digital rights

The Future Of Publishing In Microcosm | The Increasing Internationalization Of Irish Publishing

Yesterday I was a little unfair to Easons for the pronouncements of the company’s spokesperson and the tone of the article on its ebook strategy which suggested the company was about to embark on a  mission to build a rival platform to B&N and Amazon, something that would surely have been a valiant, if doomed, effort.

When I thought about it for the rest of the day though it got me thinking about just how much ebooks are changing the profile of book publishing and bookselling and how quickly that is happening. For instance I am almost certain of two things about the Irish ebook market:

1) That foreign based platforms and retailers account for the majority of sales (Amazon, Apple, Kobo, Sony etc)

2) That like in the print world UK publishers (and their local imprints) publish the majority of ebooks bought in Ireland both in terms of units and revenue

I’m also close to certain about a third item, but without evidence I cannot prove it, here it goes anyway:

3) That US-based publishers sell more units (and I don’t doubt generate more revenue) from ebooks in Ireland than domestic Irish publishers do and are perhaps second only to the UK publishers (and their Irish imprints)

The first and the last points there are pretty radical statements. The first represents a huge change to the Irish experience of the book industry. Right now in print terms, most books bought by Irish consumers are sold to them by Irish retailers, Easons the principle one but others like Dubray, The Book Centres, Kenny’s, O’Mahony’s, Hughes & Hughes and many many others. That is despite the growth of physical sales through Amazon and the internationally owned (except for Dunnes Stores) supermarket chains. The wholesale and distribution businesses are also heavily Irish owned (with some British presence, increasingly on the Library supply side of things).

The Difference Digital Makes

But the situation is dramatically different on the ebook side of the house. Easons is the only ebook retailer of note in the Irish context (others should shout out if I’ve unfairly missed them out). On the ebook distribution side, EpubDirect are the only (and admittedly impressive) crew actually making a go of that business and even they don’t make up for the fact that the majority of ebooks sold in Ireland will have been distributed through other channels.

You can argue the toss over why this is the case but several factors loom large:

1) Irish publishers have been slow to digitize their content (though they are getting there now)

2) Irish retailers have been slow to embrace the web (except for a few notable exceptions) and slower to embrace eCommerce (again a  few notable exceptions aside) and, finally, even slower again to embrace ebook retailing

3) The costs of developing ebook platforms, ebook retailing sites and ebook distribution systems are high, the Irish market is small, while it might have been possible to forecast the potential to gain customers outside of the island, it is a difficult result to actually achieve (which makes EpubDirect’s success all the more impressive) which mitigates against anyone investing in them

In terms of sales, while UK publishers and their Irish based imprints have come to dominate the book trade, significant numbers of books published by Irish houses continue to sell in print form and account for anything between 15-25% of the trade. With ebooks however, sales from publishers whose books would not traditionally have been made available in Irish territory is increasingly likely. For instance a US published book that does well but might not get a print deal outside of the US has as much (if not more) opportunity to sell in Ireland as any other ebook, the key is whether it is high in bestseller/popular lists or promoted by the retailer for some reason

The only ebook store that really seems to cater specifically for the Irish ebook market is Apple’s iTunes so when Irish publishers do start to make content available they have to fight against ALL the published content there is, not just all the domestically published content and all the UK published content as they do in the print world. Further the people making decisions about ebook merchandising are rarely based in Ireland as once they were (or indeed still are in the print world) and therefore open to some discussion or indeed charm (not inconsiderable amounts of which the Irish are possessed).  You see the problem.

The Outside Context Problem

The Irish publishing industry is fast running into what might be described as some fashion of an ‘Outside Context Problem‘ wherein the new arrivals on the scene are vastly superior in terms of abilities, vastly superior in terms of resources and possessed of superior technology. While some of the participants in the market might grasp the nature of the problem and respond as effectively as they can, the truth is that the disparity in attributes makes success unlikely and the new threat is very much an existential one.

