Archive for April, 2008

Big educational publishing profits headed down the toilet

Friday, April 25th, 2008

The bigger they come, the farther they fall. And textbook publishers are BIG.

Whenever book publishers gather and talk about their plight [their plight is scary, unless one has his head in the sand, in which case it is sandy], someone usually will say, “Oh, profitability is no problem in the educational publishing sector. They are different. They make bundles of money. They’ve got it all sewn up.”

Well, where there is exploitation happening, someone will find an opportunity to turn that sector on its ear. Academics have been talking up various open-source-like models for at least a decade now — figuring there must be a way to change the costs (and other problems) with the current situation. Not much has come of the academics’ grand ideas because — to put it bluntly — most professors know squat about operating a business. Their specialty is nuclear physics or art history or philosophy. Yet, the opportunity is there to see for anyone who does have a business head:

  • textbooks are massively overpriced
  • reasons excuses for this are lame
  • there are a gazillion students who need learning materials
  • there are tens of thousands of wannabe authors (all those professors need to ‘publish or perish’ — creating a textbook does count for some brownie points)
  • much of the subject matter is fairly standard: first year economics, basic physics, European history, etc.
  • “manufacturing costs” have dropped to near zero for distributing digital versions
  • customization and collaboration are now simpler with wikis, print-on-demand and Web 2.0 tools
  • loyalty to the few big textbook companies is vanishing, if it hasn’t already become non-existent
  • studies have shown students using digital texts do just as well as those using printed books.

So check out
http://www.nytimes.com/2008/04/25/opinion/25fri4.html?_r=1&th&emc=th&oref=slogin for a great New York Times editorial about the educational publishing situation. Here is another NYT article, by Randall Stross, continuing the theme:

http://www.nytimes.com/2008/07/27/technology/27digi.html?pagewanted=2&_r=1&th&emc=th

Then go to Flat World Knowledge at

http://www.flatworldknowledge.com

to see one for-profit venture that is going to bust this educational publishing sector wide open. Another group, with a somewhat different approach is Utilium (http://www.utilium.com). Both companies have huge venture capital backing. Flat World has great flash animation — I love those cartoons.

Flat World is offering students a very attractive offer: textbooks for F-R-E-E. If Flat World can balance the very considerable cost of creating/editing/producing each course text, with the revenue stream from sales of POD versions and other “products”, they will have a winner on their hands. You can see from the website that Flat World wants to capture the hearts of students. Imagine the value of having all those students’ eyeballs and emails (if professors select Flat World texts as compulsory). No wonder the venture capitalists oversubscribed their start-up fundraising.

Utilium’s approach seems different, but they are also only in beta. Looks like they are hoping professors will cobble together the texts from free web sources. Utilium’s site is geared toward the professors, not a bad approach since the professor will select the text.
An obvious challenge will be getting professors on side. That buy-in might be forced on them (just listen to the screams of “academic freedom” falling on deaf accountants’ ears) by those who currently have to pay for all those over-priced texts. When a university is granting a “full ride” scholarship, that includes paying for the texts. Lowering textbook expenses could save almost $1,000 per student per year for the university foundations.

Another company offering eTexts is Freeload Press — see them at www.freeloadpress.com — who offer free textbooks that are supported by advertising.

The other group currently paying for textbooks consists of non-full-ride students. Each year the number of students is decreasing. Major colleges and universities, who once had to shut out vast numbers of would-be students, are finding themselves in a competition with other institutions for enough students to keep courses going. If students demand free texts and threaten to vote with their feet, the administrators will soon put the profs on track to adopting the new delivery model.

Wasn’t it Thompson — one of the biggest players in educational publishing — who sold out a few years back, and invested into information and related technologies, such as buying Reuters? They were big; maybe they saw a fall coming.

Using podcasts to promote sales of printed books and the audio book edition

Friday, April 25th, 2008

There’s a great article in the SF Chronicle by Chris Cadelago about giving away books as a way to promote and get started – it is called Take My Book, It’s Free.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/05/DDS7VUH5M.DTL&hw=take+my+book+its+free&sn=003&sc=764

I wrote about this promotional tactic last year in my marketing book — interviewed some of the fellows mentioned — so it is great to see the phenomenon building.

At our publishing house, I see releasing episode podcasts (for free through PodioBooks.com) as a neat way of getting promotional value and customer feedback during the recording process. If the author is involved in narrating the book, and this is done on a home-scale basis taking many weeks, each episode can be released as completed. That’s what we are doing with one author right now. When all chapters are finished, it takes little to re-purpose the episodes into a full audio book for sale as an MP3 download or made-on-demand DVD/CD

For some authors, narrating their own book may not work. But for those with an “inner ham” eager and able to perform, why not put that energy to good use in promoting and creating another way to sell the content?

