The Polarisation of Publishing

Publishing whatever sector, geography and format has always adhered to Pareto’s 80/20 law and in many cases less than 20% have generated even greater than 80% of revenue and unit sales. This obviously leads to a polarisation of the market, with in many cases, no more than a handful of publishers and channel operators dominating each sector. Many don’t like it, cry monopoly, but its not going away and the dilution of one operator will just be replaced by another.

We recently raised the question of the impact of the migration from print to digital revenues and asked what it would mean to organisations, supply chains and the remaining print based operations. We all know digital is happening and continues to accelerate and although we may not be able to predict where the line will be drawn, the impact will be significant and not preparing for it may be like a publishing ‘Pearl Harbour’. Perhaps today’s biggest conference circuit agenda should be on , ‘How to survive in a downsized print world.’

When Chris Anderson first coined ‘long tail economics’ in 2006, many were cynical and merely asked where the money was. It challenged the fundamental principles of the economies of scale and scope on which the 20^th century was successful. However, today no one can deny that the long tail is here and not only has it arrived, revitalised the forgotten back list, inspired many authors to do it themselves, but it has challenged the industry’s obsession with front list. Penguin’s recent acquisition of self publishing operation Author Solutions, is not just about feeding the machine, it also about trying to accommodate the new long tail world and get involved in a mass movement. Amazon have once again shown great strategic vision and application with their Kindle DP programme, which could now become a significant jewel in their crown and although other players are trying to emulate it, they are playing catch up and are clearly behind the curve. Open research and access is also going to have a significant impact on some markets and change the balance of power across the value chain. However, we still to see some more moves and there are some real opportunities today that are just begging to be taken.

Only this week we read in Publishers Weekly about the demise of print back list sales which is in part down to reduced shelf space and also part down to digital offering what we believe is a more logical and better home for these works. This again impacts the balance of the market both in terms of front versus back list and also physical versus digital. the interesting question is, if the physical back list market becomes less predictable and attractive does this give publishers the confidence to digitise their back list or raise the risk that digital migration may not be rewarding? Will they merely sit on their assets, revert them, digitise them with no marketing effort, or let them slide into an orphanage? Digital may only be seen to be worth the effort if it generates sales and if the digital shelves are full how do readers find and differentiate the back list from the rest?

We are no longer talking about ‘long tail’ economics but ‘long market’ economics.

So what will be the organisational and economic impact of the seismic changes that are taking place today?  It is not just a case of responding and generating new revenues, but one of managing and protecting old ones too. We and many others believe that the 80/20 law will still prevail but that the market will become even more polarised and middle ground will change radically. One of the leading thinkers and a Director at Bloomsbury, Richard Charkin, recently is quoted as saying that, ‘publishers should now start to act and think as start-ups.’ A very scary thought for some, but a stark reality for many.

In some media sectors competitors are now working together to share investment and importantly risk and reward. Do we see a similar collaborative publishing environment, or a continuation of the ‘winner takes all’

Many still believe that digital is just about pouring the physical book content into a digital container. Whilst others believe that digital wizarderly and extras will prevail and digital content will become a full blown multi media experience. Reality will be somewhere in the middle but what is clear is that publishing will continue to polarise and in doing so create some exciting opportunities which will demand market and organisational change.

The democratisation of reading and writing is happening and the question is who will be prepared, fit, and responsive and succeed in the Brave New World of digital and physical content?

Some say the today’s weather is becoming more volatile, extreme and unpredictable. Welcome to publishing tomorrow.

The Future is Not Binary - Part 1

Publishing is a diverse and complex industry. Some would argue that it is many industries that have merely been brought together by a common format the book. These industries are diverging as a result of opportunities such as print on demand (POD) and digitisation (ebooks). Some would say that this heralds the end of the generalist publisher and retailer and promotes specialists both in terms of the development of content and rights and their sale to the channel and end consumer. Some may box the different publishing models and predict which will fail and which will succeed in the future. Publishing is and will remain diverse and complex and the one thing that is certain going forward is that there are no silver bullets and that its future is not binary.

If we look at POD, we have to understand that it is about manufacturing, inventory and distribution. We all know that it is not suitable for all, but that it is suitable for many. Its suitability is not always at title level and may even only be at a certain stage in the life cycle of a title. Some have long understood this and have successfully used POD to manage their production, inventory and distribution of their back list, retaining titles that would have been uneconomic to do so in the old model. Some have been able to do this because their rights model enabled them to effectively exploit the sunk cost and move fee based titles across. Many publishers who work on a royalty based model may find that their contract prohibit this approach.

POD is all things to all people. For many today, it represents short cycle print runs and enables them to reduce inventory. To others it is print on demand, sell one make one. To some retailers it offers localised printing and just in time not just in case stock control and responsive customer service. But by itself it is just digital production.

One of the most successful POD publishers is Cambridge University Press, who through their vision have built up a significant POD inventory of some 10,000 plus titles. Has this been economically successful? Yes. Has it been operationally successful? Yes. Is their model applicable to all even within their sector – probably not? I remember sitting down with three major publishers and two industry bodies at the advent of POD. The objective was to look at the systems and process implications of POD and establish the common way forward. The publishers could not even agree then of the definition, let alone the business model and processes.