Look closely and you will notice that this blog claims to be relevant to publishing. Look closer and you’ll see an interest in digital publishing; the result of a summer spent writing my MSc dissertation on the subject.
For posterity and comments I have linked the principle components of that dissertation in the rest of this post. I have even slapped in the abstract first so you can see if you want to go on and read the rest!
Abstract
This dissertation examines the landscape for UK trade publishers in the digital market. By examining the potential avenues currently available for publishers, this dissertation clarifies how publishers are acting to capitalise on the opportunities available, and minimise the considerable risks that internet publishing can offer. The subject area studied covers the opportunities and threats facing trade publishers, particularly UK ones, and how these are being interpreted by a selection of publishers with distinct criteria. Two major research strategies are used: (1) Qualitative analysis of literature relevant to web 2.0 businesses, especially trade publishers and (2) three case studies. Literature and data has been examined from archives, journals, newspapers, the most high profile books discussing the issues, and interviews with the digital publishing directors involved. The CEO of the eBook download application market leader is also interviewed and this is compared to the approaches of the three publishers examined and academic publishing. The three publishers are ambitious high profile businesses in markedly different situations and this is reflected in their prioritisation of the threats and possibilities facing them. The wider application and impact of their approaches are also examined by examining a small Scottish publisher that is also beginning a digitisation process and has kept itself abreast of how those larger publishers have addressed the same market. This dissertation challenges the publishing industry’s current pricing policy and identifies the most critical elements of digital publishing on the internet that publishers must address. These include pricing, the fragmentation of the internet consumer base’s interests, the business models and threats from Amazon and self-publishing and the conflicting issues of obscurity and piracy. Typically they have been recognised but for a variety of reasons they are not being acted upon by an industry wary of falling foul of market forces as the music industry has done in the past.
This dissertation is submitted in part fulfilment of the regulations for the
MSc in Publishing
Edinburgh Napier University
2009
A Tale of Three Houses: The Dawn of Digitisation in the UK Trade Publishing Sector
Jonathan
Contents
Introduction x
Methodology x
Literature Review x
Macmillan x
Canongate x
Faber & Faber x
Conclusions x
Bibliography x
Appendix (Interviews)
Appendix 1 (Neelan Choksi – Lexcycle) x
Appendix 2 (Frances Pinter – Bloomsbury Academic) x
Appendix 3 (Sara Lloyd – Macmillan) x
Appendix 4 (Dan Franklin – Canongate) x
Appendix 5 (Henry Volans – Faber & Faber) x
Appendix 6 (Faber & Faber Slides from London Book Fair 2009) x
Appendix 7 (Jonny Gallant – Saint Andrew Press) x
Introduction
You are about to begin reading Italo Calvino’s new novel, If on a winter’s night a traveler. Relax. Concentrate. Dispel every other thought. Let the world around you fade. Best to close the door; the TV is always on in the next room. Tell the others right away, “No, I don’t want to watch TV!” Raise your voice–they won’t hear you otherwise–”I’m reading! I don’t want to be disturbed!” Maybe they haven’t heard you, with all that racket; speak louder, yell; “I’m beginning to read Italo Calvino’s new novel!” Or if you prefer, don’t say anything; just hope they’ll leave you alone.
(From the opening of If on a winter’s night a traveller by Italo Calvino)
Italo Calvino’s If on a winter’s night a traveler begins with a description of his reader organising himself to read a book. He closes himself into his bedroom having shouted at his family to turn the TV down; he then judges whether to read the book seated, and he adjusts the light before he gets too absorbed in the book to do so later on. The next part of the extract deals with what book to select from the bookshop and the list of possible categories to choose from: books he should have read, books he would like to have read, books he never finished…
Calvino identifies two key issues for readers today using electronic devices: the most comfortable way of reading (position, location, strain on the eyes, how etc) and the opportunity to read (whether they want to read, whether they are interested in books, competing interests with one’s reading time etc). Both are problems that a publisher of digital content has to address and must tackle successfully if they are to devise a workable business model.
Trade reading can’t compel people to buy it in the way that vital text books in academic publishing can; and so the digitisation of it is problematic. Trade publishers cannot afford to ignore digitisation; so they must therefore thoroughly evaluate the new market arena and prepare for all aspects, dangerous and profitable, therein. Some of the most problematic aspects are outlined above. Ultimately trade publishers must produce content that people will pay money for. On the internet, for all the potential customers it might possibly offer, people may simply not be interested. There is a plethora of interesting free content on the internet competing for potential readers’ attention while they have downtime and access to their electronic devices.
This research project will examine how a selection of British trade publishers are approaching these challenges of digitisation. It begins with an examination of a cross section of the reading available in order to understand three crucial points:
1) What environment are publishers entering?
2) What possibilities are available to them as producers of content?
3) How can they make money from their digital content?
This thesis explores the market that trade publishers as a whole are entering and establishes what they face. In order to achieve this the following literature review examines the history of the internet. Studying the history of a discipline, as the mathematician Henri Poincaré said, allows the student to understand the condition of the science. In this case Lawrence Lessig in The History of Ideas provides that history and the features that are an intrinsic part of its design. How the internet has evolved into the current web 2.0 environment is then explained by Tim O’Reilly and the feature of web 2.0 that has had arguably the biggest impact, the so called “Long Tail”. This is thoroughly explored by Chris Anderson in The Long Tail: Why the Future of Business is Selling Less of More, and the pertinent features of it are examined in the context of UK trade publishing, most notably the threats from Amazon and self-publishing. Writer and blogger Cory Doctorow is also used, especially his online book Content, and his experiences of using the internet to make money from releasing files of his books for free are examined. Between these authors and those who question them, the opportunities available to publishers are scrutinised. The commercial viability of using the internet to sell content is the focus of this section.
Discussion of this subject in the literature review is then followed by studies of three UK trade publishers. This provides live examples of how viable commercial models can be built and offers more detailed insight. This study necessarily involves exploring what channels are available to the publishers when bringing their products to market and how those channels can be capitalised on. An important part of this is understanding publishers’ attitudes to free content and Digital Rights Management (DRM). Examining these aspects, and effectively assessing how UK trade publishers can build viable digital models, must also include discussing the challenges that these publishers face.
Each of the three publishers questioned in this study offers a different perspective on how British trade publishing operates. Each is at an early stage of building a model for a market place that is not yet fully mature. Therefore each one deals in a large part with issues that face the whole sector as well as providing insight into three distinct approaches within that sector. They are the approaches of Canongate, Faber & Faber and Macmillan UK trade division. Their examples show the solutions of respectively: an ambitious small-medium publisher (that is recently formed); an independent medium sized well branded publisher that has been identified by its peers as a trendsetter, and a medium sized publisher that is itself part of a large multinational.
