Monday, September 01, 2008

Create Digital First

If we look once more at the economic model for publishers in the emerging digital age, we have to ask whether the old model is sustainable? If we start to question this, then the next question is often more about margin than models, but are costs tied to current processes?

We have all seen the decimation of pricing in the music industry. Only last week we visited a media mega store in Piccadilly Circus. The thing that struck us was; not the range, it was huge, nor the listening stands waiting for any album to be scanned, but the pricing. Remember when the record companies and retailers successfully defended themselves against the allegations that CD were being allegedly sold at artificially high prices and that territorial pricing was a sham. Last week we saw big £1 dump bins, many collectable albums at £3 and then the vast majority, even in niche genre, priced at £6. Two for £10 or even 3 for £10 offrers where plastered across the cases Those costing more than £10 were rare and restricted to those special and scarce collectables such as ‘Rubber Soul’ by The Beatles. Was the store heaving? No. Were there long queues at the checkouts? No.

The music world has been shaken long and hard. How people buy, what they buy, how they consume and as a result, what they are prepared to pay for it, are all changing.

‘But books are different,’ we all scream and we may well be right, but perception is what counts and reality often has to follow. It’s the consumer perception that really counts; after all they pay at the end of the day. Do we know or understand their perceptions on digital pricing, or do we assume we know their views? The UK’s Book Marketing company, have stared to extend their highly respected services to cover digital consumer trends, but is it enough, and are we all contributing, listening and responding to any findings?

Today we are the start of a digital consumer offer but it is in the main based on yesterday’s physical cost model, processes and perceptions. Merely taking the finished book and generating a digital rendition that mirrors the physical one is what music did with CDs. Is it logical to merely replicate the book and create just another rendition? We don’t envisage the same demand change as music experienced in selling just fragments (tracks), but it is possible to see the selling of instalments or part works, where all the complete ‘book’ may not be bought.

Some would argue that only when publishers fully digitise their pre press processes and create format neutral content will they have the flexibility to change not only their cost structure but also their product offer. The alternative could be consumer demand driving down prices where the only flexible element is the margin.

The current rights debates do not stop publishers digitising their processes they merely stop them being able to realise all the possible opportunities. However, at a time when the digital market is not established, for many, this may be a huge leap into the dark.

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