Simon & Schuster

The “Big Change” era in trade book publishing ended about four years ago


Book publishing is still very much in a time of changing conditions and circumstances. There are a host of unknowables about the next several years that affect the shape of the industry and the strategies of all the players in it. But as publishers, retailers, libraries, and their ecosystem partners prepare for whatever is next, it becomes increasingly evident that — from the perspective of trade publishing at least — we have already lived through the biggest period of transition. It took place from sometime in 2007 through 2012.

At the beginning of 2007, there was no Kindle. By the end of 2011, there was no Borders. And by the end of 2012, five of America’s biggest publishers were defending themselves from the US Department of Justice. The arrival of Kindle and the exit of Borders are the two most earthshaking events in the recent history of book publishing and its ecosystem. The Justice Department suit first distracted and then ultimately strait-jacketed the big publishers so it was both difficult to focus and then difficult to react to further marketplace changes.

Paying close attention to what we then called “electronic publishing” started for me in the early 1990s, with a conference other consulting colleagues and I organized for Publishers Weekly which we called “Electronic Publishing and Rights”. This was before Amazon existed. It was when the big transition taking place was from diskettes to CD-Roms as the means of storage. And it was even before Windows, so the only device on which you could view on a screen anything that looked at all like a book was a Macintosh computer, which had literally a sliver of the market. The most interesting ebook predecessor was the Voyager Expanded Book, and it could only be used on a Mac.

In this speech I gave in 1995, I put my finger on the fact that online would change all this and that publishers shouldn’t spend too much energy on CD-Roms.

The period from then until when it was clear Kindle was establishing itself — the awareness that it was for real slowly dawned on people throughout the year 2008 — was one where the inevitability of some big digital change was generally acknowledged. But dealing with it was the province of specialists operating alongside the “real business” and largely performing experiments, or getting ready for the day when it might matter. There was a slow (and inexorable) shift from store-purchasing to online purchasing. And the online purchasing almost all went to Amazon. But even that wasn’t seen as particularly disruptive. Neither ebooks nor online purchasing called for drastic changes in the way publishers saw their business or deployed their resources.

The first important new device for books in 2007 didn’t start out as one at all. It was the iPhone, first released in June of that year. Although Palm Pilots were the ebook reader of choice for a big chunk of the then-tiny ebook community, they lacked connectivity. The iPhone was not seen as an ereader when it came out — indeed, Apple head Steve Jobs still believed at that point that ebooks were not a market worth pursuing — but they could, and did, rapidly become one when it was demonstrated that there was a market. And they vastly expanded the universe of people routinely paying for downloaded content, in this case music from the iTunes store.

Then Kindle launched in November of 2007. A still unannounced number of Kindles sold out in a few hours and Amazon remained out of stock of them for several months! Because the original Kindle was $399, it was only a “good deal” for the consumer who read many books on which they could save money by buying electronic. What this meant was that Kindle owners bought ebooks in numbers much greater than the relatively small number of devices placed would have suggested. Throughout 2008, the awareness dawned on the industry that ebooks were going to be a significant business.

And that awareness rapidly shook loose a raft of competition. Barnes & Noble saw that they had to compete in this arena and started a crash program to deliver the Nook, which first appeared almost precisely two years after the first Kindle, in November 2009. Months earlier, Amazon had released the app that put Kindle on the iPhone. Meanwhile, Jobs had become persuaded to take ebooks seriously, and, anyway, he had a store selling content downloads to devices like crazy. Now, about to launch his new tablet format, the iPad, he had what looked like the perfect vehicle with which to launch ebooks. The iPad and the iBookstore debuted in April 2010. A month later, Kobo entered the market as a low-priced alternative with their first device. And by the end of the year, Google reorganized and rebranded what had been Google Editions into Google eBooks. The original concept was that they would populate the readers that were using epub, which meant Nook and Kobo at that time.

All of this change within three calendar years — 2008 through 2010 — created a blizzard of strategic decisions for the publishers. Remember, before all this, ebooks were an afterthought. Amazon had applied pressure to get publishers into the Kindle launch in 2007. Before that, no publisher that I can recall made any effort to have ebooks available at the time a book was initially launched. There were workflow and production changes (XML FIRST!) being contemplated that would make doing both print and digital editions a less onerous task, but they were seldom fast-tracked and doing ebooks meant taking on and managing a book-by-book conversion project.

During the period when Amazon was pretty much alone in the game (the pre-Amazon market leaders, Sony and Palm, faded very quickly), they started pricing Kindle titles aggressively, even willing to take losses on each sale to promote device sales and the ecosystem. This alarmed publishers, who were seeing small Kindle sales grow at what were frightening rates and raising the spectre of undermining their hardcovers. It didn’t hurt that the retailers with whom they (still, then, though not now) did most of their business were also alarmed. Nook arrived and Barnes & Noble would never have been as comfortable as Amazon with selling these new products at a loss. But B&N also worried about the impact that cheap ebooks might have on more expensive print book sales. Amazon didn’t.

So when Apple proposed in late 2009 and early 2010 that there could be a new way to sell called “agency” which would put retail pricing power for ebooks into the publishers’ hands, it met a very receptive audience of publishers.

And that, in turn, led to the Department of Justice’s lawsuit against the big publishers which was instituted in April of 2012.

Coinciding with and enabled by all of this was the huge growth in author-initiated publishing. Amazon had bought CreateSpace, which gave them the ability to offer print-on-demand as well as Kindle ebooks. The combination meant that a huge audience could be reached through them without any help from anybody else. When agency happened (2010), they started to offer indie authors what amounted to agency terms: 70 percent of the selling price for ebooks. This was a multiple of the percentage an author would get through a publisher.

Agency pricing fell right into Amazon’s and the self-published hands. Getting 70 percent on the ebook, the indie author got $2.10 pricing at $2.99 and $2.80 pricing at $3.99, royalties comparable to what they’d get from full-priced print. Many bestselling indie ebooks were priced at $0.99. The very cheap ebooks indie authors would offer juxtaposed against the publisher’s agency up-priced (many at $14.99) and undiscounted branded books created a market opening that allowed the Kindle audience to sample (aside from the free chapter that is standard in ebooks) cheap ebook authors for peanuts. Suddenly, names nobody had heard before were on the map, selling millions of ebooks, and taking mindshare away from the industry’s output. And it also handed the publishers’ authors an alternative path to market that could only have the effect of improving their negotiating position with the publishers.

Meanwhile, Borders sent the most persuasive possible signal that the shift in sales from stores to online, accelerated by the ebook phenomenon, was really damaging. They went out of business in 2011. That took the account that sold upwards of 10 percent of most publishers’ books, and a far greater percentage of the bookstore shelf space for backlist, off the board. Or, viewed another way, publishers went from two national retailers who could place a big order and put books in front of the core book-buying audience to one.

So the authors’ negotiating position was stronger and so was Barnes & Noble’s.

And all of those events — the devices, the ebook surge, the introduction of the agency business model, and the Department of Justice suing most of the big publishers, a very noticeable rise in successful independent publishing, and the increased leverage of the trading partners with whom publishers negotiate their revenues and their costs — were head and body blows to the titans of the industry. Every one of them threatened the legacy practices and challenged the legacy organizations and resource allocations.

During this period, Random House (the number one publisher) merged with Penguin (the number two publisher) and created a super-publisher that is not far from being as big as the four remaining members of what were called “The Big Six” in 2007. If you are viewing the world from the perspective of HarperCollins, Simon & Schuster, Hachette, or Macmillan, that might have been the biggest development of all.

Compared to the sweeping changes of that era, what has happened since and what is likely to happen in the next couple of years is small beer. There are certainly clear trends that will change things markedly over time.

Amazon continues to grow its share, and they are around 50 percent of the business or more for many publishers these days.

Barnes & Noble is troubled but in no immediate jeopardy and is still, by far, the number one brick-and-mortar account for publishers. But the optimistic view is that their book sales will remain flat in the near future.

Independent bookselling continues to grow, but even with their growth since Borders went down, they are less than 10 percent of the sales for most publishers. It is true that ebook sales for publishers have flattened (we don’t know the overall trend for sure because we don’t really know the indie sales at Amazon, and they’re substantial) and don’t seem likely to grow their share against print anytime soon.

These things seem likely to be as true two years from now as they are now. Nothing felt that way in from 2008-2012.

Digital marketing, including social network presence, is an important frontier. The industry has a successful digital catalog, called Edelweiss, which has obviated the need for printed catalogs, a cost saving many publishers have captured. And another start-up, NetGalley (owned by Firebrand), has organized the reviewer segment of the industry so that publishers can get them digital advance copies of books, which is cheaper and much more efficient for everybody.

Owning and mining email lists is a new skill set that can pay off more each year. Pricing in digital seems to offer great opportunity for improved revenue, if its effects can be better understood. International sales of American-originated books are more accessible than they’ve ever been as the global network created by Ingram creates sales growth opportunities for just about every publisher. That should continue and requires new thinking and processes. Special, or non-traditional, markets increase in importance, abetted by digital marketing. That will continue as well.

Audio, which has been one of the big beneficiaries of digital downloading, will continue to grow too. The problem from the publishers’ perspective is that Audible, owned by Amazon, owns most of that market. So they have a sophisticated and unsentimental trading partner with a lot of leverage controlling a market segment that is probably taking share from print and ebooks.

And with all of this, what will also continue to grow is relentless margin pressure from the publishers’ two biggest accounts: Amazon and Barnes & Noble.

But the challenges of today aren’t about change of the magnitude that was being coped with in the period that ended five years ago. They’re more about improving workflows and processes, learning to use new tools, and integrating new people with new skill sets into the publishing business. And there are a lot of new people with relevant skills up and down the trade publishing organizations now. That wasn’t so much the case when things were changing the fastest, 2007-2012.

It isn’t that there aren’t still many of new things to work on, new opportunities to explore, or long-term decisions to make. But the editor today can sign a book and expect a publishing environment when it comes out in a year or two roughly like the one we have today. The editor in 2010 couldn’t feel that confidence. The marketer can plan something when the book first comes up for consideration and find the plan will still make sense six months later. And while things still very much in flux in sales, a blow comparable to the loss of Borders isn’t on the

Of course, there could always be a black swan about to announce itself.

This post explains why, among other reasons, I will no longer be programming the Digital Book World Conference, as I did for seven years starting with its debut in 2010. At its best, DBW anticipated the changes that were coming in the industry and gave its attendees practical ways to think about and cope with them. Future vision was a key perspective to programming although we always strived to give the audience things they could “take back to the office and use”.

It has been harder and harder over the past couple of years to find the big strategic questions the industry needed answers to. The writing was on the wall last year when most of the publishers I talked to felt confident they understood where books were going; they wanted to hear from other segments of the digital world. That was a sign to me that the educational mission I had in mind for DBW since I started it was no longer in demand.

To their credit, the DBW management, as I understand it, is trying a new vision for the show, more focused on the immediately practical and the hands-on challenges of today. I wish them the best of luck with it.

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In an indie-dominant world, what happens to the high-cost non-fiction?


I first learned and wrote about Hugh Howey about four years ago. At the time, he was one of the first real breakthrough successes as an indie author, making tens of thousands of dollars a month exclusively through Amazon for his self-published futurist novel, “Wool”. As soon as I could track him down, I invited Hugh and his agent, Kristin Nelson, to speak at the next Digital Book World, which they did several months later, in January 2013.

In the years since, Hugh has had a very public profile as a champion of indie publishing and as a critic of big publishers. When I first encountered Howey, he and his agent had already turned down more than one six-figure publishing deal. Nelson ultimately did a print-only deal for “Wool” with Simon & Schuster, a deal consummated before the big publishers made the apparently-universal decision that they would not sign books for which they didn’t get electronic rights.

