Books

On Innovation & Disruption

Baldur Bjarnason has a great post on his blog this week, Which kind of innovation? In it, he asks whether ebooks can be considered a true disruptive innovation (as per the work of Clayton Christensen’s The Innovator’s Dilemma) or whether they should be considered a sustaining innovation that the publishing industry flubbed.

It’s a great question and he supports it well, but I think he’s wrong in his assessment for a number of reasons. Firstly his premise is mistaken, ebooks are not the disruption, merely the manifestation of the disruption (of which more below) and secondly even if we are to accept his categorization of ebooks as the disruption/sustaining innovation, he misses a key point about the nature of the trade publishing industry that undermines his argument.

On Disruption
The error Baldur makes in looking at ebooks as the disruptive innovation rather than considering ebooks as part of a wider context. I would contend that ebooks themselves are simply one symptom of a much wider and radical transformation that is underway, digital creation and distribution of content.

This process has actually been ongoing for quite some time and began with the emergence of tools that digitized the back-end of the business; word processors, computers, design software, email and much more (which changed writing, editing, typesetting, design etc) and has over time moved from there towards more front facing aspects of the industry (production, distribution, selling) before starting to make a large impact on the consumer side of the industry, consumption in the form of ebooks and web-reading (not to mention making many other forms of content from music to games available to those consumers).

It is this process which is causing the disruption, not ebooks which are merely one, now obvious, fork that it enables. What’s more this process is very much a disruptive one. It enables self publishing, which Baldur points out has the potential to be very disruptive and I would argue already has been and will continue to be. It also makes real the competition between all forms of content in a very cutthroat way. Digital creation and digital distribution pits amateur against professional, curated against random, quality against crap and, probably most importantly of all, form against form and past creation against current creation. It makes accessible all things ever created (once digitized) and pits them against all other things ever created.

So yes, the ebook is just a format change, but it is not a sustaining innovation in any true sense of the word. Rather it is a symptom of an ongoing, radical and endless disruption of the creative content industry in all its guises (and one which is replicated across most industries that have an information/content/data/entertainment component which is to say, them all).

On Trade Publishing
But let us move beyond the argument of whether it is or isn’t disruptive in itself and onto Baldur’s case of why eooks are just a format change the industry flubbed. One of Baldur’s key points is this:

Unlike most disruptive innovations, ebooks were very quickly adopted by the publishing industry’s most profitable customers, people who buy the most, spend the most, and talk the most about books.

The problem here is that those consumers are not publishers’ most profitable customers, rather they are the customers of their most profitable customers, bookstores.

So when Baldur says:

Amazon’s release of the Kindle was like the iteration of the Thinkpad or the Powerbook that first made them viable as desktop replacements, not a disruptive innovation but a discontinuous sustaining one.

He needs to consider  the impact on bookstores before he can say the Kindle was a sustaining innovation. Ebooks might be just a format change but they are a format change which would, if they were adopted by a large enough group of consumers, wipe out publisher’s key trading partners. That is what makes them so disruptive to the industry even though they are only a symptom of the real change.

To ignore this key fact is to misunderstand the trade publishing industry as a whole.

Baldur also says that:

Ebooks are a sustaining technology that are being mismanaged into devaluing an entire industry (that mismanagement is a subject worthy of a series blog posts) while the true disruptors get to work in peace. (In the long run, Google is the real winner here.)

I have much to fault in this section.

First Baldur notes that ebooks have brought about a considerable devaluation across the industry (which presumably has been a boon for readers) something I question and isn’t really held up by the figures either even if you look at the most recent figures from the UK, print sales were down modestly but digital sales more than made up for it.

He rests the fault for this at the door of publishers who have flubbed the transition to a new format. BUT how else might they have acted? Ebooks threatened, and still threaten, to close  their most profitable route to market, bookstores.

The only booksellers who have successfully launched rival ebook offerings have done so only with great difficulty. Barnes & Noble has sunk considerable cash into the project and struggles to gain further traction in the US or any beyond the US, even as it has successfully spun out the entity and sucked in money from Microsoft. Kobo was started as an independent entity and recently sold by Indigo to a non-booktrade player.

If Ebooks were indeed sustaining and just a format change, we should be seeing the old order of trade publishing flourishing, we are not, our bookstores are dying. Publishers can and will survive ebooks, but their major customers look almost certain not to. Print booksellers are looking like the major casualty of a “format change” which seems to me an unlikely occurrence of that “format change” were indeed sustaining.

One thing Baldur certainly gets right about the implication of this true disruption wreaking havoc up and down the supply chain is that Google is happily egging the disruption on, but he misses that Amazon is too. if he got that, he might see this for what it is.

Go Read This | Burning the Page – an instant review | FutureBook

On my kindle waiting to be read after The Signal & The Noise:

I could review this book for another thousand words, and still have more to say. In that, this book is incredibly valuable. We’ve not had much exposure to the minds of those driving the eBook revolution, and to have something to engage and in places disagree with strongly is rather novel. There are some very nice idealistic long-term statements in here, and though this is no exhaustive business history we get an idea of some of the thoughts behind the technology. I cannot in all honesty say I’ve been blown away by what I’ve read, but it has given me a more direct perspective on another experience of eBook History. Merkoski’s peek behind the curtain is valuable, it will be interesting to see if the conversation goes somewhere new from here.

via Burning the Page – an instant review | FutureBook.

