The changing nature of the publishing value chain

The traditional value chain of the publishing world has become rather a tangled mess of late. Traditional roles are constantly being redefined and all parties involved are looking for the right way to go about in the new digital age of publishing. Just a quick scan of recent developments shows that the value chain really has become the value network Clayton M. Christensen speaks of .

Both Amazon and Barnes & Noble have started their own publishing ventures. B&N’s Pub It! and Amazon’s Encore and Crossing imprints are mainly aimed at the serious self-publishing author and rely on public opinion and crowd sourcing. With the recent launch of The Domino Project and Montlake Romance Amazon has upped the ante even further by diving head first into “real” publishing.

Bookish is an initiative of three of the Big Six – Hachette, penguin and Simon & Schuster – and aptly called “The new digital destination for readers”. The aim is to sell directly to consumers, as a partner of existing retailers. In this way they aim, as Mike Shatzkin correctly stated, to be more like Kobo and Google than Amazon. It is proof that the stakes of reaching the consumer get ever higher when three companies this big skirt the edges of anti-trust laws to be as big a threat to Amazon as possible.

The big news last week was, of course, British agents turning publisher as well, with Ed Victor, Blake Friedman and Curtis Brown announcing their intentions.

Another, often overlooked, development is publishers moving into library territory. We already know about Bloomsbury’s successful Bloomsbury e-book library. Recently US giant McGraw-Hill started its own initiative, called McGraw-Hill eBook library, aimed at consumers and libraries.

There are more examples, no doubt. These just serve to prove the point that the lines between the actors in the traditional value chain are rapidly disappearing. New entities are forming. The market that is slowly emerging will have a very different dynamic and laws than the ones we know.

We publishers need to find our own part in this in order to survive. At the moment it’s a bit of a gold rush, with parties claiming their stakes and digging for gold in the hope to find gold first. The gold, here, means  “the consumer” or “the reader”. There is a slight edge of hysteria in the way I hear publishers call for the need to reach the consumer’s heart. Certainly in the US, where during the Digital Book World conference last January Vertical Communities were all everybody was talking about.

I find that slightly disconcerting. It is certainly true that publishers need to learn more about the people reading their books – knowing reader’s preferences will be key in the digital marketplace. But I find that the real message for publishers is being drowned out by the constant call for “connecting with the consumer”.

For me, key to all forms of innovation is knowing what you are good at and what not. Knowing what you will be able to do and what not.

A publisher has, traditionally, never been involved much with the consumer. Our business was mainly with retailers. In the meantime, the retailers got very good at knowing who their customers were and catering to their needs. This is something we should not have allowed to happen. But we did.

And now we are faced with the decision: do we chase and hope to catch up? This way is, in my opinion, fraught with danger. The technological, knowledge and financial gap between publishers and the big retailers is immense. That is undoubtedly the reason why rivals like Penguin, Hachette and S&S team up to try and rival Amazon, Google and Kobo.

The secret to the heart of the consumer is ease of use and the level of service you are able to provide. And even for a partnership on this level of Bookish it’s hard to see how they will be able to successfully lure away readers already entrenched in other well-developed platforms. The investments are huge, the possible gains uncertain.

For smaller markets like the Dutch market things are even more pressing. US and UK publishers operate on a global scale that is unreachable for Dutch publishers, even when they team up. There are currently attempts being made to develop platforms on a national level, by the Bookseller Association, the Association of General Trade Publishers and the Library Association among several others.

The attempt is understandable, even necessary – we need to offer our readers the best service possible. The trouble is, however, we are not able to compete with Amazon or the local dominant e-tailer, Bol.com. They are, however, perfectly able to compete with us. After the introduction of the Kindle in the German market we can now see the impact of Amazon on a European market: the lack of German content does not hinder Amazon at all. It just makes Germans read more English. Enough for the German publishers to be extremely worried.

This means, in my view, that we publishers need to go back to what we do best: finding the best authors, obtaining the necessary rights and making this content available in as many channels and formats as possible. Chris meadows, in an article in Teleread states that publishers should focus on customers, not format, but in my view, that should be the other way around.

Digital reading creates a plethora of new reading moments on different devices that we are in dire need of new formats to service reader’s wishes in trains, on their break, in waiting rooms and whatnot. If we do not create these formats, we will not connect with the reader. Publishers need to make these formats for and – as important or maybe even more so – make these formats known to our readers.

We also need the channels to sell them in. But the technological market changes rapidly and the need to innovate is constant. Publishers cannot bet on two horses and hope to survive in the long term. Not in a small market as Holland, but also, I daresay, in the US and the UK. As the market slowly matures, consumers will eventually choose one or maybe two platforms where they buy their books.

We need to focus on innovating our formats and finding the right authors. And then we need to find the right partners to sell them to the reader. In the new value chain, roles change. Anybody can be a publisher. In the long run, focus on content and smart partnerships will give publishers more add value then blindly investing in a race we can’t win.

And by way of a coda, an example of how all partners in the traditional chain can find ways to cater to the new needs of consumer is Enthrill. This new start-up has found a way to introduce e-books as a physical product in stores. This is an inventive solution to the question how booksellers can to merge e-books and mobile reading and buying with traditional book stores. Just placing e-book covers in stores with a download link inside would not have been enough to satisfy consumer expectations with regards to the way they want to manage their content, so Enthrill offers a solution integrating sales on the floor with the shops online environment and offers the choice between either a PDF or a ePub download (have a look at the video presentation).

A perfect example, in my view, how one could use existing business models and technology and create something new and truly innovative. Publishers should take note.

 

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