Friday, June 10, 2011

‘How do we Cross the Digital Divide?’

Presentation to the Norwegian Book Congress
Oslo, Norway, June 2011

I would like to start by offering four observations which I believe help forge the future of ‘the book’ and with it our digital future.I will then look at how these are reshaping the author, the publisher, the book channels and bookstore and are starting to determine the winners, survivors and the losers.

The first observation is that we now live in a YouTube society. One, where self expression and opinion can now be, heard, seen and shared in a click.

Yesterday we listened, watched and read media. Today we make it and instantly share it. Today is less about quality and more about the width.

At the start YouTube looked bad quality, with cameras often out of focus and juddering. But YouTube today has redefined video and even influenced film. It has created a new genre of film, created new stars, launched musicians and given us all very funny moments. With social networking it has redefined communication and expression.

This explosion of creativity means that Publishing must now learn to embrace the author, whose English and grammar may not be old school, but who has a story to tell and often a new language to tell it in.

Self publishing is no longer the grubby slush pile of sad unwanted titles, but a vibrant market which is increasingly engaging more and more people. This is not bad, this is not to be looked down on, but is something exciting, new and to be celebrated.

We may not have more readers today but we certainly have more writers!

We must now celebrate and learn to accommodate a new dawn of creative expression which the YouTube world has created.

The second observation is that digital is different.

This may sound silly and somewhat obvious but many publishers by their actions obviously don’t think so. Many see digital as merely replacing the physical jacket with a digital one. Same text, same blurb same stuff.Some want to enrich it by adding more media and make it in effect ‘fatter’, but it remains the same story, same stuff.

It isn’t about stuffing the unsuspecting book with multi media, gizmos and delivering digital stuff. It is about understanding how digital makes things different and creates new opportunities. The challenge is to recognise that digital offers a fundamental change in the development and delivery of content and how it is read.

Ask yourself why do we still continue to produce books with around 300 pages, or the optimum print economic model?

Why does the work even have to be complete on initial publication? After all the serialised story is not new, Dickens did it in the 19th century. The Japanese Keitai style of novel may now be more appropriate for the new mobile technology and lifestyle than today’s all or nothing 300 page tome?

Another issue is the assumption that digital rights are just an extension of print rights. Why do we continue to combine digital and print rights and surely its like combining film and print rights – sometimes relevant but far more the case it’s not.

Digital is different.

The third observation is about marketing and promoting works.

The book industry appears still locked in a 20th century time warp and in denial over the 21st century.

As an industry we have failed to deliver anything but an ISBN to identify a work and now are use it to identify everything and every part of everything. We failed to understand the need to group renditions of the same or similar works and fragments were unheard of!

The International Standard Text Code (ISTC) has long missed its opportunity and one that is not coming back again and lies buried deep in the industry labyrinth of standards.

Industry standards bodies which achieved so much to improve the print supply chain appear to be standing transfixed like rabbits in the digital headlights. They also remain focused on business to business but it is business to consumer that presents the challenge and these bodies where never set up with that focus.

Today the line between content and context is blurred.

We used to use jackets, blurbs, search inside widgets to promote and market books.
However, today we live in a YouTube world of visual real time promotion and social and viral marketing.Its ironic that everday all of us find stuff via search engines and these often care little about structured metadata and ISBNs.

We talk a lot about watching and learning from other media sectors yet we appear to have not even seen or understood music’s MTV moment.

The forth and final observation is that media in a digital form; music, film, news , games, books are moving from a world in which we bought and ‘owned’ media to one where we subscribe and licence it on demand.

Cloud computing and mobile technology is changing how we access and utilise media. Pandora, Spotify and the likes of Last FM are starting to supply whatever music we want to hear, whenever we want to hear it and wherever we want to listen to it. Online gaming is proving that many want to play and compete with others online. TV on demand’s growth is proving that we don’t want to be scheduled but to watch at our convenience.

The on demand world changes not only how we distribute and consume media but also how we licence it.In reality we now no longer own an ebook but merely licence it. This obviously impacts how we price it and what people are willing to pay for it.

So what do we draw from these brief observations and is there a way in which we should respond?

