The Changing Content Landscape in Publishing

Written for Unlimited Priorities and DCLnews Blog.

On May 23-24 many of us in the publishing industry will be attending the BookExpo America 2011 in New York City at the Javits Center for another annual coming together of who’s who in publishing. The exhibit halls will be filled with thousands of industry professionals and people who are there just because they love books. Depending on the hall you visit and the booths you stop by, you will come away with a few different feelings about the book publishing industry. Last year I spent two full days at the exhibits and the air was filled with the love of printed books. Publisher after publisher showed no indication that the world was changing or if it was, no one was admitting that the traditional book is under any pressure from technology.

Electronic content is one of the most used applications; the growth rate is compounding each month.

Yet there was a small group of Digital Book exhibitors all banded together in a small area of the Javits Center, which were showing the tools of the future. And if this group is successful in bringing new technology and opportunities to publishing, then the future of the printed book will certainly take on a very different look. Some are even questioning the future of the printed book!

In a very short period of time, the technology companies led by Apple are flooding the market with tools to feed users with eBooks. Apple has sold over 15 million iPads and the iPad 2 sold over 500,000 units the first weekend it was available. Samsung has the Galaxy Tab, Motorola the Xoom, Blackberry the Playbook, Toshiba has a Honeycomb-based tablet in the works, and don’t forget the mainstay eReaders from Amazon or Barnes and Noble. The consumer market is almost replacing the laptop with the tablet computer and consumers around the world are finding all sorts of applications for their new equipment. Electronic content is one of the most used applications and the growth rate is compounding each month.

How is the landscape of traditional publishing changing? The North American Big Six publishers…are all experiencing a continuing decline in sales of trade books at the brick and mortar stores.

The Kindles from Amazon have been accepted by users as their eBook reader of choice. Amazon sold over 7 million Kindles in 2010 and is on track to sell over 35 million by 2012. Amazon reports that its eBook sales are outpacing print sales in the hardcover area at 180 to 100 and in the paperback area 115 to 100. Apple has over 2500 publishers in their iBookstore and has delivered over 100 million eBook downloads. If the eBook readers were not enough to make an impact on print book sales, consider that smartphones can also be used to read content; the iPhone with its 100 million handsets is a major player in the e-content market as well. Other smartphone manufacturers are also enjoying commanding sales growth.

With this type of infrastructure in place it is not so surprising to find a major impact on traditional book publishing. So what is happening out in the market place? How is the landscape of traditional publishing changing? The North American Big Six publishers including Random House, Penguin, Harper Collins, Simon & Schuster, Hachette Book Group, and Macmillan are all experiencing a continuing decline in sales of trade books at the brick and mortar stores. Everyone knows about the loss of Borders stores and the continuing trend of the loss of shelf-space. The NA Big Six had a significant advantage over everyone else in that they were able to put books on shelves. They have been distribution experts followed by strong marketing and editing. Their power is now on the wane as the distribution function in the eBook age is of less value.

Another important function up in the air since the market is now a global is the negotiation of territorial and language rights. Selling rights to publish best sellers in other countries has been a big part of the annual Frankfurt Bookfair. Imagine the impact to the traditional way of doing business when an eBook can be delivered around the globe with the push of a key on a keyboard. No inventory issues, no freight, no customs clearance, and no delay. You want the item, you buy it, and it is immediately available on your tablet.

No inventory issues, no freight, no customs clearance, and no delay. You want the item, you buy it, and it is immediately available on your tablet.

If the NA Big Six don’t look out they are soon going to find a new Big Six taking over their role. Amazon, Apple, Google, Kobo, Ingram and Overdrive could just as easily perform all or most of the functions that the NA Big Six offer. Each of the companies above can deliver an eBook to a user anywhere in the world. They have eBookstores from direct relationships with publishers and have the customer services and maintain help desks that connect the users to their platforms.