Go Read This | Taking a Third Pass at Selling Movie Subscriptions – NYTimes.com

A thoroughly fascinating piece over at the New York Times looking at Stacy Spikes’ struggle to build a subscription based business in the film going space. It’s fascinating one so many levels but the one that sticks, firmly, in my mind is his answer to the question below:

Q. Are you saying that you could lose money on the subscriptions but make it up with other revenue?
A. We believe the best way to have a successful business model is to have multiple revenue streams. This model is very similar to that of a studio that is focused on more than just box office ticket sales.

via Taking a Third Pass at Selling Movie Subscriptions – NYTimes.com.

We should lock that idea in our heads and think of it every day in every way when we look at our own industries. Multiple revenue streams, multiple revenue streams, multiple revenue streams!
Eoin

Putting Things In Perspective | E-book sales data, the truth is out there | FutureBook

The Bookseller released publisher sourced data on ebook sales. There’s reason to be somewhat skeptical of the information in the sense that it is seller supplied and while non-one is saying it, there is the minute danger that some padding or exaggeration could creep in. However, the reality is that these figures are probably a very good approximation of where sales are in the UK (with the caveat as The Bookseller notes, that self-publishers are not represented*):

The basic numbers are clear. The data shows that the e-book market for traditionally published digital books is much bigger than previously thought, with estimates suggesting that a total number of 65 million e-books were sold in 2012, representing a value of about £200m – at least double what it was in 2011 in volume terms more than double. That would mean the overall book market grew in 2012, despite spending on print books falling £74m.

via E-book sales data, the truth is out there | FutureBook.

To put that in perspective, Nielsen released figures for the 2012 calendar year in Ireland that put sales at “a total of €123.4m and 11.5m units in 2012.”

Even allow for the fact that the Nielsen numbers for Ireland are widely seen as covering maybe 80% of sales, we can assume fairly happily that Irish print sales were well less that €150m and 15m units at the retail level.

Which when you think about it means that the ebook market, just for the UK is already bigger than the entire print market in Ireland. There’s no reason an Irish publisher cant attack that space aggressively and with relevant ebooks just as well as a UK based publisher.

What’s more, even if we assume a smaller growth rate for that digital share (say 10 or 20% in 2013) the market will STILL be larger than the Irish market and the space for growth is STILL more significant that that for most Irish publishers in print form.

Publishers committed to print or still unconvinced by digital sales, the alarm is ringing and you’ve pressed snooze once too many times, ignore it once more and the alarm will stop warning you and you’ll sleep through this change!

 

__________

*They’ve also excluded some 20p bestsellers. Which I find a little odd, but I can see where they were coming from. Personally, I would have included them.

Go Read This | At play in fields of tablets « PWxyz

Much, much more in this post to read, but the graph that grabbed me was this:

Placed in the context of publishing, this makes Google a critically interesting entrant in the tablet wars. Google has not heretofore made a big splash in digital book sales, although it has long been deeply engaged in publishing for years through its Google Book Search program, which has seen several iterations and re-brandings, not to mention a few “minor” legal skirmishes. Indeed, Google rather ingloriously pulled out of its partnership with independent book stores recently, leaving a market opening that others, like Zola Books, are racing to fill. Yet every indication suggests that books are integral to the Google Play release; as The Verge’s Tim Carmody notes, all of the Nexus 7′s most prominent competitors are reading tablets.

via At play in fields of tablets « PWxyz.

Go Read This | After viral e-book, Iowa author inks seven-figure deal | The Des Moines Register | DesMoinesRegister.com

I wonder how long before we stop reading these types of stories, either because it has become so established a route to publishing success that it’s not worthy of comment or because no author would be crazy enough to do the deal?

I suspect publishers will just have to keep paring back their at operations edges (the fat if you will, though i sure in some cases they’ll be cutting muscle) in order to offer enough cash and royalties to sink these deals:

“It’s life-changing,” said Graves, who chronicled her path from rejection to viral e-book sensation last month in the Des Moines Register. “I’m happy for my good fortune and humbled by it. I’m not sure what happened.”

What happened is this: The 45-year-old Clive mother of two rose before the sun and work at Wells Fargo every day and tapped out a steamy novel about a 30-year-old English teacher shipwrecked on an island with a 16-year-old student. She was rejected by 40 book agents and 14 traditional publishers so she spent $1,500 for editing and formatting and posted the e-book on Amazon.com. It sold only 100 copies in the first month, then took off by word of mouth and thousands of positive online reviews from readers.

A paperback was offered and by last week the title rose to No. 7 for e-books and print sales combined on the New York Times best-seller list.

via After viral e-book, Iowa author inks seven-figure deal | The Des Moines Register | DesMoinesRegister.com.

Go Read This | Independent bookstores embrace digital publishing with ‘espresso’ book machine – The Washington Post

I’m intrigued by this. Not least because 5,000 paperbacks in 7 months is 23 books a day. Impressive stuff, though I wonder if ut makes any money:

Politics and Prose has produced almost 5,000 paperback books — some in as little as five minutes — since receiving the book machine nicknamed “Opus” last November. Leggett said about 90 percent of the books printed on the machine are self-published works by local authors.

The others are out-of-print editions, millions of titles available in the public domain like Google Books, and digital formats licensed out through major publishers including Harper Collins.

Alfred Morgan Jr. was able to get a copy of his father’s out-of-print 1923 aviation guide, “How to Build a 20-foot Bi-Plane Glider,” printed on the machine for $8. The volume was on Google Books.

via Independent bookstores embrace digital publishing with ‘espresso’ book machine – The Washington Post.