands until the digital era were really shortcuts for the trade, not for the consumer. The buyers at chain and independent bookstores, the collection development team at libraries, and the editors of major book review media all believe they understand the difference between a Farrar Straus or Knopf book and one from a “lesser” house. That figures into the “hurdles” I cite above. Top publishing imprints found it easier to get placement and reviews and get their books in front of the purchasing public.

That fact (alongside the fact that big publishers grew by acquisition of smaller companies and often would preserve the name of the company they bought, which is how Knopf ends up a Random House imprint and Scribners is an imprint at Simon & Schuster, to cite two of far more examples than you’d care for me to name) started the proliferation of imprints we now see. It has been fueled by publishers’ use of imprints as way to attract and award top acquisition talent.

Imprints have dedicated editorial teams and usually some internal marketing resources, but their value as identities is diminishing. The point to them was always to provide useful branding for business intermediaries, not the end consumer. And, as they proliferate, their value for their original B2B purpose is diluted.

(It is currently fashionable to castigate publishers for their focus on the supply chain rather than the end purchaser. This fashion, along with the totally ignorant bashing of the convention of “returns”, is based on apparent indifference to the history and development of the business. When the entire imprint structure of publishing houses is built around B2B brand recognition and has been built up that way over a century, you’d think people would think twice before being reflexively dismissive of the B2B focus. It is really only recent developments that have turned it into a questionable idea.)

But times really have changed. Attention on the end user is rising; the intermediary structure is declining. And publishers should be rethinking their branding strategies, at the core of which are imprints, as they address the emerging marketplace realities.

Publishers seem to recognize that the competitive statement they need to make going forward is about quality, expertise, and investment in professional support for the creative effort. This will distinguish theirs from the swelling mass of self-published books which are usually sorted out today by their pricing. On the agency model, the Big Six books are $9.99 to $14.99 (a few bucks cheaper on the backlist) while the self-published books cluster around a band centered at $2.99.

That may actually work, for now. But what if big publishers want to compete at the lower price points but still make a “quality” statement? And some indie writers are trying to nudge pricing up a bit while publishers are experimenting with bringing them down, so what if we start to see both indie and branded ebooks in the $5.99 range? Can the big publishers do anything that would help them then?

I think they can, but it will be require a decision that is painful to make, considering their history. They should, for the most part, get rid of their imprints. They should brand every general trade book they publish for quality and professionalism, and that only requires one name per major house and could never benefit from more than two.

That is, knowing that a book is from the Random House family of books is all the quality branding the consumer needs. They don’t benefit from from the more nuanced distinctions between Crown and Knopf, and Random House scatters its consumer firepower to its disadvantage trying to establish multiple names in the consumer mind. (In fact, I’m not sure the big houses even try to establish all these imprints as consumer brands. If they’ve already abandoned that effort, they’ve taken the first step in the direction I’m trying to encourage here.)

If this idea is right, then each Big Six house should select one name (and logically, the single best known name they now have among consumers would be the most sensible choice), or perhaps two, and promote it. (The second name might make sense if there is an imprint already known for “quality”, like Farrar Straus or Knopf.) No other name should be promoted to consumers unless it is establishing a clear niche identity (Fodor travel books or tor.com science fiction, as examples). There’s no point establishing brand identity unless you expect consumers to return to it repeatedly, the way they return to stores to buy reading material.

Consumers can’t keep dozens of imprint names straight in their heads, but they can learn the names of six big houses, particularly if they’re starting with names they already know. Like the possibility that Random House should preserve the brand equity in Knopf in addition to building Random House as the general trade imprint, there are nuances to consider in other houses to best implement this strategy.

For example, should Penguin perhaps restrict the use of the Penguin name to classics and established backlist and use something different (Viking?) for everything else? Penguin, because of its publishing history, means something to some people, although I’d argue that not restricting the use of the imprint name to classics and the most distinguished backlist actually dilutes the meaning it might have.

Should Hachette, a name that probably has very low recognition to US consumers as a quality book imprint, be ditched as the brand? Should the company use Little Brown, the most venerable and best known of its imprint names, even though it has created an internal distinction between LB and its relatively new (and therefore mostly unknown to consumers) Grand Central imprint?

What’s the best known name the company now known as Macmillan has? Is it Macmillan? Or is it St. Martin’s or Henry Holt? Farrar Straus might have a cachet worth preserving at the high end, but it would be diluted if it were the overall brand. I suspect that should be Macmillan, but that’s not what they’ve ever called their books; it is just what they have recently started to call their company!

America’s biggest consumers of books can readily remember a few company names to signifying “quality”, and perhaps a few more to mean premium content. Knowing a book comes from an established company with a long list of previously-published titles that book readers are familiar with is the kind of signal people need to be persuaded to part with a few additional bucks for an otherwise unknown author. But that’s all we can ask the brand to do: signal professionalism and quality. The much more nuanced distinctions that the imprint names have been intended to communicate within the trade can’t possibly be delivered cogently to the public at large.

And since the public is now the brand target that matters, it is time to align brand strategy and the brands themselves to that reality.

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