Redrawing Borders Part 2

In the first part of ‘Redrawing the Borders’ we described the changing landscape and the polarisation that is happening across the market. In this article we will look at the vertical, author power and the freeconomy

Vertical. We recognise that book buyers are eclectic by nature and although they will have strong preferences on some genre they are bibliophile by nature. However there is logic in verticals and the argument that focus counts. Be it romance, poetry, crime there will always be that vertical opportunity for both publishers and retailers.

For retailers it’s often about establishing the niche and getting the selection to match that from a broad range of publishers and then augmenting that with other complimentary products and offers. With publishers its about getting the best content packaged right. The interesting issue is that the vertical publisher needs as broad a target market as possible in order to maximise sales, but needs to establish brand empathy with the genre without finding themselves ‘typecast’ in the horizontal offer. For example Do you find Wordsworth, Penguin, OUP classics side by side under classics, literature, fiction or by themselves in the corner? Should Mills and Boon be stocked apart form others or fully interspersed within the shelf? What other offers would you expect alongside crime (deerstalker hats, CSI crime kits, videos, Colombo raincoats)?

Whatever we think vertical segmentation is growing as everyone realises it’s an opportunity to differentiate the offer from the pack. We look at those who have gone belly up in the UK retail market over the last few years; Woolworths, Zavvi, Flop, Borders, none of them where exactly vertical in their focus.

Author power. We used to call it the slushpile and it was a challenge for many aspiring authors to get past it. It then went to slushpile on demand where authors were lured into the print on demand model supported by many vanity publishing operations. Today we see the slushpile becoming the contentpile, the showcase pile, the shop window for all. Some publishers have started to take this on board and have opened up their own ‘X factor’ websites where the voting public determine the winners from the losers. The winner obviously gets a publishing contract, a ‘Simon Cowell’ mentor and turns from frog to prince overnight!

However some new publishers have started to create a total business based around digital self publishing based not on providing x number of books and a bill but on providing a retail shop window, an aggregated service that promotes and sells digital books. The question of sale is interesting as being published can be far more important than making money to many aspiring authors and having a big shop window even more important. Imagine Google with a self publishing offer tied to a commercial engine or even paying royalties based merely on ad revenues based on hits.

Author power is real, its about realisation that big advances and large sales may be only for the few and shrinking and writing may not be so rewarding for the majority. This significantly impacts the High Street retailer as their offer is effectively squeezed. Should booksellers support and promote aspiring authors and become their patrons?

Freeconomy. Whatever we think and feel about the ‘free’ economy, it’s here and it’s not going away. Free obviously doesn’t always mean free, it may just be free at point of consumpsion and is being paid by another business model. A classic case is Spotify the digital streaming service that is taking Europe by a storm. There model is free and is paid for by advertising, premium service sales which are ad free and by downloads. Will it work? The challenge it has is to convince consumers that music on demand makes more sense than music to own and never play. We think it shifts the consumer mindset to a different place and is spot on. Others are already hot on their heels. Can it apply to books? We would simply ask Google if it could apply to books.

What does this all mean to the high street retailer? The answer is difficult as one is virtual and digital and the other physical. What is clear that as consumers have moved to digital games, video downloads, music streaming, the high street didn’t move with them. As business models shift it hard to see how the High Street moves.

Not Waving but Drowning...

I read with great interest Fred Newman’s piece on Bookselling in the Digital era which was featured in Publishing News this week. Many of the points made where very valid and much of the logic of his overall premise is correct – bookselling is changing - not because books are changing, or because publishers are changing but because the consumer and what they expect and want is changing. This is an extra challenge in a market that has a many to many supply chain, where titles are often unique in there relationship to the channel and in market which has so much product.

We therefore return to the digital role for Booksellers, or bookselling in the digital era? Are they the same or different? Is there a digital role for booksellers, or do they merely have to adapt how they sell physical titles within a digital environment? The Brave New World report clearly and resolutely stated the case for the inclusion of the existing channel in the digital market. It argued for consumer research and trend analysis and importantly it talked about co-operation and a collaborative approach. So why are we still going over old ground and a case that was made 12 months ago? Maybe it because, like the Supply Chain 10 years earlier, many listened, many agreed, but then went about their own exclusive agendas. The publishers today are far from co-operating let alone collaborating. If anything it’s like the ‘wild west’ with everyone trying to outsmart each other whilst smiling and exchanging platitudes. The retailers know how to retail to the mass market but in the main don’t have direct marketing skills and services let alone digital capabilities.

Publishers face significant challenges as ebooks, audiobook downloads, podcasts and blogs are merely the delivery mechanisms. They need to digitise their processes – how they acquire rights, develop, produce, promote, market and finally sell them. It is about changing processes, relationships and rights. Merely trying to increase margin and disintermediate the retailer and channel will not work.

In a world of confusion, the consumer tends to lead and like water find the route of least resistance, Amazon, Google etc. The music industry faced different challenges, but was equally led astray. Look where it is now – would you invest in EMI? All media sectors are facing digital challenges and none are of the woods yet.

Someone once ask why their business had failed even though they had listened, trained staff and responded? The answer given was – You can teach someone to swim but you can’t stop them from drowning, however, the chance of them drowning without any swimming lessons is far greater. Today the industry has to learn to work together, set out clear ‘quick wins’ and adopt an inclusive approach to digitisation. This will not guarantee survival. There is no silver bullet. It is not just booksellers that are at risk but everyone between the author and the reader.