Also interviewed in the course of this research project is the CEO of Lexcycle, Neelan Choksi (see appendix 1). Lexcycle runs the Stanza application that allows users of iPhones to access a range of eBooks. The application is free and so are 50, 000 of the 110,000 eBooks available via Stanza. Stanza makes its money on the other 60,000. Retailing through Fictionwise and Books on Board, Stanza/Lexcycle earns a referral fee for every book the purchasers use. The retailer then pays the publisher and the publisher pays the author. Though principally directed at US users at the moment Stanza is downloaded in over 60 countries and its two million users have over the one year of trading downloaded twelve million books. As a potential channel to market for trade publishers the possibilities are enormous. This is not however as obvious a choice as it may seem. It is still in a vulnerable position as the model is closely tied to Apple, so if Apple were to launch its own application (and presumably device) it would in Choksi’s words “be a killer”. This vulnerability and the immaturity of the device market compels publishers to move very guardedly when planning a strategic move that would involve this kind of technology. But this is not the only reason that publishers are being extremely cautious.
The last person interviewed was Frances Pinter the publishing director of Bloomsbury academic. The model devised by Pinter is based on printing off short runs of books stored electronically. Digital printing and Print on Demand technology (POD) mean that the days of prohibitive economies of scale on short print runs are gone. Both Amazon (Hoy 2009) and academic publishers use the technology and the availability of POD printers offers another option to trade publishers.
In order to demonstrate the importance of the three publishers reviewed this thesis compares and contrasts them to the small Scottish semi-specialist Saint Andrew Press. It is the publisher for the Church of Scotland originally set up to publish the interpretive works of the Rev. William Barclay. Now the publisher boasts an extensive list from philosophical and religious publications and guide books on Scottish Churches through to successful poetry editions, histories and biographies, such as the very successful My Father: Reith of the BBC. Their list is reasonably extensive and covers a specialist area as well as books of more general appeal. With a staff of four the organisation cannot dedicate anyone to spend even 50% of their time working on digitisation, but because the publisher is ambitious and feels it has work which could perform well, it is keen to start a digital operation. Their most pressing argument is that if they do not establish a presence in the digital market place then their natural niche on the internet could well be taken by a specialist list or imprint from the likes of Bloomsbury. Saint Andrew Press’s solution has been to scrutinise a range of digital warehouses and then select one on the basis of which can distribute widely and offer flexible, tailored packages for a few selected titles; and more importantly give a service that SAP can easily learn from. Their approach has been directly influenced by the lead of the larger publishing houses. This project examines these larger houses’ resources and the way in which they have responded to the market and used these resources. By comparing and contrasting these approaches with that of a much smaller organisation we can gain further perspective on the digital plans of Macmillan, Canongate and Faber & Faber as well as their impact on UK trade publishing.
Using just these examples of British trade publishers automatically limits the extent of this thesis. However it also provides a clearer study and not least because Canongate cites the Faber as an influence and standard bearer to other houses. Macmillan helps with the overall comparison. Comparing all three to the example of SAP offers an industry context to replace some of the shade that is necessarily lost by only using three principle examples.
Methodology
In order to research this dissertation three main publishers have been examined. The method for examining each one was simply a telephone interview. In each instance the publisher was selected (as per the criteria given in the introduction) then a series of questions were decided upon that would reveal the most about the publishers’ priorities, intentions and the dynamics of their models. These varied slightly from publisher to publisher and are given in the appendix.
Each of the publishers’ selected digital directors was telephoned and emailed in advance to arrange a time to discuss each set of questions. They were emailed the questions in advance and each appointment was met.
The people interviewed were:
Sara Lloyd (Macmillan Trade division): see appendix three
Dan Franklin (Canongate): see appendix four
Henry Volans (Faber & Faber): see appendix five
All interviews lasted between thirty to forty five minutes.
In some cases follow up questions were sent and replied to by emails for clarification.
In order to cross reference the information gleaned from these interviews, statistical sources from the internet were also consulted. Referring to this data allowed the answers of the three digital directors to be put into perspective.
In order to find out certain aspects of Lexcycle, whose Stanza Application for the iPhone is being closely scrutinised by some trade publishers, another set of questions were emailed. Because the CEO Neelan Choksi is American, and at the time of research was in America the only way that he could easily reply was by email, his answers were given in this format. The questions and answers between the writer and Neelan Choksi are also in the appendix.
As an insight into academic publishing Frances Pinter of Bloomsbury Academic was also interviewed. This was carried out in the usual way and the notes of this interview are found in appendix two.
In the conclusion the example of Saint Andrew Press is used. All information on this example was gathered whilst on a publishing internship there (confirmation of this is in appendix seven).
Telephone interviews, because they are live provided an excellent chance to closely examine each publisher. The most detailed insight gathered however was gathered from Saint Andrew Press through a summer of internship work.
Literature Review
As publishers prepare flexible business models that will allow them to adapt to the ever evolving market, there is a lot of attention being paid to how the internet, which drives so much of the change, has evolved thus far and how it now presents opportunities for trade publishers. Early internet sales, how and why Napster evolved and how free content has proliferated – and how it can be presented to the customer – have all been under scrutiny to some degree. Publishers must fully understand the properties of the internet and its inherent opportunities and dangers. In turn they can understand how to make the most of it; either as a provider of content that uses the internet to boost sales or as a provider that depends on the internet.
It is clear that major change is due before eBook sales are a significant asset to trade publishing. What changes exactly is not yet clear but the possibilities of wide and easy distribution will be crucial to future internet business. The internet environment itself therefore requires careful and close analysis. This is provided by many authors, but a number stand out and are examined here: Lawrence Lessig for his evaluation of how the internet has evolved and the importance of free content (Lessig 2001); Tim O’Reilly who has consolidated important definitions of what constitutes web 2.0 (O’Reilly 2005); Chris Anderson who looks at one of the most important features of web 2.0 – The Long Tail model (Anderson 2006) –, and Cory Doctorow who as a writer, and distributor of both free and commercial content, offers valuable insight on internet publishing (Doctorow 2006). Between them these writers offer an evaluation of what kind of market the internet offers for books and eBooks, how the internet enables the market, how it has evolved, where it may yet head, what features have become important and how the content industries can make money from features of the internet.
