Saving scholarly publishing, and saving civilization.

In 16 minutes.

The full text, and the YouTube videos, are at:

http://www.nap.edu/staff/mjensen/scarcity.html

or you can watch Part I (missing my preface, that’s available in the full text):

and Part II:

A few segments from the text:

The realities I see ahead of us, in the next ten to fifteen years, militate for some radical strategic choices, in the next three years.

I believe that we must shift our business models — publicly, transparently, intentionally, thoughtfully, but radically — to a digital one, with open access as the backbone of scholarly publishing. We must do this to survive a tremendously turbulent next decade, and to ensure that our mission, and its survival, continues to be fulfilled.

…

But CO2 does something much worse. While we bicker with global-warming deniers, the ocean is getting more acidic. Excess CO2 plus ocean produces carbonic acid. Ocean acidification is a clear and present danger. A slight rise in acidity dramatically affects calcium-carbonate-based lifeforms, like most plankton, shellfish, and coral, the cornerstones of the ocean biosphere.

If humans do not drastically reduce our CO2 output in the next ten years, our rich, biodiverse ocean will become an acidic, jellyfish- and algae-filled cesspool, in our lifetimes.

If, over the next decade, humans continue doing what we have done for the last fifty years, then we will construct our own hell, and our grandchildren will curse our names.

…

Within the context of a world in crisis, we *must* demonstrate that we’re radically rethinking our relationship to the future. We must demonstrate that we are part of the solution, not part of the problem. We must seize initiative now, and start making changes as fast as we can.

Open access + digital publishing will help get us to a sustainable world, and keep us in the mix.

Imagine, in five years, a different income stream where 50% of your income comes from some kind of value-added digital sales, and 25% from print-on-demand, and 25% through institutional support of fixed costs. Dissemination and societal impact will increase 50x, because the material is openly available and promoted online.

With that kind of documented dissemination of scholarly value and University brand, to the broadest public, no dean would be motivated to cut the support that enables scholarship to thrive online. And, our CO2 production will be radically decreased.

The presentation was controversial, and raised both some hackles and some hair-on-the-back-of-the-neck. Far more congratulated me than condemned my analysis — and many said they were rethinking strategy in light of what I showed them.

It was risky, but knowing what I’ve learned over the last two years doing the Apocadocs project, it was a risk I needed to take. Time’s a-wasting.

I’ve been interested to see the  responses, and this post can become a response locale — I’m linking back here from the fulltext, in hopes that some discussion can ensue.

The first, Europe Between Oceans, by the renowned archaeologist Barry Cunliffe, is a masterful work, combining history, archaeology, geography, anthropology, and a smorgasbord of other disciplines in explaining the transformation of human culture and society in Europe from prehistoric to the dawn of the modern, encompassing a ten thousand year period from 9,000 B.C. to 1,000 A.D. Cunliffe writes with erudition and clarity, never oversimplifying, but without the befuddling writing designed more to impressed than to illuminate that is so common in academic circles. The publisher, Yale University Press, is clearly at the top of its game here: the layout is splendid, with plenty of pleasing white space, yet full of helpful maps, photos, and charts. Europe Between Oceans covers much familiar ground, but drawing from the latest research in a multitude of disciplines it provides strikingly new insights.

The second is Lapham’s Quarterly, a literary journal edited and published by former Harper’s editor Lewis H. Lapham. I wasn’t enough in the cognoscenti, I’m sorry to say, to get on board for the first issue, nevertheless I’d learned of the journal’s existence by the second issue, had subscribed by the third, and purchased a gift subscription for my parents by the fourth. Published quarterly, each issue covers a theme—thus far War, Money, Nature, Learning, Eros, and the current issue, Crimes and Punishments. Lapham mixes and mashes genres and primary sources in his investigation of each theme, from ancient to modern, employing excerpts of stories, essays, poetry, art, charts, and photography. Imagine Herodotus and Lazarillo de Tormes slapping high-fives to Franz Kafka and Raymond Chandler because they made it into the latest issue. Reading Lapham’s is like being an observer to the musings of an accomplished collector gripped by bibliomancy during an extended weekend visit to his abode.

