2012 Digital Perspectives: The Consumer

We have written a series of short articles titled, ‘2012 Digital Perspectives’ which we shall publish this week. These will look at what we believe are the short term issues, challenges, potential game changers and outcomes across the digital publishing value chain.

Yesterday we looked at digital publishing from the author perspective and today we look at the Consumer. It’s the same house but we shall see a different perspective.

Today’s media noise about ebooks and digital is now driving a greater consumer awareness about the opportunities and importantly what they want from digital content. What issues matter may vary by the different consumer demographics and they will change with time.

Who do the public recognise as the drivers of their ebook needs – Amazon, HarperCollins, Randon House, Penguin, Apple, Kobo, Barnes and Noble, Waterstones, Google?

We now live in a global world where consumers are connected 24x7 and can compare prices at a click of a mouse. They no longer are influenced by newspapers, magazines, TV, radio but now have a virtual world of information available in a click on the move. Importantly, the largest power block is not the youth, but the silver surfers, who now have the greater disposable income and time, are increasingly technically savvy and are the heavier book readers.

What Amazon has taught us is that no single device is going to satisfy demand and that ebooks have to be available across all platforms. They learnt this trick early on in the physical book world with ABE, marketplace and other ventures and now have transferred the logic to digital.They also recognise that the first page consumers turn to in a book in not the copyright page to see it it’s a new book.

Amazon understand consumer demand and behaviour better than most and it is this that aligns them with consumers. We should remember that it was consumers made Apple, Amazon, Google, Facebook and it was consumers that walked away from MySpace, Napser, Sony.

What are the key issues consumers look for in digital books? Do we understand these, or do we presume to understand them? Price is probably a major if not the major driver, but does this apply to all content and demographics? Availability is probably a major driver, but is it of the latest, or the right content and how do they find it in the digital haystack, let alone validate it is the right one for them?

Digital rights management has to work for not just publishers and authors, but also consumers. Napster demonstrated the folly of tight control and MP3 music is the norm and DRM free. Even Apple have had to yield to consumer demand for DRM free music. We must always consider the consumer usability needs, as well as our own and if we make it too hard to enjoy, share, borrow and read then, they will find an alternative.

The industry must find a way forward on the library ‘free to lend’ versus ‘buy to own’ issue. Consumers will increasingly question the commercials and ownership benefits and the more some refuse to do business with libraries on digital, or demand unreasonable terms, the greater the divide becomes with the group that matters – the consumer. Libraries charging for loans should not be off the agenda and we must also recognise that loans, rentals and on demand commercials should not be restricted to libraries and their members. As consumers become more aware that they have ‘lost’ the right of the first sale doctrine on ebooks then an ‘on demand’ 'Spotify' model could be the obvious answer.

The folly of agency pricing was not in a return to retail price maintenance by a back door to just stifle Amazon and support Apple, but the fact that it was not in, or would not be perceived to be in the consumer interest.

The salient lesson that the music producers failed to grasp was that the ‘customer is always right’ and it is all about perception and making that a ‘win win’ not a ‘win loose’ situation.

Publishing's 'Napster' Moment is Now!

The Book Business is now experiencing its ‘Napster’ moment. It is not about file sharing and digital distribution, but about an industry facing significant digital disruption. It is a wake up call and although books face similar issues to other media industries, ‘books are different.’ Music had to initially deal with losing control of distribution and the threat of ‘free music’. However, the Book Business now have to deal with changes right across the value chain, the relationships that have supported it, from the author to the reader and even the physical spine that has bound it together for many centuries.

Creative Explosion

We now have at one end of the chain, published authors, whose reward and recognition system is imploding, whilst the number of books available and unpublished authors cambering to be heard, is exploding. Our culture is now moving from watching TV and film, listening to music and reading to one of creating, film, music and stories. The digital world has created a platform which allows anybody to express themselves and a social environment that actively demands it. We are living in a YouTube, Scribd, Wattpad, Flickr, Twitter, Facebook and Wiki world and the genie is going back into the lamp. Some may suggest that the vast majority of what is outside of ‘publishing control’ is not worthy, but others may ask who the best arbiter is.

Our book world today can only digest and develop so much content. The ‘Napster moment’ here, is a case of content creation outstripping the capacity of channel to absorb it. Some may say this has always been the case, but the reality is that the publisher can increasingly be now bypassed and is no longer the ‘gatekeeper’. As the traditional publisher route is being squeezed, authors are now increasingly siezing their new opportunities to be read

Content Demand

At the other end of the chain, we have the consumer, who now lives in a Google and Wikipedia world and expects instant access to everything. We have governments, stating that internet access and broadband connectivity is now a basic right and those without are below the poverty line.