There are other writers who are not discussed in the pages of this research but who should be read for a wider view of possible futures for printed material and how the internet can affect daily life and business. Jeff Gomez in Print is Dead: Books in our Digital Age sees a future where everything is read on a screen. Envisioning “Generation Download” Gomez anticipates the passing of the printed book because its present adherents are drawn to it out of habit and sentimentality. He sees screen based material as inherently more appealing for being more malleable. Jeff Bezos, CEO of Amazon agrees and compares books to horses nowadays (Mossberg 2008); unnecessary but still kept in existence for limited use. This view is criticised by Umberto Eco in The Future of the Book. Eco offers a valuable historicist’s critique of the theory that eBooks will kill print books; he believes eBooks will change rather than destroy the market. He points out that writing for example did not mean the end of people having to use their memories, as feared at the time, and that fears such as this inevitably occur at the dawn of a new technology. Another broad commentary is provided by Don Tapscott and Anthony Williams in Wikinomics: How Mass Collaboration Changes Everything it essentially identifies the drivers of web 2.0 as “Wikinomics” where collaboration (“wiki”) meets economics (“-nomics”). Tapscott and Williams discuss how these principles extend to a broader culture in as broad an environment as possible. Wikinomics is based around openness and the sharing of information, and the authors cite the open licensing of Linux that has seen its sophistication increase exponentially. This is as a result of outsiders adapting it for their own needs, and heralds a less proprietary approach generally to, for example, intellectual property and bandwidth. The writers see the information economy as the driver and their discussion relates to internet business as a whole. Meanwhile Matteo Pasquinelli laments the commercialisation of the internet in Immaterial Civil War: Prototypes of Conflict within Cognitive Capitalism and explores how disseminating content affects its value (both cognitive and economic). Each of these writers offers valuable context to the study of how the internet affects collaboration, business and content. None of them however provides sufficient discussion that can be directly applied to understanding how the internet affects trade publishing. For this reason they are not discussed below.
For trade publishers Lawrence Lessig provides a revealing history of the internet and its effect in The Future of Ideas – though, writing in 2001, his history finishes right at the cusp of web 2.0’s emergence (without expressly identifying it). The Future of Ideas champions the cause of GPL type licenses and rights; it argues that copyrighted intellectual property is more valuable (and more lucrative) if aspects of each work, or related aspects, are free. Having “commons” raises the profile, increases the audience, readership or user base and allows greater collaborative input to enhance quality and innovation. This results in a higher overall industry value that every viable enterprise can benefit from. He also asserts that the existence of commons – and therefore the creativity that commons foster – is under threat and eroding. This is not an uncommon view point and, in a lecture at Edinburgh Napier University in late 2008, John Calder, the renowned publisher of Gangrene, also expressed concern that censorship would increase across the internet.
Lessig is certainly very worried about the threat to choice but his first claim that free content will add value to the internet and the industries that use it is the more popular. Indeed the publishing industry is treading carefully as a result of this school of thought. However the degree to which packages of content can be made “free” is difficult to decide upon. Lessig of course cannot predict where the ideal balance can be struck and admits this – though he is generally pessimistic about the future of intellectual property on the internet as its use becomes increasingly tightly regulated and policed. He also struggles to some degree with the concept of “free”. He continually emphasises the importance of commons on the internet as serving the function which commons such as public roads offer the privately owned, but otherwise isolated, land around them. This is an interesting point for publishers. He points out on page thirteen that the roads on which you drive are paid for independently of their use. But he doesn’t go any further into this and conflates this with access to history where the researcher isn’t paid (he does not seem to be talking about a history book but common knowledge) and control of government (as in free speech and the right to vote). These resources, he claims are different to those like, say, chewing gum which is paid for at the counter. He puts it thus:
“Access to chewing gum may rightly be controlled all the way down; but access to roads, and history, and control of our government must always, and sensibly, remain ‘free’”. (Lessig; 2001;p.14)
Whilst he presumably means that some totally free commons would be a tremendous aid to the digital economy he still stumbles over his logic. By grouping these “resources” together he misses the point that the majority of the people using the road do in fact pay for it through their taxes (which in the US are levied at a State level); they just don’t pay for it at point of use. The fact that not every user pays is mitigated by the fact that a critical mass still do. This does open the question to suppliers of commodities (such as publishers) of whether their business can persuade people to pay for their product even if not at point of use. Where consumers, like the road users, can pay a flat fee (like road tax) for unlimited access at set periods. In other words: subscription. From the point of view of a publisher one of the most valuable contributions from Lessig in this book is his unwitting implication that a subscription model could be used. Trade publishing has so far been highly reticent to look at this possibility, and the logical continuation of Lessig’s point is that a subscription model may well be an effective approach. Regardless of what conclusions publishers can draw from Lessig, his basic assertion is that some facilities which do not need to be paid for (presumably at all), would do no harm in stimulating creativity and thereby growing the market whilst developing diverse product channels. Encouraging a plethora of home-based artists with their own computers and internet access though is not good news for everybody.
As far as publishers are concerned, Lessig’s argument seems to hail the advent of widespread and successful self-publishing by authors. To established publishing houses this may seem discouraging. But Lessig’s analogy of roads and inadvertent highlighting of subscription shows them a possible model that would take advantage of what established publishers can offer. It would be like the state building roads and receiving road tax as well as more VAT receipts from higher value businesses that benefit from the roads. There is a parallel for a business with a range of products that are each easy to find (interest having been attracted by free material), pay for and download. This assumes that consumers are interested by the service available – such as the chance to download sections of a book to their laptop or iPhone when they start a long train journey, or download an audio book. If interested by the content or the first part in a series they may well then pay a full subscription to make future downloads at will over a certain time frame (Stanza’s CEO identifies subscription as a very viable potential model for publishers). One of the key aspects here is selling packages of information – the other is the Pareto scale that many of the receipts on the sales graph would follow and this is taken up later by Chris Anderson in The Long Tail: Why the Future of Business is Selling Less of More. The Long Tail is the first quintessential feature of web 2.0. It works because small sites and narrow areas of interest make up the lion’s share of the internet’s possible applications. By leveraging the customer self service and algorithmic data management to reach to the entire web, businesses with this diverse but shallow pool of stock are able to achieve sufficient sales. The term “Long Tail” derives from the shape of the graph that uses a Pareto scale which shows the 80% of the internet which traditional business models don’t target.
Publishers will notice though the clear message from Lessig to offer free material in order to stimulate the wider list, and the industry at large. This he envisions would enhance the return on what protected intellectual property there is for publishers despite the increase in self publishing that it would allow. As Lessig says the internet is expanding the more it is used (Lessig; 2001; p.58). If a publisher only owns 2% of the content in the industry then the returns will be better if the industry at large is expanded, rather than the publisher’s share of the copyright material: two per cent of x (the value of the market) when x is multiplied by 3 is more valuable than five per cent of x as it was before (2% of x by 3 > 5% of x). As the message is dedicated on a broad basis to all industries using the internet, and especially those dealing in intellectual property, there are no further suggestions on this path that might help a publisher with online content. But that is not the point of the book and his unwitting suggestion that subscription could be an effective model is a point that trade publishers would do well to examine.
