This weekend was #FutureBookHack, a hackathon which brought together hackers that were digital leaders from top-tier publishers (Faber, Harper Collins, Pan Macmillan, Penguin Random House, and Simon and Schuster), as well as other industry experts including industry analysts (Nielsen), booksellers (Blackwells) and literary agents.
While The Bookseller has extensive coverage of the event itself, there hasn't been much coverage of the key themes that emerged not only from the formal presentations/workshops, but also from the more informal discussions that took place over the weekend.
Given such a unique collection of experts, there was a lot of industry insight which I've gathered together to share with a wider audience.
I've split it into - the more formal topics; (discoverability, audio books and children's books); the informal ones (Netflix for eBooks, Publishers vs Self-Publishing); and then rounded up some of the more insightful smaller points.
SPOTIFY/NETFLIX FOR EBOOKS
Given how "hot" this topic has been over the last year, it was almost an inevitable that this was bought up a number of times. Almost always via a participant raising it to one of the publishers rather than vice versa.
The overwhelming view from the publishers, was that the model didn't work for the dynamics of the book market. The fundamental argument being, that most readers aren't restricted to the number of books they read because of cost, but because of time.
While a music listener or movie watcher might significantly increase their consumption as the incremental price drops to zero, book readers are already close to their limit in how many books they can read.
For example, with music a single is only 2-3 minutes long, so with a subscription service the amount of genres to which a consumer listens increases significantly. An average book takes 10-20 hours of reading time and many consumers already purchase more books than they are able to read.
The fact that piracy hasn't occurred for eBooks in the way it has for movies and music, adds weight to the viewpoint that eBook consumption isn't price restricted.
As this is the case, it seems impossible for a pricing model to exist that would both make sense for publishers and readers. Readers can't be given more value for the same amount of money, and publishers can't justify the cannibalization of their sales market if subscriptions can't produce similar revenues. Publishers also lack secondary revenue streams (merchandising, concerts, etc.) that allow other industries to justify the low revenues from services like Spotify.
However, there might be exceptions for particular genres where reading patterns are different, and this has been demonstrated in a few markets. Comic books (via Comixology and Marvel Unlimited), and technical books (Safari) are both examples where readers are likely to increase consumption. They're also both markets where consumers often purchase physical editions of books they already have in electronic form, further reducing the impact of cannibalization.
There may also be other factors that play into market dynamics for specific genres beyond volume of readership. For example with academic books, a subscription model on the reader's side would be of value to students who would no longer have to carry around heavy books, and on the publisher's side it would solve the major problem of secondary market resales.
Some publishers are however looking at alternative ways of segmenting subscription markets. For example, book serialisation and models where consumers can subscribe to a particular author.
PUBLISHERS VS SELF-PUBLISHING
When self-publishing of eBooks first took off, there was significant concern in the industry that the self-publishing market could end up disrupting the publishing industry. This left many publishers in an existential crisis, questioning what they actually did, and how they added value.
As the eBook industry has matured the initial concerns have largely been allayed, with publishers finding that in general, self-published authors would prefer a traditional publisher if given the option.
Publishers now often sign up successful self-published authors, and source new books from services such as WattPad. Taking on such authors reduces the upfront risk of investing in a book, as the authors have already proven demand, so the overall impact has actually been positive for publishers.
Arising from these discussions was also the wider topic of what precisely publishers consider their “key value-add” and why authors still wanted to go with traditional publishers. Reputation, risk and expertise were the three key factors.
- Reputation: as authors still want the prestige that comes with a reputable publishing house, and getting printed books into bookshops
- Risk: as the the publishers take on the upfront risk in paying for advances and investing in editorial, marketing, and printing costs.
- Expertise: not only covers both the services such as - editorial, proofing, and marketing, but also the publishers expertise, and position, in managing the overall process.