This week there was a lengthy interview with Howey done by DBW editor Daniel Berkowitz published on the DBW blog. In this piece, Howey reviews many of his complaints against publishers. According to him, their royalty rates are too low and they pay too infrequently and on too much of a delay. Their authors are excluded from Kindle’s subscription revenue at Kindle Unlimited. Their ebook prices to consumers are too high. And, on top of that, they pay too much rent to be in New York City and they pay their big advances to wealthy authors who don’t really need the money, while aspiring authors get token advance payments that aren’t enough to give them time off to write.

Howey’s observations are not particularly welcomed by publishers, but he has a deep interest in indie authors and, by his lights, is always trying to help them by encouraging them to indie-publish through Amazon rather than seeking a traditional deal through an agent. He has organized the AuthorEarnings website and data repository along with Data Guy, the games-business data analyst who has turned his analytical skills to the book business whom we featured at the most recent Digital Book World this past March.

Howey and I have had numerous private conversations over the years. He’s intelligent and sincere in his beliefs and truly devotes his energy to “industry education” motivated by his desire to help other authors. Yet there are holes in his analysis of the industry and where it is going that he doesn’t fill. Given his substantial following and obvious comfort level doing the marketing (such as it is, and it appears Howey’s success as an author hasn’t required much) for his own books as well as his commercial performance, it is easy to understand why he would never consider publishing any other way but as he has, as an indie author who is “all in” with Amazon. But he seems to think what worked well for him would work best for anybody.

In this interview, Howey says that any author would be better off self-publishing his or her first book than going the route of selling it to a publisher. And he actually dismisses the marketing effort required to do that. Howey says the best marketing is publishing your next book. He thinks the best strategy is for authors to write several books a year to gain success. In fact, he says taking time away from writing to do marketing is a bad choice. Expecting most writers, or even many writers, to do several books a year strikes me as a highly dubious proposition.

It is impossible to quarrel with the fact of Howey’s success. But he makes a big mistake assuming that what worked effectively for him makes self-publishing the right path for anybody else, let alone everybody else.

Howey also has an unrealistically limited view of the output of big publishing. If you read this interview (and I would encourage anybody interested in the book business to do so), you see that he thinks almost exclusively about fiction or, as he puts it, “storytelling”. Books come, like his did, out of an author’s imagination and all the author needs is the time to write. Exposure through Amazon does the rest.

He gives publishers credit for putting books into stores (although he would have them eliminate returns, which would cut down sharply on how effectively they accomplished that). But he thinks stores will be of diminishing importance. (We certainly agree on that.) He gives credit for the indie bookstore resurgence to Amazon, which would be true if you credit Amazon with the demise of Borders that wiped out over 400 big bookstores and created new opportunities for indies. But the idea that Amazon is allied with indie bookstores is contradicted by two realities. One is that the indie stores won’t stock Amazon-published books. The other is that Amazon, now in the process of opening its second retail store, may plan dozens, hundreds, or thousands more to come! We really don’t know. Certainly, very few indie bookstores would be applauding that.

Here’s how Howey sums up his advice to authors.

“Too few successful self-pubbed authors talk about the incredible hours and hard work they put in, so it all seems so easy and attainable. The truth is, you’ve got to outwork most other authors out there. You’ve got to think about writing a few novels a year for several years before you even know if you’ve got what it takes. Most authors give up before they give themselves a chance. It’s similar to how publishers give up on authors before they truly have a chance.”

This seems like sound advice, but it isn’t how it appeared to work for Howey. He published a novella which was the start of Wool and his Amazon audience asked for more. Three more novellas later, over a period of just a few months, and the four combined became his bestselling novel. Six months after he started, he was making $50,000 a month or more and had an agent selling his film rights. Then his agent started selling his book rights in non-US territories and in other languages. Meanwhile, Howey continued to earn 70 percent of the revenues from his ebooks, in a deal Amazon offered that matched what they paid to agency publishers, the biggest publishers. (Would Amazon be paying authors 70 percent if publishers hadn’t come up with that number for agency? Should big publishers get some of the credit for the very good deal indie authors are getting?)

The logic that Howey offers about how self-publishing stacks up against doing deals with a big house is very persuasive, but there are two pieces of reality that contradict it.

One is that, at this time, four years after Howey did “Wool” and eight years after the launch of Kindle, there are no noteworthy authors who have abandoned their publishing deals for self-publishing. (It appeared briefly that Barry Eisler was the first such author, except that it turned out he signed an Amazon Publishing deal after turning down a Big Six contract; he didn’t go indie. And, frankly, while he’s somewhat successful, he’s not a show-stopper author for any publisher.) In fact, Amazon’s own publishing strategy has apparently switched away from trying to persuade big commercial fiction authors to do that and is focused on the genre fiction that is the core of the self-publishing done through them. Howey has been offering the same analysis for quite a few years now but so far, the publishers have lost hardly anybody they care to keep to self-publishing. And we’re now in a period where the split of books sold online (ebooks and print) to books sold in stores (where publishers are beyond helpful; they’re necessary) appears to have stabilized — at least for the time being — after years of stores losing share.

The other is that Howey’s analysis totally leaves out one of the biggest categories of publishing: big non-fiction like history or biographies or industry analyses that take years of research and dedication to complete. Unlike a lot of fiction, those books not only take time, they require serious help and expense to research. In a imagined future world where all books are self-published, aspiring fiction writers give up very little (small advances) and successful fiction authors have the money to eat while they write the next book they can make even more money on doing it the Howey way (even though none have). But big non-fiction books like Jane Mayer’s “Dark Money” (or anything by David McCullough) took years of research to put together. “Dark Money” was undoubtedly financed at a very high level by the Doubleday imprint at Penguin Random House. How books like that will be funded in the future is not covered by Howey’s analysis.

Now, that’s not to say they must be. Economic realities do rule. Howey’s thesis that things are shifting in Amazon’s direction and away from the ecosystem that has sustained big book publishers is correct. He predicts that there will be three big publishers where once there were six and now there are five. I concur with that. As that happens, maybe the big fiction writers will take Howey’s advice.

But that solution is no solution for authors like Jane Mayer or David McCullough. A world without publishers where authors do the writing and the publishing might give us an output of fiction comparable to what we have now. But the biggest and best non-fiction would need another model if publishers weren’t able to take six-figure investment risks to support them. Amazon’s not offering it and neither is Howey. If the future unfolds as Howey imagines it, we’ll never know what books we’re missing.

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Book publishing lives in an environment shaped by larger forces and always has


(Note to my readers. This longer-than-usual post is really two. The first half is a recital of what I believe is very relevant history. The second half is about how things are now. Although I am personally fascinated by the historical context, if you get bored with the history, the bolded text below marks the spot you can skip down to to get to “today”.)

Book publishing has always adapted to an environment shaped by larger forces. That hasn’t changed.

Andrew Carnegie provided a big lift early in the 20th century when he financed a lot of libraries, taking books and reading into every corner of the country. In the 1930s, publishers led by Putnam and Simon & Schuster made “returns” a part of the commercial equation between publishers and bookstores because the depression was making stores especially wary of taking on inventory.

After World War II, the mass-market paperback revolution was made possible by a network of magazine wholesalers (also called “IDs”, or “independent distributors”) who could push product out to hundreds of thousands of points of purchase.

In the 1960s, shopping center development boomed. The mall developers wanted “bankable” entities to sign up for their stores before the projects were built. Banks providing mortgage cash liked national brand names for that purpose better than unknown local entrepreneurs. That fact spawned the mall chains, Waldenbooks and B. Dalton, which each grew into the hundreds of stores by the 1970s. All those new stores opening created pipelines for publishers to fill that made the book business grow even faster.

Then in the late 1980s, Wall Street believed the destination superstore was a good bet and happily financed Borders (which bought Walden) and Barnes & Noble (which bought Dalton) to build out the 100,000+-title store model. This again created huge pipelines for publishers to fill and, unlike the situation when 25,000-title mall stores were proliferating, the orders to fill them went deep into publishers’ backlists.

All of this 20th century growth fit a similar model for publishers, leaning on booksellers to present their books to the public and to manage the inventory in an ever-expanding number of bookshops. So publishers continued to focus on business-to-business marketing, honing their expertise at positioning their titles for reviewers, bookstore buyers, and library collection developers but only occasionally addressing the public, or any segment of any book’s consumer audience, directly. And they continued to focus their sales efforts on persuading stores to make commitments to their books. The ability to get “buys” from the booksellers really drove marketing and revenue.

Then in 1995, Amazon arrived and changed the game in many ways. And we can see in retrospect that the birth of Amazon heralded an even bigger change in the commercial context for publishers. Amazon’s arrival began an era which is now in full flower, where the environment for book publishers is largely influenced by major tech companies for which publishing is a hardly-noticed activity even though their impact on the world of publishing is profound. Although there are certainly others who figure in, the environment today for marketing and delivering books is shaped by what Professor Scott Galloway of NYU Stern School of Business calls “The Four Horsemen”: Amazon, Apple, Facebook, and Google.

Amazon, like booksellers before them, handled the direct relationship with consumers and evolved, after an early period of depending on Ingram for their stock, to staging the inventory to serve them. It pretty quickly became apparent that they were much more disruptive than prior innovators in many ways. Among them:

Amazon operated in an environment without geographical constraints; their sales weren’t constrained by local boundaries like the physical bookstores. They could effectively provide service to customers from anywhere. So even in the beginning, when they were taking such small share away from each of the existing market players that they hardly noticed it, Amazon was building a substantial customer base for itself.

Pretty early in the game, Amazon persuaded Wall Street that it was “different” and didn’t ultimately have to make its fortune selling books. Books were just the key to the first step: customer acquisition. The profits would come from subsequent steps: selling those customers other things (and — the more sophisticated part — selling the infrastructure it was creating at scale). Once the investment community was on board to finance that strategy, Amazon was liberated to price-compete in a way that, it is clear in retrospect, no book-centric retailer could keep up with.

The number of shipping points for Amazon, which have recently proliferated and is now in the dozens at least, grew slowly, so Amazon was inherently more “efficient” with its purchases than bookstores could possibly be. Each book shipped to them had a much bigger sales base than it would in a single store and therefore also had a much lower chance of being returned. At the same time, as they took sales away from brick-and-mortar stores, returns from that side of the business tended to go up, at first because the publishers’ sales forecasting was unconsciously working with a diminishing base, and then later because moving to fewer titles in stock became part of the solution to reduced sales and returns were part of how they got there.

The book-buying public adjusted very quickly to Amazon. For several decades leading to the 1990s, publishers and bookstores had learned that a massive in-store selection was a powerful magnet to draw customers. The choice of books has always been so granular that it is virtually impossible for any retailer to stock everything a customer might want. Jeff Bezos knew and understood that, and he had the vision to understand how an online retailer could benefit from the impossible challenge a brick-and-mortar bookstore faced.

Amazon used a Baker & Taylor database that hadn’t been “cleaned”, so it had a lot of out-of-print books in it. Amazon turned that into a benefit for their customers, because it gave Amazon a platform to tell a searcher that the book they wanted was no longer available if that were the case. (If you just don’t find your book when you search, you would be inclined to look again elsewhere. But if you find it and are told it is out of print, you would perhaps look for a substitute.) Combining that with rigorous “promise dates” telling customers when their books would arrive progressively lured, and then satisfied, more and more book buyers. The less likely the buyers thought it would be that they’d find a book in a store, the more likely it would be they’d just order it from Amazon. In a story we’ve told on this blog before, we learned on a consulting assignment with Barnes & Noble in the first couple of years of this century how dramatically the buying habits of academics had shifted away from store-shopping to buying from Amazon.

By the end of the first decade of this century, the future had arrived with a vengeance. Amazon dominated the rapidly-growing ebook business, driving the publishers into an embrace with Apple (one “Horseman” come to save them from another) that brought them into conflict with the Department of Justice. And then Borders, one of the two dominant national bookstore chains and proprietors of more than four hundred 100,000-title stores nationwide, shut down, taking a big double-digit percentage of the nation’s bookstore shelf space with them.