Both of these works, at the apex of modern publishing, might cause one to wonder how they could possibly be improved upon in electronic form. Surely they prove the point that e-books could never fully replace print. And yet, and yet…

Jumping just a bit into the future, let’s grab our podkinfliptop, with its color touch screen and multimedia capabilities, and run. Placing the cursor next to an unfamiliar term in Cunliffe’s book, like Bosphorus, brings up its definition. Clicking on the place-name of Tyre deploys Google Earth. Maps of migrations or empires, instead of static, depict the spread and flow over time. Instead of a single picture depicting the ancient city of Miletos, or a bronze warrior god from the 12th century, a gallery of photos is embedded in the e-text. Links lead to further scholarship or modules about topics of particular interest to the reader. Cunliffe’s tome is a big book, nearly too hefty to curl up in bed with comfortably for a nice reading session, but in its e-format it poses no problem on the podkinfliptop, which you read while touring the Aegean region with your family. At the ruins of the Byzantine fortress in Anadolu Kavagi, you take a striking photo and instantly upload the photo to the book’s gallery.

With Lapham’s, the electronic version might explore the theme over the course of a few months with a daily or weekly segment, loaded automatically onto the device, instead of a quarterly publication. Links abound between and among volumes; users add links to other content in order to further illuminate the theme, sharing the links with other users. The podkinfliptop version includes old newsreels, film segments, Billie Holiday singing “Strange Fruit” or Johnny Cash at Folsom, a poem read by its author.

All of these capabilities exist today, in one form or another. A central question is, of course, who pays for all of this? I’m not optimistic that many publishers can, with a positive ROI, create both a beautifully laid out print version and a link- and multimedia-rich electronic version, but nor is it yet clear that many electronic-only publications are financially viable. As I point out in my recent article, larger publishers like Cengage or Pearson certainly have the resources to create resource-rich electronic publications for higher education, and a number of non-profit initiatives, like Connexions or Yale Books Unbound, are underway. But while readers may not balk at forking over $35 for the beautiful hardcover Europe Between the Oceans, customers seem to expect a lower price for electronic versions. Perhaps instead of selling 20,000 copies at $30.00 each of the hardcover, and dealing with returns, YUP could sell 250,000 copies at $10.00 of the e-version. Lapham’s could get a larger number of subscribers at a lower price, or offer it free under a government grant, or corporate or foundation sponsorship. The “publisher” provides the platform and content, encouraging the community to contribute additional links and resources, building on the “book.” I have to remain optimistic that this type of publishing can survive and prosper in the digital age. The University of Michigan Press seems to be betting on it.

This makes me wonder how much of this model is applicable to publishing. There are already some entries into this, such as Harper Collins’ Authonomy, Smashwords, CompletelyNovel, Amazon’s CreateSpace. I haven’t seen any yet, though, that quite come close to the level of participation, excitement, and cool/hip level as Threadless. But I think it’s possible, and even probable, that someone will, sooner rather than later.

In the academic space, I find that Common Ground publishing, which runs the International Journal of the Book, has an interesting business model and process. They run ~15 conferences, on subjects in the humanities and science, each with an associated journal. When you present at one of their conferences, as I did in October, you receive a year’s access to the associated journal, and you can submit an academic paper to the journal. When you submit your paper through the journal’s peer review process, you also agree to peer review two to three papers for the journal. Common Ground also is able to implement a striking balance between technology (everything is submitted and approved online) and personal touch (you always have a sense that there are real people involved). They also encourage and offer opportunities for collaboration and participation.

My article on “Innovation and the Future of e-Books” was recently published in The International Journal of the Book. My premise is that the development and acceptance of e-books today parallels incunabula in the 15th century. The paper considers three examples of innovative e-books to illustrate the potential and pitfalls of electronic publications. This peer-reviewed paper is now available on the RAND web site (free download):
http://www.rand.org/pubs/reprints/RP1385/

There is another, emerging POD, however:  purchase on demand.  While print on demand (I will be careful about using the abbreviation here, as it can lead to confusion in this context) changes the economics of book production, purchase on demand changes the economics of book consumption.  Both forms of POD are likely to grow in the next few years and their development will increasingly be linked.

Consumers are used to purchasing things on demand, so what’s the fuss?  Someone walks into a bookstore, eyes a copy of The World Without Us or Sense and Sensibility, picks it up, and steps to the cash register, where it is purchased–on demand.  In this situation, the burden of maintaining the inventory lies with the bookseller, not the consumer.  The bookseller provides the necessary aggregation (the huge stock of titles in a bricks-and-mortar store), and the consumer plucks one copy out of that aggregation for purchase.