Which sounds very dramatic but think of it this way. The Irish consumer market for trade books is around €150 million a year and 15 million units all in. Suppose only 30% shifts digital over time or €45 million and 4.5 million units. That would leave only €105 million up for grabs for Irish retailers in print form and 10.5 million units. The impact on stores, book publishers and other market participants would be pretty dramatic. There would be closures and job losses and the industry would be considerably weaker. And that’s just the impact on the retail side of the trade. The impact on the publishing side of the trade is unknowable, but there is little doubt that it would be significant and would probably be negative for the domestic publishers (see my earlier paragraph on why). The UK publishers will probably cede sales to US-based publishers, especially if US publishers seek to enforce global ebook rights deals on authors.

We are probably headed in the direction of 30% digital pretty quickly. If we even approach the kind of conversion to digital sales that seems to be happening in the US or even the UK, we can expect that 30% figure to be a reality by 2015. By then the Irish industry will have changed radically and will become almost unstoppably more international not just in terms of the books that sell her, but also in terms of those who sell them. US publishers will probably be the second biggest publishers of ebooks bought by Irish readers (if not the first having overtaken the UK).

There’s interesting evidence of this too from the other side of the fence. The AAP reported that ‘total eBook net sales revenue [for US publisher] for 2011 was $21.5 million, a gain of 332.6% over 2010; this represents 3.4 million eBook units sold in 2011, up 303.3%.’

Frustratingly the APP did not share details for Ireland (those were contained in the full report but not as a single territory, rather as part of a larger group of English language territories) so we don’t know how well those publishers are doing here. Still, we can assume that they did well relative to the size of the market.

What’s more, Ireland and the story of change in the publishing industry really acts as a microcosm for the rest of the English language publishing industry (indeed it acts as a microcosm for any small market which shares a language with a much larger market be it French or German or Spanish or Chinese).

In some ways the whole industry is encountering the ‘Outside Context Problem’ I mentioned earlier as software and technology firms move into a traditionally physical business, but for larger companies, responding can be easier because of their scale and their resources make for a wider context as it were. It’s the small markets where the combination of these larger players and the changes in technology make for such a difficult problem.

Beautiful day here in Dublin!
Eoin

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Interestingly (or maybe just interesting for me) I wrote some time ago about the impact of divergent rates of digital growth on small markets, and in many ways this post is all about that impact. The increasing internationalization of the Irish publishing industry is driven by the very issue I highlighted: Divergent Growth Rates In Digital.

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A Problem: Ebook Rights, Small Markets & Divergent Digital Growth Rates

The Frankfurt Book Fair this year was an interesting one for me. It crystalized a few of the many ideas that have been bouncing around in my head. Publishing Perspectives in particular touched on one of the MAJOR issues for smaller market publishers and I wanted to hammer home the point in this post.


I have bad news for publishers of English language books in smaller markets and by that I mean English language markets outside of the UK and US:

Being a small market english language publisher is going to get harder as digital grows

Put simply I believe that US and (initially less aggressively but shortly with the same fervour) UK Publishers will seek to control world english language rights for digital and with it any rights (enhanced/video/audio etc.) they may need in order to sell ebooks and enhanced ebooks on a global basis. This may spread to an all out claim on world English language right including print, somehow I suspect that’s a ways off for now and the emphasis will be on ebook rights.

Why is this?
The reason is that US & UK publishers a compelling economic case for holding those rights while smaller English language markets have less of a business case for retaining those rights.

As Kindle sales, and B&N’s Nook and Apple’s iBookstore and sales through the multiplying ebook retail outlets grow to 10% of group revenue US and UK publishers can begin to plausible include revenue projections for digital editions of new titles.

And some of the growth in ebooks is global. Kobo talks about serving over 200 countries with their ebooks:

Meanwhile, our direct business at Kobobooks.com is rocking and we’ve delivered ebooks into 200 countries from Azerbaijan to Vanuatu – we’re making books available in more places to more people than ever before.

What’s more, they know that the markets that are currently buying ebooks globally are likely to grow rapidly if they even partially reflect

So we have large publishers seeing sales internationally that they can EASILY service at little marginal cost. Acquiring the right to sell to those markets is a sensible strategy that hedges against future global digital sales while delivering real if small sales now.