The challenge with rapid and fundamental change is that it is disruptive. Anything that takes time to adapt is probably dead before it is born. Development by committees was once needed and consensus was seen as the goal but moving at the pace of the slowest and accommodating all could now be a recipe for disaster today. Collaboration and consensus is always best, but these are no longer acceptable if it takes too long.

What is becoming increasingly clear is that the roles and value of those between the author and the reader are increasingly being questioned and are blurring. There is no divine right to survive and some will not make it across the digital divide.

I would now like to look the roles we thought we understood so well and would last forever.

I want to give you my insight into: authors, publishers, channels and bookstores. The players in today’s trade Value Chain from the Author to the Reader.

The Author

These authors all have something in common:

  • Stieg Larsson
  • John Steinbeck
  • Ian Fleming
  • JD Salinger
  • Roald Dahl
  • Jane Austen
  • John Buchan
  • Ernest Hemingway
  • Catherine Cookson
  • Raymond Chandler
  • James Joyce
  • Enid Blyton
  • Joseph Heller
  • Agatha Christie
  • Douglas Adams
  • Joseph Conrad
  • Henry James
  • George Orwell
  • Philip K Dick
  • Graham Greene
  • EM Forster
  • Kurt Vonnegut
  • Vladimir Nabokov
  • William Golding
  • Aldous Huxley
  • F Scott Fitzgerald

They are all dead.

Many of their works are in the public domain and are termed classics, others works remain in copyright but are out of print and some are still in print.

I’ll give you a test. Walk into any bookshop anywhere in the world and I will bet you that less than one in a thousand buyers turn first to the copyright page to see when the book was published and if it’s new. Obviously, the exception are those who seek first editions but in the main readers care less about the age of the work than its content. However some would say that publishers appear to care more about the new than the old.

Authors are for life not just for Christmas.

In the digital world an author doesn’t go out of print, do not get forgotten and filed away under ‘reprint under consideration’ and importantly can find a second audience. Digital may not generate the unit sales of print but can offer a perpetual bookshelf for all to enjoy.

Digital is just as much about rediscovery as it is about creation.

The Bloomsbury Reader programme is one example of the digital opportunity to rediscover past modern classics. There are many more now being initiated by authors themselves, by literary estates, agents as well as publishers.

Rewarding authors in a digital model is a challenge and merely replicating the old royalty system with different digital rates, is at best questionable and worst plain stupid. Its ironic that in an on line world of instant sales, cash transfers, real time information and where digital sales are sold effectively on consignment, it still take months for an author to be paid their digital royalty and they can’t they see their digital sales in real time? Its as if everyone has forgotten about real time sales and still want to force digital sales through old print royalty systems.

Is it any surprise that many authors and agents are now taking their digital opportunities more seriously than some would suggest their publishers are?

In a Youtube world we must also respect that some authors may just want their works to be available. I love this quote from music legend and folk singer Woodie Guthrie ‘This song is copyrighted in the US, under Seal of Copyright 154085, for a period of 28 years, and anybody caught singin it without permission, will be mighty good friends of ours, cause we don’t give a dern. Publish it. Write it. Sing it. Swing to it. Yodel it, that’s all we wanted to do.’

The Publisher

A good friend and US publishing consultant and thinker Jim Lichtenberg once related that publishing was similar to two frogs mating. They produce thousands of spawn, which turns into hundreds of tadpoles, who eventually become tens of baby frogs swimming around avoiding their many predators. Finally, a mere handful make it to the bank and came ashore. One is kissed by Oprah Winfrey and book is turned into a ‘Prince’ and a bestseller. The moral being that you needed the thousands to get to the one best seller and predicting that is often very difficult.

Today that still prevails in printworld but in digital the stakes are somewhat lower and the returns even less predictable and more baby frogs can now make it to the bank.

However we must realise that publishing is not one industry but several that have been merely joined by a common format the book.

As digital starts to explode the book spine, then these different sectors will move often in different digital directions and at different speeds. Academic and professional is digitally different to education and they are both different to trade. Even within sectors such as trade genre will diversify.

