The Fall of Book Publishing: The Rise of New E-Book Business Models
Experimenting Our Way to Success – Reinventing Publishing Models
Amazon revolutionized book reading in 2007 when it introduced its Kindle book reader. Within the past three years, the explosive sale of book readers has caused a massive surge in the sale of e-books, already outpacing the sale of hardcover books, with a prediction by Amazon CEO Jeff Bezos that they will outsell paperbacks within the next year.
We are witnessing a major transformation of this industry. Within five years, the vast majority of all books sold will be e-books. Big box retailers like Barnes & Nobel and Borders will have shuttered most of their storefronts. The printing press industry, along with the craftsmen of ages past who have made a fine art of applying ink to paper, will be mothballing their machines. And the media, almost in unison, will begin writing the eulogy for this 500-year old industry.
But before we focus too much on what we’ve lost, we need to pay close attention to the other side of the equation. Digital book publishing will be an exciting new industry with truly amazing potential for growth.
Digital publishing does not mean fewer books or fewer readers. Rather, it paves the way for lower cost publishing, new forms of “books,” more authors, more titles, and a host of new opportunities. Most importantly, it will set the stage for experimentation as inventive young minds help redefine the form and nature of books.
In January, Deb and I attended the Consumer Electronics Show in Las Vegas where we saw no fewer than 20 new e-book readers being introduced into the marketplace. In addition to these, the number of other mobile devices such as tablets, laptops, and game consoles, with e-book reading capabilities, were something like 10-20 times as many.
These readers, along with the breakneck million-a-month pace being set by Apple’s iPad, are driving the ubiquity of digital reader access for every possible piece of written material that becomes available.
Competition will be fierce. So fierce, in fact, that the cost of book readers will begin to plummet. Within 5 years, some will reach prices as low as $20, maybe less. They will become as commonplace as calculators and virtually everyone will have one.
Two-Way Flow of Information
People today tend to resent the one-way flow of information. For most of history our technology has only allowed information to flow in one direction, and businesses have capitalized on this limitation.
For centuries people have used one-way information flows to establish themselves as the undisputed expert on a topic simply because there were so few options for voicing a dissenting opinion.
Today the rules are different. Information flows quickly and in many different directions. Anyone voicing their ideas can expect to have either direct or indirect feedback on it.
Most forums have comment sections. People now expect to be able to interact with the author. Their comments fuel other comments, and if some article does not have a comment section, opinions are stated on social media sites, with or without the author being aware of what’s going on.
Interested people want to immerse themselves with ideas, and they will to do this through comments, author interaction, wiki forums, and other forms of topical conversations.
Books have traditionally been the epitome of one-way information, but digital books are changing all that. Not only do they accommodate good interaction, some go out of their way to promote it.
Readers who become engaged with the information in an e-book will become evangelists for it. They will not only tell others, they will broadcast it to the world.
Emerging New Business Models
Interactive book forums are setting the stages for publishers to experiment with entirely new business models.
Rather than focusing on selling large numbers of books to become profitable, eBooks may very well become loss leaders, setting the stage for a series of other pricier products and services surrounding the author’s area of expertise.
Keeping in mind the time scarcity that most authors have, the cost of the services will increase along with the amount of time the author has to commit.
These types of services will vary greatly depending on the type of books, personality of the authors, and the timeliness of the topics.
In much the same way the music industry has shifted to selling concerts rather than records, the publishing industry will look for new ways to monetize the performances of its talent base.
Yes, people will still pay to purchase books, but they may be willing to pay far more for a variety of other ways to engage on the topic. Hosted mastermind sessions, subscription newsletters, interactive telepresence calls, one-on-one consulting, and paid appearances and speaking gigs are all options that next-gen publishers will consider as they calculate the value of a new unpublished work.
Much of this already goes on today, but continued experimentation will pave the way into virgin territory.
Some books will include ads, both in-text and display ads to help the bottom line. A few will experiment with product placement strategies, affiliate marketing, and other ideas for cross-promoting products.
Pushing Costs Back Onto the Authors
At the same time, as we move into an era of uncertainty, book publishers will invariably begin to shift many of the costs back onto the authors. The cost of reviewing manuscripts, content strategy sessions, layouts, and editing may be charged up front before any sale takes place. Along with shouldering more of the upfront costs, authors may also be presented with a cafeteria-style menu of promotional packages for every form of media to help improve awareness and increase the chances of landing a next-generation best-seller.
To compensate, publishers may opt for a smaller piece of sales initially. These pay-to-play models will virtually eliminate the industry’s upfront costs, so the big profits will come when “freemium” and premium services get added into the mix.
Rest assured, publishers will retain their role as the credentialing authority, to maintain the quality in their brand and control the exclusivity of their talent. In doing so, they will also command a premium price for their premium services.
Digital E-Book Readers are Only Phase One
When our only systems for creating books involves applying ink to paper, we are very limited in our capabilities. Adding color has been difficult and expensive. Images and photos have required special processes. Inserting a video has been impossible as were animations and any other form of movement.
Pages on a printed book are static. They don’t move. The progression of events has to be linear – one page after another – with no chance for hyperlinks, mouse-overs, informational pop-ups, or any other non-linear decision trees.
E-books, however, are opening the door to all that and much more.
Once we get past the notion that books have to be framed around a device that makes them look and feel like a traditional book, we can begin to experiment with some truly novel story-telling systems. Here are a few of the many possibilities:
- Non-Linear Thinking – Storytelling will no longer have to be sequential or even logical. Some stories may involve such things as treasure hunts, game interludes, or even intelligent systems that write the story on the fly.
- Movement – Rather than static characters and images on a page, a digital book may include animations, video clips, movable charts and graphs, touchable interactions, voice clips, note-taking modules and much more.
- Augmented Reality – In its current state, augmented reality can easily add three-dimensionality to any page, image, or idea through the use of a head-mounted or spatial display. We’ve only begun to scratch the surface on this type of technology.
- Holography – Stepping beyond augmented reality are other forms of holography, a science that so far has not lived up to its full potential. But new and better holographic systems will undoubtedly come, and they will unleash more than a little creativity into the storytelling process.
Books that tell a story will have an entirely new palette of options for bringing their masterpiece to life.
Some Final Thoughts
Much like transitioning from LPs to cassettes to CDs in the music industry, moving from printed books to digital books will alter the publishing industry and change the way money is made.
The key to this emerging business world will be agile minds and nimble leadership. Stiff competition will come from small players and consumers will undoubtedly become bewildered by all the options.
Attention spans will become an increasingly precious commodity.
As a rule of thumb, the decay rate for old content is increasing nearly as fast as the creation rate for new content. Since there are physical limits to how much the human brain can absorb in a day, the pool of active content can only grow as long as we develop faster absorption rates and grow the number of Internet users.
Eventually we will see old content stagnating as fast new content is being created. (Probably within the next 10 years.) For this reason, the economic lifecycle of books and information products will continue to shorten along with the ease of new content creation systems.
Yes, we will hear lots of grumbling from the publishing world and even see some bizarre legal and legislative attempts to slow the transition.
But this is an exciting time for both authors and readers alike, as storytelling and information products shift into an entirely different gear.