The future of publishing

On Publishing Mergers & Strategy

I have been mulling the Penguin Random House deal for some time now. In fact, I wrote most of this post about ten days ago or longer. I’ll be honest enough to admit that my failure to post my thoughts was as much due to work commitments as it was to a conscious decision, even so it has been useful to wait (as is often the case, we too often underestimate the value of inaction).

I’m glad I waited because it’s quite remarkable what you can discern when you stay out of the flow of an issue. Firstly it meant this post comes in the wake of Peter McCarthy’s wonderful piece When Elephants Mate: Thoughts on the Potential Penguin Random House which explores the merger in wonderfully telling detail and is a must for the interested. Secondly, it comes in the wake of this piece of news News Corp., CBS in Talks Over Merging Book Businesses. Both pieces have been useful in underlining my thinking.

I’ve felt, watching and reading the reactions of tweeters, journalists and thinkers, that there have been three clear waves of response to the news. The first wave of response was mostly surprise (not without some humour and a considerable degree of fun as people contemplated names for the possible merged outfit (my own was definitely Random Penguin). Some discussion pondered the sheer scale of the entity, the number of imprints, staff, buildings  books and authors it would encompass. Best described as the shock and awe stage I think.

The second wave echoed with fear; fear of the powerful combination that the first wave only began to consider, fear of reduced options for writers, agents and readers, and a fear of the changes this new entity would bring to an industry that seems of late to be in constant flux. The fear and loathing stage seems an apt description for this stage.

The third, more considered wave, saw discussion of the merits of the merger in terms of what it equipped the larger entity to do, the power shift relative to digital interlopers and other publishers not to mention the chances for success. In general this wave of discussion was an attempt to put the events in context, consider the implications and look to the future. The dealing with reality stage I pegged it.

To most of those discussions I felt I had little extra to add. One area however seems to have been curiously overlooked in the discussion to date, the fact that we are seeing two very different strategies in action here and strategies that are making value judgements on entire industries. And what are they?

Well the first is a clear strategic decision to move out (and definitively so) of the trade publishing industry. That’s what Perason has done. Make no mistake about it, it wanted shot of trade publishing, and saving the prize of the Penguin brand for use in other areas where it might be useful (like its educational publishing segments) it got shot of it (intriguingly it is also rumoured to be keen to sell the FT though those rumours seem to have been put to bed more recently). What interests me is that Pearson isn’t out of publishing, just trade publishing. So it made a decision based on its read of  its abilities, its resources and its weaknesses. Probably the likelihood of future profits and the environment of the sector had a large bearing too.

Pearson’s takeaway from that analysis was that even with the most recognisable brand in trade publishing, they’d rather be out of the game, than in it. When you let that sink in, the fear and loathing stage doesn’t seem so unreasonable.

Of course, in counterpoint, Bertelsmann made a very different decision indeed. Penguin Random House is now a Bertelsmann beast, majority owned by the company and, I suspect, likely to be wholly owned by it at some point. Bertelsmann has doubled down on trade publishing. As if to confirm the company’s strategic decision it purchased the remaining stake in Random House Mondadori. Bertelsmann sees value in trade publishing, so much value it has gone to the trouble of building the largest English language trade publisher in the world.

It begs the question, “Which one of these huge companies is correct?”

Of course, it doesn’t necessarily have to be a zero sum game. Both parties could well have made the correct decision for their own enterprises and simply assessed their abilities and their desired return on capital very differently. As we line up for the follow on round of mergers that the dealing with reality wave has suggested is likely and recent reports indicate are indeed in the works, we should be looking at what strategy the parents of these trade publishing giants are pursuing and how that will impact the shape of things to come.

We are living in interesting times, or whatever that means!

Publishers, Stop Being Craven, Forge Your Own Future

For some time there has been a funny dichotomy in the publishing industry worldwide.

On the one hand publishers have decried the growing influence of powerful tech companies from outside the industry. Google, Amazon, Apple all fall into that category (Amazon aside from being an impressive online retailer is also an amazing tech company). They are feared and despised both as huge outside firms with enormous capabilities and cash compared with publishers and also as companies driving the industry in a direction it wasn’t keen on going.

On the other hand, various parts of the industry have gushed about the latest moves by these companies, Apple’s launch of the iPad as a media’s saviour, Google EBooks as a game changer or now, Google’s One Pass as a way to beat Apple’s new and restrictive trading terms for content bought in App by consumers.