Not all books are sold one at a time, however; in not all instances is there a bookseller or an equivalent who is willing to bear the cost of carrying inventory.  In academic publishing, for example, one marketing practice is the standing-order plan.  For this kind of service, libraries fill out a profile (“Send me all books on American history, but do not include titles from the following list of publishers”), which is filed by a wholesaler.  The wholesaler then ships all books that fit the profile to the customer.  In this instance the cost of carrying the inventory is borne by the library, which receives hundreds, even thousands of titles, none of which have been individually examined by a librarian.

Purchase on demand arises when a subscription service such as a standing-order plan is already in place.  The aim of the purchaser is to disaggregate the subscription and pay only for specific titles.  This practice, which is just now beginning in the book industry, shifts the inventory risk from the library back to the wholesaler–and the wholesaler may in turn shift it back to the publisher.  The full economic implications of this are not known, but it is likely to result in fewer books being published, fewer copies of books being printed, and higher prices for the books that do get published.

Subscription bookselling is not new (think of the Book of the Month Club), but in a digital age, it is becoming more common.  One growing practice is the sale of digital aggregations of books to libraries, for which Oxford Scholarship Online is the model.  If OSO were to be moved to a purchase-on-demand program, the many titles in the collection would not be paid for until a library patron actually wanted to look at them.  Many publishers are now launching services very much like OSO’s, and Google is arranging to market even larger aggregations as an outcome of its recent legal settlement with publishers.  Will libraries want to acquire the entire collections, or will they determine to pick and choose, letting patron demand drive purchases?  It’s useful to ponder what purchase on demand will mean in the context of the recent Google-publisher settlement. 

For a library to move to purchase on demand, it will have to make a comprehensive catalogue available to its patrons, with instructions on making requests (“only two purchase requests per patron per week,” etc.).  The catalogue will serve as a front end to book acquisition (and it should be noted that many of the acquired books will be printed on demand).  There is no catalogue in existence today with sufficient information to support the various requirements of purchase on demand.  Amazon’s catalogue covers too much territory  for academic libraries and lacks summaries and other essential metadata; the catalogues of the wholesalers themselves are highly compressed; the catalogues of individual publishers are not aggregated in a single place.

While these examples are from institutional markets, it is likely that some of the same forces will apply as consumer subscription services are established.  We have already seen this in the music business, where consumers have gleefully been disaggregating the collections of songs stored on a single CD.  For producers of intellectual property everywhere, it is useful to bear in mind that digital technology can be applied to every point of the supply chain.  The use of bits over atoms does not put an end to the economic jockeying of producers, distributors, and customers.

Let’s say more and more real book readers find, “you know, reading on this iPhone, Android, smartphone I have is pretty good…” And the marketplace for reading on the phones grows quickly. Plenty of skeptics for that idea, sure. But not impossible. (Keep this in mind: three doublings make ebooks 8% of the market. Will that happen in 3 years? It certainly couldn’t take as long as five…)

Let’s further say that iPhone does not end up owning the world, and iPhone and Blackberry find themselves competing on everything — including “aps” and, of course, including books, with Nokia, Dell, Google Android, etc. And let’s say that (at least for a very long time) each device and screen and market channel creates enough need for some proprietary tweak that we add admin, tech, quality control, and a host of sales and marketing issues to be dealt with by the publishers and distributors. Seems like’s what’s happening.

And let’s say that multiple developers will create competing platforms to run on all those phones. We know about Stanza and Scrollmotion Iceberg for the the iPhone right now. Amazon bought Mobipocket specifically because it was multi-system compatible, which at that point meant it could play on both Microsoft dot lit and Palm PDAs. We already have a complicated distribution system with Ingram Digital and Content Reserve as the principal distributors to get publishers to online retailers and libraries, but not really putting you on Kindle or iPhone.

Just seems to me that ePub can’t solve all these problems automatically. I’m sure it will be a big help, but opportunities to complicate things are arising faster than standards can be created to keep up with them.

If sales of digital files become significant AND they are maximized only by managing the technology, deals, and marketing at a wide variety of major accounts, it is a good thing for publishers and for DADs (digital asset distributors). And, parallel to the physical marketplace, it will be interesting to see what tradeoffs develop between handling an account through a distributor and managing it directly. No doubt the technology pieces will prove to be best handled by an aggregator or consolidator, but the quality control and product marketing opportunities will be aspects publishers will want to control.