Already Amazon, Apple, and Google have demonstrated their power in the marketplace. These three companies have changed the publishing landscape with their impact on pricing and setting terms and conditions. Apple with their introduction of the Agency sales model tore down years of book selling with the destruction of the wholesale model. Amazon exercised their strength on setting the prices for the original eBooks. All of these changes in the marketplace are being watched by a growing number of companies that are looking to take advantage of the new opportunities in publishing.

The timing is right for companies outside of our industry to come in and shake up what has been an old boys’ club.

The timing is right for companies outside of our industry to come in and shake up what has been an old boys’ club. Venture backed companies are betting that using modern tools and techniques, they can have an impact on the future of book publishing. There has been a host of high-quality self-publishing companies that have sprouted up offering a full range of publishing services. One company in particular has caught my attention: Smashwords, the brain child of Mark Coker a successful entrepreneur. They offer a full service operation that can get your eBook published in any platform and the author keeps 85% of the price instead of standard 25% royalty. Other self-publishing companies are Scribd, Author Solutions, and Amazon’s CreatSpace or Kindle Direct Publishing group that is offering potential authors a full publishing solution. These are just the first of many companies that are going to be supporting authors bypassing the traditional mainstream publishers.

While trade eBooks are perhaps the best selling segment of the marketplace, it is interesting to note the changing landscape in textbook publishing. Textbook publishing is on its way to having an extreme makeover. Some industry experts that are predicting that within 5-7 years the digital textbook will reach its tipping point and that eTextbooks will become the dominant format. The popularity of the iPad and the other tablets as well as the adoption of EPUB3, OER, and Open textbooks will help drive this shift to eTextbooks. Unlike trade books where the traditional publishers are losing market share, it is the major textbook publishers such as McGraw-Hill, Pearson, Wiley and others that are driving this market. The textbook companies have invested in new companies such as Inkling to support their business objectives. Another group supported by the publishers is CourseSmart.

For years, traditional textbook publishers have lost revenue to the sale of used textbooks. Textbooks have been difficult to update as the process of editing and reprinting anything less than five years old has been expensive. Electronic textbooks can be updated every year with new data added. There is hope by many students that the e-textbook can be priced at a lower price, offer a range of new features such as online editing, cut and paste, and note-taking support. Publishers will be able to produce eTextbooks at a lower unit cost and be able to tailor-make editions for different markets.

No discussion about the changing landscape in publishing is complete without the mention of the opportunity to truly create new works. Publishers are going to begin creating highly-accessible interactive content. There are a wide range of devices such as the iPad and the smartphone where enhanced content can be viewed and consumed. There is a need for software companies to support the publishing industry in the conversion and creation of multimedia e-products. Books, journals, newspapers, and magazines all are fertile ground for technology companies to assist publishers in the production of their electronic products. There is an active and growing market out there for companies to assist in building new products or converting old content to the appropriate format. Make sure your technical staff is ready for HTML5 and EPUB3.

Nearly every publisher that I visit or work with is faced with the same predicament. Most publishers have plenty of content sitting around in large backlists, an active publishing program that they want to convert over to eBooks, or new ideas for interactive products. What I don’t see is a level of technical expertise within the publishing houses. Every publisher from Random House, to the New York Times, to the University Presses needs help in achieving their digital potential. This missing skill is a fact that the venture community has recognized and we are seeing many start-up companies getting into the market to support this critical need.

If your company is offering technical support to the publishing community be sure that you are offering the latest and greatest software solution. Be on the lookout for new startups that are hitting the market such as Vook, a new media company that is working on video integration with eBooks. The publishing industry is moving rapidly to transition to the new market opportunity provided by the devices supporting e-reading. No one is standing still. The market, the technology, and the opportunities are moving rapidly.

See you at BEA 2011. Have a good show!

About the Author

Dan Tonkery is president of Content Strategies as well as a contributor to Unlimited Priorities. He has served as founder and president of a number of library services companies and has worked nearly forty years building information products.

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