Perhaps the only exception to this has been Amazon who, despite being one of the most innovative and reader friendly companies in the business, has been routinely lambasted. Even it’s clever and effective popularization of ebooks and ereading was seen as a BAD thing. Amazon, it seems, can do no right!

Well I’m sick of it. I tired of hearing the industry complain and point one minute then jump up and down in happiness at the anticipation of NEW things SAVING content the next. I’m tired of bad strategy decisions prompted by poorly thought out positions. I’m really bored with people arguing about why this or that needs protection and honestly I don’t care what Apple does next.

Lots of sensible people have been talking about what publishers should be doing to make their OWN way towards a sustainable future. Mike Shatzkin has written about it, so has Brian O’Leary, Don Linn and Kassia Krozser, many, many others have too. But none of it seems to impact the mainstream discussion.

  • Here’s a simple truth: the web (in particular digital distribution of content) is undermining the existing economic model for publishing
  • A second: the author is gaining power vis-a-vis the publisher
  • A third: the existing system cannot persist, the parts of the industry that don’t change, will fail
  • And a last one: YOU are responsible for your own future and it’s time you stopped waiting for someone else to make it happen

Digital content WILL dominate the future*. You don’t have to like that, but you DO have to accept it. When you accept that you’ll begin to see that the systems behind publishing need to change rapidly or else you need to create a new organisation to work within the new rules (and economic realities).

It’s time for the industry to stop worrying about Apple, Amazon and Google. It is time for the industry to just forget about all of them and to decide how it is going to bring stories to readers in a way that keeps it relevant, interesting and hopefully profitable or else to decide that it is going to grow old and die gracefully. In either case, I’m pretty sure it’s time to shut up and do it.

~~ ~~ ~~

*By that I don’t mean print will go away, it won’t, but just as letters have been superseded by email, phone calls and text messages, it will become less important. It will though, have a fascinating and interesting future and it may well be that it’s where your future lies if you decide to pursue certain strategies, but that is YOUR decision.

GO READ THIS | Why Online Retailers Will Squeeze Out Publishers In The Book Business | paidContent

You know, this is a terribly defeatist attitude. I see no reason why smart and driven action by publishers can’t bring about change, though along vertical niches rather than broad trade lines:

In short, I don’t think publishers will figure all this out in time, which is why retailers will dominate the customer relationships in the future. They can amass enough of a consumer base that they can market a book to hundreds of millions of consumers and, more importantly, get enough of those consumers to buy the book. With those 100 million billing and messaging relationships, Apple and Amazon would only need to achieve a reasonable 1 percent conversion rate to help an author sell 1 million books, a level few authors today reach.

via Why Online Retailers Will Squeeze Out Publishers In The Book Business | paidContent.

My 2010 Publishing Heroes

Last year I chose some folks who I though had made 2009 interesting in publishing terms and I believed would do the same in 2010. I think I was broadly right about them. You can see the 2009 list here. For 2010 I’m doing the same.

Richard Nash ~ The Risk Taker
Nash is moving ahead with Cursor a new type of publishing company based on communities, authors, shorter contracts and generally many of the ideas that have been floating around books for a few years now. He’s fiery, inspiring and willing to take a gamble (and be wrong too). He has spoken several times over the last few years about where publishing is going and he never fails to offer rich and convincing arguments to back up his point of view. I’m hoping he’ll be successful, not least because his first imprint community is called Red Lemonade!

Gareth Cuddy ~ The Doer
Sometimes you need people who just get down on the ground and shift dirt. IN many ways that is what Gareth Cuddy has done in Ireland. His DirectEbooks has been selling ebooks for some time now and as he would no doubt concede himself, right now the market is not mainstream, but it is getting there. He’s been pushing for more Irish publishers and small publishers to get into epublishing and through his EpubDirect service he’s offering publishers a decent way to get digital fairly quickly.

Rebecca Smart ~ The Changer
Osprey really shouldn’t be cool (except maybe to military history nerds) but it is. It has created an online community for military history buffs and pioneered direct marketing methods that keep the company engaged with its readers and released a book on Zombies (complete with accompanying video). It recently bought the apparently unconnected Angry Robot Sci-fi imprint from HarperCollins and have shepherded it to great success. Much of this is down to Rebecca Smart’s savvy leadership and ability to drive change. She’ll no doubt say that the great staff behind her at Osprey are as much responsible and I think she’d be right, but even the best Army needs a good general.