Why is this good for publishers? Because the key way publishers ADD VALUE is by managing a complex set of revenue opportunities. To the degree that almost all the sales take place in Barnes & Noble and Amazon, plus what you can get from Ingram and Baker & Taylor, it weakens the publisher’s core competitive and value proposition. If ebook sales take off in a highly fragmented way, which now seems to at least be a possibility, it will drive the standards and interopability and efficiency wonks absolutely crazy, but it will give a lot of publishers some very constructive work to do.

When Amazon started out, we knew little of all the things Amazon subsequently taught us, things like the ease of ecommerce, the technology of user authentication and online processing of credit cards, the value of superb customer service, and that unique characteristic of the Web, the ability to create a storefront that could claim to hold truly comprehensive inventory in a particular domain.  While not all organizations do these things as well as Amazon today, and none do them better, the fact is that Amazon has taught us well:  more and more of what Amazon does is now available to rivals.  It is no longer necessary to build your own shopping cart, and if you are stumped by the risks involved in taking an order by credit card, there are vendors lined up to take this problem off your hands.  The gap is closing, and for Amazon to stay ahead of the pack, it must continue to innovate at a breathtaking clip.

Unfortunately for Amazon, other Web services are coming up with comparable innovations.  Amazon built a community around its offerings, but the Amazon community is nothing compared to those found at MySpace, Digg, or Facebook.  And Amazon created what may be the first credible ebook device, the Kindle, but already the possibility of reading etexts on the iPod and iPhone is making the Kindle seem like an unlikely winner.  We can imagine a Dr. Frankenstein of ecommerce rummaging in the graveyard for body parts to cobble into the monster that will resemble nothing so much as Amazon:  A second-best shipping system, a second-best shopping cart, a second-best print-on-demand service–but in the end, a credible alternative to Amazon’s systems:  not good, but good enough.

Where Amazon continues to trump all pretenders is in the breadth of its inventory–The World’s Largest Bookstore was its original claim.  It would be very, very hard to replicate this inventory (or, rather, the online catalogue that represents that inventory, which may be warehoused at Amazon or at Amazon’s many vendors).  It may no longer be necessary to catalogue and support all titles, however, if a new online merchant could dominate a particular subject area.  Mike Shatzkin has argued persuasively that the infrastructure of online bookselling marks the end of general trade publishers, which will be replaced with “verticals” in particular fields, abetted by tapping into online communities built around particular topics.  In time the science fiction vertical or the ancient history vertical or any number of other subject-specific sites could incorporate ecommerce activity and pressure Amazon at the edge of empire, relying on the intensity of community involvement to strengthen their marketing proposition vis-a-vis the industry leader.  Amazon tries to be all things to all people, but a niche site must simply be everything to a self-defined group of people.  The intensity of focus becomes the merchandising weapon of choice.

It is astonishing to think of how little a new, topically-based ecommerce site would have to do for itself.  Inventory can be drawn from Ingram or Baker & Taylor; ecommerce software can now be purchased off the shelf; fulfillment (once a big headache for warehouses that were not set up to handle orders to individuals) now has several suppliers; metadata for catalogue entries supporting the ONIX standard can be sent from publishers to the new site; and so on.  Part of Amazon’s position at the head of the pack derived from its willingness to invent new infrastructure and build it.  Now the world of ecommerce is being disaggregated, and the vertically integrated Amazon is beginning to look like it was built for an earlier era.

These thoughts, and the controlling metaphor, were prompted by a recent experience in my local, beloved used-book store.  I wandered among the idiosyncratically organized stock, the stacks of books of all description, the book spines whose lettering had worn away:  paradise.  There on a shelf I spotted the two-volume Modern Library edition of Gibbon’s Decline and Fall of the Roman Empire.  I hesitated before picking up the books and carrying them to the cash register, but I had promised myself to read Gibbon before I died.  I joked with the cashier that she wouldn’t see me for a long time because I had a very long book to read first.  She said that I would have to read quickly, as the store would close in a month.

Among other causes, Amazon had helped to put that store out of business.  But the proprietor has already begun his next venture, in online bookselling.  He is not himself a threat to Amazon (some of what he will do will be with Amazon’s many services), but he is one of many people and companies gradually coming to terms with the behemoth and finding new ways to find a customer, turn a profit.  It is an army of thousands and they are starting new ventures, testing new value propositions.  It could be said that if any of them achieve anything of importance, Amazon will simply buy them.  But Amazon can’t buy everything:  unlike the imaginative space opened up by a book, the balance sheet of even an imperial corporation is not infinitely extensible.