What is the magic strategy for selling more books?

Monday, April 21st, 2008

Every day, authors come to me, looking for a quick fix. They want to know the simple secret for turning their manuscript into a profitable venture. Surely there is some magic strategy or formula, they say, suggesting that I might be holding back some profound wisdom.

Well, there is a pattern (or strategy) we follow to maximize the potential for profitability. And since I’m a triple-bottom-line guy, I define profitability as achieving whatever financial, personal, spiritual, political, environmental goals you have set out for yourself and your book. At the risk of being pedantic, I will emphasize that determining those goals (your PURPOSE in the 14 Ps of book marketing) is essential to figuring out your overall marketing plan.

The strategy is roughly as follows, and I could talk for half an hour about each point:

  • determine your USP – unique sales proposition – and ensure editing, design and promotions tightly reflect that POSITIONING statement
  • quality of content is essential to have readers’ satisfaction — that’s the PRODUCT part — so get the best writing, editing, design and presentation you can afford so you are promoting a product of which you are totally proud
  • start the PUBLICITY locally (geographically and networking), then expand as you learn
  • do the free, maximum impact marketing tactics — such as getting reviews on your book’s Amazon page
  • grab the low-hanging fruit (go to the obvious, easiest market niches first) — this is identifying and targeting the best PUBLICs
  • create multiple editions and distribute to multiple channels (PLACE), so you aren’t solely focused on bookstore sales with their tiny margins and yucky returnability
  • have fun: do only those promotions that you look forward to and can easily afford (a fit with your PURPOSE/PASSION and your three profit plans of PEOPLE, PLANET and PROFIT$)
  • aim for the long-term: try to set up sales as a perpetual flow of revenue with minimal new effort or investment; look to creating a “classic” that will sell steadily, forever.

Can this be done? Sure. We do this with every author. Can following this strategy pay off financially? Definitely yes. One of our books is paying its author over $200 per month in royalties, eight months after its launch — and none of this royalty is from local bookstore sales. I see that as creating a long-term classic, almost like having an annuity. Seeing this success is why I’m re-working three manuscripts of my own — tuning up the quality level, so I can launch more classics, and build my passive income stream.

That’s the magic and not-so-secret formula. Plot out your 14 Ps of Book Marketing DeMystified and away you go!

David Byrne’s article in Wired about musicians’ options has parallels for authors

Saturday, April 19th, 2008

Hey, thanks everyone for caring about the future of publishing — and how that will impact creators and publishing houses.

I suggest that you check out a new article in Wired magazine by David Byrne. He lays out a continuum of choices for musicians that is very similar to what is developing in the book publishing business. Byrne describes 6 options, ranging from signing a deal that gives the music label total control of your “brand” at one extreme, to complete DIY at the other extreme.

http://www.wired.com/entertainment/music/magazine/16-01/ff_byrne?currentPage=all

What do you think would be the matching 6 options in book publishing? We certainly have the equivalent to what Byrne calls the “360 equity” deal in the blockbuster contracts from the big 6 publishing houses. And there is the extreme Do It Yourself version using Lulu, CafePress, Blurb and CreateSpace. Book publishing’s equivalent to music’s M & D (manufacturing and distributing) is the “author services” companies, such as Trafford, AuthorHouse and Xlibris. The “Profit Sharing” model is what our own Agio Publishing House uses and what Robert Miller is setting up at HarperCollins. I predict that we’ll see more businesses launched to allow creators and smaller publishing houses to collaborate and cooperately manage some aspects of publishing: cooperative distribution (with  larger margins for the creators and publisher, and no returns) being the most obvious need.

In Byrne’s article is a clever illustration to show the transition over time away from vinyl records to cassettes to CDs to downloads. That’s happening in the book world too — as we’re starting to see the move to reading books on cell phones and other devices, and listening to talking books on iPods and cell phones. Sales in bookstores has already eroded for sales online of the printed book, which in turn is being eroded by sales via download of purely digital books.

As Byrne points out, the creators will have more choice and opportunity as the business situation evolves.

Unleashing the creativity of independent writers around the world

Wednesday, April 16th, 2008

How can we unleash more creativity in the literary world?

Problem – The Existing Model
Before the era of printing presses, books were laboriously created by scribes, meticulously copying an existing manuscript, in response to an order from a nobleman or someone in the Church’s hierarchy. It was literally “print-on-demand” using a quill pen. The rich and powerful controlled book publishing, dictating what would be printed. Few writers could expect to have their writings accessible to a wide audience.

