The Publishing Industry and its Relevance in the eBook Age
The eBook has arrived, and it is moving through the book industry with great force. The once relatively stable market landscape around which publishers have built their businesses for over the last century or so is shifting violently beneath their feet, threatening to topple them. The marketplace for selling books is no longer what it once was; the advent of digital access through ereaders, the steady growth of the blog culture online, and recent sales figures for ebooks are all indications that digital publication and sales cannot be ignored by print publishers. Times have changed as far as printing and selling books is concerned, and if publishers still want to be around to sell any books at all, they’ll need to change as well. This paper’s goal is to talk about what roles publishers have traditionally filled in the world of books, and to examine some of the ways in which those roles are being undermined by various factors today. It will primarily draw on current industry commentary and examples from the book publishing world in order to illustrate different ways that publishers can, and must, seek to maintain their relevancy in today’s increasingly digital and online environment in order to survive as a business. Book publishing is a big industry, and the marketplace environment it inhabits is becoming more complicated every day, so I won’t strive to elaborate on every single tiny problem facing publishers presently. However, I do intend to clearly talk about the most significant issues they are facing; namely, how they must move to cope with the advent of ebooks and their effects on the publisher’s role as a provider of books to the public. Opportunities do still exist for publishers in the digital plane, but they are competing against difficult opponents: self-publishing services that are continuing to crop up online, such as Amazon’s own self-publishing services, as well as the increasing number of online information outlets entering the competitive sphere by producing their own ebooks. But before examining what publishers may need to change, it will first be helpful to see what the expected role of the publisher has traditionally been in terms of book production and distribution. This will offer some perspective on what actual transformations publishers may have to undergo in order to stay relevant.
Since the advent of the movable type press invented by Johannes Gutenberg in the mid-15th century and the explosion of print culture that followed it, publishers have taken up the role of moving aspiring manuscripts to press and producing them en masse as books for the public to consume. At its core, this has always been the most fundamental thing that publishers do. They get books out into the public sphere. They bring books to readers. Over the years, the business model for the publishing house evolved until it took the form we see today. Publishers pay an author an advance in exchange for producing their manuscript into a book, advertising and selling it to book stores, who then sell as many books as they can to readers and return any unsold books to the publisher at cost. The publisher pays royalties for each book sold to the author, and the process continues on for other authors and other books. This model benefits the most from the publisher’s ability to sell many books to various physical retail outlets where they will have maximum exposure in stores to the public eye, by being placed right up front in store windows and on display tables.
In the past, the publisher has always been the authority on knowing what books will sell. It has been the writer’s responsibility to provide manuscripts to publishers, and the publisher’s responsibility has been to market those books to the reading public to the best of their ability. But it was always the publishers who had authoritative control over the material going out into the public sphere. The publishers chose what to publish. That authority is now being eroded by the current marketplace. The publisher’s traditional business model relies quite heavily on being able to put books of their choice in sight of the general public in physical book store locations. With the advent of online retailers such as Amazon, selling books this way has become much more difficult for publishers to do. They can of course still sell books to Amazon and other online retailers, but the business model the industry was built on still benefits more from having their books in physical store locations where people can walk in and pick them up. The very physical presence of books in stores is what helps them move from the shelves.
The problems for publishers are compounded significantly when ebooks become part of the discussion. First of all, as more and more of the book buying market is occupied by ebooks, printed book sales have begun to fall. According to an April 2011 ebook survey of publishers by Aptara surveys, they reported that “One out of five eBook publishers generates more than 10% of their revenues from
eBooks” (Aptara, “Uncovering eBooks’ Real Impact”). The amount of attention publishers need to pay to their efforts in publishing ebooks is steadily growing. Furthermore, as self-publishing services become cheaper and easier to access, publishers are beginning to lose the control they once had over the distribution of material. Authors who once would have had to get a deal from a publisher to produce a book now have alternatives to publish ebooks online by themselves for only a small capital investment and a much better financial return. Bob Lefsetz from The “Lefsetz Letter” confirms this idea:
Book publishers are losing control of distribution. You can go on Amazon and sell your own book today … They have a deal, certainly if you’re willing to charge $3, you get 70% of the revenue. That’s very different from a traditional publisher’s deal. It’s very difficult to get a deal with a publisher, and they give you a rotten deal because they give all the money to the superstars (Bob Lefsetz from the TOC podcast series, transcribed by Jenn Webb in “Publishers, you have to change your business model”).
