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Digital Outlook: How Technology is Changing the Book Publishing Industry

By Sven Larsen (@Zemoga)

What’s going to happen to the book publishing industry? That’s the question many people were asking after the recent announcement by Amazon that they are now selling more Kindle books than paperbacks. Hot on the heels of Apple’s astonishing iPad sales numbers, it would seem that Christmas 2010 was the tipping point for e-readership. With over 20 million devices (Kindles, iPads, Nooks, Galaxy tablets) sold last year, and over 50 million projected to be sold this year, e-book distribution is now a genuine mass-market proposition.

So what does that mean for publishers? To answer that question, we need to look at the two traditional roles the book industry has played in the production and sale of reading material: curation and distribution.

In the traditional model, aspiring authors submit their manuscripts to agents who then submit them to publishers. If an editor at a publishing house likes a manuscript, he may offer an advance to the author and schedule the book for publication. The author traditionally receives a royalty of anywhere between 5 and 10% of the cover price and all other revenues are spent on production, printing, shipping and marketing of the finished product.

It’s a necessary filtering process for publishers who are assuming almost all the risk in promoting a new author or title (book sales are traditionally 100% returnable) but far from a perfect system. Everyone has heard the story of numerous publishers rejecting J.K. Rowling’s HARRY POTTER series. As Clay Shirky notes in his brilliant new book COGNITIVE SURPLUS, “There’s no obvious reason why people who are good at running a printing press should also be good at deciding which books are worth printing.” When we take the printing press out of the equation and the risk of producing actual physical copies is also removed, accepting a publishing house’s opinion on what is “good” becomes less and less acceptable for an aspiring author.

Digital also removes the need for distribution expertise and many of the tools and methods publishers use to sell a book. When I worked in publishing we often joked that if you printed 2.9 million copies of a book that could have sold 3 million copies you were a genius. But if you printed 3.1 million copies you were a failure. Digital removes the risk involved with excess inventory or even shortages. If Oprah were to recommend Cory Doctorow’s next novel on her show tomorrow, there would be none of the marshalling of forces required for digital versions that there would be for the print version (print more copies, get that big Oprah sticker on the cover, get those copies to bookstores in time for the show airing, etc.). Similarly, digital removes much of the hidden costs of book publishing, like paying co-op dollars to a retailer for endcap or table placement. Sure, a publisher can still by ad space or prominent placement on Amazon but it’s not essential to having a book reach a certain level of sales performance. And practically anyone can list their product on Amazon and other digital marketplaces. A special relationship with the buyer at Barnes & Noble isn’t required.

There are a lot more factors to consider in any industry as complicated as this one but it’s a safe bet that the number of books available will only continue to increase. At the same time, physical production and distribution will become less important as consumers weigh the convenience of digital delivery versus the social experience of purchasing from a knowledgeable vendor who is familiar with their likes and dislikes. An Amazon recommendation can’t compete with your local independent bookseller but big players like Barnes & Noble and Borders may want to put a lot more thought in to hiring decision.

For publishers, there will need to be a move to a more author centric model. With big names like Seth Godin and his Domino Project clearly illustrating the appeal of self publishing, traditional houses will need to sell themselves on their ability to help improve content, provide subject expertise and promote and market the finished product. Whether that means partnering first time authors with experienced editors, adding in notes & eye catching graphics, or getting the author on that coveted Today Show or Oprah spot, it’s clear that their strengths will lie with a service model rather than the “Guttenberg Economics” (Shirky’s phrase) that have driven the industry since the 15th century.

In the end, digital may be one of the best things to ever happen to the publishing industry. It will turn the focus back on content, and the houses that will ultimately win will be the ones that provide the most value to their authors and their consumers. There’s an opportunity for publishing to be focused less on moving around flattened, dead trees and more on the ideas that inspire authors to write and readers to read.

And isn’t that what the industry is supposed to be all about?

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By Sven Larsen (@Zemoga)

What’s going to happen to the book publishing industry? That’s the question many people were asking after the recent announcement by Amazon that they are now selling more Kindle books than paperbacks. Hot on the heels of Apple’s astonishing iPad sales numbers, it would seem that Christmas 2010 was the tipping point for e-readership. With over 20 million devices (Kindles, iPads, Nooks, Galaxy tablets) sold last year, and over 50 million projected to be sold this year, e-book distribution is now a genuine mass-market proposition.

So what does that mean for publishers? To answer that question, we need to look at the two traditional roles the book industry has played in the production and sale of reading material: curation and distribution.

In the traditional model, aspiring authors submit their manuscripts to agents who then submit them to publishers. If an editor at a publishing house likes a manuscript, he may offer an advance to the author and schedule the book for publication. The author traditionally receives a royalty of anywhere between 5 and 10% of the cover price and all other revenues are spent on production, printing, shipping and marketing of the finished product.

It’s a necessary filtering process for publishers who are assuming almost all the risk in promoting a new author or title (book sales are traditionally 100% returnable) but far from a perfect system. Everyone has heard the story of numerous publishers rejecting J.K. Rowling’s HARRY POTTER series. As Clay Shirky notes in his brilliant new book COGNITIVE SURPLUS, “There’s no obvious reason why people who are good at running a printing press should also be good at deciding which books are worth printing.” When we take the printing press out of the equation and the risk of producing actual physical copies is also removed, accepting a publishing house’s opinion on what is “good” becomes less and less acceptable for an aspiring author.

Digital also removes the need for distribution expertise and many of the tools and methods publishers use to sell a book. When I worked in publishing we often joked that if you printed 2.9 million copies of a book that could have sold 3 million copies you were a genius. But if you printed 3.1 million copies you were a failure. Digital removes the risk involved with excess inventory or even shortages. If Oprah were to recommend Cory Doctorow’s next novel on her show tomorrow, there would be none of the marshalling of forces required for digital versions that there would be for the print version (print more copies, get that big Oprah sticker on the cover, get those copies to bookstores in time for the show airing, etc.). Similarly, digital removes much of the hidden costs of book publishing, like paying co-op dollars to a retailer for endcap or table placement. Sure, a publisher can still by ad space or prominent placement on Amazon but it’s not essential to having a book reach a certain level of sales performance. And practically anyone can list their product on Amazon and other digital marketplaces. A special relationship with the buyer at Barnes & Noble isn’t required.

There are a lot more factors to consider in any industry as complicated as this one but it’s a safe bet that the number of books available will only continue to increase. At the same time, physical production and distribution will become less important as consumers weigh the convenience of digital delivery versus the social experience of purchasing from a knowledgeable vendor who is familiar with their likes and dislikes. An Amazon recommendation can’t compete with your local independent bookseller but big players like Barnes & Noble and Borders may want to put a lot more thought in to hiring decision.

For publishers, there will need to be a move to a more author centric model. With big names like Seth Godin and his Domino Project clearly illustrating the appeal of self publishing, traditional houses will need to sell themselves on their ability to help improve content, provide subject expertise and promote and market the finished product. Whether that means partnering first time authors with experienced editors, adding in notes & eye catching graphics, or getting the author on that coveted Today Show or Oprah spot, it’s clear that their strengths will lie with a service model rather than the “Guttenberg Economics” (Shirky’s phrase) that have driven the industry since the 15th century.

In the end, digital may be one of the best things to ever happen to the publishing industry. It will turn the focus back on content, and the houses that will ultimately win will be the ones that provide the most value to their authors and their consumers. There’s an opportunity for publishing to be focused less on moving around flattened, dead trees and more on the ideas that inspire authors to write and readers to read.

And isn’t that what the industry is supposed to be all about?

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