Tuesday, May 18, 2010

Brave New World: 2020 Vision in Digital Book World (Part 1)

Presentation to the Seoul International Book Fair, Seoul, South Korea,

Part 1 The last four years

The Brave New World report was published less than four years ago, in November 2006. Its aim was to identify the opportunities and challenges for booksellers in this new emerging digital market. We did not write the report and walk away. We undertook the task of updating it through the Brave New World blog.

When we started the blog there was no Kindle, no iPhone, no apps; Google were a threat but there was no Book Settlement; libraries were still full of books with not an ebook in sight and digital ebook format wars still prevailed.

We now find ourselves with; a colour tablet, a new ecosystem ‘Appleworld’, a growing digital market, a new pricing model, Amazon present in all areas of publishing, no Microsoft Live Book Search, Google in litigation, epub, Adobe controlling DRM and much more.

Five common threads that have prevailed through the 1500 articles that we have written in our blog

1. The inevitable convergence of technology.

In a highly visual and coloured world, who would have expected a ‘black and white’ device to break new ground? The eInk technology offered the ability to read in bright sunshine, had a long battery life and was the size of a book but lighter. It could store thousands of titles and enable you to carry your whole library around with you. The eInk reader was heralded as the next consumer ‘must have’ and the tool to promote a return to mass reading.

However, it was dull, chunky and reminded you of those early and non-portable laptops or the early mobile ‘brick’ phones. We saw eInk as a transient technology, a black and white TV in a colour TV world.

Despite its failings, short life expectancy, high ticket price and the lack of real depth of digital content, the eInk readers still achieved some significant steps. They dramatically reduced the ebook formats to basically two open ones– Adobe eBook and epub, plus Amazon’s proprietary Kindle format. Also they achieved wide adoption of a single DRM service – Adobe’s ACS4 and in doing so opened up inter-operability between devices.

Importantly, the eInk reader gave the market confidence to move forward with ebooks.

In 2006 we had smartphones that weren’t ‘smart’. Their old and tired operating systems were built for the previous era and constrained their user interfaces and ability to browse the web.

The impact that Apple’s iPhone had on the market can’t be underestimated. Overnight the mobile phone was redefined. First the ‘look and feel’ changed from trying to accommodate keys and screen, to touch screen. Second the device became multi media offering video, audio and colour. Third it continued to exploit the inbuilt camera. Fourth it was wirelessly connected 24x7 to the internet. Finally it introduced, promoted and generated a new form of application – the app with its own app store.

The iPhone also has had a significant cultural impact and introduced new technology which has been enthusiastically accepted by young and old.

It is the invention of the first decade of the 21st century.

The potential rival came from the most unexpected quarter - the search engine and advertising giant, Google. They also took an unexpected strategy to provide an open solution to all the vendors. The Android was capable of multi tasking and also had an open app store.

Just as the iPhone had done some three years ago, the iPad starts to re-defined the mobile and media User interface. Forget that it doesn’t have a camera, is not multi tasking, doesn’t have some simple and widely used connections, doesn’t support Flash. These can be and will be fixed. It is about redefining the user interface, applications and portability.

The question now is not about the applications we will use in the future. Will we now adopt a ‘thinner’ approach, accessing applications from the Internet and running and storing files via cloud computing?

2. The new entrants, the outsiders the technology giants

Google were scanning first and asking questions later. They were hoovering up all library works and creating a sizable repository of digital content. Their main competitor was Microsoft with their Live Book Search book scanning programme.

In May 2007 Microsoft declared that they were pulling out of the race. The sight of Microsoft’s enclosed Stand at BEA 2007 and publishers being shuffled in through the closed door one by one, to be quietly let down in confidence, must go down as the most embarrassing public market exits.

Google was now free to put its foot down, to scan on regardless.

In October 2008 the Google Book Settlement was unveiled. We have written numerous articles on what we see as this ill conceived and audacious ‘land grab’ for little money and exclusive gain of orphan works. Our articles chart the events from day one when we declared it ‘The Great Book Bank Robbery’ to today, when we await Judge Chin’s decision on the revised settlement.

The industry took too long time to understand the implications and had to be informed by many from outside, such as the US Justice Department, before the tide started to turn and people started to understand the challenges posed by the settlement. Whatever the outcome, it heralded a new era where new entrants seemingly went after the prizes.