Publishers are also being faced with competition from some unlikely publishing competitors. For example, news websites have begun to assemble and sell ebooks on various current affairs topics using collections of their own previously published or posted material, with some new writing in some cases as well. Julie Bosman and Jeremy W. Peters co-wrote an article for the New York Times which declares that “Book publishers are surrounded by hungry new competitors: Amazon, with its steadily growing imprints; authors who publish their own e-books; online start-ups like The Atavist and Byliner” and which notes that “Now they have to contend with another group elbowing into their territory: news organizations” (Bosman & Peters, “In E-Books, Publishers Have Rivals: News Sites”). How this particular form of self-publishing affects publishers depends on the kind of books they want to publish, but the reality is that new competitors are starting to seize opportunities that could be seized by publishers instead. Bosman and Peters quote Stephen Rubin, the president and publisher of Henry Holt and Company, part of Macmillan, as saying “Surely [news sites are] competing with us. […] If I’m doing a book on Rupert Murdoch and four magazines are doing four instant e-books on Rupert Murdoch, then I’m competing with them“ (Bosman & Peters). Mike Shatzkin takes note of the same issue in his blog post “Four years into the ebook revolution: things we know and things we don’t know”, confirming the knowledge that other sources of writing online can provide ebook material easily and for cheap. He does state, however, that “We don’t know if book publishers will develop an ebook publishing expertise that will make them able to persuade those brands in time to go through them, the way they have in the print book world, rather than disintermediating them” (Shatzkin, “Four Years…”). Disintermediation is the threat to publishers posed by the increasing wealth of self-publishing options. Some publishers are trying to make their move into the ebook market, although it seems that many are still behind the times. Paul Biba highlights this issue by quoting a daily email from “Shelf Awareness”, who say that “Two out of three e-book publishers have not converted the majority of their backlist titles to e-books” (Paul Biba, “Two thirds of publishers have not converted backlist to ebooks”). Publishers will need to take more action to actively seize the opportunities appearing in the ebook marketplace.
The necessity of publishers preparing to endorse ebooks is made even clearer by recent (and continually escalating) figures of ebook sales. The potential for growth right now is very large, and publishers need to realize this and prioritize their efforts in ebook distribution. The International Digital Publishing Forum collects quarterly ebook sales data alongside the Association of American Publishers, and their figures for the third quarter of 2010 showed ebook revenue through wholesale channels numbering at approximately $119,700,000 (IDPF, “Industry Statistics”). Comparatively, the revenue figures for 3rd quarter 2009 show revenue of less than $50 million. It should be noted that these statistics do exclude a significant number of publishers (12-15 trade publishers) and by no means can these revenue figures be applied across all areas of publishing. However, the indication is still quite clear that ebook sales growth is taking place very quickly. The demand is there, the demand is growing, and publisher will have to be able to meet that demand in order to survive.
So how exactly are the publishers supposed to do this? What are the specifics about their business models, their practices that need to be addressed? A number of publishing professionals and pundits have been writing on this topic for quite some time now, and their insight should prove to be most helpful in coming to some kind of meaningful conclusion. The core issues are that print sales are falling and bookstores are closing, which makes the old business model of “sell lots of books to retailers” a less financially reliable way of doing things (even more so than it already was, with publishers already required to buy back unsold books). In addition, ebook sales are and popularity are increasing, which means publishers need to be aware of ebook purchasing trends so they can capitalize on the most efficient ways of selling their ebooks to the public. The benefit with distributing ebooks is that the number of access channels for them is also increasing. Services like Amazon, ibookstore, and the ability to purchase books directly from a person’s ereading device and app of choice all mean that publishers can get access to more sales channels as long as they can find them. Mike Shatzkin summarizes the position publishers would desire to see themselves in to avoid being cut out of the distribution loop:
Amazon wants to dominate content sales to all devices. Publishers want an ecosystem with as many contact points for consumers as possible to protect them from being disintermediated by somebody downstream (namely Amazon). And they like the necessity of managing a lot of resellers because it protects them from being disintermediated by somebody upstream (the agents or authors). (“An aspect of the Amazon-Apple battle the tech world doesn’t care much about”).