While Lessig does examine some business structures (like MP3.com – see below) he generally avoids committing to certain conclusions that would offer a more compelling case if more rigorously treated. He inevitably refers to Napster but mentions only in passing that its 57 million strong user base actually enhanced record sales (Lessig; 2001; p.214). Even though more detailed analysis would have been too involved for the book’s scope and balance this avoids the fact that this compelling point needs a more thorough treatment. An example is later provided of a viable business model in MP3.com but, without a firmer appraisal of the benefits of peer-to-peer networks, his conclusions can only go to the point of claiming that the larger corporations which engineered the demise of Napster have been unnecessarily greedy – and this greed is central to his fears for the future of online creativity (Lessig; 2001; p.214).
Lessig’s assertion that creativity is threatened by this trend is difficult to substantiate in retrospect as self publishing has expanded with the help of sites such as lulu.com (this is examined later). His assertion is also difficult to maintain when the shape of the web 2.0 economy is considered – though Lessig, writing in 2001, does not actively identify web 2.0 and in fairness could not be expected to. To the student of the digital economy this book offers most as an upholder of the integral value of offering free content on the internet to stimulate creative production and as a beacon to the danger impinging on that creativity.
However Lessig is not the only writer to have expressed fear for the future of expression. A similar view was published in 2008 in the Seattle Times which identified the threat of powerful corporations censoring content and forcing charges onto the end user (The Seattle Times; 2008). The newspaper was calling for the Federal Communications Commission to act decisively against the activity of AT&T censoring comments critical of the then president George Bush. This fear is also echoed in Leslie Harris’ statement for the Center for Democracy & Technology as its CEO, to the Senate judiciary Commitee, subcommittee on Human Rights and the Law in May 2008 (Centre for Democracy and Technology 2008). Contrary to these views, however the US government has passed the “Internet Freedom Preservation Act 2009”, which expressly cites in its findings that “A network neutrality policy is also essential to give certainty to small businesses, leading global companies, investors, and others who rely upon the Internet for commercial reasons” (Internet Freedom Preservation Act 2009; sect 2; article 12) and that “The national economy would be severely harmed if the ability of Internet content, service, and application providers to reach consumers was frustrated by interference from broadband telecommunications network operators.” (US Internet Freedom Preservation Act 2009; sect 2; article 8). Supporting creative freedom is now a government issue in America as it is in the UK since Tony Blair openly endorsed the creative industries.
Lessig’s concern at the time for the eroding freedom of the internet is at the core of The Future of Ideas – because of perceived changes to the architecture within which the internet operates. The crucial architecture in question is the end-to-end user concept. At the time of publication the writer feared its erosion in favour of easier to control Microsoft and AOL dominated networks (Lessig; 2001; p.281).
Lessig spends a great deal of the book going over the advantages of the concept of end-to-end networks replicating, remixing and redistributing content widely and freely– and here his analysis of it raises very pertinent points for the publishing industry:
“Yet there are elements of this future that we can fairly imagine. They are the consequences of falling costs, and hence falling barriers to creativity. The most dramatic are the changes in the costs of distribution; but just as important are the changes in the costs of production. Both are the consequences of going digital: digital technologies create and replicate reality much more efficiently than non-digital technology does. This will mean a world of change.” (Lessig; 2001; p.7)
Falling costs in distribution and production are of massive importance. The low costs of uploading a PDF and distributing it on the internet without any printing costs offer a truly massive potential for publishers. A far wider audience can be reached, as even though some digital production costs can be high there are no printing costs and the low cost of distribution suggests the potential to sell a cheaper product in future, with presumably wider appeal. The fact that publishers generally have not reflected this in their eBook prices raises the question of how will they continue to maintain high prices in the face of such a market force. It does suggest that publishers are ignoring the huge number of potential sales in favour of retaining a high mark up on their existing sales. It will be interesting to see if this approach offers the most effective business model, however it does seem that market forces are against the publishing industry’s approach, and therefore surely something must give.
Lessig’s book is not designed to examine this point though and the single content value issue he addresses is that of free content. He has promoted the emancipation of source code and rights to copy, mix and burn across the internet – but he offers very little empirical commercial rationale. As a commercial utopia, his idea falls down because he doesn’t really suggest how to generate income. He is vague about the commercial benefit of the free file sharing service Napster – all he does is say that Napster would have allowed the internet music industry to flourish further – and then thematically he dries up(Lessig; 2001; p.214). He even draws short of saying exactly how it would flourish in a commercial sense.
The business model that Lessig actually cites is that of MP3.com; an online music file sharing business. This model (unlike record companies) was concerned only with the distribution of music (not the production of it). Founder Michael Robertson identified “good data” being the key to this music delivery service. (Lessig; 2001; p.142) MP3.com made its money from using subscriptions and advertising and thus became profitable (Morgan, 2000 cited in Entertainment Weekly 2000 ). It was in turn able to pay artists with “Pay for Play” (P4P) on the basis of the number of downloads and streams of their songs. MP3.com expanded its service by streaming every registered music file owned by each user to its server and making that user’s music available to them whenever they logged onto the internet, wherever they were.
In the words of Lessig, “MP3.com pushed production by encouraging artists to produce and distribute music across its site (Lessig; 2001; 127).” To Lessig, sites like MP3.com, EMusic.com and Napster were at the heart of the internet’s utopian potential. He is correct to focus on the innovation and potential of these sites (as the first sites to distribute content wide scale) – but he does not actually give a very satisfactory, or even cursory, description of the commercial viability. What he does do is identify MP3.com for example as a “service bureau” (Lessig; 2001; pp.128). By briefly analysing this business model Lessig can illustrate the inherent features that would enable an internet business to flourish (wide customer base, ease of distribution) and facilities needed to capitalise on these features (collection of “good data”, ease of use for the consumer). However, the point of Lessig’s example is to show how vested interest is stifling this kind of innovation, and the potential of using free (at point of use) commons. Rather aptly therefore, MP3.com was sued by the record industry for duplicating tracks for commercial gain. After settling out of court for $200m, MP3.com was then sold in 2003. (UMG RECORDINGS, INC. v. MP3.COM, INC. 2000)
Chris Anderson’s appraisal of MP3.com, in The Long Tail (Anderson; 2006; 5.01.00), succinctly identifies all the shortcomings of MP3.com. As he points out the business model was a collection of diverse (but crucially not mainstream) music from bands wishing to make a name for themselves. They paid MP3.com to make their music available to, theoretically, millions of users. In effect all MP3.com offered was a website of unrecognised music with nothing to attract large numbers of users (Anderson; 206; 5.02.22). In order to escape the obscurity it found itself in, MP3.com, introduced its streaming service – which finally got it shut down. Anderson, in a very short space, is able to appraise MP3.com much more convincingly than Lessig – after all the service was shut down and sold. His is mainly able to do this by identifying the inherent weakness of MP3.com in comparison to iTunes (another Long Tail business) as not offering any mainstream music to the casual browser as a point of entry to the service. The conventional marketing term for this appeal to the casual browser is “hook”.