It is interesting to observe sectors such as academic and professional consolidating into more vertical units and trying to move increasingly direct, whilst their institutional buyers are trying to take control themselves and break them up. Education publishers are now creating learning platforms where curriculum content is only part of the solution. We see Trade publishers trying to create niche and brand verticals. What is interesting is that the economies of scale and scope that prevailed in print don’t always transfer to digital where there are now newer and bigger gorillas. Nimble and agile are words that should count in digital publishing.

All too often we still see digital books being produced last as if they are an afterthought they are not seen as integral or even the primary production driver of a work.This just perpetuates yesterday and that may not be appropriate tomorrow.

Publishing should be digital and Digital publishing is publishing

The Channels

Digital and network technology together with a global economy have changed the channels we once knew. The wholesalers and distributors who thrived in the print world are increasingly finding it though against the new digital aggregators of the virtual world.

My company’s technology underpins the Gardner Books digital platform in the UK, KNV/O in Germany, Centraal Boekhuis in Holland, the Bloomsbury online library shelf and the ebog public library system in Denmark and others, so giving me some good insights to digital channels.

The US trade ebook market share today is different according to who you listen to but the general consensus is that Amazon has between 55 and 60%, Barnes and Noble between 15 and 20%, Apple 10%, Kobo between 5 and 10% with Google has to make it mark and around 2 to 5%. The rest are not worth writing about.

Do you see an opportunity for others to achieve these levels or even double digits?
Will Amazon’s number continue to fall as others grow? Are the US market shares like to prevail across all trade markets?

Interestingly I refer to these players as channels but they are increasingly vertical aggregators, providing digital platforms and selling direct or through affiliates.

The market share figures will change between countries and some US centric offers such as Barnes and Noble may find it tough where their brand is not known. The global brands such as Amazon, Google and Apple will however find it easy to use their brands and reach to dominate all markets. But will they remain focused on English language titles and other major languages, or take on all books in all languages?

Just like Barnes and Noble have demonstrated the strength of a localised brand opportunity in the US, I believe the same is true in many other markets. Countries that have their own language and an indigenous publishing heritage and industry could focus on that and learn to compliment the English language books and channels as they have with print.

However, fixed price markets that supported print may not work well with highly reactive and free markets and the lack of VAT harmony can also present a negative consumer issue.

Amazon has all the bases covered from author to reader and their recent announcement of the establishment of a full publishing division under the leadership of Larry Kirshbaum is not one to be ignored.

Barnes and Noble have long published and bought into print runs. They have also acquired Sterling Publishing and also have now launched their self publishing ebook venture Pubit.

Channels are no longer just about distributing books.

The Bookstores

So where does this leave the Bookstore?

This is an interesting picture I took of a beautiful storefront in Lille, France. The shop once was a bookstore and over the window it still says Livers modern and Livers Ancient – new books and old books but under this somewhat iconic façade is now a mobile phone shop advertising the iPad2 in its window.

Is this the future of the bookstore?

We have seen the dramatic downfall of the bookchains in the US with Borders, Angus & Robertson and Borders bookstore chains in Australia, and Whitcoulls stores in New Zealand and the UK with Waterstones being sold for chump change.

Independents continue to suffer with some making headway whilst many in the US and UK find it harder to survive against the discounting wars and their alienation from the digital world. Some believe that fixed price markets are the answer others that they often just perpetuate inefficiency and over production and we now live in a global economy that can expose localised price differences in a click.

The US ABA’s Indie Bound service may offer a digital hope for some bookstores but remember the bookstore that enters affiliate deals will be effectively handing over their brand and even clients to others. This after all is just another white label affiliate store.

The UK trade, just this month, awarded Sainsbury’s, the UK’s second largest supermarket the accolade of Best Book Chain. Sainsbury were not alone and Asda who are owned by WalMart were also in the running. This speaks volumes for the state of UK bookchains and the challenges now facing Waterstones.

This picture is of a book section within Asda early this year where they were selling books at £1 each and not a few thousand but hundreds of thousands. Interestingly they were cheaper than the gift cards in the next aisle. I recently also wrote about Carrefour supermarket book selling in France. Due to the fixed price market they are unable to offer deep discounts or the ridiculous prices of Asda. But they can enjoy high margin sales protected by the fixed pricing and high income driven by a focused range and their large footfall.

