The e-Book Onslaught Transforms Publishing
After 30 years of false starts the e-book revolution is upon us. Paper-and-ink books may not be ready to go the way of the scroll, but a generation raised reading screens has finally collided with cheap memory, crisp displays, wireless networks, low power processors, and batteries good enough to make it all work when crammed into a sleek folio you can stash in your backpack.
What hath Moore's Law wrought?
Much has been made of how the user experience will change as new forms of media get integrated into electronic books. But readers' lives won't change nearly as much as publishers'. The great publishing houses had better gear up to adapt their business models. Fortunately, lessons abound.
Change came unwelcomed to the newspaper business, a hundred thousand voices exploding from the blogosphere to whipsaw the news cycle. This onslaught confuted longstanding journalistic principles regarding sources, standards, objectivity, and editorial integrity. Or, more accurately, it demolished the comforting illusions we held about those principles. Dethroning the doyens, journalists now rank as low as Congressmen in public esteem. Reviving the respect granted professional journalists is going to take some work. Compounded by the implosion in classified advertising revenue and the addiction of consumers to free web news, the economics of the newspaper industry are in tatters.
The e-Book gives the industry a second chance. Watch smart newspaper publishers remake themselves, slashing production and distribution costs, shedding the powerful industrial unions that hobble profits, and emerging as streamlined versions of their former selves. Not all newspapers will survive, and few will remain in the hands of the superannuated families that historically dominated the inner circle. But as long as there is an unsatisfied hunger for trusted voices the future can still belong to newspaper brands that recapture that trust.
The record labels stand as the sorriest example of what not to do. At first asleep at the switch then desperately fighting against the digital tide, their power slipped away into the hands of the artists, concert promoters, and i-Tunes impresario Steve Jobs. Watch the record labels wither into nothingness, living off the declining residuals of their catalogs.
Book publishers escaped this fate thanks to a wake-up call courtesy of Google's threat to digitize the world and Amazon's ham handed attempt to monopolize distribution. Publishers are lucky that Apple wasn't first out of the blocks. If the i-Pad preceded the Kindle and Steve Jobs grabbed the high ground, the game would be over. Instead a real marketplace has emerged for e-Books with multiple products, multiple formats, and multiple distribution channels setting the stage for healthy and spirited competition.
By way of full disclosure, we've had a ringside seat in this drama via our investment in an e-publishing services provider called LibreDigital. From that perch we've watched the risks and opportunities unfold.
Many readers that buy their physical books from Amazon are attracted by the stellar logistics. Amazon's logistics are so good it has parlayed this core capability into everything from electronics to toiletries. But physical logistics brings no value to downloading an e-Book. The distribution business up for grabs.
Here are the key success factors. Online book reviews are going to have to start sporting Buy Now buttons. Consumers are going to demand personal e-Book libraries that guarantee that the e-Books they buy from any source will be readable on any device they own today or tomorrow. Readers will want to annotate e-Books and lend them to friends just like they do physical books, perhaps on some restricted sample basis that might lead to a new sale. Smart publishers will tie the social networking aspects of e-Book selling and marketing to loyalty reward programs. All of this can be accomplished through digital rights management administered in the cloud.
Once this business is up and running publishers will not need Amazon or Apple or Google and may be better served developing direct relationships with customers. They can do this on their own or through behind the scenes consortia managed by third party providers whose multi-publisher capabilities not only offer customer convenience but anti-trust cover. Entirely new analytics opportunities will open up denied publishers when they drop-ship palettes of books to stores or hand over digital files to arms length retailers. Imagine the upsell and cross-sell opportunities if publishers get this right.
Can authors start bypassing publishers just as easily as publishers bypass retailers? Some bestselling authors might strike out on their own. And readers will buy self published e-Books from unknowns now and again, especially if these are priced low enough to abandon without remorse. But a book is neither a blog nor a song. Books are a bigger investment in readers' time, making the opportunity cost of reading a crummy book high. Regular readers will expect books to be professionally vetted and edited and will gladly pay a few bucks to be protected from the infinite supply of lousy writers. Woe be it to publishers seduced into publishing junk just because lower production and distribution costs make this feasible. Without the discipline of unsold books landing back on their balance sheets, imprint will ultimately matter more to readers, not less, in the world of e-Books.
Readers rejoice.
