Friday, August 13, 2010

Bye-Bye Bricks: Book Publishing's Digital Future is Now its Present

The ebook revolution continues apace over the summer, with Amazon's beach-friendly newest Kindle ebook reader model selling out in a matter of days and both publishers and retailers realizing that their business models are going to be changing far more rapidly than they may have planned even a year or so ago. How quickly is digital book distribution finally taking hold? In a recent New York Times article, Simon & Schuster CEO Carolyn Reidy noted that ebooks are now bringing in 8 percent of their revenues and that they would probably rise to 40 percent of their revenues in three to five years. Thinking about how newspapers and magazines have crawled towards twenty to thirty percent of their revenues coming from online operations, that's quite a rapid shift ahead for the book publishing industry.

Many factors are combining to make ebooks the present of book publishing rather than just its future. While declining ebook reader prices and touchpad devices like the iPad may be encouraging more people to switch to ebooks, mobile phones equipped with Internet access and high-quality touch displays are also becoming default devices for ebook consumption. Demographics are another factor that are pushing consumer ebook sales. While more senior audiences may still opt for print, people with education and affluence are on-the-go people who find ebooks a perfect match for their fast-paced mobile lifestyles. One key demographic that is falling to ebooks rapidly is women. Dorchester Publishing, the U.S.' oldest publisher of mass-market books like romance novels targeted largely at women, saw its sales of its print titles decline 25 percent in 2009, while its e-book sales are expected to double in 2011.

The rapid shift in revenues from print to ebooks was enough to convince Dorchester to make a historic decision - they will discontinue their mass distribution of print titles through retail chains such as Wal-Mart and will instead distribute all of their titles as ebooks that can be printed on demand. I have to smile a little bit at this, as I've been suggesting this as the model for success in book publishing for many years. It's a lot easier to fill up an online shopping cart with ebooks at ten dollars a pop that takes up no physical room to speak of than it is to trudge down to the store to pick up a title for twice that amount or more that may never make it into your travel bag. In the process of doing so, book readers can get further into more titles, creating more lines of additional purchasing interest that can cross a publisher's catalog more broadly when they decide to refill their ebook reader.

The question is, though, whether traditional publishers will remain the ones whose wares will be in those readers. Momentum continues to grow for independent publishing by authors. The Guardian featured a column by novel author Ray Connolly recently, in which he describes his bringing his most recent book to life first in chapter-by-chapter form on his Web site for free and, once finished, as a premium ebook or print-on-demand edition available via his fledgling Plumray Books imprint. Seasoned talent from the publishing side of the business is also beginning to stretch its wings in independent, author-driven publishing. Recently John Kilcullen, a highly experienced publishing veteran who launched the popular  "for Dummies" line of how-to books now published by John Wiley & Sons, joined the board of directors of FastPencil, one of many fast-growing startups that help authors find online audiences for their content and to shepherd it through to finished ebook and print-on-demand titles.

All of this leaves book superstore retailers like Barnes & Noble scratching their heads as to what to do with their cavernous facilities that they used to nudge independent booksellers out of many local markets. The New York Times article notes how increasingly their stores are now filling with their Nook ebook readers, board games and other non-book items. That's fine for the peak holiday seasons when people are desperate for gift ideas, but hardly a strategy for making good use of pricey retail space the rest of the year. Making print-on-demand more attractive as a click-and-pickup option may help retailers like Barnes and Noble make better use of their large facilities, but as these technologies become increasingly affordable they are as likely to show up on a local Starbucks, independent bookseller or Wal-Mart as a book superstore. It could be that Barnes & Noble jumped on the ebook train just in time from a book trade perspective, but its real estate problem remains largely unsolved. More cozy Apple Stores with lots of high-ticket merchandise and stocked with iPads that support ebooks are probably a better template for major book retailers.

With the book-bricks duopoly of publishing and distributing print books dwindling, it's clear that book publishers are cornered into having to back fewer and more broadly appealing titles, much as magazine publishers have had to choose between hyper-mass interest titles and handful of niche titles. When Chris Anderson published his book on "The Long Tail" a few years ago, he predicted rightly that electronically distributed niche content would be the future of publishing. What he didn't capture completely accurately was how quickly media companies would find their fundamental economics challenged by the chasm between operations designed for a wide array of "hits" and the assault on their margins by natively digital content that becomes a hit from its online grass-roots origins.

Put simply, their profits are disappearing from print even as it becomes more complex to produce mass-market books for a wide array of ebook formats and more costly to invest in new all-digital publishing platforms that can adopt to both traditional and online publishing concepts. Add in authors who are tired of picking up chump change from their royalty fee structure and lured by fatter ebook profits for authors, and book publishing has gone from a quiet and safe little world in a few years one which is facing unprecedented change with resources to adapt to change dwindling rapidly. The good news is that for now the ten-dollar ebook is likely to be a highly profitable format for publishers if they can learn how to get the proliferation of ebook formats under control.

Book publishers may have a brighter future than newspaper publishers, but only if they learn from their mistakes. Book publishers cannot afford to ignore the rise of independent book publishing the way that news publishers have snubbed bloggers incessantly. Good content is where you find it, and people will trust whatever brand delivers content best to where they want it electronically. It appears that companies like Barnes & Noble that are willing to shed or transform their "brick" operations and companies like Amazon that never had them in the first place are embracing independent authors more rapidly than traditional publishers. What is the value of a publisher in this equation? If they can continue to push popular content out more effectively than independent authors partnering with major ebook portals, probably a lot. But time is against those odds panning out. Bye-bye, bricks. We'll stop by for a latte some time soon and reminisce about times gone by.
Post a Comment