The collapse of Borders had an impact on the publishers’ ecosystem comparable to what the effect will be on sea levels when the Greenland or West Antarctica ice sheets break off: a sudden surge of change reflecting a long-term trend. As Hemingway wrote about the way things often happen: “gradually, then suddenly”.

And this brings us to the world we live in today. Like a frog in gradually heated water, many of us have lived through the change so we may think we’re more adjusted to it than we actually are.

Publishers now live in a world where more than half the sales for most of them — the exceptions are those who are heavily into illustrated books and children’s books — occur online through varying combinations of print and ebooks. Their two biggest accounts — Amazon for online sales and Barnes & Noble for stores — each reign supreme for their channel of the business. (And although Amazon has opened a store and Barnes & Noble has an online sales capability, they are likely to remain the leading player where they are now and much less important in the other channel.) Because they’re so important, they can be increasingly aggressive in how much margin they insist on as discount from the publishers’ price and various merchandising fees.

When bookstores were the distribution path for books, they were also the primary avenue for “discovery”. That was what the big store was about. People could browse it and find things they had no idea existed that they wanted to buy. But, as we all know, “discovery” now is largely an online thing, driven by some magical combination of “search engine optimization”, social media promotion and word-of-mouth, and online retailer merchandising.

So the model that has served publishers for a century, putting out books through a network of stores that both draw in the public and contextually position the books for them (in topical “sections” and some featured placements like windows or front tables), has been seriously eroded. What has replaced big parts of it are online purchases of books “discovered” through a variety of mostly online channels. And that’s where the Four Horsemen become so prominent.

Amazon and Apple are, along with Barnes & Noble, where most of publishers’ sales will take place. Each retailer does its own merchandising, of course. All of them will undoubtedly be increasing the variety and sophistication of its offerings, but will also have different rules and algorithms influencing how they respond to descriptive copy and metadata triggers the publishers will be providing. Understanding how this all this works at Amazon and Apple as well as publishers always did with Barnes & Noble and other brick-and-mortar retailers is a clear agenda item for all publishers. And they get it.

What some are still learning is “the fallacy of last click attribution”. (This is one of the more important nuggets of knowledge I’ve picked up in the past couple of years from my partner, Peter McCarthy, as we’ve been building our Logical Marketing business.) In a nutshell, that means that where somebody buys something is not necessarily where they made the buying decision. If you’re an Amazon Prime subscriber getting free shipping on your books, you go to Amazon to buy regardless of where you learned about the book. And that’s why all four horsemen are so important.

Although Google is also a retailer, a much less potent one than Amazon or Apple, Google’s importance is that it dominates search. And despite the penetration of apps on both the iOS and Android platforms (more everybody needs to understand about Apple and Google), search is still the primary way almost everybody looks for things. Google still has in the neighborhood of 60 to 70 percent of search activity (even though Microsoft’s Bing now powers AOL and Yahoo search). Many of the sales transacted on Amazon and Apple are made because of search results delivered by Google. According to the latest SimilarWeb numbers, approximately 25% of Amazon’s traffic originates as a Google search. One quarter. And Amazon is one of Google’s very largest advertisers.

Google also has an enormous impact on an author’s ability to be part of the merchandising process. Google Plus hasn’t turned out to be much of a social interaction platform, but an author’s profile there can have a big impact on how the author and his/her books rank for search. This has long been true but is not, even now, universally appreciated.

In short, Google Plus author pages are nearly as important as Amazon author pages, a fact totally independent of the traffic either of them gets.

Facebook is the only one of the Four Horsemen that doesn’t (for now, anyway) actually function as a retailer at all, but Facebook is increasingly important to book marketing. Something north of two billion people use Facebook, a billion of them every day. Nineteen percent of the world is on Facebook; forty percent of Internet users. More and more time is spent there by more and more people.

As anybody who uses it knows, Facebook makes it incredibly simple to share content or links. More and more authors and publishers are learning how to use Facebook as a marketing and advertising tool. Everybody’s there. Rule #1 of marketing: fish where the fish are.

So the transactions take place primarily at Amazon, often at Barnes & Noble (still) and Apple, and occasionally at Google. But the drivers to the transactions are Google and Facebook. (And others, of course, but none approaching the importance of those two.) How successfully publishers will sell books in the future will largely depend on how well they master the opportunities presented by Amazon, Apple, Facebook, and Google.

One of the big new opportunities, beyond the scope of this piece to cover in detail but very much part of the new operating environment, is “nearly effortless global” sales. All of the Four Horsemen reach every corner of the planet. The structural barrier there is that the responsible sales operators haven’t historically had to think about many different global sales opportunities.

Another is to make better synergistic use of author relationships. What authors do on Facebook and Google Plus (and a host of other social networks) needs to become part of the publisher’s overall picture of the book and its marketing. And the structural barrier there is that the editor is too often forced to be the conduit for this coordination, a task for which they are neither prepared nor supported.

Operating through and with these behemoth companies is a big challenge for our industry. David Young, who just retired from Hachette UK, shared an observation with me when he was CEO of Hachette US a few years ago. The CEO of a big publisher in the past could always get the CEO of his or her biggest accounts on the phone if necessary. That was no longer true eight years or so ago when he made the observation, talking about Amazon. (And talking about Amazon a few years before Hachette and Amazon had a very public dispute that hurt Hachette sales very badly.)

There are two legacy accounts for publishers that remain critical to their future: Barnes & Noble, the industry’s one omni-channel wholesaler, and Ingram, which began as a book wholesaler but which has morphed into a service provider helping publishers with all sorts of modern challenges, including global distribution, print-on-demand, and now, with the acquisition of Aer.io, the ability to promote and sell through new technology Ingram and Aer.io offer. Ingram, unlike any of the other players, is helping smaller publishers with tools to enable them to punch above their weight. That is likely to be a growth proposition in the years to come.

But B&N and Ingram, just like all the publishers, will have to understand the strategies and activities of the four big companies driving change and creating a new ecosystem for the book business. They’ll also have to do it without a direct line to their CEOs. But, then, not very many publishers were able to get Andrew Carnegie on the phone 100 years ago either.

Digital Book World 2016 has a lot of programming addressing the issues raised in this piece. Professor Scott Galloway will talk about the Four Horsemen. Professor Jon Taplin of USC will analyze how revenue has moved from content creators to tech companies and suggest some ways some if it might be clawed back. Rand Fishkin, founder, former CEO (and now Wizard) of Moz and perhaps the most knowledgeable person in the world about search, will offer the latest insights into how search is being affected by “local” and “mobile” and then have a session to take questions.

Virginia Heffernan, author of Magic & Loss will discuss the cultural and economic impacts of the digital age for content creators.  Antitrust attorney Jonathan Kanter  will look at the relationships among book publishers, major technology players, and consumers from a competitive and regulatory perspective

Roy Kaufman of Copyright Clearance Center will moderate a panel talking about changes in copyright law, something also driven by big players affecting the publishers’ commercial environment. And we have a slew of presentations about companies “transforming” — changing how they do business in fundamental ways while maintaining the revenues that sustain them. That will include a presentation from Ingram Chairman and CEO John Ingram. And Barnes & Noble’s new Chief Digital Officer, Fred Argir, will talk about how they are building out an “omni-channel” strategy and what they can offer publishers in the way of improved digital discovery.

And there will be panel discussions of both the issues we identified as publishing opportunities: global sales and marketing collaboration with authors.

DBW 2016 takes place in New York March 7-9, 2016.

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Can crowd-sourced retailing give Amazon a run for its money?


Although it has always seemed sensible for publishers to sell their books (and then ebooks) directly to end users, it has never looked to me like that could be a very big business. In the online environment, your favorite “store” — the one you’re loyal to and perhaps even have an investment in patronizing (which is how I’d characterize Amazon PRIME) — is only a click away. So however you learn about a book (or anything else), it is very easy to switch over to your vendor of choice to make the purchase.

There is a concept called “the fallacy of last click attribution” that is important in digital marketing. You don’t want to assume that the place somebody bought something (the last click) was the place they decided to buy it (attribution). If you’re a marketer, you want to aim your messages where the decision gets made and you need to know if that wasn’t where the purchase was made. You learn quickly that the two are often not the same.

There are a variety of reasons why direct sales are hard for publishers. One is that their best retailer customers — Amazon and Barnes & Noble, of course, but many others as well — don’t like their turf encroached upon by their suppliers and they have power over their suppliers’ access to customers. They particularly don’t like it if suppliers compete on price.

But it isn’t just publishers who have trouble competing with the online book retailers and ebooks are just as hard as print. On the ebook side, many readers are comfortable with specific platforms — Kindle, Nook, Kobo — and are uncomfortable “side-loading” content into them. And when you get away from the owner of an ecosystem, the complications created by the perceived need for DRM — some ability to either lock up or identify the owner of content that might be “shared” beyond what its license (which is what a purchase of ebooks is) allows — makes things even more complicated.

Because it appears so superficially simple to transact with trusted customers, attempts to enable book and ebook sales by a wide variety of vendors are nearly as old as Amazon itself. In fact, Amazon began life in 1995 leaning almost entirely on Ingram to supply its product and began discounting in earnest when Ingram started to extend the same capability to other retailers through a division called I2S2 (Ingram Internet Support Services) in the late 1990s. The aggressive discounting by Amazon quickly and effectively scared off the terrestrial retailers who might have considered going into online sales.

When one company, a UK-based retailer called The Book Depository, organized itself to fulfill print books efficiently enough to be a potential competitor, Amazon bought them. Nobody else ever really came close. Borders didn’t try, initially turning over its online presence to Amazon. Barnes & Noble partnered with Bertelsmann in the 1990s to create Books Online, which has continued (to this day) as BN.com. But they have not (to date) managed to achieve a synergistic interaction with the stores to give themselves a unique selling proposition. And the Amazon discounting strategy, designed to suck sales away from terrestrial retailers and partly supported by Amazon’s reach well beyond books, was never a comfortable fit for BN. As a result, Amazon has never been threatened as the online bookselling king.

Barnes & Noble dominates physical retail for books; Amazon owns online. One channel is shrinking; the other is growing.

Trying to do retail for print books without a substantial infrastructure is just about impossible, but ebooks are tempting because, at least superficially, those challenges appear to be much smaller. That may have been behind the attempt by three publishers — Penguin (before the Random House merger), Hachette, and Simon & Schuster — to launch Bookish a few years ago. By the time it opened, Bookish was touted as a “recommendation engine”, but its true purpose when it was started was to give its owning publishers a way to reach online consumers in case of an impasse with Amazon. They get points for predicting the impasse, which Hachette famously suffered from during ebook contract negotiations with Amazon in 2014. But the solution wasn’t a solution. Bookish never had the juice to build up a real customer base and probably never could have, regardless of how much its owners would have been willing to invest.

There are currently two noteworthy players in the market enabling any player with a web presence to have an ebookstore selling everybody’s titles. One is Zola Books, which started out two or three years ago promoting itself as a new kind of web bookstore. They were going to let anybody create their own curated collection of books and profit from their curation. And they were going to host unique content from brand name writers that wouldn’t be available anywhere else. It didn’t work, and now Zola, having acquired much of the defunct Bookish’s tech, is trying to be an enabler of online ebookstores for anybody who wants one.

That same idea is the proposition of Hummingbird, an initiative from American West Books, a California-based wholesaler that provides books to leading mass merchants. They have created technology to enable anybody with a web presence to sell ebooks. The company told us that their internal projections suggest that they can capture 3% of the US ebook market in 24 months from their imminent launch. They promise an impressive array of resellers, ranging from major big box retailers (many of which are their customers for books) to major publishers themselves.

There are others in the space, providing white label platforms and other direct sales solutions, including Bookshout, Enthrill, Bluefire, and Impelsys. And there are distributors, etc. who support their clients’ D2C efforts — Firebrand, Donnelly/LibreDigital, Demarque.

