Digital Change in Publishing: Lessons Learned in the US

1. Digital Change in Publishing:Lessons Learned in the US Mike Shatzkin To the IfBookThen Conference Milan, Italy 4 February 2011

2. A brief history of ebooks in the US • Why America was first: 300 million people, one language, one set of commercial laws • It started complicated in the early 1990s: Voyager Expanded Book and CD-Roms • Simple straight text in late 90s: Rocket Book, Softbook, then PDAs (Palm and MS) plus PDFs on PCs • Sony Reader introduced in 2005 • Into 2007, Palm “dominates” device reading in a miniscule market

3. But with the arrival of Kindle, everything changed • Kindle introduced November 2007: almost instant success • Why? Title selection; direct downloads; good reading experience; Amazon audience • And pricing • But that caused problems for publishers

4. Why publishers wanted to restrain Amazon’s growth in 2009 • Two segments of growth: online print sales and device-read ebook sales • Amazon market share north of 70%, perhaps 80% on both • Proven willingness to twist arms for margin • Online sales hegemony probably unassailable • Kindle alone was locking up heavy readers • Amazon’s very aggressive pricing was scary

5. Agency was their answer; and maybe it worked • Key to agency: price set by publisher, not retailer • Five of six top US publishers do it; so most top titles are price-controlled • Amazon device ebook share drops 30-40% • Other factors: Nook, iPad, Google

6. Experience with ebooks so far:some lessons learned • Price matters a lot, but high priced branded books can sell (even at $20!) • Early device adopters tend to be heavy readers (practical and financial reasons) • Effective interoperability was important, but provided within “closed” systems • Ebook sales, at least at first, are frontlist-driven • Impact on brick-and-mortar: significant

7. And now America exports an ebook infrastructure • Three big companies might dominate the global ebook market, all American: Amazon, Apple, Google • Wild cards (at the moment): Kobo, Sony • And longer shots: Copia, Blio, consumer electronics players and mobile phone players • And a US player which should go global: B&N

8. These players come with capabilities and audiences • All sourcing titles in all languages • All have multi-device platforms • Each has, or is developing, a separate content-focused app market; separate opportunities, separate platform challenges (Apple, Android in flavors, and Kindle – so far) • Many have ambitions to control some content exclusively

9. How can local ebook resellers compete? • Carry titles in all languages • Deliver multi-device functionality • Keep up with features (lending, notes, dictionaries) • Deliver impeccable customer service • Provide local propositions for libraries and institutions • Deliver local in-store support and promotion (the B&N example)

10. And retailers need to play to native strengths • Work with local authors, IP owners, and brands to capture and provide unique content • Maximize knowledge of local content silos, pricing practices, and rights • Market to your own language-based customers globally!

11. What publishers should be thinking about • Don’t waste resources defending print; you can’t • Rethink your capabilities to gain advantage in digital: products and marketing • Don’t be fooled by a currently trivial ebook market, pricing protection, or VAT issues: US tells you change comes faster than you think • Be conscious of verticals; think about audiences you serve, not just IP you own • “Start with XML”: workflows must deliver print andepub

12. We’re all global publishers now • Know Amazon, Apple, and Google like an American • Rethink exploiting your own IP: should you do an English edition? Or a dual-language ebook? • Rethink rights acquisition; should you acquire by territory instead of by language? • Recognize English-language books as a competitor at home; use price, release dates as weapons when you can • Accept this reality: bookstores will decline