Go Read This | How in-app purchase is not really destroying the games industry | Sealed Abstract

On the face of it this is just a piece about the gaming industry, though a fascinating one. In fact this article raises issues for all content industries from games, to books, to newspapers, magazines and music.

It covers the gamut, the explosion of content, the role of market makers (in this case Apple – though to a lesser mentioned extent, Google), the use of price as a lever and the challenges of making money in markets that have become so large, diverse and saturated.

I’m reminded of two realities most forcefully when reading it, firstly that while digital unleashes greater freedom to create and make content of all kinds available, thus empowering the creator relative to the middlemen and women of the previous era, it also (in its current guise by power of platform) shackles them to the power of another middle-person (for books, mostly Amazon) AND makes a sustainable career even less likely because of the huge increase of content such freedom unleashes. Secondly, I am reminded of just how little information is publicly available to those looking at the book trade. Consider the information in this article about the nature of games sales in the iOS store and ponder how different our conversations might be about ebooks if these facts were more openly shared (some notable exceptions on that front would be Smashwords who share quite a lot of data).

Getting people to play your game in a market of 150,000 alternatives requires a different kind of marketing. For example, if the user can choose to pay $0.99 for your app, or pay zero for another app that’s probably just as fun, they’ll pick the free one. The result follows: 90% of apps are free in 2013 when weighted by monthly average users. And when you look only at those apps that use an experiment/test/data-driven approach for their pricing, you see a strong upward trend in more free apps. So the pricing experiments that these developers are running (you know, actual flipping research, not just speculating baselessly in an HN comment) are telling them it’s better to go free.

via How in-app purchase is not really destroying the games industry | Sealed Abstract.

Go Read This | The publishing industry’s new product categories | Studio Tendra

Another decent piece this from Baldur:

Finally, once you have a set of ideas and aspirational projects, you need to whittle them down, or at least prioritise them. That means you need to look at the cost-revenue balance for each one. And to do that you need to figure out the business model, often from scratch because, unlike print, interactive media doesn’t come with a business model attached.

via The publishing industry’s new product categories | Studio Tendra.

Moving Up The Value Chain: How Digital Publishing Disrupts

A good while ago now (nearly 2 and half years I think) I wrote a piece called Whither Publishing In The Twenty Teens? It looked at the changes in publishing which I argued were being driven by digital publishing over the internet.

I made a prediction in that post:

3) Quality and curation will deliver rewards (so firing editors may be self-defeating) in the long-term, if you survive the shakeout. Given the proliferation of poorly written/created content, acknowledged quality will be a valuable feature as will good filtering capabilities (as we can already see).

The point here was that value could be created through curation of content, whether that meant building a dedicated niche in one topic or aggregating content from one specific area or doing that across many topics at once, but ensuring depth and value in each.

At the time I was interested in how traditional publishers might adapt their print curation to online and digital curation, something several have done well and others have not. I saw both an opportunity and a challenge to traditional publishers in the new curation.

I stand by the thrust of it, but I think I failed to make clearly enough a subtle point about that prediction. That is, that as blogs and websites gained credibility and status, they could quite easily move up the value chain towards the same kinds of products traditional media/publishers currently produce. If they show that THEIR curation is at least as effective and valuable as that of the traditional publishers is, then they can benefit from that prediction as much as anyone. It’s the classic example of a disruptive player moving up the value chain and it is happening before our eyes. What’s more, because they were coming from a smaller cost base, they can likely do it more competitively than traditional book publishers.

In many ways, it is the problem newspaper and magazine publishers have been facing for a long time, writing itself all over the face of book publishing. It’s a slightly different type of problem from the issue of self publishers growing in confidence and ability  (equipped as they are now with more tools to aid the creation, distribution and sale of their books). We are talking here about content producers designed around the web, using the web as a platform and building their content offering off a low-cost base and often offering most of that service for free to web surfers.

Demand Media has just announced the launch of two series of ebooks one on wine varietals and the other on pets. I recall how Demand was viewed when it first came to prominence, a content farm, and in some ways it has never shaken off that description, but with this move it shows that its low-cost model can deliver content that has pricing power and provides value.

Here’s how Jeremy Reed discussed their new effort:

As the digital landscape continues to change and new concepts are introduced, we’ve stayed focused on the still important idea of connecting people with knowledge through various media. The shift to smartphones and tablets has opened opportunities for new content formats, and the lines that once separated how people consume content — on television, in print, via online or through mobile devices — have all but disappeared.

The eBooks we’re releasing today exemplify this change. For people interested in learning about the vast world of wine or the intricacies of pet ownership, our collection of eBooks offers a modern alternative to what’s offered online or on shelves today.