Then, yesterday (Tuesday) morning, Ingram announced that they have acquired Aer.io, a technology firm based in San Francisco headed by Ron Martinez. The Ingram-Aer.io combination will probably motivate the owners of Zola and Hummingbird to rethink their strategies. It is motivating me to reconsider whether, indeed, a large number of Net points of purchase for books could change the nature of the marketplace.

Disclosure is appropriate here. Ingram has been a consulting client of ours for many years. In that role, I introduced them to Aerbook, the predecessor to Aer.io, two or three years ago and I knew that Ingram had invested in it. But I didn’t know about the integration the two were working on until literally moments before they announced the merger on Tuesday. It is extremely powerful.

What Martinez and Ingram have built with a simple, elegant set of tools is the ability for anybody — you, me, a bookstore, a charity, a school, an author — to build its own branded and curated content store. You can “stock” it with any items you want from the millions of books and other content items Ingram offers. You can set any prices you want, working with a normal retail margin and paying “by the drink” for the services you need, namely management of the transaction and fulfillment. And while there is certainly “effort” involved in building your selection and merchandising, there are no up-front or recurring charges to discourage anybody from getting into the game.

One of our observations in the past couple of years has been that Amazon’s competitive set is limited because most of their ebook competitors don’t sell print books. It seemed to me that the one chance to restrain their growth — and every publisher and bookseller that is not Amazon would like to do that — was for Google to get serious about promoting and selling print as well as ebooks. But that won’t happen. Google is a digital company and they’re interested in doing all they can with digital media. They don’t want to deal with physical, even — as I suggested — doing it by having Ingram do the heavy lifting.

Whether any publishers or booksellers or other merchants or entities can build a big-and-profitable business selling books using the Aer.io tool remains to be seen. But it would seem that many can build a small-and-not-unprofitable sideline to their current activities and it would be one that would underscore their knowledge, promote their brand, and provide real value to their site visitors and other stakeholders. Thousands of these businesses could be consequential; millions could be game-changing. How many will there be? That’s impossible for me to predict, but the Aer.io proposition is totally scaleable, so the answer depends entirely on how enticing it is for various entities with web traffic and brands to have a bookstore.

And, depending on the uptake here, there will be some strategic conversations taking place around this at Amazon as well. When they have a handful of competitors selling print and ebooks, as they have, price-matching (or price-undercutting) can be an effective, and targeted, strategy. But how do you implement that when there are thousands of competitors, some of which are discounting any particular title and many of which are not? And does the customer care if they’re paying a couple bucks more to buy the book “directly” from their favorite author, particularly if the author offers a hand-signed thank-you note will be sent (separately, of course) to acknowledge every purchase?

How this will play out is something to watch over the next few years but there is at least the potential here for a real change in the game.

We already had John Ingram, Chairman and CEO of the Ingram Content Group slotted as a keynote speaker for Digital Book World 2016 to talk about one of our main themes: “transformation”. More than half of Ingram’s revenues come from businesses they weren’t in 10 years ago. We’ll see how things look as they start to roll out Aer.io, but it would seem likely Aer.io would be an appropriate add to the program as well.

If you haven’t signed up yet for DBW (which runs March 7-9), the Publishers Lunch code gets you the lowest price.

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Ebooks change the game for both backlist and export


There are two aspects of the business that ebooks should really change.

One is that ebooks can really enable increases in sales of the backlist.

The other is that ebooks will really enable sales outside the publisher’s home territory.

The second piece of this hardly even requires much effort. At a conference called Camp Coresource hosted by Ingram two weeks ago, Mary Cummings of Diversion Books, which last year launched a romance-only eBookstore app, EverAfter Romance, reported just short of half of EverAfter’s app users are coming from outside the “home” (US) market. Of that 49 percent, only about 6 percent come from the UK and Canada. Of course, Diversion owns world rights on many titles. And the rest of the world has far more than half the people, even far more than half the English speakers, in the world. So the US is still responsible for far more users per capita, but that’s really of secondary importance. Getting half one’s customers from markets that would have been very hard to reach ten years ago — without any extraordinary efforts — is a very new thing.

This global reality comes up in another frequent current discussion. The big publishers are suggesting that ebook sales have plateaued, perhaps even declined. Amazon says “not true”, that ebook sales are still rising. Some analysis, such as what is done by Data Guy for Author Earnings, says that the publishers’ big books are losing ebook share to the indies, primarily relying on data scraped from Amazon to make the case. The most commonly-offered explanations are that publishers’ success forcing higher ebook prices for their titles, combined with a decline in new converts to ebooks (who are inclined to “load up” their devices when they first start reading digitally) account for the apparent trend.

But the comparison can also be skewed. All Amazon sales from outside the US that are not made through a local Amazon store are credited to the US store. And when Amazon distributes indie ebooks, they always (or at least almost always) have global rights. So it could well be the case, and often is, that the publisher-ebooks that are being compared to the indie-ebooks are working on a smaller territorial base for sales. There is an apples-to-oranges problem that makes it difficult to compare Amazon sales of indie ebooks to those from publishers.

The point to capture is that just having ebooks for sale around the globe can bring markets to a customer’s door, wherever the book originated. Any rights management policy that prevents an ebook from being on sale anywhere is likely to be costing some sales.

The backlist challenge is trickier and the results might not be as obvious. Two of the biggest drivers of ebook sales are discovery in response to search and the amplified effect of existing sales momentum in bestseller lists and retailer recommendations. (“People who bought this, bought that.”) A power law distribution seems inherent in ebook sales. Those that sell develop sales momentum; those that don’t remain hidden and buried.

But a lot of that has to do with metadata. Publishers have been getting better and better at writing the descriptive copy that determines whether search engines identity them as an “answer” to the right queries. That means that as you go back in time, the copy is less and less likely to be useful for the purpose.

And there are some realities about budgets and effort allocation in big companies to take into account. The lion’s share, and that means more than 90 percent, of budgets and internal effort allocations for marketing go to the current frontlist. The backlist has many times the number of titles as the frontlist, so a much smaller amount of money and assignable labor is spread over a far larger number of titles. On a per-title basis, there have hardly been any resources available for backlist. And since backlist sales of ebooks have not generally been robust, predicting the ROI necessary to increase those budget allocations requires courage. Or foolhardiness.

Then there are corporate political realities. New books have advocates. There are the editors in the house who signed them and whose careers will be affected by how well they do. There is a publisher for each imprint watching the imprint’s P&L, firm in the belief that very few backlist books can move the needle but that every new title can. And the publishers and editors are also the ones who know the books and tell the marketers what they’re about and (too often) who the audiences are for them.

And, on top of that, publishers often count on backlist sales to be the most profitable precisely because they don’t have to allocate marketing spending or staff time to those books. There sometimes seems to be a fear operating at publishing houses that starting to expend marketing effort on backlist is opening a Pandora’s Box which would compromise the most profitable aspect of their business.

But there are hopeful signs that this is changing.

Carolyn Reidy, the CEO of Simon & Schuster, keynoted the recent annual meeting of the Book Industry Study Group by underscoring how S&S has changed its approach to capture backlist opportunities. Reidy made the point that between print bought online and ebooks, more than 60 percent of the company’s sales came from Internet channels. She said that at S&S’s weekly marketing meeting, which I’m sure was almost exclusively frontlist-oriented until very recently, they are now looking at their books “through a lens of daily opportunities”. That could include noting it if a book is listed for a prize or mentioned on a TV show or in a tweet by a celebrity. The chances that a book will be discovered by somebody searching for the book that way are multiplied if the book’s descriptive copy points the search engines in the right direction.

This is an approach we first saw for ourselves at Open Road Digital Media a few years ago. Their “marketing calendar” focused on holidays and predictable events like graduations, not the publication dates of forthcoming books. Of course, Open Road didn’t have any frontlist at that time. All the books they acquired in the early days of the company were backlist for which digital rights were somehow available. They made a virtue of a deficiency. But marketing the backlist in the light of the most current “daily opportunities” is precisely the right thing to do.

It is worth noting that when Reidy spoke at Digital Book World in January 2014, she pointed to the opportunities in global. In the prior year, she noted, S&S had sold ebooks in more than 200 countries.

Recognition of an opportunity is a necessary first step and assigning human and capital resources to pursue it is the second. But the biggest publishers are also going to need digital tools to fully exploit what is now open to them. When we looked at what Open Road was doing, they had about 1000 titles in their shop, all of which had just been acquired by the team in place. They could keep them in their heads. The biggest publishers have tens of thousands of titles in their backlists, many (if not most) of which were acquired and launched by editors and publishers who are no longer in their employ. Many of them have old and out-of-date descriptive copy which is not readily updated because nobody working there now knows the book.

It will soon be seen as necessary to employ technology to monitor the news and social graph and to “bounce” the results of each “daily opportunity” off the possiblities in the backlist. It will for quite a while longer still require humans to do some targeted research into what today’s relevant search terms are and to write the descriptive copy that will respond to them, but technological assistance will multiply the effectiveness of the human efforts.

We should expect the backlists to start increasing their share of every publisher’s annual sales. And we should expect offshore ebook sales to do the same.

There are recent reports from the US and UK that print unit sales are up while ebook unit sales are down. This is being celebrated by some as an indication that book consumers are turning away from digital reading to go back to print. Perhaps because I intuitively find this so unlikely, I can think of caveats.

The presumed reductions and growth are very small and the measurement techniques are pretty crude, so there is an accuracy question. But we also know — as was referred to in the main body of the post above — that new ebook converts tend to “load up” their digital device when they start reading that way. I believe the purchases at first are somewhat “aspirational”, but then settle into a rhythm more like replacement. So ebook purchases are inflated in relation to ebook consumption early in one’s ebook-reading “career”. Fewer new ebook readers each month (which we certainly have) mean fewer people loading up.

Of course, print book sales actually rising, which is the implication from the recent data, is an independent marker that, if borne out over time, requires another explanation and that would be one that I don’t have yet.

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What Oyster going down demonstrates is not mostly about the viability of ebook subscriptions


The news that the general ebook subscription offering Oyster is throwing in the towel was not really a surprise. The business model they were forced to adopt for the biggest publishers — paying full price for each use of a book with a threshold trigger at considerably less than a complete read while, at the same time, offering consumers a monthly subscription price that barely covered the sale of one book, let alone two — was inevitably unprofitable. Their only hope was that they’d build a large enough audience fast enough that publishers would become in some way dependent on it (if not the revenue it produced) and agree to different terms.

It would be a mistake to interpret Oyster’s demise as clear evidence that “subscriptions for ebooks don’t work”. Obviously, they can. Safari has been a successful and profitable business for nearly two decades. The Spain-based 24Symbols has been operating an ebook subscription business, mostly outside the US and mostly not in English, for too many years to be running exclusively on spec VC money. Scribd has very publicly (and a bit clumsily, in my opinion) adjusted their subscription business model to accommodate what were unprofitable segments in romance ebooks and audiobooks, but the inference would be that for other segments the business model is working just fine. And then there’s Amazon’s Kindle Unlimited, which is sui generis because they control so many of the parts, including deciding more or less unilaterally how much they’ll pay for much of the content.

What seemed obvious to many of us from the beginning, though, was that a stand-alone subscription offer for general trade books could not possibly work in the current commercial environment. The Big Five publishers control the lion’s share of the commercial books that any general service would need. All of those publishers operate on “agency” terms, which makes it extremely difficult, if not impossible, for a subscription service to pull those books in unless the publisher allows it. The terms that the publishers would participate in the subscriptions required, which were, apparently, full payment for the book after a token amount was “read” by a subscriber, combined with a limited number of titles offered (no frontlist), made the subscription offer inherently unprofitable.

The publishers see the general subscription offers as risky business for books that are currently selling well a la carte. Not only would they threaten those sales, they threaten to convert readers from a la carte buying to going through the subscription service. To publishers, this just looked like another potential Amazon: an intermediary that would control reader eyeballs and have increasing clout to rewrite the terms of sale.