Mike Shatzkin ~ The Thinker
Mike is pretty darn smart. What’s more, he’s pretty darn good at putting his thoughts down in a clear, concise and accessible way. If you don’t read his blog, you really, really should. As one of the brains behind Digital Book World (a conference I’ll sadly not be attending this year) he has managed to start the in-depth conversations that US Trade Publishers NEED to have if they are to survive the shifting playing field of digital publishing.  For that alone and the pleasure of reading the posts he shares so freely, he makes the list.

The FutureBook Team
The last choice is always a hard one when one is creating a small list. So I’ve cheated and chosen a team. I’ve done this for a few reasons. Firstly I think FutureBook (a blog and conference run by The Bookseller) came to life quickly, embraced the web rapidly and grew by engaging in a fashion that felt very web native and very focused on community and providing value. Secondly I felt that in doing that they provided a critical hub for debate and discussion about ebooks outside of the US but in the English language. It made ebooks real for many publishers and booksellers outside of the US and that was pretty useful in a year that has been dominated by digital developments. So well done to Samantha Missingham, Philip Jones et al, a fine job, well done.

Go Read This | Publishing industry at risk from agency model, claims agent | theBookseller.com

The way I see it, folks ant dumb, they know that the cost of a virtual copy is virtually nothing. Now you can argue about VAT and other costs but in their heads they think you are robbing them when you price hard and high, so either be willing to accept blow back as this tension grows or lower prices.

She said: “Why would people pay the same for a virtual book, with none of the graphic design, physical presence, production and distribution costs accepted as part of the printed kind? I always thought that in those early days e-books should have been given away as an add-on to the printed book. That would have made readers feel they were getting something extra as well as ensuring the new format received very wide exposure very quickly.

via Publishing industry at risk from agency model, claims agent | theBookseller.com.

Go Read This | Publishers should be stirred, but not shaken by Bond move

Philip goes on to conclude that Publishers have much to bring to the party. he might be right, but the core power they used to have of reaching people through distribution is now gone, the balance of power has shifted and Authors or Rights Holders have a greater ability to operate without publishers:

She told me: “Penguin accepted long ago that they didn’t have the digital rights. Of course they wanted to do it, but why would we. With a brand like ours, people are looking for the books anyway, so the publicity and marketing will happen. It also gives us greater clarity of sales, which books are selling and where. We are very lucky to have such a big brand.”

Of course the deal will be interpreted as a shot across the bows of traditional publishers. And why not? Despite the energetic way that the estate has looked after the Bond brand in recent times—including the development of the Young Bond books and the new titles written by Sebastian Faulks and the Jeffery Deaver version to come—it is unlikely that the estate would have seen an opportunity to self-publish in this way until fairly recently. It has seized the opportunity at the right time, and in a way that will allow it see closely how the market develops.

via Publishers should be stirred, but not shaken by Bond move | FutureBook.

Go Read This | Waterstone’s needs to find its Nook | FutureBook

Nice post from Philip here. Personally I think the physical retail presence and access to HEAVY BOOK BUYERS and BROWSERS via that retail presence is the key to Barnes & Noble’s success with the Nook.

It’s an odd story in a way but it reinforces the idea that one of the key weapons in the future of the industry is knowing the customer OR having access to them directly. The three winners in the ebook space right now, Apple, Amazon and Barnes & Noble all have either huge databases of customer information or direct access to them in places where they part with their money, we shouldn’t miss that when thinking about this today.

Many people wrote off the Nook when it first launched in the US. The name was a bit, well, odd. It had a funny colour strip that didn’t serve much use, except to show book jackets. The e-books available weren’t cheap enough, when compared to Amazon’s overly aggressive pricing. And it had initial shipping problems, a sure-fire technology killer. It was seen as the last gasp of a dying mammal washed ashore by a particularly arch digital wave.

We neglected to look at the two key advantages it had over the Kindle. There was the innovative sharing function, which Amazon has now copied, that gave users a sense of having purchased something tangible—not just a license to read. And of course the ability to read any book for free in one of the chain’s 700 shops, making a physical connection to the shops via digital. The latter gave it something Amazon could never have.

via Waterstone’s needs to find its Nook | FutureBook.