Google have now announced they are to sell digital books and compete head to head with booksellers through Google Editions and they continued to scan.

However, Google now face significant opposition in Europe to the Settlement and their scanning programme and now face a second class action legal suit from illustrators and image rights bodies in the US.

Google highlighted to an industry that was built on the trading of rights that it didn’t even have a rights registry, nor the collective will to address one without being funded by others.

Apple's Steve Jobs said of the Kindle and reading in 2008, "It doesn't matter how good or bad the product is, the fact is that people don't read anymore... The whole conception is flawed at the top because people don't read anymore.” We have recently witnessed his apparent 360 degree turn with the iPad.

The truth is that you have to look at what drives a company to understand what they want out of any market segment. Apple is about Appleworld, a xenophobic and insular control approach to moving device and service sales. Books only interest them if they sell devices.

Sony went head to head with Amazon. They did provide the epub push and forced Adobe to spawn the ACS4 DRM service. However they created four devices in less than two years and although they sold reasonable numbers of units, some would suggest they lost their way and have missed the boat.

Adobe’s support of epub was a brilliant move in not only capturing the high ground but also in tying it to their ACS4 DRM service. It also enabled them to lock themselves into many of the new eInk devices coming on stream. However, the major trick was to ensure that their solution not only supported epub, but also Adobe eBook which was based on the ubiquitous PDF format.

Amazon now covers all the bases from the author to reader. They support authors direct, are a publisher, own the audiobooks market, have the largest physical global bookstore, own a sizeable chunk of the ebook market and have a global brand synonymous with value and service.

Their most significant move has been to drive down the cost of ebooks. Publishers may believe that the agency model gives them back control but when we step back, we find that the ebook price is still a lot lower than originally envisaged by many publishers and Amazon’s revenues are now protected irrespective of the price paid. Some may say this is not a wise move by publishers and one that also presents new potential issues on tax in the US and retail price maintenance in the UK.

3. The Digital Content Itself

The majority of digitisation programmes have merely taken the physical book and poured it unaltered into the ebook. In essence the editorial and production process continued unchanged and the finished book was then ‘converted’ to an ebook, merely replacing the physical jacket with a digital one. For all the huff and puff about digital many publishers’ editorial and production workflow are still rooted in the analogue world.

We wrote a number of articles on the Japanese revolution with the Keitai novels and digital Manga comics. However we saw little movement in the West ‘book straight jacket’ economic model of 250 to 300 pages. We did see limited experimentation with multi media and others starting short story publishing programme. But these were the exceptions.

We believe that Digital Publishing is Publishing and is about everything from author to reader, not just the finished product.

4. The author
The Author has now been given the opportunity to go direct digitally. Previously print on demand (POD) offered a limited channel to market but it was cost prohibitive and demanded relatively high unit price.

Many things are driving the author to rethink digital. The higher royalty rate originally offered by publishers on digital, has slipped along with advances, the midlist and back list authors continue to be overlooked. Publishers such as Random House believe the ebook is ‘just another book format’ and irrespective of contract, to claim digital rights. Others would like to rights reversals not applied to digital and POD to effectively keep books in print.

Scribd, Wattpad, Amazon and Lulu.com have all started to offer authors a digital self-publishing opportunity and channel.

In a weird twist, the new agency model could be the biggest boost to authors going digital by themselves. US author J.A. Konrath claims that he can sell more ebooks at lower prices than a publisher and earn more to boot. Under the 70/30 split things suddenly get a whole lot better! He thinks the $2.99 could become the new bargain rate for authors such as himself and one that which will look very attractive against the ‘safe’ publisher pricing.

5. Social Networking
Social networking has exploded into the culture. Today, Facebook is getting more hits than Google search. Twitter has also exploded onto the scene and Ivy Bean showed that you are never too old to learn and at the age of 103 started to Twitter. Now 104, she has some 55,000 followers.Facebook and Twitter have made celebrities out of people who many would not have even heard of. Together with the likes of YouTube, they have revolutionised journalism, even woken up politicians to new ways of communication and reconnected people who where disconnected in the old world.

In many ways Facebook, Twitter and YouTube are the new Gorillas in the back yard of publishing and pose as much opportunity, challenge and threat as any in tomorrow’s digital book market.

To read the full revised Brave New World report online

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