It does not help Lessig’s case that the model he has chosen to analyse is not a viable one. But it does demonstrate the power that corporations and their lawyers can wield – and this after all is one of his intentions. It is clear from both this and the fate of Napster that corporations will protect their copyright where duplication is involved (as Bloomsbury have repeatedly had to do with Harry Potter books), but Lessig is more concerned with using existing content for remixing into new products – and the market deciding which is the most viable. The internet enables a diverse list of content to be accessed where previously limited shelf space meant only the most popular 20 % won exposure and thus earned their proprietors money. Lessig’s assertion that this power is critically damaging innovation is unconvincing. It certainly doesn’t help in terms of scale; but the exposure that Long Tail models give to niche interests would suggest that creativity does flourish in 2009. Market forces enable it to do so.
Establishing the importance of free commons to support this creativity, allowing the adjacent privately owned source of commercial revenue to flourish (Lessig; 2001; 214), was a point well made – and it is important to realise that it utilises the critical properties of the internet. These properties Lessig has identified by discussing the internet’s architecture. He also discusses the dangers and threats inherent in these; most notably the wide ranging freedom to create potentially available, and of course the perceived threat to it. The potential he cites has been taken up across the web as web 2.0 businesses adopt the use of open licence software to some extent – Linux/Apache for IBM and Gmail and Google maps for example use free commons (alongside closely guarded proprietary aspects) to invite user participation and quicker technological development. The continuing rise of the FSF (Free Software Foundation) and creative commons license (as used by Bloomsbury academic) would also suggest this.
Tim O’Reilly dedicates a very useful article to discussing the defining characteristics and development of web 2.0 (O’Reilly 2005). He provides a treatment of these characteristics and how they are used by Google and Amazon. How they benefit from, or even depend, on the defining user rich experience is crucial for understanding how business and the internet relate.
Web 2.0 entities like Wikipedia and Amazon are increasingly data driven and Amazon make it easy for potential customers to see what previous customers have said about each item. The point is that the user can add value to the site both by recommending an item and associating it with other products. This however does mean that the input needs to be regulated to some extent – which given the inherent size of a Long Tail business is not easy. It is though an approach used by many websites.
Intellectual property restrictions are also key or more specifically; “Some rights reserved”. This would more precisely be described as: some rights reserved on some aspects with all rights reserved on USP aspects such as critical algorithms (as per Google). Tim O’Reilly’s guide to this is simply to use licences with as few restrictions as possible. In other words making it easy for users to adapt a product (albeit under licence). Updating on a regular basis as part of the user experience a) tests applications before general release and; b) engages the user base.
The final principle is simply: Cooperate, Don’t Control. Because web 2.0 applications are built of a network of cooperating data services, offering interfaces for these and content syndication (which of course will re-use those of others), will capitalise on the ease of data distribution and adapting existing applications that the internet allows. This phase of internet programming naturally inclines towards flexible coding and these “lightweight programming models” with loosely coupled systems are best suited to this environment.
As far as publishers are concerned most of these points refer to either wiki-books, general web marketing or blogs (not all of which are popular with publishers today) – but web 2.0 must above all be accessible to as many users as possible. This means that software must therefore be usable in as many different formats as possible. Blackberrys update calendar dates remotely to executives’ PCs and the ePub format can be used on PCs , iPhone, Blackberry or on e-readers. This is because ePub is a widely usable format; it is therefore characteristic of web 2.0. (O’Reilly 2005).
Web 2.0 has seen the emergence of several phenomena that have changed, or have the potential to change, publishing dramatically. There is Google (and Google Books) and a range of popular and entertaining websites competing for people’s attention (like Youtube) and there are also online retailers like Amazon. The latter is also a major threat to publishing at present. Its threat to digital publishing comes in the form of a range of eBooks that can be downloaded through its Kindle e-reader or newly acquired Stanza application for PDA devices.
Amazon of course uses a Long Tail business model. As per the opening of Anderson’s book, the future is selling less of more. Amazon for example makes a profit from selling small volumes of hard to find items to many customers. This means that a wide demographic is needed – both in terms of number and variety. While conventional businesses aim to sell a reduced number of popular items (and therefore find branding easier), the internet has enabled the group of people who as a demographic buy a large number of not very popular items, to become very important. Vital to accessing this group are statistics; according to Chris Anderson statistics are the secret of 21st century economics (Anderson; 2006; 00.12.27).
Analysis of the music sales of a digital jukebox with access to 10,000 albums showed that 98% of those albums sold at least once per quarter. In other words there was an enormous, virtually limitless, aggregate market for niche music (Anderson; 2006; 00.15.15). Statistical analysis makes it easier to market to those interested in the more diverse titles. Digital distribution meanwhile makes providing them with content really just a matter of development costs and marketing costs. Overtime substantial revenue can be made from slow but continuous sales of niche products. This of course means that publishers have the chance to build models based on backlist sales. Either they can convert existing PDFs to ePub format, or they can continue to commission books for niche audiences. Either way they will require both good marketing to the appropriate demographic areas, and excellent Search Engine Optimisation (SEO). In music consumers are consistent in that they look at almost anything (Anderson; 2006; 00.15.34) so marketing will surely develop to cater for this – working on the basis that consumers will eventually pick up on the product (admittedly this is yet to be proved with books). Therefore each product must have genuine selling points and these must resonate with a targeted demographic group. This is not so divorced from the old marketing adage that the best marketing device is a good product. As a publishing exemplar Anderson tells the story of the sales of Touching the Void – and how Amazon transformed it (Anderson; 2006; 00.28.00). After Touching the Void initially failed, the much more widely marketed Into Thin Air (another climbing disaster book) was launched, among other places, on Amazon. Customer reviews of Into Thin Air often referred to Touching the Void which eventually became much more popular. According to Anderson we are leaving the information age (information is so easy to get) and entering the recommendation age (Anderson; 2006; 03.41.23). Be it by respected celebrities, or other users of the same websites and blogs. In the case of Long Tail business models such as this it seems probable that subscription based revenue would be less effective and that a pay per use system, such as the current revenue model on Stanza would work more effectively so long as it was easy to pay and download, as with Stanza. But recommendation will of course remain a critical part of why customers choose certain products – information (more particularly sales data) is currently one of the strongest sellers on the internet and publishers will have to successfully harness it. Anderson’s implied point is that statistics are key.