In the first centuries after the introduction of printing presses with moveable type, nearly all books were self-published [what we might today also call “independently published”]. Usually the author would split the investment, and any profits, with a printing press owner. (That typical business arrangement led to a printer having shared common law liability with the author or publisher – even today – for libel, slander and breach of copyright.) So although the investment was a large one, affluent or sponsored authors had an opportunity to be published. Writers such as Virginia Woolf, Mark Twain, Rudyard Kipling and Beatrix Potter are examples of indie authors of that era.

Over the past 100 years, the book industry evolved to being controlled by a few players. Apparently the six largest publishing houses headquartered in New York City now account for about 80% of all books sold in the English language! They, and the medium-size publishers, shun manuscript and proposals from new authors. They are pursuing the goal of having a “bestseller” to make up financially for all the poorly-selling titles they launch. The distribution and retailing decisions are also in few hands – it is a near oligopoly situation in which access and business terms are dictated by billion dollar companies such as Barnes & Noble, Borders, Amazon, Ingram, Baker & Taylor, and Libri.

Nowadays, millions of people wish to write books and, in so doing, to have an impact on the lives of their fellow inhabitants of this planet. Authors wish to educate, entertain, persuade, inspire, reprimand, document, help… There are no shortages of authors, new ideas and manuscripts. There are, however, many barriers in today’s book industry stopping a freer flow of new books. We are all impoverished when so much of the world’s creativity is being stifled and suppressed.

With few exceptions, independently-produced books are refused by distributors and retailers. In large part due to ‘returnable’ terms [see other posting], the book trade has evolved into a closed shop catering only to the “mainstream” publishing houses who in turn dictate who will be published. The publishing houses, with limited capital to venture on new talent, become “gatekeepers” to the literary commons, barring the work of so many.

Even if accepted by the gatekeepers, the words and ideas of a manuscript face multiple layers of editing and a refinement process that, some authors claim, polishes away or distorts their originality and creativity. For those authors determined to control the content and presentation, independent publishing is the only option, and fortunately, the business world is evolving and new mechanisms are available.

Solution – The New Model
The world is changing rapidly with the introduction and proliferation of new technologies:

  • Indie authors are discovering the innovative print-on-demand publishing services that reduce complexity and costs drastically, while providing access to global markets. Books can be publicized and sold over the Internet to people worldwide. Although tens of thousands of indie authors have adopted this solution, awareness is still limited to a tiny fraction of all writers and readers – mostly in the most technologically-advanced countries. As more writers and readers – especially those in disenfranchised portions of society – learn about new publishing services, everyone’s cultural choices and our collective literary legacy will be greatly enriched. Some of these services are Agio Publishing House, AuthorHouse, Blurb, BookSurge, CreateSpace, iUniverse, Lulu, Trafford and Xlibris.
  • Publishing in the new e-book formats presents a more “level playing field” for all. Although this medium has not yet attained mainstream acceptance in sales, it is clearly only a matter of time until better displays are introduced to allow for a totally-acceptable reading experience.
  • When the bane of “returnability” distribution is conquered, publishing will become more profitable for all involved. And if publishing houses are freed of their “blockbuster” fixation, they will be able to apply their editing talents and marketing expense to a wider range of new talents.

Actions
What can individuals do to help unleash creativity?

  • Spread the word about on-demand publishing and other innovations which make independent publishing now very affordable, convenient and efficient. Emphasize that the author retains the control of the content, presentation and marketing. Some publishing services will pay you a referral fee as a thank-you.
  • Test out the e-book reading experience. Only with a growing “critical mass” of consumers will this publishing method improve and eventually thrive.
  • Opt for reading books by independent authors and small publishers to encourage literary diversity. Give those over-hyped “bestsellers” a pass.

Are Printed Books “Dead Meat”?

Wednesday, April 9th, 2008

Denny Hatch just emailed me about a comment on the future of printed books that I left at his witty and insightful blog at

http://www.targetmarketingmag.com

He mailed to me:

Thanx for writing.

I am not convinced that the printed book is dead meat. The paperback book is a marvel—light, portable, requires no batteries or plug-ins. When it arrives, you can open it and use it immediately. Beach sand won’t gum up the works, it can be read in full daylight, and it won’t electrocute you if it falls in the bathtub. Books create an aura of warmth on home shelves that impress friends and family. Never forget the words of Clarence Day (1874-1935):

“The world of books is the most remarkable creation of man. Nothing else that he builds ever lasts. Monuments fall, nations perish, civilizations grow old and die out; and, after an era of darkness, new races build others. But in the world of books are volumes that have seen this happen again and again, and yet live on, still young, still as fresh as the day they were written, still telling men’s hearts of the hearts of men centuries dead.”