Whichever way you look at it the result is the same on the traditional bookstore.

Waterstones today may have challenges in stores but they also have an equally dire digital and online proposition. Earlier this year I wrote two articles, one of which is my second largest read of all time, entitled ‘Would You Buy an eBook Reader off this man?’ A recommended this read for anyone wishing to see how not to do it.

Last year when I spoke in Gothenberg I offered these ten tips for booksellers. I still hold to them:
  1. Own The Customer Relationship
  2. Create Communities
  3. Sell Books
  4. Think Mail Order and Internet
  5. Be Promiscuous
  6. Stop Competing with your allies
  7. Forget POD think DOD (Digital on Demand)
  8. Price Right
  9. Don’t sell eReaders its not your business
  10. Keep abreast of the Digital Market

All Bookstores are being squeezed by the new channels, new retailers and even the threat of Libraries loaning the ebooks for free over the internet. Amazon and Barnes and Noble also now have launched ebook loan services and Google wants to be a friend to both libraries and bookstores.

Bookstores now need to think outside of their comfort zone and into the digital one.
They may not sell digital over the counter but have to start to think of their business in a digital world.

I learnt a lot about the booktrade from my wife Annie Quigley who owns Bibliophile, the largest independent mail order bargain book club in the UK. She has just received a royal warrant for bookselling to Buckingham Palace and to the Duke of Edinburgh and she is one of only two booksellers to achieve this distinction. She has some 80,000 members which she sends a 36 page tabloid newpaper catalogue every 5 weeks, offering some 1300 titles, many of which will sell through on that catalogue. She buys firm and operates out of a warehouse in London’s East End.

This month she has just gone live with an ecatalogue.

This will go to over 50% of her members who can now order in a click off the ecatalogue and can also share it with anyone. Not only does it mimic her physical catalogue, include her unique reviews of every book, it offers annotations, bookmarks, send to a friend and much more. You can also text search across the ecatalogue. It also now holds her unique and personal Youtube book review videos and plays these within the catalogue. Best of all she now knows everyone who opened that catalogue and what pages and videos they viewed, and their orders are automatically captured within her back office.

Today the YouTube videos are of high end art or specialist and collectable books where the buyer wants to experience the book being handled and see more than just flat dry pages. They not only provide her members with a great experience but they put Annie’s enthusiasm and passion right in front of all her customers.

Forget meet the author this is a sort of, ‘meet the bookseller’.

In less than a couple of months she now has some 70 plus videos up on Facebook, YouTube and her blog and these numbers are growing every week as she buys, reviews and sells more books.

Annie is no ordinary bookseller, she is an editor and a marketer and also a publisher.

Bibliophile is digitally bringing back books she knows sell and have been forgotten.

She has just published, on the Kindle platform, her father’s ‘Lost For Words’ and ‘Diana’s Story’ which were also made into Emmy and Bafta award wining films and after a few years were forgotten by his publisher.

Next she plans to epublish her mother’s 30 historic novels and much more.

So I believe that booksellers do have a real future in the digital world.

I am pleased that here in Norway you thinking outside of the box and are working as one on your The Norwegian Bookdatabase.

It provides Norwegian Publishers and Booksellers the perfect platform to co-operate. It will also provide a viable platform to support Norwegian literature. Some may say that Norway is a small market but it supports hundreds of publishers, 650 bookstores and some 800 libraries and I don’t call that small.

Importantly, the repository is yours and you should keep it that way.

We all now live in a Brave New World and learning to compete, survive and flourish is all about ‘How we Cross the Digital Divide?’

Today I have given you four observations which I believe are things we must all take into consideration when planning our way forward. Today’s YouTube world is here, Digital is different, Digital marketing has to be consumer centric and we are from owning media to now licensing it on demand.

I have also given you some insights as how these may impact authors, publishers, channels and bookstores.

Finally a word of warning.

These are perilous and unchartered digital seas and although I may be able to teach you how to swim, I can’t stop you from drowning.

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