The wealth of information these statistics illuminate is itself a warning to publishers. As helpful as it is they should be careful of how the likes of Wikipedia operate in conflict to themselves. Anderson pays considerable attention to Wikipedia and its strategic quality from so much detail on so many subjects (Anderson; 2006; 2.20.24). Unimportant, unpopular subjects still have detailed articles because space isn’t an issue – this gives the site its appeal. From a publisher’s point of view it means that having a wide range of information is not a unique selling point (USP) they can continue with; the popularity of Wikipedia shows that the public will always refer to it regardless of the reliability of each article. Wikipedia also shows that niche information is extremely popular; as demonstrated by the huge number of articles that people put the time into uploading. This latter feature is also borne out by the growing number of niche books available through Amazon and Barnes & Noble. Anderson quotes Barnes & Noble CEO Steve Riggio saying that in 2005 they sold 20% more niche books than in 2004 because of, among other things, self publishing (Anderson; 2006; 2.38.25)– another threat to publishers and an indicator that they can’t take so much for granted. Anderson highlights the impact of self publishing sites such as lulu.com where self publishing is easy. The fact that few of these books become commercial successes is according to Anderson not an issue for many of the writers (Anderson; 2006; 2.34.16). 98% of books published aren’t commercial (Anderson; 2006; 2.34.54) but this evidently doesn’t stop people from writing and the market for niche books is, as demonstrated above, growing. Obvious drivers to the casual observer are those on the internet; fragmentation; ease of publication (which feeds the demand while publishers solemnly work through three year publishing plans), and the extent of peer review and the consequent listings on Amazon and Yahoo. Anderson says that he is sanguine about the future of the book industry because of the increasing sophistication of first step publishing allowing more writers and their voices into the chain (Anderson; 2006; 2.39.05). This therefore offers more for publishers to sign and build on. Fragmentation is an obstacle to wide sales but this is where publishers’ marketing and branding, and their sophisticated handling of products, offer a difference in producing something that can be widely distributable.
Wide distribution with commercial success for Long Tail products, and success for Sony type corporations’ blockbusters hits are not mutually exclusive. This is well argued by Anita Elberse in the Harvard Business review. She argues that because of the internet the very best products (often with the most production value and marketing behind them) will quickly gain success whilst those slightly less brilliant releases will receive markedly less:
“First and foremost, lesser talent is a poor substitute for greater talent. Why, for example, would people listen to the world’s second-best recording of Carmen when the best is readily available? Thus even a tiny advantage over competitors can be rewarded by an avalanche of market share. Second, people are inherently social, and therefore find value in listening to the same music and watching the same movies that others do. Third, when the marginal cost of reproducing and distributing products is low—as it certainly is with goods that can be digitized—the cost advantage of a brisk seller is huge. Frank and Cook (ed. in their 1995 book The Winner-Take-All Society) were elaborating on the economist Sherwin Rosen’s earlier work describing the “superstars” effect, in which a field’s few top performers pull ever further away from the pack. According to this line of thought, hits will keep coming—to the increasing detriment of also-rans.”
(Elberse 2008)
The economics of both systems are dependent on exposure and on the internet this means distribution (to support viral marketing in the case of blockbusters). In the digital environment this of course is free and fast so it allows huge dissemination. As Elsberse identifies, the internet magnifies the sales in the head of the Pareto scale, but like Anderson’s main point it also conveys value on the Long Tail of the scale. In short the internet conveys value, potentially across the board; and its inherent ability to disseminate widely is behind this.
With Long Tail more than just exposure is needed. It works if three things are available: a wide choice of products, a large population of customers and negligible stocking and distribution costs. With the internet Amazon has the demographic while the home businesses cover the other costs. Money is made from the 80% of the market who make up the tail on the Pareto scale (according to power law distribution).
The supply side drivers are low storage and distribution costs – so this is a model that digital publishers can take advantage of themselves. Centralized warehousing therefore is vital for hard copies of books (in other words warehousing them with quantities of other publishers’ books); and digital warehousing for eBooks would allow a wider range and therefore longer tail. With publishers the longer the backlist the longer the tail: therefore classics (i.e. out of copyright books) will become very competitive if Long Tail becomes popular with publishers. As operations like the Gutenberg project offer classics online for free publishers would have to add (for example) significant quality, editorial apparatus in order to distinguish their classics products. Even then it is not known how they would fare as the general public has shown an inclination to snub the quality for the free when it comes to news channels – and TV journalism has suffered from this – just as the music industry has suffered from piracy. This latter affliction though is being slowly brought to heel by the music industry. One way it, and Amazon, have targeted music sales is by analysing music purchases very closely.
But Amazon’s strength as a general online retailer, and of course retailer of books, does not seem to extend to its digital operation just yet. Amazon’s sales strategy for downloads – from eBooks to music files – shows substantial caveats in these areas. It also does little to reassure of the future of the dedicated eBook reader device (be it Kindle II or the Sony e-reader).
The first point is that Kindle sales are not massive (a recent Citigroup report puts total Kindle sales at roughly 500,000 units) (O’Brien 2009). Given the prices of the e-readers (the new Kindle DX costs $489) this is maybe not that surprising. But it must partly also be because Amazon’s package is seemingly still at odds with a service that is truly accessible and engaging for users. Cory Doctorow is particularly scathing; identifying price, terms of service and the anti-copying technology (Doctorow; 2008; p.64 ). These factors already put the products at a disadvantage to print books because they can’t be resold or lent to friends (Cane 2009).
As Doctorow points out, Amazon can change the customer’s eBooks without notifying them or simply delete them. There is also the massive entry fee for the service (the cost of the device), DRM that precludes circulation, format incompatibilities and a terrible navigation facility. These last two features are common to every reader device so far and they struggle to remain faithful to the original layout, especially if there are footnotes. He extends this criticism to their MP3 store which also prohibits lending and reselling. iTunes meanwhile, which has now replaced DRM with simply watermarking files, is comfortably ahead on sales with 2.4 billion downloads in 2008 to Amazon’s 130m(Kim 2008).
iTunes, like Amazon, is an example of the successful Long Tail business Anderson envisions rising to dominance. While these businesses are undoubtedly doing well, so are well marketed products such as blockbuster movies or high profile books (as Elberse argues) – The Kite Runner sold eight million copies worldwide (Orange 2009). There is also no actual evidence that Long Tail models will achieve dominance over the companies behind these highly targeted sales.