So they only participated in a limited way. Penguin Random House (the biggest, and in shouting distance of half of the most commercial books all by themselves) and Hachette Book Group did not even experiment with the non-Amazon subscriptions. HarperCollins and Simon & Schuster, and to a lesser extent Macmillan, participate in a limited way. Multiple motivations drove the participation that did take place. The primary goad, probably, was to simply oppose Amazon. Having customers nested anyplace except the behemoth in Seattle can look like a good idea to most publishers. But another was to collect at least some of that VC money poured into an unlikely-to-work business model before it was exhausted. And because the publishers got to decide which books to include, they could choose backlist titles that weren’t generating much revenue anyway and which might benefit from “discovery” within the subscription service.

(Carolyn Reidy, the CEO at Simon & Schuster, tipped to this in her talk last week at the BISG Annual Meeting where she specifically mentioned the value of the discovery S&S has seen take place in the subscription platforms.)

But not all the subscription services were equal. The established Safari was in a market niche, serving mostly B2B customers in technology companies. (They have recently gone to an expanded offering because Boeing and Microsoft techies don’t just need books about programming; they’re also parents and cooks and gardeners so general-interest non-fiction can appeal to them. But that’s not the foundation of Safari’s business and they’re not trying to push fiction.) Scribd had a foundation business as a sort-of “YouTube for documents” that the ebook subscription business both built on and enhanced. For Amazon, Kindle Unlimited just gave them another way to transact with the ebook customer and it gave them another outlet for their exclusive Kindle content.

Only Oyster and another pretty-much simultaneous startup, Entitle (which had a proposition more like a book club than a straight subscription service), were trying to make the alternative ebook revenue stream into a stand-alone business. Entitle went down before Oyster. Librify, another variation on the theme, was acquired by Scribd.

So the failure of Oyster is actually another demonstration of a “new” reality about book publishing, except it is not so new. Book publishing — and book retailing — are no longer stand-alone businesses. Publishing and bookselling are functions, and they can be quite complementary to other businesses. And as adjuncts to other businesses, they don’t actually have to be profitable to be valuable. What that means is that entities trying to make them profitable — or, worse, requiring them to be profitable to survive — are at a stark competitive disadvantage.

Amazon is the past master at making this reality obvious. Remember that they started as a “book retailer” and nothing else. They leaned on Ingram’s Oregon warehouse to enable their business model, which was to take an order for a book and accept payment, then procure the book from Ingram and send it to the customer, and then a little later pay Ingram’s bill. This positive cash-flow model was so brilliant that Ingram could have readily enabled lots of copycats, and they formed a division called Ingram Internet Support Services to do just that. So Amazon killed that idea by cutting their prices to no-margin levels and discouraged anybody else from getting into the game. That was in the late 1990s.

They could do that because the financial community had already accepted Amazon’s strategy of using books to build a customer base and to measure future business prospects by LCV — the “lifetime customer value” of the people they did business with. And it became clear pretty rapidly that they could sell book readers other things so no- or low-margin sales were simply customer acquisition tactics. This was a game Barnes & Noble and Borders couldn’t play.

Now book and ebook sales are almost certainly no more than a single-digit percentage of Amazon’s total revenue. Kindle Unlimited, like their publishing enterprises and self-publishing offerings, are small parts of a powerful organization that has many ways to win with every customer they recruit.

Scribd is not as powerful as Amazon, but they began with a network of content creators and content consumers. That gave them a marketing advantage over Oyster — not every customer had to be acquired at high cost since many potential customers were already “in the tent”. But it also gave them some stability. Eyebrows were raised recently when Scribd put the brakes on the lending of romance books and audiobooks. But tweaking the business model for those verticals simultaneously leaves open that the model is actually working in other niches.

We can see this playing out in a much more limited way in Barnes & Noble stores, where books are being replaced on shelves by toys and games. But that’s not likely to be enough diversification to matter in the long run. It is certainly not going to get B&N where Amazon is, where far more than nine out of every ten dollars comes from something other than books. And Barnes & Noble is nowhere near a point Amazon has reached: where the profit from book sales is incidental if they keep bringing in new customers and also keeps them loyal.

The story on Oyster, still incomplete as of now, is that a lot of their management team is on its way to Google, which, in effect, “bought” the company to get them. Google seems to be trying hard to make sure we don’t think they bought Oyster’s business, they just bought Oyster’s staff. Obviously, Google fits the description of a company with many other interests in which books can play a part. In the beginning, that was all about search. Now it is also about the Android ecosystem and media sales in general. An ebook subscription business, or even a content subscription business, could make sense in Google’s world. But it would be a relatively small play for them. My hunch, and it is only a hunch, is that they have something other than a mere “book subscription service” in mind for that Oyster staff to work on. Smarter observers than I seem to believe that the personnel Google recruited give them knowledge about Oyster’s mobile reading and discovery technology. Of course, that’s core information for Google.

Similarly, Apple, which now has subscription service for music, might also consider doing one for books — or for all media — at iOS at some point. They don’t have one of Amazon’s advantages — a big stable of intellectual property they control — but they are all about creating an ecosystem that people stay in and don’t leave. Book subscriptions could enhance that.

But the central point I’d take away from this is not that subscription failed, but that a pure book business play failed. One obvious question that provokes is when we will see some signs of synergy between Kobo and their owners at Rakuten, who presumably have Amazon-type ambitions but haven’t seemed to use their ebook business to help pursue them.

And what is true of book retail is also true of book publishing, as we observed in this space quite some time ago. Both publishing and book retailing will increasingly become complements to larger enterprises and decreasingly be stand-alone activities that business can dedicate themselves to for profit.

The New York Times this morning has a front-page article essentially reporting that the ebook surge is over, at least for now, and the print business appears stable. This is great news for publishers if the trend is real. Unfortunately, there were a few important points either elided or ignored that might have undercut the narrative.

One is that, while publishers report ebook sales as a percentage of total book sales steady or slightly declining, Amazon says (and Russell Grandinetti was quoted in the article) their ebook sales are going up. Assuming all this is true, is the difference perhaps sales migrating away from publishers (which sales would be reported by the AAP stats they rely on) and moving to cheaper indie titles available only through Amazon (which sales would not)?

Another is that publishers are raising prices on ebooks and making the price rises stick because of Agency. Is all the sales resistance created by higher prices resulting in print sales, or is some of it causing the book to be rejected for something cheaper? In other words, might total sales for many titles be less than publishers would have looked for before? (At least one agent tells me this is the case.)

And another is that the indie bookstore resurgence has occurred in the years following Borders’s demise and the shifting of the product mix in Barnes & Noble. It is worth asking whether the indies are temporary beneficiaries of a sudden shelf space deficiency or whether we’re really seeing not only an increase in print reading, but a renewed interest by book readers to go to stores to buy the print. That question isn’t posed in this piece.

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The big global publishers are integrating across both territories and languages


Since I posted this two days ago, one of the Big Five CEOs pointed out some things I missed that are important. These are addressed in a post-script at the bottom. Subscribers to the blog would have received the original post without the “correction”. My apologies.

The announcement this week that John Sargent has apparently moved up another notch in the global Holtzbrinck hierarchy reminds us that the cross-border and now cross-language integration of the publishing giants, a very complex undertaking, continues to develop. Sargent was already the global “trade” head for the company, which suggested that integration of the publishing strategy and operations across Macmillan (Holtzbrinck’s trade division) companies was already an important priority. Now he is EVP of the entire global entity.

This follows an announcement a few months ago by HarperCollins that it was appointing digital head Chantal Restivo-Alessi to be EVP, International, to oversee the publishing through Harper’s growing foreign language capabilities.

Until very recently, just publishing simultaneously in a coordinated way across English language companies located in different countries was a seldom-attempted challenge. HarperCollins and Holtzbrinck seem to be shooting right past that hurdle and are setting themselves up to publish in multiple languages in a coordinated way, which is a much heavier lift.

The publishers who are doing this are seeing at least two things that motivate them.

One is that selling books is considerably more profitable for publishers than selling rights. This fact has been behind the creation of the global trade publishing behemoths in the English language. Until things began to change in the 1970s, there really were no trans-national book publishing companies. Since then, acquisitions have given us five big global trade book publishing houses. The only American-owned one, Simon & Schuster, and the French-owned one, Hachette, seem to have the least integrated global English trade presences. Simon & Schuster just has less in the way of foreign-based assets. Both Hachette and Penguin Random House have a federated structure by which the local companies report up to the parent, not to a global trade head. Macmillan and HarperCollins have both been more aggressive about integrating their international English publishing efforts.

And now both of them appear to be interested in extending that integration beyond their English-language companies.

The logic behind this kind of integration is both clear and unassailable. In the Internet age, as we’ve seen for a long time, there really is no such thing as “local” publication anymore. Anything announced anywhere is heard everywhere. And it actually requires active controls to stop anything that is available anywhere from also being available everywhere. Because English is so widely known beyond native English-speakers, the English language editions of new high-profile books sell in many countries for which the first language is not English. This has become a new factor in placing non-English rights.

Until the Internet really “arrived” two decades ago, the rights-trading activity could take time and it didn’t matter, even within the English-speaking world. I remember about 20 years ago when my friend George Gibson discovered the bestseller phenomenon “Longitude” by Dava Sobel. He published it in the US and it became a big bestseller. But even though it was a story that took place in England, it took him a year or more to make a sale to a UK-based publisher. (When he did, “Longitude” went on to one of the longest-runs of all time on the UK bestseller lists.)

A story like that would be very unlikely today. Gibson owned those rights to sell. The chances are the search traffic numbers alone would have accelerated the process of finding a buyer. Or else the US publisher, even a tiny one like Walker, where Gibson was at the time, would have released the ebook for global distribution and made some sort of deal for print to be made available as well.

Because the marketing of each and every book starts with the enthusiasm of an acquiring editor, and because each new deal an agent can negotiate is a new opportunity to get a publisher to overpay, both agents and publishers were comfortable with the process as it has always been. Relatively few of the high-profile agented books are even sold for “world English”, let alone with rights beyond the English language. Just like publishers’ value is directly related to the number of accounts through which they find customers for a book, an agent’s value is directly related to the number of deals they can make for each property.

If an author can get the reach they need through Amazon alone, then it is hard to accept a royalty from a publisher of a third or less of what Amazon will pay directly. Amazon, the publishers, and the author community are all very aware of this. It is one of the two main reasons why publishers try so hard to shift share away from Amazon. (The other, of course, is that the bigger Amazon’s share of the market, the more leverage it gives them to push for a bigger share of each sale.)

And if we see a trend where one publishing deal gets an author just about all their revenue, it will also be harder for authors to accept paying a full 15 percent agent’s commission to get it, particularly once the author becomes a global brand. (And the big brand authors are precisely the ones whose books will benefit the most from a coordinated global publishing effort.)

The structural impediments to publishing this way are not trivial. It will be a very long time — not in the working careers of any of today’s executives — before coordinated global publishing is important for any but the biggest books on the list. Most titles that each of the local companies puts out will be territorially constrained, as they have always been.

But it will, indeed, be the biggest ones — probably fewer than five percent of the titles that could earn half the revenue — that the coordinated efforts will affect. These are the books that every big global house needs to sustain itself.

Nielsen, through its Books & Consumer data service, is able to create individual author profiles for approximately 350 authors: those with substantial enough sales to enable digging down into the demographics of their book buyers and getting useful information with granularity. I’d guess those profiles will make popular reading as the publishers develop their global capability, particularly since Nielsen is also tracking across both countries and languages. And those 350 authors are almost certainly among the 500 top candidates for this type of treatment.

Sargent and Restivo-Alessi are blazing a new trail. Integration of publishing efforts this way will affect advances, royalties, workflows, and marketing strategies. They will effectively create “new propositions” to put in front of the biggest authors in the world. Penguin Random House and Hachette, because of their internal structures and S&S, because of its relative US-centricity, will be challenged to keep up. (Until their internal structures change, of course, or until they make some other adjustment. Which they will.)