Cheers, Denny Hatch
.

Here’s what I replied:

Hi Denny –

Thanks for your note. Yes, I agree that the printed book is not dead meat yet. Certainly the content of books (storytelling) will outlast the physical forms — whether that was written on a scroll, illuminated manuscript, block-printed and hand-bound volume, offset-printed hardcover with ribbons and gilded edges and marbled endpapers, pulp paperback, cell phone/tablet …

Today’s hardcovers are already an “endangered species” if we want to continue the “meat” analogy. Only a few months ago one of the UK’s largest publishers (its name escapes me) announced they will stop producing literary fiction in hardcover. They left the door open to a very limited run POD hardcover edition, numbered and signed by the author for collectors.

Over the next XXX years (insert a number, I chose ten arbitrarily), the “meat” of printed books — hardcover and paperback — will become less in demand, tapering off to become a specialty item. The majority of sales will migrate to other mechanisms: audio and eBook are the logical formats.

Consumers are wed to the experience of reading. They are less attached to the “smell of ink” (only a printer or publisher could imagine that) and the tactile sensation of holding a book and turning pages. If electronic tablets/phones offer ANY advantages, consumers will be hard-pressed to hold on to increasingly expensive printed books as a format. Price for the content will be one huge enticement — expect to buy a new book in digital download form for a few dollars rather than $20 or $30. With the tapering off of overall demand for printed books, the viability of local bookstores will collapse (perhaps coffeetable books will live on in gift stores). I hope some bookshops can diversify and hang on as cherished community resources — possibly by merging with libraries?

Look at what happened to movies. Sure everyone loved being with a crowd and eating popcorn in front of a massive cinema screen — with great sound. But over time we’ve seen a drop in theatre attendance and a switch to renting videos (replaced by DVDs, soon Blu-ray), and the start of the move to renting through downloads. The consumers still love “movies” — but it is the content they crave, not the container.

I know it is VERY upsetting for people in the book industry to face an unknown future. But there is no value in denying that change will happen. Better if clever people (like you) work on ways to make the transition easier and the next phase better for authors, publishers, retailers and readers. And let’s all commit firmly to making the next phase(s) kinder for our environment.

thanks,
cheers,
Bruce

HarperCollins launches a new-style imprint; we consider the future of book publishing

Monday, April 7th, 2008

There were stories this past week in the Wall Street Journal (by Jeffrey Trachtenberg, one of my favourite journalists), New York Times, Publishers Weekly and elsewhere about a new imprint of HarperCollins that will be quite radical in its practices — radical for any of the big six publishing houses.

Heading the new as-yet-unnamed imprint will be the former head of publishing at Disney. Robert Miller’s new imprint has the features that I’ve been preaching about in my workshops for indie authors and in my consulting to publishers:
- no returns (!)
- multiple editions (POD print, eBooks and audio to get into all those long tails of distribution)
- collaboration in financing with authors (the author subsidizes start-up costs by foregoing any advance; the author does not get any royalty, but gets instead a share of ‘profits’).

The first and third are, of course, not “new” — that’s the way publishing operated for hundreds of years, up until the early 20th century.

Whether or not the end of returns will catch on across the industry is in doubt, though an end to this wasteful practice won’t do more than ease the inevitable decline of the big publishers over the next ten years. It will be interesting to see how the death flailing of the big publishers plays out. Monumental change in publishing is a given and will unfold in lock-step with the turmoil in newspapers, music, films, TV, radio — in all media actually. We’ll see retailing morphing significantly, with the rise and fall of behemoths and little shopkeepers as well. Sadly, local bookstores will fade away just like the CD music stores now closing everywhere, and the video rental shops that are beginning to falter. Ten years from now the major form for “book” content will no longer be in book format, of course. Instead it will be in eBook and audio.

I don’t give Amazon’s Kindle much hope at all as a platform for either eBook or audio. Instead, smart cell phones will sprout expandable screens: possibly a fold-out like PolymerVision’s Readius (but not with e-ink which is only black and white, and can’t show video), or something that inflates or pops out and is backlit with a tiny laser projector (like MicroVision is building to put inside cell phones). Once we have larger, colour, video-capable screens on our phone/music/email/gaming/gambling/porn/medical records/PC/whatever device, capable of displaying full-size magazine and book pages in crisp clarity, who would ever use an expensive printed book, magazine or newspaper? “Expensive” because costs for the printed product will steadily rise with environmental/resource pressures on paper, printing, shipping, etc. We can expect demand for printed books will rapidly taper off, just as happened to vinyl records. Demand for the “content” will not diminish, of course; rather, the demand for content will move to the newer technology platform.