Is Amazon’s weakness its growing arrogance?  Perhaps.  Speak to the vendors who are now struggling with Amazon’s new Vendor Central system and you will find countless volunteers ready to bring down the tyrant.  Or perhaps Amazon, seeing the success of the iPhone and Stanza ebook reader, is getting desperate, as was suggested by one individual (not cited by name here as the comment was made in a private mailgroup); and this desperation has resulted in Amazon’s new insistence that it will only sell ebooks in the Kindle format.  Amazon would have us believe that resistance is futile, but the growing number of publishers studying alternatives to the Kindle suggest otherwise.

Amazon’s decline will come about because it will not be able to monopolize ebook distribution with the Kindle; because new business models (mostly based on subscription sales of aggregated content to consumers, not unlike Safari Books and similar in form to NetFlix) will challenge Amazon’s operating philosophy; because social networks organized around special interests will help to solve the problem of bringing traffic to a new or series of new online stores; because so many of the pieces necessary for an ecommerce site are available at modest cost from multiple vendors; and because many people are motivated to storm the barricades, whether for profit or just for the hell of it.

Amazon will not go quietly or quickly.  It is a great company and no stranger to risk or innovation.  But we are not likely to see Amazon continue to grow and increase its dominance of publishing and bookselling.  Sometimes it’s just time to go.

It may depend on which point you wish to make, however. I happen to agree with the idea that the brands of trade publishers have little meaning to consumers, despite the handful of exceptions (such as Penguin, Dover, and branded reference works such as Frommer’s, the For Dummies series, and Merriam-Webster). And I am all for aggregations. But RH may be looking beyond this. This is because on the Web, aggregation can take place in real time, and what appears to be a would-be stand-alone destination site may really be a starting point for syndication, not to mention an important element of an intellectual property strategy.

To begin with the easy point: the RH Web site is a natural outcome of the proposed legal settlement between various publishers and Google. That settlement marks a significant change in the publishing landscape, from a time when the key split was between works under copyright and works in the public domain, to the settlement terms, where the split is between what is in print and what is out of print. By building an extensive POD site, RH is now asserting that more and more of its titles are in print, thus keeping them under RH’s direct control and away from Google’s agreed-upon right to exploit titles that are out of print. So score one for RH in terms of intellectual property: What was out of print is now in print, and the POD Web site is proof positive.

Once RH asserts its rights, it can then exploit them. One way of doing this is to create a Web site that is search-engine friendly, which will drive traffic to the RH site. But the traffic need not come to the RH home page; the links can be deep inside the site, on the granular level of individual titles (or keywords associated with individual titles). This is real-time aggregation: the Google search-engine results page is the new B&N, the new Amazon, an aggregation created dynamically every time somebody does a search. In the ecology of the Web, a publisher’s own site is simply a loose assembly of parts, each of which is indexable by Google–thus findable and potentially leading to purchases, whether on the RH site or at the site of any other designated storefront. Offline, few publishers’ brands mean much of anything; online, only one brand matters, and that is Google. All the rest of the Web is a basket of keywords, woven together by the act of search.

If all that matters is keywords and the individual products they support, why not build a Web site for each book? Not a bad idea, costs aside, but this raises the question of climbing high in search-engine rankings. Now, the algorithms of search engines can change at any time, but at this time a collection of pieces (books, book descriptions, articles, etc.) has a higher ranking on search engines than would an individual item. The individual book, that is, benefits from the combined search rank of the rest of the site. This is seen clearly with Wikipedia. Test it. Go to Google and search on an obscure item. You will find a link high in the rankings for Wikipedia. You may be the only person who has ever searched Wikipedia for that item, but still the link to Wikipedia is usually among the top four or five on Google. This is because search ranking is cumulative: your search for an obscure item is raised up by the billions of Wikipedia searches on such popular terms as “Obama,” “Britney Spears,” and “George Bush.”

We should not assume that RH does not know how search engines work. RH’s Web site will give a higher ranking to all its books simply by putting them in one place and playing to Google’s current search algorithms. The RH brand may have little meaning to consumers, but it will develop a huge significance for Google. It’s simply wrong to think that the RH Web site is built for people: it’s built for search engines, who then direct people to the ranked sites.