Demand Media has taken almost the reverse approach of traditional publishers, but the more traditional approach (in the sense that the content being commissioned is specially created for books rather than created for multiple purposes, one of which may, at a future point, be books) also gets attention today with the funding announcement for Open Air Publishing:

Open Air believes it can disrupt traditional publishing faster. The New York-based startup has published four books. Priced between $5 and $10, all of them have at least broken even, and all of them have taken just three to four months to produce.

Now, with $800,000 in seed backing from SV Angel, 500 Startups, Charles River Ventures, Social+Capital Partnership, David Tisch, Advancit Capital, and others, he’s set to release a total of nine ebooks by the end of the year.

There is a huge amount of room for different models in the market and there will be customers for both the higher end products produced by Open Air and the cheaper ebooks created by Demand. However, in terms of scale and, I would wager, profitability, I think Demand has the game in hand. Certainly, I’d be betting any investment on them rather than on Open Air. After all their bottom up creation model means that a rigorous selection and filtering model combined with some judicious article creation around perceived gaps can result in far quicker production and, most crucially, the creation of ebooks without incurring extra cost (because the content is presumably being reused in other ways).

The Demand Media model for non-fiction publishing looks a lot like moving up the value chain from lower order prospects. In the same way the moves by the likes of GigaOm to start selling ebooks as a standalone product show two things, firstly that their reputation has created value in their brand and people trust it (their curation and editing and credibility) and also that what started as a threat to magazine publishers and newspapers is now a threat to technology and general book publishers.

GigaOm’s move shows the versatility of that publisher’s content too. Their offering now encompasses free content (ad-supported of course so not FREE free), premium subscriber content (their Pro offering) and what might be described as their mid-range content, their new ebook range. This comes close to the Publishing Continuum I first heard Dominique Raccah talk about and certainly does so from a surprising direction at least for traditional publishers. Whereas publishers might have seen GigaOm journalists as potential authors on their lists at some point in the future, it seems clear that GigaOm journalist are at least as likely to be published by their own home imprints.

It is becoming increasingly clear that the internet IS creating direct competition for new non-fiction books exactly as has been predicted that it would. Another short paragraph I wrote two years ago seems relevant if sadly telling now:

The challenge for most publishers is first to realize there IS a challenge and that responding to it is less about social media, ebooks and fancy apps (though they all have a role) and more about rethinking the way you conceive content and how and where you deploy that content to engage and build an audience.

If the world of publishing doesn’t seem to be moving very rapidly, that’s only because you are looking in the wrong direction.

From a very, very, rainy Dublin!
Eoin

On THE Platform And What That Means

When you look at this ebook game from a distance it seems to make a little sense:

1) Microsoft & NewCo. = Content, Device, Apps + possible future Mobile play via Nokia & Windows 8

2) Apple = Content+ Device, Apps + Mobile play

3) Amazon = Content, Device, Apps + Whispersync making Mobile already a significant play in my book but an actual partnership not yet to hand

4) Google = Content (-ish), Apps + Mobile (with Motorola) and a Device neutral stance

Leaving Sony and Kobo somewhat on the sidelines missing some element of the game. Of course those two, like the previous four also have a crucial component in the forthcoming game, lots of cash. And, seeing as folks seem to be tooling up for a platform war, I reckon they are gonna need that.

Of course we know already that all the players in the top league have some fashion of a flaw.

For Amazon the very success of the company’s ebook strategy has created a huge problem in that they are now the team to beat. Apple has a locked down and locked in strategy as closed as the rest of its walled gardens and there’s little chance of it opening voluntarily. B&N and Nook well they as yet have little international footprint (what does this move mean for Waterstones digital strategy?) Google, well where to start with Google? Its execution in the ebook space has been poor and right now does not inspire confidence, though it does have what I think is the better long-term concept.

The biggest problem for everyone though is that a platform war is pretty pointless in anything longer than a medium term horizon (by which I mean 5-10 years). Just as Google is failing to maintain its grip on attention and Facebook is growing stronger every day, someone will rise to take Facebook’s place and then another will rise to take theirs. This impermanence of pre-dominance is, for me, a defining characteristic of the web, and it is driven by the incredibly low to non-existent barriers to entry online because the WEB IS THE PLATFORM, which fosters competition, innovation and experimentation.

That is not to say that those who succeed will inevitably meet a doom, Google is doing quite handsomely thank you, and no doubt Facebook will do well for some time too. Which means that in the medium term a successful ebook platform will milk the system just as Amazon appears to be doing right now. I just believe that their platform has no long-term, sustainable foundation. Moving against Amazon is mostly pointless, rather the focus should be on finding a way around Amazon using the web as a platform and not relying on another closed platform.