There is though undoubtedly a great range on the market – yet this also fails to prove that diversity guarantees success. With the plethora of eBooks and eBook devices with their software (and of course their shortcomings) one can draw parallels with the videogame crash of 1983 (Earasmatazz 2009). It certainly does seem that the sector is in a similar bubble – though probably more so in the US than in the UK.
In 1983 the paying public simply stopped buying videogame products despite the range available. The comparisons with the e-reader market now are that there are lots of e-readers available (as there were consoles) with not very impressive software (like the 1983 games) whilst PCs and Smartphone offer an all round service with the capability for more complex products (like the PCs that attracted the buyers in 1983). Technology like Smartphone and iTouch is also easier for publishers to exploit if they want to release cross platform packages like Canongate’s The Wire where the eBook is being joint marketed on a deal with HBO’s TV series. With these latter products the entry fee (device purchase) is of course much more palatable than eBook readers.
Despite the obstacles to Amazon’s digital campaign, both technological and self imposed, the new Kindle DX offers a critical feature; wireless internet access. This facility means that books can be downloaded in 60 seconds – a feature targeting impulse buying – and buying books is easy with the service available which unlike the offline Sony reader does not need to be plugged into a PC (O’Brien 2009).
Where Amazon sells print books alongside Kindle versions, 35% of sales have now come from downloads (O’Brien 2009). However Kindle readers are still to make a major impact and all the new service does is allow it to match one feature of the Smartphone/iPhone service.
Publishers should pay careful heed to the common strength of Kindle DX and the iPhone/Stanza axis. Fast internet access means impulse buying can be straightforward. It is also evident that Amazon still has potential in the eBook download market – and that they hold a great advantage over publishers in their cache of customer statistics.
This is where publishers must focus – and they must address all influencing factors, one of which is price. Among other factors, price can be lowered if the dissemination is as large as it could be. If, as Lessig and Doctorow identify, free copies boost distribution then price is clearly a factor to some extent. iTunes go through the middle ground; they offer relatively cheap (99p) single tracks but they are still similar in price to hard copies sold in music shops. Crucially however they are easy to buy and download and now are free of restrictive DRM. Though the impact of this new move is yet to be quantified, their sales figures of $2.4b in 2008 show their model works – and this must be because of ease of use. It is also noticeable that they do not charge particularly high prices. In other words they have stepped away from the record industry’s earlier stance (circa Napster) of guarding the value of each product and are now promoting the distribution of each product in return for the growing circulation and rate of sales they receive back.
The music industry is a parallel when only one other precedent (the 1983 games crash) is available and it must be remembered that the music industry initially suffered very badly from piracy. Like the Harry Potter books with publishing there were products that were very attractive to pirates. This meant that simply concentrating on dissemination in order to avoid obscurity firstly wasn’t its problem and secondly meant lost sales. The response was aggressive and it did the industry no favours to be seen targeting students who had downloaded a few tracks. Macmillan is one of the many publishers that do not want to fall into the trap of looking like a greedy corporation as the music industry big players did. While presenting fierce lawsuits meant that courts were granting in favour of the record companies, sales were still being lost to piracy. The advent of iTunes has, demonstrably, made the music industry commercially more successful. It maintains its billions of sales and despite criticism of its pricing policy – the service is straight forward and people enjoy using the device the iTunes music is downloaded to. The sales figures for the industry do indicate that the current price model is working well enough. As a model for publishers this may well have potential, but only if the reading public really takes to the devices in question and are willing to pay. Right now it does not seem that the e-readers are that device but PDA type devices that can support Stanza offer a publishing parallel (albeit embryonic) for the iTunes/iPod model. However, publishers appear to be having problems engaging their customers with the right pricing policy. One reason that iTunes maintains a similar singles price to CD versions is to avoid channel conflict which might well force CD retailers out of business (Anderson 2004). It could be that publishers are forced into this to protect bookshops – but that is not the rationale most widely offered.
At the moment then the cost of eBooks is still comparatively high with the same (or even slightly higher) being charged as for print books. The rationale being offered by some publishers (in this case Caroline Reidy, the chief executive of American publisher Simon & Schuster) is simply that the content is the commodity:
“The concept that because a book is an e-book it should automatically be priced significantly lower than a paper book is one we don’t agree with… What a consumer is buying is the content, not necessarily the format.”
(Rich a 2009)
This means that they are going to have to convince people who might download the files that they are worth exactly the same as the books they can buy in a high street shop.
It would be convenient for publishers that by keeping prices up they improve their margins thanks to the lack of printing or distribution costs. Whether this can be maintained remains to be seen. It is of course noticeable the high margins generated from the high retail price of eBooks is not yet making publishers significant returns (not one of the publishers evaluated in this study makes more than 1% of their sales through eBooks). It may well be that more general appeal can be achieved from lowering the retail price – which publishers can still afford to do on a sale by sale basis. This is because in most cases the biggest single cost of a book’s production is the printing and binding (Woll; Chicago; p.166). And it is also noteworthy that consumers are objecting to those high costs. If publishers really do try to take on market forces then it is unlikely that they will make much progress in the long run. Publishers who maintain high prices on the ground that they are waiting to see how the market behaves (Neill 2008) may be able to keep them up but there is no guarantee how long the market will support this.
The market environment in 2009 has posed publishers with a variety of challenges. First of all there was the collapse of Woolworths at the end of 2008 as a result of the economic downturn. With lobbying from the Publishers Association EUK, Bertrams, banks and major supermarkets were able to keep books in the high street in the critical period before Christmas. Despite successes such as this last year was hard as the PA itself saw a drop in surplus for the financial year from £140,404 to £117,603 and the income and expenditure account drop from £496,497 in profit to £22,900 in loss (Publishers Association 2008). Above all this represents a major expenditure in lobbying and legal activity for the publishing industry as a whole. These figures are therefore not surprising when the activities for the year are taken into account. First there was formed a negotiating group to lessen the impact of Woolworth’s administration, then there was the green paper being brought forward by the European Commission to “water down” copyright. This is however still at the stage of policy development so the most significant figures are those of publishers’ bottom lines over the past year. Harper Collins for a start has taken a very severe hit in operating income – dropping from $160m to $17m over the last year. Newscorps, the parent company has blamed a ‘weak retail market’ for the poor results of the trade publishing division in particular. It also claims that most of its businesses (all of which are media) have reported growth in market share despite the poor figures (HC worldwide profit collapses 06.08.09 Graeme Neill, Bookseller website). If that is true then it is more evidence that providers of content need to focus on expanding their industries and not their own market share. One thing is certain from these statistics; print sales are in decline – Jeff Gomez devotes an entire chapter, Byte Flight to this concept in his book Print is Dead (Gomez 2007). Large publishers are struggling.