With a reasonable ebook infrastructure, publishers can take full advantage of the fact that they cost less to produce, don’t occupy need to occupy physical real estate, and can be obtained by readers directly from many multiple points of contact. Publishers will need to take steps however to insure that their books are the ones being bought, since any other publisher they may be competing with also has access to these multiple points of contact with their readers. Publishers may need to take an even more active role in promoting their authors, especially since the way books are getting exposure is now shifting to a much heavier element of online communication. Mark Coker, founder of the ebook website www.smashwords.com, posted a survey to the popular ebook forum and website www.mobileread.com, asking them to identify their primary way of discovering their next book to read. The survey had 12 choices, and as of the posting of his results, 206 people had answered his survey. Coker noted that “The most-selected answer was ‘Recommendations from fellow readers on online message forums, blogs and message boards,’ with 29% of respondents choosing this. By contrast, only 4% selected, ‘Personal friend/family member recommends it to me’” (Mark Coker, “How ebook buyers discover ebooks”). While one survey alone isn’t necessarily indicative of the dominant trends when it comes to readers choosing books, there is no doubt that online communication could prove to be a critical element to the successful distribution and marketing of ebooks. Readers will find out about electronic books through electronic means, and this is definitely a fact that publishers will want to pay attention to as they move forward with their ebook selling efforts. They already go to great lengths to achieve similar aims by hyping up books by authors of theirs, by buying the physical real estate in bookstores and organizing events like author signing sessions. It stands to reason that they should set up a similar information generation engine online for ebooks . Online interaction and ebooks aren’t going away, and Mike Shatzkin has posted his take on these marketplace changes, more or less asserting that publishers will have to figure out how to adjust in their own ways to the digital world:
We note that all these changes in the marketplace were created by others, not by publishers. That’s not necessarily a bad thing, or even a new thing. Publishers also didn’t spring for the investment that created superstores and then Amazon in the 1990s, all of which increased their sales. A publisher’s role is to use the channels that are available to get books into the hands of readers. (Shatzkin, “Publishing is living in a world not of its own making”).
The growth of ebooks has advanced quite quickly in the last 4 years, and although the rate of growth must necessarily slow down at some point, ebooks are still becoming more popular and are continuing to occupy more market space than ever before. It’s been shown here that the decline of book stores and the advent of ebooks have greatly complicated the world for publishers. It may not prove easy for publishers to manage their position in the book buying world, but as critical discussion has demonstrated, things are not necessarily hopeless. If publishers hope to be able to keep up at all with the advent of ebooks and their faster distribution, faster information transfer and lower prices, they will have to move quickly to capitalize on every bit of market space they can with ebook publication. It is unlikely that the publishing house will remain standing as the sole pillar of authority it once was, the pillar that determined what once was and was not worthy of publishing. But perhaps they can move to act as a filter for quality work and take action to keep their own ebook publications in the center of the public eye as much as possible. With the right audience focus and enough effort spent on establishing a publisher’s own brand and digital presence, they may yet be able to maintain themselves as a reliable source for quality material in a world of abundance.
Biba, Paul. Sept. 21, 2011. “Two thirds of publishers have not converted backlist to ebooks”. Teleread. http://www.teleread.com/paul-biba/two-thirds-of-publishers-have-not-converted-backlist-to- ebooks/ Accessed Oct. 4, 2011
Bosman, Julie & Peters, Jeremy W. Sept. 18, 2011. “In E-Books, Publishers Have Rivals: News Sites” in The New York Times. http://www.nytimes.com/2011/09/19/business/media/in-e-books- publishing-houses-have-a-rival-in-news-sites.html?_r=4 Accessed Sept. 27, 2011
Coker, Mark. Sept. 26, 2011. “How ebook buyers discover ebooks”. Teleread. http://www.teleread.com/paul- biba/how-ebook-buyers-discover-ebooks/
Accessed Oct. 4, 2011
International Digital Publishing Forum. “Industry Statistics”. 2011. http://idpf.org/about-us/industry- statistics Accessed Oct. 4, 2011
Shatzkin, Mike. Sept. 25, 2011. “Four years into the ebook revolution: things we know and things we don’t know”. The Shatzkin Files. http://www.idealog.com/blog/four-years-into- the-ebook-u revolution-things-we-know-and-things-we-dont-know Accessed Sept. 27, 2011
Shatzkin, Mike. Oct. 2, 2011 “An aspect of the Amazon-Apple battle the tech world doesn’t care much about”. The Shatzkin Files. http://www.idealog.com/blog/an-aspect-of-the-amazon-apple- battle-the-tech-world-doesnt-care-much-about Accessed Oct. 4, 2011
Shatzkin, Mike. July 24, 2011. “Publishing is living in a world not of its own making”. The Shatzkin Files. http://www.idealog.com/blog/publishing-is-living-in-a-world-not-of-its-own- making Accessed Sept. 29, 2011
“Uncovering eBooks’ Real Impact: Aptara’s Third Annual eBook Survey of Publishers”. April, 2011
http://www.aptaracorp.com/home/survey/ Accessed Oct. 4, 2011
Webb, Jenn. Sept. 28, 2011 “Publishers, you have to change your business model”. O’Reilly Radar. http://radar.oreilly.com/2011/09/publishers-you-have-to-change.html Accessed Oct. 2, 2011