Agents for the biggest authors in the world will be hearing the new pitch. On the one hand, they’ll be looking at opportunities to do record-breaking contracts. On the other hand, they’ll be doing what used to be two, three, four, or more deals in one and, in the long run, probably making at least some of their authors wonder whether they should have to pay that same hefty commission the next time around. When an author in this category asks for a fee reduction to continue the relationship, I suspect that most of the time, they’ll get it.

Of course, working in multiple languages and territories is something Amazon can also do very well. But they will probably stay out of this competition, at least at the beginning, because it will be a high-advance environment and Amazon has shown no taste for that as a strategy.

Nonetheless, the signs are that the ecosystem at the top of the commercial pyramid is going to have some new distinguishing characteristics. It has been noted many times in many places by many people that the economy the Internet creates favors the winners and exacerbates power law distribution. This is about to become another example.

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And now the postscript.

In fact, the “structural” differences are not as dramatic as the post describes them, although there are differences and, indeed, HarperCollins and Macmillan are best-positioned to offer and execute on global multi-language and multi-territory deals than the others.

Markus Dohle is the CEO of Penguin Random House. He has the same “authority” as Murray and Sargent do. But Random House has always been highly “federated”, with a lot of power in the imprints. That makes coordination across territories that much more challenging, as does the fact that PRH is twice the size of HarperCollins and six times the size of the other three. Being of a “certain” size is necessary to make global publishing possible, but the larger you are beyond the minimum required, the harder is coordination. It could even be that smaller global publishers — there aren’t many, but Quarto is one example and Bloomsbury another — could execute on this concept even better than the Big Five. On the other hand, smaller publishers won’t compete for the massive books like those of the 350 authors that Nielsen tracks.

In Hachette’s case, Arnaud Nourry in France holds a position above all the companies as well. All the English-language Hachette publishers report to him, as well as others. But since the biggest books have their biggest share of sales in English, and because Hachette too has given great autonomy to the local companies, it is still likely that they would find it difficult to engineer the kind of coordination we’d expect to see from Harper and Macmillan in the relatively near future.

And, finally, Carolyn Reidy of Simon & Schuster is also a global head, but the company doesn’t have nearly the resources across languages and countries that the other four do.

Since I’m adding this post-script, I will also report that a couple of significant agents pushed back at me on Twitter, saying that they were very skeptical of the potential for big company coordinated synergy across the world. They’re saying they’ll be hard to convince. But, then, so did the original piece.

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A 10-point strategy for mini-vertical creation


The last post here, where I suggested that publishers should reconsider how they handle first serials, begs a number of follow-up questions. Two people commenting on the post raised the concern that HarperCollins wouldn’t have been able to handle the traffic the “Go Set A Watchman” excerpt would generate. My IT advisors say that is actually a trivial concern. In fact, if News Corp has the capacity in any of its businesses, that capacity could have been “lent” to HarperCollins for the purpose. Or it could have been leased from someplace outside. All it would take is a modicum of advance notice.

But if the challenge of getting the necessary bandwidth is really a trivial one, it is a bit more complicated to come up with a strategy that addresses this new reality. It is fine and dandy to know you’ll “self-publish” book excerpts and drive links and traffic to them to get visibility for the books and engagement with their audiences, but those are tactics, not strategies, and they need to live within a bigger context.

Here’s the overall point. Any business that makes money by selling content must have a direct marketing component to their strategy. For some, including trade book publishers, that should be about having marketing platforms that they own and control, not primarily about controlling the sales transactions. But content can be used to foster audience engagement and the set of engaged potential customers that can be generated is an asset that will become a necessary component of every publisher’s toolkit.

This post is essentially about creating verticals. It should be emphasized that verticals are not an “all or nothing” proposition. You can build out audience-centric interest to highly varying degrees and gain benefits even with an effort as small as where these suggestions start: a landing page.

With that in mind, here’s a battle plan every large publisher should adopt. The strategic approach suggested here can be configured to work for fiction, but it is best to start with non-fiction topics.

1. Look at every topic, subject, or category for which the house has 20 or more backlist titles and which define audiences to which you intend to publish in the future. Identify all the relevant titles you have for each audience. (Here is a hint that no publisher should need: ask your special sales department.)

2. Select three-to-five categories to start. Make your choices based on which ones have the most active backlists and/or the most new titles being planned. The more focused you can be, the better. That is, “baseball history” is better than “sports history”; “knitting” is better than “crafts”; “adventure travel” is better than “travel”. Everything we will suggest will work best if you have a “tentpole”: a title or author that is very famous and popular so definitely include any categories for which that is true for you.

3. Create landing pages for each of those categories under the publisher domain. So those pages would be called something like “publisher.com/baseballhistory” (which doesn’t exist). We’re recommending this approach initially to exploit (and over time to build) the domain authority of the publisher site, which will be reflected in better SEO for each component and, in fact, for everything the publisher posts.

4. While the “landing page” will contain links to all the relevant books that led to its creation, it is best to have rich and unique title-specific copy created specifically for that page, rather than the “canned” marketing copy that already exists. Aiming the copy at people who probably found the landing page through a search will work better both for SEO and to better engage those who come to it.

5. The excerpts offered for each book should not be “first chapters”. Those already live all over the web. Duplicated content is bad for everybody’s SEO. Different excerpts should be posted for this mini-vertical. And every time you post an excerpt to the vertical, promoting that excerpt through press contacts and social media effectively promotes the entire little enterprise.

6. Authors should be offered the opportunity to post relevant content here, to promote themselves.

7. The appeal and power of the mini-vertical will be enhanced if relevant books from other publishers are included as well. This is not necessary but it would add value.

8. Each mini-vertical needs an “editor-in-chief” who will post something relevant on a regular (weekly) basis. But one EIC could handle several of these sites. Certainly one person can handle the 3-to-5 we suggest as the starting group.

9. The mini-vertical landing pages will develop their own SEO juice over time, in direct proportion to how much new content is posted — which can be a lot if there are lots of new books from which to post excerpts, let alone author Q&As or promo videos or other material — and how much what is posted is promoted, which generates inbound links.

10. The point to this whole exercise is engagement. The site EIC should respond to all queries and comments. If excerpts are offered frequently, signing up for free subscriptions to that content should be enabled. Purchasing should be made as easy as possible, preferably with links to all of the top retail vendors. (Offering a direct purchase from the publisher is the least important sales option.)

Starting and managing a handful of these mini-verticals should be quite doable for less than six figures, a trivial investment for any publisher doing $50 million or more in sales and a manageable one for publishers doing much less than that. At the very least, the publisher who does this will build a network of engaged consumers that can be reached for nearly zero incremental cost, reducing marketing spending and multiplying marketing efficiency for new books far into the future. The publisher’s “domain authority” will be substantially enhanced, adding SEO juice and audience for every piece of content they ever post.

But the payoff could actually end up being a site that becomes a world of its own, worth spinning off to its own domain, and capable of being a self-sustaining (or even profitable) business in its own right.

This is a low-risk, high-reward strategy. Some publishers are already pursuing a variant of it. Any publisher without the capabilities it can deliver will increasingly be challenged to be competitive with those who have it.

I don’t mean to imply that there is no “content marketing” among publishers today. The Content Marketing Institute did a profile on Rodale which, being a vertical publisher, has a more obvious path to thinking this way. But Simon & Schuster has vertical sites —  TipsOnHealthyLiving.com and TipsOnLifeandLove.com — and has tried others. Peter McCarthy was in on the building of a number of verticals at Random House. And the genre fiction publishers — perhaps, most notably, Tor — have really tried to talk directly to their readers. But the opportunities to build marketing platforms for publishers that have access to content and to self-interested author labor have hardly begun to be explored.

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Four of the big five have new deals with Amazon and only the biggest is still to negotiate one


A reporter called earlier this week focused on what he figures are the upcoming negotiations over trading terms between Amazon and Penguin Random House. I had observed when Amazon was throwing sharp elbows at Hachette during their contractual dispute that Amazon wouldn’t try similar tactics with PRH.

Since then, with HarperCollins and Amazon having announced they’ve reached new terms, deals have been done with all the Following Four US publishers. It would appear that the DoJ’s and Judge Cote’s work to stop publisher-controlled pricing across retailers has been very largely undone by the deals independently arrived at. So it is a sensible question for a reporter to ask, as this one was: can Penguin Random House do better than the others did in these negotiations?

I don’t know the answer to that. And even after a deal is announced, none of us will necessarily know the answer. But this is an appropriate time to consider the power of Penguin Random House’s position in the marketplace. It is very strong. If I were any of the other four major publishers, I would fear PRH more than Amazon as a potential disruptor of my business. When I put that proposition to a UK-based executive of one of those companies at the London Book Fair last week, he readily agreed with me.

When one considers what a segmented business publishing is, the Penguin Random House combination becomes that much more eye-catching. These five companies — PRH, HarperCollins, Simon & Schuster, Hachette, and Macmillan — compete much more with each other than they do with anybody else. Cambridge competes with Oxford and other university presses. Quarto competes with Chronicle and Abrams and Running Press and outside the US with Egmont and other illustrated book publishers. Yes, a bestseller might come from anywhere: Harry Potter came to the US market from Scholastic and the UK market from Bloomsbury. But the publishers who compete for the bestselling authors and the front-of-store slots repeatedly are the Big Five, which were formerly the Big Six.

And when Penguin merged with Random House, that was not just any old merger of the Big Six. It was a merger between Number One and Number Two. It has created a single company that is, in the US market, about twice the size of its next competitor (about $2.5 billion in sales for PRH against about $1.2 billion for HarperCollins). And HarperCollins, in turn, is about double the size of each of the other three.

What that means is that PRH, like Amazon, can make its commercial decisions independently from the rest of the industry. They can take risks that would be very challenging for anybody else. Amazon could afford to get into a dust-up with Hachette that affected the supply of books in ways its customers could clearly see and make it public to try to make a point. Random House, even before the merger, could afford to stay out of the new iBookstore (they wouldn’t play ball with agency terms in the beginning) for a while, which would have seemed a big risk to the others. (Of course, the DoJ and Judge Cote didn’t see it as individually-discernible risk. Their explanation was “collusion”.) That decision by Random House paid off in big ways in 2010 with higher sales per ebook title (because they didn’t go to agency, which reduced the per-title take) and higher unit sales (because agency would have forbidden discounting, and Amazon went to town discounting Random House books against their agency competitors).

In the past year, Scribd and Oyster announced ebook subscription programs. Pretty quickly, HarperCollins and Simon & Schuster announced varying degrees of participation in the services. And then Macmillan followed. But Penguin Random House and Hachette stayed out. Hachette is the most author- and bestseller-driven of the major houses and author brands are the most likely long run casualties if subscription services succeed. But, if they succeed, Hachette will have to go back to them hat in hand. Penguin Random House won’t, necessarily.

Because if subscriptions are actually the wave of the future and the title rosters from Scribd and Oyster are sufficient to make that happen, then PRH could compete with them entirely on their own. They would have as many prominent commercial books from their own reservoir as the other services have aggregated. And they wouldn’t be sharing with a third party vendor.

It is worth noting that PRH has gone into the Scribd service with audiobooks.

When Oyster announced last month that they would now sell ebooks a la carte as well as in subscription bundles, some of the press saw more significance to the move than it warranted. Scribd started out as an a la carte document access site. Amazon itself formed a subscription service (Kindle Unlimited) the minute Scribd and Oyster announced what they were doing. If you have the capability to sell ebooks, why not sell them by whatever commercial arrangement the customer wants?

By the same token, the distinction between publishers and retailers is melting away. Amazon went into publishing very quickly after ebooks enabled self-publishing. Barnes & Noble published proprietary books for years, even before they bought Sterling in 2002. HarperCollins built a retailing capability for themselves in the past year. (The Tor.com imprint of Macmillan said they’d be selling DRM-free ebooks directly from their own site, but we have seen no evidence that they actually ever did.)