The downturn has affected all areas of the book trade: Random House (the world’s largest trade publisher) has seen a drop in revenues from €1,837 in 2007 to €1,721 for 2008 (Bertelsmann 2009). Amalgamated Book Services lost a number of key accounts making it particularly vulnerable owing £11,000 at the balance sheet date (it then fell) (Neilan 2009), and Borders Bookstore has also struggled to the point that Luke Johnson was forced to sell. All phases of the book industry are struggling, but eBook downloads are a sector that is growing; Random house saw its downloads rise by 400 percent over 2007 and Lexcycle has reported 12m downloads in its year of trading (see appendix 1). Random House in fact says that its performance has been strong – claiming a 6% rise in turnover between 2007 and 2008. However, while the company has been cutting back (including 33 jobs in April) a small rise in turnover does not demonstrate actual growth – and the operating profit has plunged by 11% over the same period (Page 2009).
In a struggling market with poor print sales and growing eBook sales (however small) publishers need to refocus. Developing eBook circulation and sales is one possible path ahead. As their exposure is important and the aim must be to expand the content market they should also consider issuing free content in a quasi-Keynesian approach. Lessig correctly asserts that commons are vital for creativity but wrongly that big producers of content wouldn’t allow commons. Anderson is adamant that diversity thrives on the internet, and this in itself promotes creativity and O’Reilly cites outsourced creativity (as an example of free content), as a feature of web 2.0 business. Lessig shows exactly why the internet has evolved offering this unique function (the ability to collaborate across space and time), whilst Anderson, O’Reilly and Docotorow et al discuss how it can be used. At the heart of this type of business, Anderson claims, are statistics, and Amazon is the best example of this. It is also a living example of how to engage the massive user base that the internet offers. Despite this, as Cory Doctorow explains, Amazon is still some way from offering its users an eBook service or product of genuine widespread appeal. That gap is currently filled by Lexcycle/Stanza even though they have recently been absorbed by Amazon. This greatly increases Amazon’s chances of reaching an internet audience for books in the long run. Effectively Amazon now has two live pioneer projects – one of which provides customers with an alternative to the e-reader and so far it is seeing more eBooks downloaded. If the Stanza model proves the more likely but Stanza fails (presumably because of a rival from Apple) then whatever takes over from it means will presumably also offer a tempting channel for publishers. Their hopes need not only hang on the success of Lexcycle. Whatever happens the potential for this kind of distribution could see real growth and therefore offer publishing a lucrative channel to market – if it were to eventually offer the end user something of genuine appeal.
What it offers publishers is a means of accessing a very wide market that is still growing (iPhone and iTouch users) and a necessary part of making publishers’ products popular in this channel is ease of access and payment. From a publisher’s point of view this means distribution and pricing. Both of these are addressed by Anderson though he identifies the existence of a range of products that are widely distributable as generally more important than professional marketing. However professional marketing is a key part of the typical publisher’s strategy. In publishing houses marketing is also tightly linked to editorial services and selection – another critical function. This system, as the following case studies show, is continuing to work for trade publishers and is fundamental to their digital plans.
Doctorow also addresses the issues of distribution and pricing, and he like Lessig supports the use of issuing some free products to boost circulation. He is confident that having done this has made him more money than if he had stuck to a pure payment model:
“Most people who download the book don’t end up buying it,
but they wouldn’t have bought it in any event, so I haven’t lost any
sales, I’ve just won an audience. A tiny minority of downloaders
treat the free ebook as a substitute for the printed book — those
are the lost sales. But a much larger minority treat the eBook as
an enticement to buy the printed book. They’re gained sales. As
long as gained sales outnumber lost sales, I’m ahead of the game.
After all, distributing nearly a million copies of my book has cost
me nothing.” (Doctorow; San Francisco; p.71)
Like Doctorow there are other authors engaging with their readership in blogs and chatrooms, distributing free copies and receiving surprisingly high numbers of commercial orders for books in return (Strauss 2009). The eBook market is small but growing so the stimulus of free content for growth needs thought. This ties in well with the O’Reilly principles of Web 2.0. How eBooks fit into commercially successful web 2.0 and successors will of course depend on some extent to how cheap and easy it is to distribute their products (at least according to these principles). But the evidence is far from conclusive. It has though done enough to convince elements of the publishing industry who now use the Scribd service to reveal free samples of their content:
“The company claims it handles over 50,000 new documents every day, and sees visits from over 50 million users every month. Those numbers make it an appealing target for publishers looking to attract new readers, and Scribd recently announced that it has reached agreements with several, including Random House, Simon & Schuster, and Workman Publishing Co.
The terms of the agreements weren’t disclosed, but the plan is that a variety of book material will be made available through Scribd at no cost to readers. This material may be anything from excerpts to entire novels. It wasn’t stated explicitly, but some of the accompanying literature suggests that the excerpts are likely to come from books that are selling well on their own, while full novels will be made available if they’re part of a larger series that hasn’t yet found an audience.
The fact that Scribd is offering the publishers this level of control over their content is part of the appeal.”
(Timmer 2009)
The take up for Scribd so far is actually not very extensive in terms of which publishers are showing their (controlled) content on the site. Two of the three publishers examined in the following sections are planning to use the site in future (as yet with no particular date in mind). This in itself shows a group of businesses vacillating until the path becomes a little clearer. Nonetheless free content is showing signs of being important even though writers rather than publishers seem to be the main proponents of offering free content – via self-publishing. This is also of course a large part of promoting creativity on the internet though it naturally means more self-publishing. But as the market is growing this does not necessarily mean a diminishing share for publishers; it just means different topography. Notably, there is no evidence that every author self-publishing is wishing to make serious money. Publishers, with their experience and expertise in branding, and their ability to make packages of, for example, hyperlinked multimedia content still may have an important long term role to play. But in doing so they will need to be wary of what Amazon can offer if it gets its service right and how their own products are going to be priced and distributed.
Amazon and self-publishing therefore offer the greatest threat to conventional trade publishers; Amazon in particular. However their threat is not as great as it may seem and the publishers examined here are confident that their well targeted and produced content will be successful digitally. As yet none have confirmed which distribution channel they will definitely use but each is undoubtedly flexible, and different attitudes to available systems are clear.
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