Thursday, November 17, 2011
Digital Content Is Different
Yesterday we sat down with someone who is starting a new digital venture. As we discussed the potential, the market, the options and much more, it became apparent to us that there are a lot of things that applied to the physical book market, that simply do not apply, or should be questioned in the digital market. Walking blindly into the digital world assuming that all remains the same is in danger of establishing a set of urban myths that we have written about in the past but that continue to dog all our thinking and real digital opportunities.
We would like to take the opportunity to offer a dozen points as to why we believe digital content is different.
1. Size - 256 pages and x thousand words were mere economic parameters that prevailed and mattered in the physical world. They become meaningless and irrelevant in the digital world. The author is free to write as little, or as much as they feel appropriate and that convey his story and that the consumer can digest. One would argue that small starts to become beautiful and large may be present a page turn too many. Short stories present a great digital opportunity, but may only happen if they are thought through economically and cost is taken out. After all many successful authors started their writing with short stories and articles. We still have still to adopt and adapt the Keitai model in the West, but if Dickens could write and sell by instalments why are we waiting for the finished tome?
2. Price – Some would suggest that prices must relate to the physical book and that any major price reduction on digital could cannibalise physical sales and the market. Some also suggest that digital is a huge investment and that the costs of the physical product are still incurred in the pre production and marketing activities. The problem is all too often this thinking is based on ebooks being just ‘another rendition’ and that each must stand economically on its own two feet. Why aren’t ebooks ‘given away ‘as aperitifs, lost leaders and to stimulate and drive physical sales? Why doesn’t digital content adopt simple price points like other media? Finally, digital content must be different as demonstrated by the differentiation given to it by the vast majority of governments.
3. Age - The consumer may want the ‘latest book’ but this is often driven by media and promotion. How many consumers do you see opening a book at the copyright page to check when it was published before they buy it? Amazon’s advanced search has a publication date field which is missing on The Book Depository, Waterstones and Blackwell’s who has a ‘published between two dates’ option. We may be thick, but we couldn’t even find an advanced search at Barnes and Noble or Kobo. The eWorld now has to compete with, not just the remaining books on the shelf, or in the store, but all books ever published.
4. Rights - When you buy an ebook, it may be literally just for Christmas! eBooks do not have a second life, no first sale doctrine and being able to lend them to friends. Therefore, to say they are merely just another rendition is like saying there is no difference between a taxi and a car, both get you from A to Z, both are driven by an engine but both are very different .
5. Media - Today we see books, music, film, games, being offered separately on some sites and collectively, as a one stop media shop on others. Dedicated media offers will work as long as they offer the consumer value, but when the vast majority of digital media is now supplied through white labelled channels this makes the one stop shop attractive. As some start to ‘enhance ebooks’ the synergy between media sectors could further erode and the one stop shop appear even more compelling. As we have seen it isn’t difficult for supermarkets, associations or in fact anyone to sell white label stock off their brand with no inventory cost.
6. Taste – It used to be said that you could judge a person but the books on their bookshelf. However, when their collection is no longer visible, no judgement is possible. Some would advocate that this merely flips into a social network opportunity, where readers share their book experience, favourite reads and what they have bought. However, we would suggest that this is a different and ignoring the hype has still to be proven between strangers.
7. Device – The ebook evolution was born out of a combination of digital content and reading devices both being widely available. Today we have now passed that stage and replaced the device with a device agnostic platform. Importantly mobile devices have not stood still and we now have smart phones with sufficient power, Amoled screens, apps and broadband connectivity to challenge ereaders, games machines, laptops, and even the emerging tablet itself. Multi media devices have arrived to your hand and technology is going only one way – smaller, cheaper and smarter. We would suggest that the ereader device is fast becoming irrelevant.
8. Leadership – The largest players always dictated the game and the book market has been no different. Amazon has established itself as the largest driver and influencer in the market today and will be for some years and the largest retailers are no longer defined by square footage or constrained physically. Will tomorrows leading retailer be that with the best mailing list and management? As the retail internet offers become somewhat indistinguishable does this open the door for smaller specialists and innovators to survive and thrive? We also assumed the largest publishers will drive the market but is this a given? Will again the innovative and agile score over those who will find it hard to tack and change course in what will be choppy seas?
9. Re reading the novel - People often say that they re read their favourite books and its true, but they often do this after a long period of time. Guess what, the ebook format, device, technology may have changed by the time you get round to re reading it! It may be like going back to cassette, vinyl and eight track.
10. Metadata – We used to cringe when the dreaded ‘m’word was raised and often found ourselves in the uncomfortable position of having to use a word which itself was an instant turn off. Great strides have been made to rationalise the communication between trading partners and improve the physical supply chain and standards and metadata where pivotal to this. However, when you have all the content digitalised and the associated material and information is fully indexed the game starts to change. Some 80% of what you need to know about the book is retrievable from the digital content itself and some other information exists in real time. This must change how we communicate and what we communicate as we move from a transactional and physical supply chain to one that is driven by media content and social interaction. The library world has finally accepted that the old MARC record is past its sell by date and maybe it will be followed by others we regard as essential today. We now have to radically rethink information, access and retrieval and equally who is best to lead us through this revolution.
11. Rental and the public Library - We strongly believe that ebook sales are going to move from downloads as we know them today to online and cloud based rentals. Netflix, Last FM, Pandora and our favourite Spotify are among those leading the way. Many may see this as a huge threat but is this real or more based on the challenge it poses to the existing business model . We have written much on this radical change and on the redefinition of the library tomorrow. Some may resist the move to online and rental, but it will happen and it may well not be a top down driven but a bottom up revolution.
12. External agents –5 years ago, when we wrote the Brave New World report, we recognised that the digital world was going to be heavily shaped, not from inside but from the outside. Today we have all seen the impact that the likes of Amazon, Apple, Google and others continue to have on the market and the evolution of digital publishing. These new entrants have bothered to invest in the physical channel and when some suggest that they should acquire Borders, B&N etc the answer is obvious and negative.
There are many thoughts we all have as to how the market will evolve. It is important that we start to see digital content as different and free it from the physical book spine that will continue to choke it.