So, the reporter trying to understand the possibly-occurring Amazon-PRH negotiations wondered, would PRH become a retailer?

I don’t think so (at least not anytime soon), but I still believe — as I did when I first speculated about all this 2-1/2 years ago — that a store could have a competitive selection of books with titles exclusively from PRH. No other publisher could serve a general interest audience at retail without other people’s books as well.

How else could PRH be disruptive? They could offer a license to schools for their titles. If a school bought one of those to load its students’ digital devices with content, they wouldn’t have everything they might want but they could conceivably have all they need. How hard would it be to sell a competing license with less good stuff in it? How hard would it be to build an aggregation so that a competing license had as much good stuff in it?

The executives I’ve spoken with at PRH — and I have high personal and professional opinions of all of them — have consistently disclaimed any interest in most of what I’m suggesting. And, indeed, they haven’t started a subscription service and they’ve shown no signs of rolling out a program to create PRH-only bookstores. There are reasons, aside from altruism or short-sightedness, why they might resist these solutions. After all, PRH publishes about half the most commercial titles in the US book trade. Subscription services and retail competition would weaken the existing bookstore network, and PRH benefits from its existence in proportion to its relative size, which is to say “much more than anybody else”.

In fact, I’ve discussed the possibility that they could be so disruptive with the CEOs of two of the other Big Five, and neither executive (unlike the one I met with in London last week) expressed much concern. One said “they don’t want to do that”, meaning “they don’t want to destroy the competition in the trade” (which is a point of view that is actually supported by what the executives at PRH have said to me, as counter-intuitive as it seems). And the other one believes that having PRH in the game to negotiate with Amazon and B&N helps keep the terms of trade in check for everybody else as well. That executive likes having PRH there, with all its size and clout.

I had the conversation with the reporter that was the catalyst for this post on Wednesday morning and it was mostly drafted on Wednesday afternoon. Penguin Random House’s new consumer-centric web site was unveiled Thursday morning and underscores their support of the trade (they’re trying to push sales to retailers, not sell directly themselves). The site appears to give a page for every book they’ve got, which could well prove very useful as they build embellishments.

They refer the sales over to a robust choice of retailers for all formats. One thing I noticed was that a particular ebook I looked for — Napoleon, A Life by Andrew Roberts — is $45 in cloth, $20 in paperback, and the ebook is listed at $29.99! Running through the list of retailers to which PRH links directly, we can see that Amazon and Google Play discount the book down to an identical approximately 14.4% off $25.65 (with Amazon touting the massive saving over the hardcover price!) but the others listed — Apple, B&N Nook, Books-a-Million, and Kobo — offer it at the $29.99 list price. Close observers of the changing state of agency pricing will be watching whether the pricing or the discounting profile changes when PRH concludes that next round of negotiations.

And, incidentally, this also jibes with something we were told very recently by an ex-Nook employee, who said that the DoJ and Judge Cote effectively stopped B&N’s ability to compete with Amazon in its tracks when they opened up discounting of agency. Not only did they strip out margin that B&N desperately needed to compete, competing then effectively required price-monitoring capability to keep up with Amazon that was beyond their capabilities. Google has no problem doing that and maybe nobody else can keep up, but it would take looking at a lot more than one title to prove that.

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The Digital Book World program this year covers the waterfront of the digital transition for book publishing


(This is a longer-than-usual Shatzkin Files post reviewing the topics and speakers for the 26 breakout sessions at DBW 2015. It serves as a checklist of “things to think about right now” for book publishers living through the experience of digital change. The entire program is here. We decided not to link to each and every speaker.)

The main stage speakers get most of the promotional attention leading up to Digital Book World. That’s just good marketing because there are many important names. Some have written big books (in addition to many other things they’ve done) like Ken Auletta, Seth Godin, and Walter Isaacson. We have a number of CEOs on the main stage as well, including Brian Murray of HarperCollins, who has just been named PW’s “Person of the Year”.

But half of Digital Book World is the six breakout session slots, at which attendees select from several choices. I take some pride in saying that we’re requiring some of the toughest decisions our attendees will have to make in 2015 very early in the year when they decide for each slot which session to attend and which ones they have to skip.

What we tried to do was to schedule things so that our “tracks” — two or more sessions on marketing, data, global, transformation, kids/education, technology, and new business models — are set up to allow people to attend all the sessions in that track. But there is overlap, of course.

“Marketing” is definitely the marquee subject for DBW 2015. We have seven sessions under that heading. On the first day we have a conversation about the skill sets required for marketing today, chaired by my Logical Marketing partner Pete McCarthy and featuring Jeff Dodes of Macmillan, Angela Tribelli of HarperCollins, Rick Joyce of Perseus, and Hannah Harlow of Houghton Mifflin Harcourt. Since two of the panelists are recent imports from outside publishing, presumably hired precisely because they had skill sets that publishing training wouldn’t have produced, this group is bound to help all publishing marketers identify what they need to bring on board.

That will be followed by a session on Smarter Video Marketing, which will be chaired by Intelligent Television founder Peter Kaufman, leading a discussion among video marketers Scott Mebus of Fast Company, Sue Fleming of Simon & Schuster,  Heidi Vincent of National Geographic Books, and John Clinton of Penguin Random House. In a world where authors are making their own videos and YouTube is the second leading search engine, this is a topic that suddenly needs to be on everybody’s radar.

The third marketing track session on Day One is on mobile marketing. Since tracking data is now showing that people now do more searching on mobile devices than on PCs, making sure books are optimized for mobile discovery has rapidly become essential. Thad McIlroy, a consultant with a long history in publishing, did a report on mobile for Digital Book World and will present some of his findings to kick off the session. Then he will lead a discussion including Nathan Maharaj of Kobo, Kristin Fassler of Penguin Random House, and CJ Alvarado of Snippet, a reading app that has been specializing in creating mobile reading experiences for branded authors/musicians /personalities, to detail how publishers and retailers are responding to this new reality.

Also related to marketing and also running on Monday, we’ve set up a break-out session for Joe Pulizzi, head of the Content Marketing Institute, who will have done a presentation on the main stage. Content marketing is something publishers need to learn from. Certainly all the techniques that are employed by non-publishers to market themselves with content created for a marketing purpose should be employed by publishers who have tons of content available for marketing. Pulizzi knows all the tricks and will have talked about many of them from the main stage. The breakout session will give attendees that want to learn more, and ask questions, an opportunity to do that.

The marketing track continues on DBW’s second day. One session, being moderated by my Idea Logical colleague, Jess Johns, will examine case studies of successful marketing campaigns. We’re featuring representatives from two of the platforms publishers can work with for marketing: Ashleigh Gardner of content platform Wattpad and Alex White from marketing data aggregator Next Big Book. They’ll each be joined by a publisher who has worked with them (about to be announced). Wattpad and Next Big Book, along with their publisher partner, will walk through what they’ve done in marketing that would have been impossible to imagine a couple of years ago.

Also on Day 2, we’ll be examining the new world of digital paid media. This has been a big challenge for publishers. Digital media is apparently cheap; you can do marketing that matters for hundreds of dollars in “media” cost, it doesn’t require thousands. But there’s also a lot of work and management involved to using digital media right. We were glad to get digital marketers from three leading publishers, Alyson Forbes from Hachette, Caitlin Friedman from Scholastic and Christine Hung from Penguin Random House as well as Tom Thompson from Verso Advertising. This session will be moderated by Heather Myers of Spark No. 9.

A marketing topic that has become top-of-mind for many publishing marketers is “price promotion”. A business has been built around it for the ebook business called BookBub, and its founder and CEO Josh Schanker will be on our panel discussing it. He’ll be joined by Matthew Cavnar of Vook, Rachel Chou of Open Road, and Nathan Maharaj of Kobo. We went for three retailers and service providers here because publisher experience with price promotion is still pretty limited, although the ebook pioneers at Open Road are an exception. Laura Hazard Owen of GigaOm will moderate this session.

Our data conversation begins on the main stage on the second morning of DBW with data scientist Hilary Mason, the CEO and Founder of Fast Forward labs. She started looking at Big Data at Bit.ly, the link-shortening and -tracking service. Mason is going to look at data across a content set that is the only one more granular than books: the content on the web. Her presentation will help us all understand how to interpret audiences for very small portions of the available content. Because we expect her presentation, like Pulizzi’s on Day One, to generate lots of questions, we also gave her a breakout session to facilitate questions and further explanations. DBW sponsor LibreDigital, which has a new offering to help their client publishers turn data into business intelligence, will help Hilary manage the Q&A.

Our panel on “Authors Facing the Industry” will be prefaced by two presentations.. Judith Curr, president and publisher of Simon & Schuster’s Atria Publishing Group, will have done a main stage presentation on the choice “self-publish or be published” that authors face. Then the breakout session will begin with a short presentation from Queens College Professor Dana Beth Weinberg of DBW’s annual “author survey”, giving a data-grounded underpinning to the panel discussion that will follow. Bianca D’Arc, an extremely successful writer of paranormal sci-fi and fantasy romance (and a former chemist), will be joined by two non-fiction writers for this conversation. Both David Vinjamuri, a marketing professor, and Rick Chapman, a computer programmer, have marketed their books themselves because they make more money doing it that way to their highly-targeted audiences. The panel will be moderated by Jane Friedman, one of the industry’s thought leaders about self-publishing.

The data we’ve never had before that is just beginning to be appreciated is the subject of our “How People Read” panel. It has become obvious that the platform owners know more about how consumers “behave in the wild” around reading than publishers do. Multiple device use, response to free samples, whether people read more than one book at a time, and how fast they read various books are all clear to those who serve up the ebooks, as well as differences in behavior that are geographically based, including uptake of English-language ebook reading. In a panel which will be moderated by Chris Kennealley of Copyright Clearance Center, Micah Bowers of Bluefire, Michael Tamblyn of Kobo, Jared Friedman of Scribd, and David Burleigh of Overdrive will share data insights their companies have gained by seeing many consumers of many genres in many contexts. Evan Schnittman, who had senior executive positions with Oxford and Bloomsbury and most recently with Hachette, will be moderating.

Of course, that last session is not just about “data”, it is also about “global”, which is another track at DBW 2015 with two sessions on Day Two.

The first of these, moderated by BISG Executive Director Len Vlahos, is on “Global Publishing Tactics”, designed to help publishers know what to do to sell outside their home territory. Speakers from three companies that provide global ebook distribution — Gareth Cuddy of ePub Direct, Marcus Woodburn of Ingram, and Amanda Edmonds of Google — will talk about what it takes to make your ebooks discoverable and get them purchased outside your home market. All of these entities distribute to just about every market in the world on behalf of a wide variety of publishers large and small. They see what works in metadata, pricing, and marketing, and they know what doesn’t. They are in a unique position to help publishers hoping to expand their global sales know what it will take to do that.

Our other dedicated global track session is the “Global Market Spotlight”, which will help our US- and English-centric audience understand the opportunities in four of the biggest emerging digital markets. It will feature local experts Carlo Carrenho from Brazil, Thomas Minkus of the Frankfurt Book Fair speaking about Germany, Marcello Vena from Italy, and Simon Dunlop of Bookmate, the ebook subscription service from Russia. Following a general introduction about how to look at new markets from Gareth Cuddy of ePub Direct, each of them will talk about how both online and ebooks are taking hold in their market, what local competitors are doing (and there is a very interesting ebook competitor coming from Germany), and what the prospects are for English-language sales in their market. This session will give very directed advice to publishers trying to get sales in four of the most promising new digital territories in the world.

Education is a subject on the agenda for trade publishers because how their books will get to students is undergoing dramatic change they’ll need to understand.

