lessons learned on the digital road: how digital change developed in the us bookmarketplace and the...
DESCRIPTION
Digital change in the US market really began with Amazon selling physical books in 1995. The ebook component, although it has grown by leaps and bounds in the past five years, didn't really become important for more than a decade. And Amazon, and then Barnes & Noble, as giant players, were able to drive both innovation and market trends in a way that may have been unique. In this talk, Mike Shatzkin will review the changes that occurred in the US marketplace and English-language publishing, including the undermining of the retail bookstore network. The changes in Latin America and Spanish will be different, of course; far more devices at far lower prices are on the market and there is a much bigger support infrastructure in place for publishers to manage a digital business than US publishers had a decade ago. So there are lessons to be learned from the US and English-language experience, but a different trajectory of change -- one which Shatzkin believes will be much faster because it is starting later -- is to be expected.TRANSCRIPT
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Mike Shatzkin Founder & CEO, The Idea Logical Company, Inc.
EspacioTendenciasBuenos Aires Book Fair | 26 April 2013
LESSONS LEARNED ON THE DIGITAL ROAD
How digital change developed in the US book marketplace and the English Language
LECCIONES EN EL CAMINO Qué podemos aprender del cambio digital en
el mercado editorial angloparlante
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Some stipulations about the history lessons
• We’re talking primarily about consumer trade books, not all books
• US: No borders, mostly 1 language, 1 currency
• US: Tilt to online growth (no sales tax)• US: Ubiquitous credit cards, robust
infrastructure for delivery
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Where are we now in the US market?
• 25+% ebooks; about 50% for fiction• Print in stores probably under 50% of
sales• Stores disappearing• Amazon power and leverage and
margin increasing• Paradoxically, and temporarily, B&N
has more leverage too
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
And real change is about to accelerate
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
How did the US get here?
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Three seminal developments in the 1990s
• Desktop publishing made pre-press cheap
• Amazon began selling; unlimited shelf space
• Ingram created Lightning Print; no minimum print runs
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
So launching new books got progressively more
difficult• Nothing went out of print• Publishers without sales forces could
compete
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Amazon’s special position; Amazon’s brilliance
• No sales taxes on Internet sales; national policy
• Huge Wall Street investment in Amazon
• Relentless consumer focus• Use of deep pockets to ward off
competition (I2S2)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
1998-2007: Amazon consolidates, ebook attempts
don’t take• RocketBook and SoftBook in 1999 or so;
too few titles and no traction• Microsoft and Palm become the market;
Amazon buys Mobi• BN gives up on ebook business in 2002• Amazon relatively unchallenged in online
print; share just grows• Sony Reader launches in September, 2006
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Reasonable to think in mid-2007 (not so long ago)
• The eBook idea just won’t catch on• Investments in digitization can slow
down• At that point: more ebooks in PDF than
any other format
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
And then the game changer: Kindle in November 2007
• Amazon’s all-out targeted marketing• Content downloads directly into the
device• Huge push to increase title count• $9.99 pricing (not initially seen as a
threat)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Very quick outsized impact
• Early adopters ($400 device) were heavy readers
• By mid-2007, sales are eye-catching (relative to prior ebook sales)
• Amazon begins to own an obviously-important market
• Combined online print and ebook hegemony marks Amazon as a threat
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Publishers already getting nervous
• “Windowing” introduced by Sourcebooks in 2008; others follow
• “Protecting print sale” and bookstores become priorities
• Amazon selling many ebooks at below their cost
• Publishers worry about getting “the call”
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
B&N wakes up; Kobo also plays
• B&N crashes a Nook program in 2009, launches in October
• Indigo’s Shortcovers becomes Kobo, takes Borders business
• But it still appears that Kindle is 90% of the market
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Apple joins the game; introduces “agency pricing”• Q1 2010; 5 of Big Six move to Agency
pricing on April 1• Apple requires it; B&N and Kobo
support it• Amazon share starts to decline,
perhaps below 60%• Random House introduces agency
pricing in March 2011 (a year later)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
US government alleges collusion around intro of
agency in Apr 2011• Three publishers settle quickly• Random House not charged; Penguin
and Macmillan hold out• Eventually, all settle• Discounting (with minimal controls) is
legitimatized
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Since the dismantling of agency
• Amazon share has risen; B&N’s has dropped
• Prices of ebooks have steadily declined (DBW bestseller list)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Other “facts” about the ebook market
• Only narrative reading has really worked
• Juveniles beginning to sell; illustrated and reference don’t
• “Enhancement” not proven commercially viable
• New tools arriving for illustrated to cut costs (Apple, Inkling, Vook, others)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
US publishing over the next few years
• Bookstores disappearing• Random-Penguin merger will have
enormous market impact• Future for illustrated is cloudy• Amazon’s power grows, including as a
publisher
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Guessing about the future, three things really
matter• Scale• Verticalization• Atomization
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Startups seem to focus on things that really don’t so
much• Social reading (must be vertical to
work)• Subscription (must be vertical or have
scale to work)• Services to “authors” (rather than to
“brands”)
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Scale
• Publishers live in a world of Amazon, Apple, Google
• Barnes & Noble didn’t have necessary scale
• Scale is a “moat”: what Random Penguin could do
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Verticalization
• Selling content alone will probably not be enough
• Internet inherently fosters depth by subject rather than breadth
• Audience-finding is inherently expensive; can’t be done book by book
• Rebecca Smart (Osprey) remark on audiences
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Atomization
• Any entity that touches stakeholders should and will publish
• Profit will be a tertiary consideration to these players
• They drive down prices and splinter markets
• Much more of a challenge to publishers than self-published authors
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
A business model is ending
• Owning copyrights for profit a diminishing business
• Providing publishing skills to non-publishers a growing business
• As things change: being more audience-centric promotes efficiency, buys time
Logical
Idea
The
Company
© 2013 The Idea Logical Company, Inc.
Happy to talk some more…
Questions?
Email me at [email protected] my writing at http://idealog.com