Another reason for a publisher to have its own site is simply to assert control of the information about its products. For all the merits of reader reviews, comments, and the like, few marketers of any product like to have others determine what is said about their products. The RH site gives RH an opportunity to create metadata (including abstracts, summaries, reviews, etc.) about each book, content that may then be syndicated across the Web even if no one ever reads it on RH’s own site. If a particular title is available from Amazon as well as RH, Amazon may choose to use the RH metadata to sell books at its own (that is, Amazon’s) site. This is true of any venue for books, which benefits from free access to the information RH has developed. In this scenario, the RH site is not a Web destination but a toolkit for other sites–not an aggregation in the conventional sense but a repository for others to draw on.

Having taken great pains to assert that the RH brand means little or nothing to consumers–but that having a RH-branded site is valuable regardless–it’s probably worth asking if RH may be undertaking a long-term effort to give meaning to its brand. It couldn’t do this in bricks and mortar; it couldn’t do this when it sold one book at a time. But online, many things change. RH may begin to market subscriptions to certain categories–The Mystery Subscription or The American Politics Subscription. In effect, RH may be taking the earliest steps toward a new kind of consumer publishing, one in which publishers’ brands will matter. Offline, this was impossible; online, anything is possible.

Fundamentally, it’s time to stop thinking of the Web as a universe parallel to bricks and mortar. Offline, there are stores; online, there are evolving dynamic relationships. Offline, aggregation is critical; online, aggregation takes place in real time and sweeps up virtual objects wherever an IP address can be found. Offline, B2B brands matter little to consumers; online, such brands can cleverly insinuate themselves into the value chain. We should not assume that the people at RH are stupid, despite the fact that they are, ugh, book publishers.

Joe Esposito

_____

MITE to Study University Press Marketing
The Monterey Institute for Technology and Education is currently studying marketing practices and strategies for university presses. This study has been funded by a generous grant from the Andrew W. Mellon foundation. The principal investigator is Joseph J. Esposito (miteupressproject@gmail.com). Participation by university press personnel and other interested parties (librarians, book wholesalers, online bookstores, etc.) is invited.

Background

It is widely acknowledged that university presses have, as a publishing segment, been struggling. Many presses have been forced to scale back their operations. Most presses have not had the means to enter new areas of activity (e.g., list expansion, digital publishing) to the extent that they would like. The question this study is attempting to explore is, Is there a way to assist the presses to sell more books, which would in turn improve their financial picture and thus help to fund other projects?

Scope

While the questions under examination potentially apply broadly to academic publishers in general, this project, at least in its initial phase, will focus exclusively on university presses with American operations.

The project is narrowly focused on press books; journals, data sets, and other forms of publication are not part of the study, except insofar as the other forms of publishing are explicitly linked to the sale of books (e.g., an author’s Web site that provides information that may lead an individual or library to purchase a copy of a press book). While the project is agnostic as to medium (an ebook can be as valuable or more than a printed text, provided that it has gone through the same editorial process), the primary focus is on print books (including print on demand) for the simple reason that this is the primary focus of most university presses. The investigation is not intended to lead to editorial determinations–that is, the aim of selling more press books will not lead to recommendations for the press to publish different kinds of books because they are believed to be “more saleable.” The key question is, Can a press sell more copies of books that it already publishes?

All presses sell books in bricks-and-mortar channels and through various online venues (e.g., Amazon). The study will be weighted toward the use of online sales channels to sell printed books, but will include a review of traditional “physical” sales methods and the marketing of electronic formats.

Principal Questions

The study will focus on three primary questions:

• What are the current practices for the presses in the marketing of books? How are these efforts divided between bricks-and-mortar and online bookselling?
• If the presses were to compile a “wish list” for marketing, especially for online marketing, what would be on it?
• What do the presses think about the feasibility and effectiveness of creating a shared online resource to assist in the marketing of books? Such a resource would be, at a minimum, a comprehensive catalogue of press titles, customizable by the individual presses in various ways, including the assertion of the individual presses’ brands, and optimized for effective Web marketing (e.g., search-engine optimization).

Methodology

The study will primarily be conducted as a series of telephone interviews with senior press personnel, supplemented by discussions with other interested parties.

Contact Information

All communications concerning this project should be directed to Joseph Esposito at miteupressproject@gmail.com.

     Let’s take a look at audiobooks. For the book publishing industry, audiobooks are one of the few areas of genuine growth. Let me qualify my terms. By “book publishing” I mean consumer or trade books in the developed world and the U.S. in particular. By “growth” I mean industry growth, not the success of a particular title or format or even of any individual publisher. The book industry thus defined is mature, but the audiobooks segment is only in its adolescence. Audiobooks are growing because they reach a new market:  people who want to read books but can’t because for any of several reasons they cannot use their eyes. Among these reasons: visual impairment; a desire to “read” while driving a car; a desire to “read” while working out in the gym, walking the dog, or jogging–any number of reasons when the eye must give way to the ear.