For anyone who doubts this will happen quickly, I offer the example of the encyclopedia. Does anyone have a printed set in their house anymore? And is anyone still using the first-generation replacement: Microsoft’s Encarta? The answers are no and no, because everyone is using Wikipedia now — and hundreds of thousands are creating the content! This all happened fairly quickly — over a span of about ten years. In 1993, Microsoft bought Funk & Wagnalls and released Encarta as a free promo; Wikipedia started in 2001. (Encyclopedia Britannica essentially went out of business in 1996, due to Encarta‘s launch only three years before. Britannica was founded in 1768. Two and a quarter centuries of business presence counted for naught in face of new technology.)

The warning in this is twofold: firstly, the delivery platform will inevitably change, and secondly, there is little value in being an old-style producer of content (“publisher”). Being an old-style giant can be a disadvantage — it is hard to have strong traditions, a huge infrastructure AND also be nimble.

What role will POD play in this rapidly-morphing publishing world?

I foresee print-on-demand will have two key roles ahead:

  • as a transitional, then residual, print technology and
  • as a gathering point for all that old “book” content, ironically for not-printed editions.

In the former role, when the market for printed books is reduced, POD simply becomes the only viable way to manufacture most books.

To explain some terminology: All books are currently printed from digital files in PDF format, with some manufactured on laser or inkjet devices in short quantities of between a single copy to many hundreds — that’s POD or print-on-demand, and is often associated with printing after an order is received from an individual consumer. Currently, if a publisher wants larger quantities, to stock on bookstore shelves, and to enjoy a lower per-unit cost, the manufacturing happens on an ink-and-water printing device called an offset press. When the demand for printed copies falls below a threshold of about 1,000 copies, it is no longer economically advantageous to print offset, so POD becomes the default manufacturing technology. As overall consumer demand for printed editions shrinks, it will becomes no longer feasible to pre-stock bookstores, so the printing-after-the-order potential of POD also comes into prominence.

From other stories last week in Publishers Weekly and other media, it is clear that Amazon’s BookSurge POD service and Ingram’s Lightning Source Inc. [LSI] are battling now to be “the” POD hub, with publishers’ margins being the collateral damage in this senseless war. Amazon is threatening publishers who don’t migrate from LSI to Amazon’s own BookSurge service; the threat is removing the “Buy Now” or “Add to shopping cart” buttons at Amazon.com from LSI-produced titles. Amazon is shooting both publishers and itself in the foot — Jeff Bezos must be hiring strategists trained at the Pentagon. It is hard to imagine a dumber public relations or strategic move.

I suggest POD’s greater longer-term importance will be in the second role: as the wholesalers of millions of digital PDF files that will be displayed on those next-generation cell phone omni devices. Amazon’s path into this next role is complicated in that the Kindle can’t display PDFs, and few content creators (currently called book publishers) trust Amazon to serve them honourably. Amazon’s latest rudeness with publishers is eroding what was left of that trust. Ingram isn’t everyone’s sweetheart either, but they are known as a book wholesaler who isn’t tied to a single retailer.

From my vantage point, the optimum outcome will be created only if the various POD printer/wholesalers can get past their capitalistic Egos and collaborate on a network of POD facilities. There simply isn’t going to be enough print business to warrant opening more dispersed print plants without pooling the jobs, and assigning the work to the nearest plant. This, however, would require Amazon, Ingram, Libri (owners of BoD.de in Germany) and other corporations to embrace the concept of sharing we all learn (poorly) in kindergarden classes. A volume of at least 100,000 copies printed per month is required to economically operate a POD plant. With collaboration, one could imagine POD plants opening across Europe, Asia, Australia, Africa, South America … and the current publishers enjoying a respectable transition to the next era of publishing.

Back in 2004 and 2005, when I was CEO at Trafford Publishing (the original POD author services company and operator of a 100,000-book per month POD print plant in Victoria, BC), I tried in vain to get BookSurge, LSI and BoD to join us in establishing common standards for print files, as a first step toward building trust and collaborating. Alas, I could never get buy-in from all three companies.

Let’s all hope that Jeff Bezos and John R. Ingram and others will see the light soon and begin talks toward a future that is gentler and kinder for everyone in the publishing industry. My fingers are crossed. :-)

thanks, cheers, Bruce Batchelor