While publishers outsource many of the services that they provide to freelancers, they add value by managing those relationships. This both prevents exploitation (as authors aren’t expert buyers of these services), and removes direct commercial incentives from the equation (if the author was paying the editor directly it would impact the author-editor relationship).
The ability for consumers to discover new books was something that concerned all the publishers, who were keen to see technology formalizing traditional methods of discovery (social recommendation systems, aggregation of professional reviews ala Metacritic), as well as more innovative approaches.
The general feeling, was that current discovery approaches had significant weaknesses. Such as best sellers lists (both online and off) generally being rigged for editorial and commercial reasons, and recommendation engines (typically of the form of “people who bought x often bought y”) being skewed against new and more unusual books.
There was also interest in how improvements in book metadata could result in better discovery (i.e applying SEO techniques to optimize books appearing in the right searches), with most metadata currently being optimized through human expertise, rather than via data-driven approaches.
In part, it felt the concern over discoverability arose from the power that Amazon had over owning the key search, rankings, and book recommendation systems (both via Amazon.com and also via subsidaries such as GoodReads and Audible), and an interest in reducing the dependency on a single vendor.
Channels to market was the key topic among the publishers addressing audio books. While consumer demand is growing, there was visible frustration in the difficulty publishers faced in getting their product to customers - both in terms of discovery and delivery (large file sizes, clunky software).
Audio books form a unique set of challenges due to the way the market is fragmented at the moment. A literature student listening to an author reading his/her own work, gets a significantly different take on the work, as against a listener who opts for audio books while driving, or from a parent who uses a children's audio book as a substitute for a bedtime story.
At the moment, the majority of the digital audio book market is core genre adult fiction. This is partially due to the dominance of Audible, who's subscription model and marketing focus is on that group.
Audio book production is expensive to do properly as it requires studio time, a producer, and a voice actor. Due to this cost, base audio books are generally priced on the basis of length, although there is significant variation in how each is priced by the retailer.
So while audio rights to books are typically inexpensive, the high fixed production costs, the nascency of the market, and the fact that audio books sales don't seem to cannibalize the sale of non-audio versions, makes publishers keen to broaden the appeal of this medium.
The overwhelming interest from publishers, was to see new services that made it easy for consumers to access audio books, and many were actively looking into technologies such as streaming, and more consumer-friendly business models.
CHILDREN’S (PICTURE) BOOKS
An unexpectedly hot area was children’s books, one of the few areas of publishing which is seeing a significant growth in print. It is also an area in which publishers are keen to see digital developments that will allow them to reuse their image assets for incremental revenue.
Due to the picture-heavy and interactive nature (pop-ups, pull-tabs, etc.) of these books, publishers are finding existing eBook formats and tools ineffective in bringing these books to digital platforms like the iPad.
There were also number of smaller insights raised that deserve a mention:
- Several publishers had experimented with building apps tailored around specific books offering enriched content, but found it wasn't successful as it was difficult to build into workflow, and also expensive with costs not being recouped from sales.
- In general, enriched content (author interviews, extra background, etc.) was hard to sell. There was not much consumer interest in paying for it.
- Industry experimenting with an eBook first model, where a traditional publisher publishes the eBook first and looks how it performs before deciding if they want to go to a print edition.
- The creation of a long-tail market by growth of eBooks and print-on-demand is often overlooked. It used to be 100k unique books that were actively selling, now it’s 1m+.
- Long-tail generates revenue, but not in economically viable amounts for anyone, but is useful for residual revenue from books that have done well in the past and require no further investment.
- Most publishers make the core of their money from “mid-tail” books with blockbusters being “bonuses”.
- The ebooks market is shifting to multifunction devices (phones, tablets), and away from eReaders. eReader users often read on other devices as well.
- On mobile devices eBooks have to compete against not only other eBooks, but also other forms of entertainment (music, games, etc.) available on mobile devices - often for a very low cost.
- Some print book genres have been decimated not by eBooks, but apps taking their place. For example, maps (replaced by Google Maps) and travel guides (replaced by Tripadvisor).