     It is thus unfortunate that digital technology may serve to diminish sales of audiobooks in some channels, though I think that digital audio is likely to help build the market overall (think of audiobooks on wireless phones). In the library sales channel, however, digital audio may cannibalize some sales. This is because the combination of audiobooks on digital compact disks and the iPod will drive up usage of audiobooks in libraries, putting downward pressure on demand for purchases in retail outlets (including online bookstores).

     Some background. The audiobook industry developed very differently in the trade and institutional market. Trade sales have largely been of abridged titles published by the very same publishers that publish the corresponding print books; library sales are more likely to be for unabridged titles, and in libraries a new group of publishers, led by Recorded Books, Inc., has sprung up. I would add, though I have no hard evidence of this, that trade sales seem slightly tilted toward younger (though not youthful) listeners, and those listeners include a higher proportion of men than institutional listeners (more likely older and female). All this is changing now, however, as the characteristics of the two channels are converging. The convergence is significant in that the two channels, which were formerly complementary, are increasingly rivalrous.

     A peculiarity of audiobooks is that the analogue format (books on tape) is still very strong, though analogue media has virtually disappeared for music (partly offset by resurgent sales of LPs among passionate music buffs). Tape works well for audiobooks because tape creates a good bookmark. Try it and you will see. I listen to audiobooks on tape, on CD, and on an iPod and have found that tape is still the most convenient (CDs are at the bottom).

     So step into your time machine and enter a public library 4-5 years ago, where you seek the audiobook section. There you have a selection of unabridged books on tape, with a trifling number of CDs. You decide to check out a title, take it home, and begin to listen. If you listen an hour or two everyday, you might finish a book in two weeks. I suspect most listeners take longer. When they are done, they return the tape to the library, check out another, and repeat the process.

     Of course, the library may not have a desired tape on the shelf. With every instance of circulation taking two weeks or more, from time to time the patron cannot find what he or she wants and turns instead to a local bookstore or perhaps to Amazon. More recently some patrons turned to Audible for downloads. The library, in other words, is not a comprehensive source of supply in part because the time it takes to listen to an audiobook restricts the utility for other patrons of the library’s inventory.

     With digital CDs, abetted by an iPod, the library’s inventory is likely to experience higher utilization. Consider this example. A patron goes to the library and checks out one, two, or more audiobooks on CD. Arriving home, the patron rips the CDs to a computer and synchs with an iPod. The next day the CDs are returned to the library, where other patrons in due course check them out–and the cycle repeats. The inventory utilization drops from two weeks or more to as little as less than one day. The need to shop at the local bookstore or online has been diminished a bit. Thus libraries carrying digital media potentially compete with other sales channels and cannibalize some sales.

     If this became widespread, it could not stand. In time publishers’ compensation for audiobooks in libraries will likely parallel that for videos at Blockbuster and Netflix, with payment to publishers being linked to the frequency of rentals. (Seth Gershel made this point to me concerning audiobooks several years ago.) Or other marketing schemes can be concocted, probably including switching the firm sale of a tape or CD to a library to a subscription-based model–anything, that is, that restrains sales cannibalization.

     Another implication of the change to digital CDs in libraries is that more trade publishers will want to control library sales directly, the better to manage the cannibalization issue. There are signs that this is already happening. Trade publishers will also be more aggressive about acquiring the rights to unabridged audio, rights that at this time are sometimes retained by literary agents, who then forge a license directly with a library audio publisher. The growing competition between trade and library sales for audiobooks will thus spawn a consolidation of rights ownership under a single brand manager–that is, the originating publisher of the book.

     This is not to say that publishers should not publish audiobooks; it is not to say that audio should not be in digital form; and it certainly does not mean that publishers should forsake libraries. What it does mean is that the digital edge cuts both ways, and that publishers have to think strategically, with an eye toward the longer-term implications of new tactics. The time to introduce Blockbuster-like pricing is not after the horse has been stolen from the barn but before the barn gets built.

     The moral of this tale is that profitable strategy is neither digital nor analogue; it is not about whether information should be free or paid; it is not about what is cool; and in its winning form by definition it cannot be what everyone else is doing. Profitable strategy is about identifying new markets and creating new value. Digital audiobooks can lead to a winning strategy, but without a thoughtful strategy, digital media giveth and digital media taketh away.