We have a consumer, who increasingly is price sensitive and is being sent mixed messages by the book industry. On one hand, the industry openly wants to control prices of digital and yearn for a return to price maintenance on all books. On the other hand, we have books being devalued through suicidal discounting and grandiose give-aways. The High street retail model is becoming uneconomic but in its attempt to attract customers through discounting, is again sending out mixed pricing messages. The only winner in discount wars is the consumer.

The consumer now wants the widest range and the ability to search, select, value and get books on demand. They don’t want limited range and have always been eclectic in their buying habit.

The ‘Napster moment’ here, is a realisation that consumers can’t be manipulated and now demand ‘my world’. They are informed, eclectic, discerning and they can now find needles in digital haystacks and can virally inform and recommend in ways marketers often can only dream of. It is a case of moving from mass marketing to direct marketing in a market you can’t control.

Commerce is global, consumers are global and publishing has to grapple with how it can break free from the previous territorial shackles, which are meaningless to the consumer in a digital world.

Stuck in the Middle
In the middle of the chain are the intermediaries; the publishers, agents, suppliers, retailers etc. All of these have to add perceived value in order to survive. However they find themselves often treading digital treacle as they try to maintain the existing business and culture whilst trying to adapt to the new digital demands. Publishers who once controlled the channel increasingly find themselves controlling a channel, but the old terrestrial one, whilst the new digital one is fought over by new entrants.

The issues are significant but often basic. How do we apply yesterday’s copyright rules in a digital world that is without even the simplest of a rights registries of who owns what? How do we demand digital pricing control without a net book agreement and control of all pricing? Meantime, how can we standby and turn a blind eye as Rome burns in a fire sale on physical works? How can the existing physical channel be protected whilst it still generates 80% plus of revenue? How does publishing engage with consumers who they don’t know? How can we compete with global brands when the only real publishing brand is the author? How do we maintain and grow the bottom-line in a price sensitive market? How do we compete with new entrants who don’t have the same baggage, often different business models and can adapt quickly and can often even invent the change?

The biggest challenge about being stuck in the middle, is that once was ‘large’ is now ‘small’ and what was once ‘small’, can find itself lost in space, or very niche. Small can be beautiful and has a place, but has often no option to follow folk and avoid being stuck in digital treacle.

The Future is Not Binary - Do we really know the Consumer?

Publishing has in the main been a mass market sector. However the digital age has turned many conventional marketing demographics and mass market views on their head. Wealth, lifestyle, age have all come under increasing scrutiny as marketers continue to try and typecast us into these boxes. The reality is that the digital explosion is acting as a great social leveller. The internet is creating vertical communities of interest that do not replace the horizontal mass market ones we know today but are often in addition to them.

Who, how and what we will read is almost impossible to predict. Ask any major media organisation if their demographics are what they expected and the answer is often no. Obviously if the content is aimed at a specific group then it is easier, but when we talk mass market material the results get more fuzzy.

So will the young be the ebook readers, whilst the older population stick to paper? Age is but a number and is a fact often ignored by marketers who often more than most from ageism. Take the recent debate on age grading children’s books. Ask who wanted it and who opposed it and why in this age it was ever conceived as wise? We all assumed that the young would inherit the Internet but consider the ‘grey army’ who today have the time, money and equal ability to master technology and are signing up and using it in their droves.

The challenge is similar to that in the late twentieth century which saw mass literacy explode into tabloid newsprint and the office automation through the typewriter. Today mass connectivity and technology familiarity is now fuelling mass change. Who doesn’t have a mobile? Who isn’t using 3G smartphones? Who doesn’t have email? Who now watches TV offline? Which house doesn’t have a computer? Who doesn’t have broadband access? The point is that we are changing our social culture, how we communicate, what we communicate, how we access and acquire knowledge, information and entertainment and how we consume or use it.

This doesn’t mean the book is dead, it merely means that some books have to change and others now need to compete differently.

One of the greatest challenges the book faces today is the sound bite, the précis, the completion for time. It always has faced the challenge but it’s now got tougher. The second challenge is the screen. Consumer’s resistance to reading on screen is eroding fast and although many still print and read, reading online be it on a PC, laptop, notebook, mobile is becoming a social norm.

The third social change is the demand for ‘my world’ and ‘my say’. This shift from mass market to a market of one is not always about content, but the access to it and its presentation. Merely replicating the printed book online, or as an ebook, could be viewed as ignoring the individual at a time when they are increasingly demanding to be recognised. People want to be individuals and seen as such. The extension of this is clearly seen today in the blogging and feedback culture. People wish to express their views on everything and nothing and not in a straight jacketed into yesterday’s marketing response forms. Wikipedia was built by one way communication but by collaboration. Amazon reader’s reviews may seem that they are often written by the publisher or author but are more than ever written by readers. This significant democratisation is captured in Charles Leadbeatter’s book ‘We Think’.

The future isn’t the same for all publishers and the greatest challenge will remain about giving the customer what they want.