Where does that put publishers? In a familiar spot I would argue. I wrote a piece two years ago about ebooks and how it was important that publishers focus on:

developing an expertise in how to sell content in many different forms and at many different prices to different audiences. Publishers should be platform agnostic, selling wherever readers are willing to buy and not focusing on if it is an e-book, an app, online access, segments, chapters, quotes, mash-ups, readings, conferences, or anything else (a point made Friday on Publishing Perspectives by Clive Rich).

Strangely I don’t think I would change a word of that paragraph today. Nor would I shy away from the other recommendation I made:

publishers need to focus on two long-term objectives: audience development and content curation. Neither of these are specific to digital activities, meaning that they will only serve to bolster the print side of the business as well, whether it declines rapidly or gradually.

I just wish I could recall them when I make my day-to-day decisions!
Eoin

___________
PS: Worth reading all these pieces:

1) The Window Is Closing

2) Why Ebooks Will Soon be Obsolete

3) Microsoft Looking To be Third Time Luck In Its Bid For Ebooks

Bookshops, You Have Three Choices

It is becoming increasingly clear that bookshops, both chains and independents, are the first segment of the trade book publishing industry to face wrenching decisions that amount to bets on survival in this digital transition.

Publishers, agents, authors, wholesalers and many others all need to respond and some have already made significant efforts to do so, but it is clear that bookshops are the facing the full thrust of this change right now.

The way I see it bookshops have three choices:

1) Bet On Digital
Betting on digital means much less emphasis on real bricks and mortar locations. In order to win in this space you’ll be taking a leaf out of Barnes & Noble‘s book and building a real platform for content that provides self-publishing access AND access for traditional publishers direct to your platform and be shifting readers to your platform in your store(s).

Waterstone’s looks like it is about to embark on this strategy by launching its own device next year, I fear it will be too late. Barnes & Noble is two years into this strategy and is well on the way to building a convincing platform with a significant share of the US ebook market. They could still fail, which only goes to emphasize the importance of acting quickly.

Make no mistake about this choice, it means closing bookshops and shedding staff and soon. It’s a hard choice for chains because up until recently floor space devoted to print books were hallmarks of success. That is no longer true.

Smaller chains and independent book stores are faced with an impossibly high barrier to entry here, their own device is an excessive cost, as is creating their own platform and I don’t see a real way for them to pursue this strategy unless they can develop a loyal customer base for a curated ebook offering. It’s not an impossible prospect, but it will be damn hard for them to take this option.

2) Bet On Retail
This is perhaps the hardest decision for a bookseller to make because in essence it involves admitting that the product that to date has defined your business, books, is no longer the most important aspect of your business.

It seems to me that WH Smith has decided that its focus should be on retail, that its retail space can be best used to sell anything and perhaps over time that means fewer books and more of the other things it sells. If that is the case, then being in the digital book business is a distraction not an essential element in its future, hence the Kobo Deal.

By working with Kobo, Smiths leverages the book portion of its business to gain revenue and to sell devices while shifting its actual in-store focus towards products that deliver more revenue and profits. The company may feel some regret about that but as a retailer it will have to be unsentimental and profit driven. The flip side of not developing its own platform and device is a significant investment saved for another opportunity.

On balance, I think it’s probably the right decision. Either ebooks take off and WH Smith must replace a large section of their product line up OR ebooks plateau and what has the company lost?

I suspect that here in Ireland Eason is following this strategy, but the signs could point either way.

3) Bet On Print
By betting on print, bookshops will be making the assessment that they cannot compete in another retail space (or that they choose not to) and, as I suggest above in 1, they simply don’t have the resources to compete in digital.

Nothing about betting on print prevents a bookshop or a chain from doing a deal with an ebook platform to sell a device and provide access to an ebook library. That will bring some revenue but it won’t  (in all likelihood) be enough to replace the revenue lost to most bookshops of falling print sales.

The bet here is that YOUR bookshop or chain will the lucky one. The one with just enough customer loyalty, just the right location, just the right level of population density, just the right amount of print loving readers, just the right range of books in the right formats and at the right prices, just the right amount of business nous and just the right amount of marketing know-how to rise above the other bookshops hoping the same thing.

Sadly, some bookstores probably most of them will lose this gamble. Many will lose because of bad luck or poor location, nothing to do with how good a bookstore or a bookseller they are which is a slightly depressing reality, but one we should face.

The winners may well do pretty well because although the overall market for print books shrinks, they will have an increased share of that market and also because the market for print will change most likely towards higher value books.

There’s a final choice of course, which is to do nothing and keep on rocking. I don’t hold out much hope for survival for those who make that choice.