College textbook publishing has been remade in the past decade. In a panel moderated by veteran industry executive Joe Esposito, we will have the four giants of college textbook publishing talk about what that has meant in each of their shops. Simon Allen of Macmillan, Ken Brooks of McGraw-Hill, Clancy Marshall of Pearson, and Paul Labay of Wiley will discuss how their businesses have changed over the past few years, and why. Each of the biggest college publishers has changed their organizational structure, their workflows, and even their products themselves in the past decade, sometimes responding to and sometimes anticipating the changes taking place in the market. All of them have essentially switched from selling textbooks to selling learning platforms. Publishers that sell content into the college market will want to understand the new platforms these players have created and how outside content will now make its way to this market.

The school market is also undergoing extreme change. Partly spurred by the new Common Core standards but also by the fact that digital devices are increasingly integrated into the lives of today’s youth, the classroom experience is being changed dramatically. Neal Goff, who has had senior executive positions in several companies, most recently My Weekly Reader, and who is currently consulting with Highlights, will moderate the discussion about the changing K-12 environment. Three companies with very different perspectives on the market will participate. Chris Palma of Google will describe the operating system that works on the district, building, and classroom level that Google is making available free to school systems, achieving remarkable penetration very quickly. Of course, Google also provides hardware (Chromebooks) and content (through Google Play). Neil Jaffe is the CEO of Booksource, which has been providing print and digital content to schools for many years and sees a continuing need to provide both in the future. And Erica Lazzaro speaks for Overdrive, the company that has dominated the ebook library lending business and is making its way in the school market through its penetration of school libraries. They each have a unique view of how this market is changing. Publishers who sell books read by K-12 students will find this session invaluable.

It is becoming increasingly understood that “gamification” is a way to engage a lot of people who might choose non-reading content, particularly potential readers among the young. Our panel on this subject includes two publishers that are using gamifying to create more engaged “readers”. Keith Fretz will speak for Scholastic, which has made this work more than once already, most notably with “39 Clues”. He is being joined by Greg Ferguson of Full Fathom Five, a collaboration created by James Frey among HarperCollins, Fox, and Google’s Niantic Labs. Another way to employ gamification to engage younger readers is being employed by panelist Thomas Leliveld of Blloon, a subscription ebook service that uses “virtual money” both to reward its users and for them to use to pay for what they read. Also on the panel will be Sara Ittelson, Director of Business Development at Knewton, an adaptive learning company that has developed a platform to personalize educational content and which has lots of data showing how students engage with educational content across ages. This session is moderated by publishing attorney Dev Chatillon.

You could call it “education” or you could call it “tech” (another one of our tracks), but either way DBW attendees will learn about some important new propositions on our Publishers Launchpad session on ed-tech. Our Launchpad sessions are moderated by Robin Warner, a tech investor through her role as Managing Director of Dasilva & Phillips. Launchpad seeks to feature companies that many won’t yet have heard about, but we think they should. Johnjoe Farragher, CEO and Founder of Defined Learning has a new approach to mapping skills to curriculum for the K-12 market. Neal Shenoy, CEO of Speakaboos, will explain his subscription platform for digital picture books which is pedagogically designed to promote education. And Jason Singer, CEO of Curriculet, will explain how his company provides a rental model combined with enabling teachers to annotate and structure the student experience. All of these companies effectively become “gatekeepers” for trade content in schools, making their models very important for publishers who want their books delivered to K-12 students to understand.

The other Launchpad session, also moderated by Robin Warner, is more clearly “tech”-centric. Kevin Franco, the CEO of Enthrill, will talk about how his company “makes ebooks physical” by the use of cards with codes, which is now being trialed in Wal-mart in Canada. Peter Hudson of BitLit enables publishers to provide a free or discounted ebook to people who own a print copy and, along the way, has also developed a really nifty technology that will identify the books on anybody’s shelf from a picture (which they call a “shelfie”). Andrew Dorward of BookGenie451, will explain how his company uses semantic search to make books more discoverable. Beni Rachmanov of DBW sponsor iShook, which has a social ebook reading platform for readers, authors, and publishers, will also present at this session.

Following the Launchpad session, we have our techiest session, moderated by my personal “go-to” guy for understanding tech development in book publishing, Bill Kasdorf, Vice-President at Apex Content Solutions. Bill’s panel’s topic is what might be thought of publishing tech’s “magic bullet”: HTML 5, a format that enables the nirvana of “write-once, use-many-ways” content creation. With the need to manage both print and digital formats and with digital now being rendered on what seems like an infinite variety of screens, the need for publishers to make use of this technology has never been greater. The panelists will include Bill McCoy, head of the International Digital Publishing Forum, and publisher practitioners Phil Madans and Dave Cramer of Hachette Book Group USA, Paul Belfanti of Pearson, and Sanders Kleinfeld of O’Reilly.

Because DBW is relentlessly “practical”, we don’t program much that is far from the current commercial mainstream. An exception this year is our “Blue Sky in the eBook World” panel, which will feature three perspectives that are clearly pushing the envelope beyond where we are today. Chris Kubica and Ashley Gordon have been convening a lot of industry thinkers around the invention of a new kind of bookstore, the publishers’ “dream” to compete with Amazon. They’ll be describing what they and their co-brainstormers have come up with. Peter Meyers, until recently at Citia, is author of “Breaking the Page” and the industry’s leading thinker about how straight-text ebooks can be improved. He’ll put forth his thoughts on that. Paul Cameron is the CEO of Booktracks, a company which puts sound tracks to ebooks and has evidence that the music along with the text improves recall and comprehension. All of these propositions are not (yet) commercially employed, but for DBW attendees who might be looking for the big things AFTER the next big thing, this is the session that will talk about those possibilities. This session is moderated by Professor John B. Thompson, author of “Books in the Digital Age” and “Merchants of Culture”.

Although what the educational publishers are doing might also qualify, we have a track dedicated to “transformation” that has three distinct groups of panelists, each demonstrating how radical change can occur in different ways.

The session on “building the trade publisher of the future” focuses on companies that are remaking themselves from what they were before. Carolyn Pittis, now Managing Director of Welman Digital and formerly on the cutting edge of change management with HarperCollins for over two decades, will moderate. We are proud to be the first industry event to host Daniel Houghton, the new CEO of Lonely Planet, a several-decades old travel book publisher, founded as an upstart, and now rethinking its publishing role in a very challenging travel book market. Lucas Wittman is at ReganArts, Judith Regan’s start-up venture which has an entirely different literary character than the art book publisher she’s working within, Phaidon. Andrea Fleck-Nisbet of Workman is in a company that has just reorganized to be better positioned for change. And Sara Domville, President of F+W (owners of Digital Book World), will describe the experience of turning a “book and magazine publisher” into a “content and commerce company” with a diminishing footprint in print and a growing dependence on ecommerce.

We aren’t neglecting publishing start-ups that are really entirely new propositions as well. Lorraine Shanley of Market Partners will moderate a session bringing together a few of them. Liz Pelletier is the publisher of Entangled, a publisher with new economics that rewards the service providers that support authors as partners in the projects they work on. Georgia McBride is the proprietor of Georgia McBride Media Group, a lean publishing start-up that is developing its properties for multiple media, not just books, taking advantage of her background in music and Hollywood. Jason Pinter of Polis Books is a bestselling thriller writer and has worked for a number of publishers (St. Martin’s, RH, Grove Atlantic, Warner Books) before he founded this digital-first genre book publisher with high author royalties (beginning at 40% of net) against advances. And Atria executive Peter Borland heads up an in-house start-up, Keywords Press, which seeks to leverage YouTube fame into bestsellers with the nurturing of an experienced publishing team.

But it isn’t just book publishers and entrepreneurs who are capitalizing on the digital transition. Former DBW.com editor Jeremy Greenfield, now with The Street, will moderate a session of media companies using digital as an opportunity to change their business models. Sometimes ebooks are very important to this effort and sometimes not so much so. The speakers in this session are Mike Perlis, the President of Forbes, Lynda Hammes, the publisher of Foreign Affairs magazine, Jay Lauf, President and Publisher, Quartz (The Atlantic), and Kerry Dyer, Publisher and Chief Advertising Officer of U.S. News & World Report. The tactics being employed by these three media companies to take advantage of their content and their audiences are harbingers of what all non-book media will be thinking about and doing in the years to come. Publishers can find new collaborators in their ranks, or they’ll be facing these entities as new competitors.

The sessions in the track we call “transformation” are also really about “new business models”. But we have two sessions that are more strictly about publishers exploring new business models.

One of these is on “publishers selling direct”, something that made very little sense for any but the nichiest publishers before the digital era. Dominique Raccah, the founder and CEO of Sourcebooks, pointed out to me that I needed that session (she surely was right!) and will appear on it. She’ll be joined by Eve Bridge from F+W Media, Mary Cummings of Diversion, and Chantal Restivo-Alessi of HarperCollins, the biggest of the publishers to aggressively pursue the direct sales option. The panel will be moderated by industry consultant David Wilk.

Publishers are also exploring new business models with their attention to “verticals”, audience-centric marketing that sticks to a topic in ways that might ultimately allow selling things other than books. This is also a big subject for DBW’s owner, F+W Media, and Phil Sexton, who runs their Writer’s Digest community, will speak about it. Mary Ann Naples, SVP and Publisher at Rodale, Adrian Norman, VP Marketing and New Products at Simon & Schuster, and Eric Shanfelt, Senior VP, eMedia, of HarperCollins Christian Publishing, show us that both specialist and general trade publishers are investing in building these enduring audience connections. Ed Nowatka of Publishing Perspectives moderates this conversation.

There are two panels that will be among the best-attended of all, but which don’t fit comfortably under any of the track headings.

Probably the two most-discussed digital change issues in 2014 have been subscriptions for ebooks and Amazon. We’re pleased to have breakout sessions on each that should really shed some new light on topics that have already been the subject of much conversation.

The subscription conversation will be moderated by Ted Hill, who co-authored a White Paper on subscription for Book Industry Study Group early in 2014 which has looked increasingly prescient as the year has gone along. The session will begin with a brief presentation by Jonathan Stolper of Nielsen Bookscan, who will deliver data from Nielsen’s recent research into subscription sales. Hill will be joined by the two biggest players in ebook subscription, Matt Shatz of Oyster and Andrew Weinstein of Scribd, to describe how their companies have fared building this new model in 2014. He will also have two publishers with books in those services, Doug Stambaugh of Simon & Schuster and Steve Zacharius of Kensington, to talk about how it is going from the publishers’ point of view. As a bonus, Zacharius also has real sales experience with Amazon’s new subscription service, Kindle Unlimited. This will be most people’s first opportunity to get a wide-ranging view of how the subscription model is really working in the marketplace for the subscription services and the publishers themselves.

And, finally, we’ll have an Amazon conversation that is extremely timely against the backdrop of a year when contentious relationships between Amazon and their publisher-suppliers became a matter of public record. Our discussion is on the subject “Can Amazon Be Constrained? And Should They Be?” and it is moderated by Ken Auletta of The New Yorker, a journalist with several decades of experience tracking both media and tech. (Auletta will be appearing earlier that day on the main stage.) He will be talking with Barry Lynn, a scholar at the New America Foundation, who has recently proposed that Amazon be investigated for anti-trust; journalist Annie Lowrey of New York Magazine, who has expressed skepticism about whether the anti-trust rubric fits; and Amazon and indie author Barry Eisler, who has been a full-throated supporter of Amazon’s position against the major publishers. No conference has ever presented such a balanced and provocative conversation about Amazon before; we’re proud it is taking place on the DBW stage.

So there’s a lot to choose from at DBW 2015. We probably won’t settle all the questions around where book publishing is going in the future, but we’re certainly providing engaged conversation about the issues that matter most. And remember after you read this: the highest-profile speakers are mostly not mentioned. We’ll talk about them in a later post about what’s taking place on the main stage.

PS: The last Early Bird discount for Digital Book World expires on Monday, December 15. Save money by registering now!

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