     The Kindle is a watershed event in electronic publishing.  It is not the first ebook device, and it may not ultimately be the one that will prevail (it could of course be one of several). But its appearance marks the point where ebooks move from theory to actuality.  Whether the leading device is the Kindle, the Sony electronic book, a cell phone platform, or some variant on an iPod, ebooks are here to stay.  In discussing the Kindle, then, I am thinking about ebooks in general.

     Not a few people have been waiting for “the ebook moment” for years.  The arguments in favor of ebooks are many and include: efficiency in the supply chain (because there are no atoms to move around); the ability to store multiple titles on one device (a boon to travelers); and the added value of links, bookmarks, and adjustable text size.  We should add to this a very important aspect of ebooks: the coolness factor.  I read a post recently by a woman who extolled the virtues of the Kindle, which she took to bed with her.  She could have taken a print book to bed, of course–she could have dragged into bed the entire Oxford English Dictionary (think of all the dirty words!)–but that would not have been as cool.  We love some gadgets precisely because they are gadgets.

     One of the unintended consequences of the Kindle and its brethren (desirable for readers, more woe for publishers) is that it will reduce the number of books that are actually sold. This will happen not because of piracy (with the proprietary Kindle, piracy may be a small problem, though ebooks built with open standards may pose larger problems for publishers), but because the architecture and business model for the Kindle support a “buy only when you need it” frame of mind, aka “just in time” inventory management.  In the hardcopy world, where many books (no one knows how many) are bought “just in case,” the number of books purchased exceeds the number of books read.  The Kindle will remove the excess, adding to the legions of misfortunes of publishers and authors.

     Let’s back up to the bricks-and-mortar world to see why this will be so.  When John Doe steps into a bookstore, he browses a bit.  He may buy a specific title that brought him to the store in the first place, but he also may buy something that happened to grab his attention. He buys that second book with the intention of reading it after book #1 is completed or perhaps for some future time–that upcoming vacation in Aruba–where, blessed with time, he will immerse himself in a book.  Book #1 is just in time, #2 is just in case.

     Prior to departing on that trip, however, something may have come up.  A friend recommended another book (worse: a friend wrote a book, signaling a requirement to read it), or something broke in the news that demanded attention in the form of a book, or Doe’s mood has changed, or any of dozens of other reasons.  The result: Doe now has in his hands book #3.  This is also just-in-case.  If Doe is compulsive, the number of just-in-case books grows and grows; if Doe’s house is like mine, the number of not-yet-read books greatly exceeds one’s life expectancy.

     With ebooks you don’t purchase a title to have it waiting for you when you get time to read it.  You purchase at the very moment you are going to read it.  There is no reason to purchase it sooner, because it is always available: there, in the Cloud, living 24/7 on Amazon’s servers.  What the Kindle does is introduce digital accountability to book publishing and purchasing.  It saves consumers money, but it does so at the expense of publishers, whose income statements for decades have been propped up with the sale of things that ultimately do not get used.

     Digital accountability has already reached into many corners of the publishing industry; in this respect, the nefarious implications (from a publisher’s point of view) of ebooks are nothing new.  Retailers have computerized inventory systems that, when they are working well and are properly managed, help to cull slow-selling stock.  Librarians review Web statistics for online journals, canceling those that are not used.  And publishers have always reviewed their own sales records in order to help determine what new properties to invest in. What’s different about the digital accountability brought about by ebooks is that it does not simply result in one title being chosen over another; it results in the wholesale reduction of the total number of books sold.  It is an industry-killer–or, if that language overstates the case, an industry-diminisher.

     What’s at issue here is that publishers who look to ebooks for grand sales opportunities are in fact taking steps that reduce the overall market.  There are exceptions to this, however.  College textbooks will likely sell more copies in electronic form, since many students currently fail to purchase expensive hardcopies at all.  And in the developing world, it is possible that digital texts may find markets that print never could (assuming the digital infrastructure can be put in place).  But for consumer books in the developed world, ebooks shrink the market.

     Not that publishers have any choice.  If consumers want their books in digital form, a publisher would be foolish not to satisfy the demand. After all, if HarperCollins decided to be print-only, it would lose sales to Simon & Schuster, if S&S decided to be both print and digital.  This is a fight for market share, however, not a strategy for growth.  Publishers who have hoped that ebooks could be a vehicle for growth will have to look elsewhere.