But the impact on smaller markets is large
Take for example Ireland (I could as easily choose the English language markets in Spain, Slovenia or San Marino), where ebook sales are lower than 1% right now. From that perspective any Irish publisher approached to do a deal for a title they have published in Ireland would be fools to let that deal flounder over digital rights.

And yet, at what point would a publisher be crazy TO do a deal that required them to cede global digital rights; 5%, 10%, 20%, 25%, 50%? What’s more, if a publisher agrees the principle now at sub-1%, how can they hope to grab back that principle at 5%, 10% or 75%?

And it’s not just English
This will be a problem for smaller markets in all languages as larger publishers realise they can reach markets profitably in a digital world that they once could only do expensively and perhaps unprofitably in print.

And it works both ways
US and UK publishers may sell print rights to smaller markets, but they will become increasingly reluctant to sell ebook rights. How would a print only publisher hope to make a run viable in a small market served 10% or 15% or 20% by digital sales from the UK or US based publisher?

Be prepared
So, publishers, what will you answer when US and UK publishers demand your ebook rights? And whatever way you answer, are you prepared for the implications?

There’s more on Frankfurt, but this is the top priority I think.
Eoin

Go Read This | NSFW: A Modest Proposal For Authors Who Abandon Their Publishers — Give Me A Break

Paul Carr is wrong-headed in some places here,  just plain wrong in others and generally snide and snarky for little reason (nothing new there I suppose). For all that he makes some valid points.

For all of the reasons above, there are really only two types of person for whom it makes a jot of sense to tear up their book deal and abandon the professionalism, billion-dollar print market, and immeasurable cachet of traditional publishing. The first is highly skilled self-promoter likes Godin who have successfully identified their entire (niche) audience and who know they will only ever sell a certain number of copies of their books to that same audience. Marketers like Godin tend to make the bulk of their money with speaking gigs anyway – books are just a throwaway promotional tool, full of ideas that even they admit will be out of date by this time next week.  Might as well take the money and keep running.

The second type of person is more tragic: authors who, for whatever reason, fear they’re about to be dumped by their publisher (or at best paid a tiny advance for their next book) and who want to save face by using innovation as an excuse.

via NSFW: A Modest Proposal For Authors Who Abandon Their Publishers — Give Me A Break.

Quick Link | 21st Century Book Publishing Problem « Mike Cane’s iPad Test

This is a not improbable outcome of the future development of digital publishing. Mike Cane is thinking pretty far ahead here, it’s worth reading and thinking about!

Oddly enough  met someone today whose vision it is to make sure these kinds of problems go away for digital content and digital intellectual property.

In five years, the contract Publisher A had for the book expires. Publisher A no longer has the right to offer that book.

The way lawyers work, Publisher A will have to remove that book from its servers.

Your book goes POOF!

This should not happen.

via 21st Century Book Publishing Problem « Mike Cane’s iPad Test.

Ryu Murakami to Release Novel Directly Through Apple iPad – Japan Real Time – WSJ

Author’s Will Drive Change as I’ve said before, especially those with an existing following or those with nothing to lose. How publishers can respond to this is worth thinking about and I suspect that means create ebook exclusive deals with authors that agree the lions share going to authors in exchange for exclusive hardback or paperback rights.

Let the nightmare begin. Novelist Ryu Murakami plans to release his latest novel exclusively for digital bookworms through Apple Inc.’s iPad ahead of the print version. Mr. Murakami, the acclaimed author of over 15 novels including “Coin Locker Babies” and “In the Miso Soup”, replaced the publishers with a software company to help develop the e-book titled “A Singing Whale,” or “Utau Kujira” in Japanese. The digital package will include video content and set to music composed by Academy Award winning composer Ryuichi Sakamoto, according to the Japanese business daily Nikkei. The newspaper reports the e-book will cost 1,500 yen ($17) and will be ready to download pending Apple’s approval. Apple Japan and Mr. Murakami did not respond to requests for comment at the time of publication.

via Ryu Murakami to Release Novel Directly Through Apple iPad – Japan Real Time – WSJ.