Looking in on the fringes of the digital publishing world, you would get the impression that publishing is dead, dead, dead, except for those among us — the living dead — in denial. You have heard these claims or charges before. Big publishers are too big and unresponsive; publishers don’t add value; all information should be open (as in open access), which will torpedo traditional publishers’ business models; all books, once digital, will rapidly adopt new tools to include video, animations, sound, and, heck, why not an entire social network?; prices are about to collapse; we have moved from scarcity to abundance — and on and on and on. What is often overlooked in these discussions or arguments or manifestos or whatever you want to call them is that changes in the editorial nature of a work do not a revolution make. To change publishing, you have to find new markets. In the absence of such new opportunities, the investment in digital media, regardless of how incredibly cool the media are, is at best going to help a publisher hold onto its current revenues and is more likely simply to be another cost item, piled atop all the others, suppressing margins. New media requires new markets.
Before I dig into what some of those new markets may be, let’s run through the range of options a publisher has in contemplating investments in digital technology.
An innovation of any kind, technological or otherwise, falls into one of three categories:
A subtractive change is one that lowers a publisher’s revenue. (Actually, it’s not revenue but gross margin that’s at issue, but revenue is a good shorthand.) Naturally, no publisher likes a subtractive innovation. It may be innovative, but it could be bad business sense, to sell journal articles one at a time instead of bundled as subscriptions; similarly, book publishers need to be wary about selling books by the chapter. Sometimes such a capability can add to revenue, but it’s also possible that someone will buy the piece or extract instead of the whole program. Unfortunately for publishers, it is not necessarily in their power to avoid subtractive innovations, as the competition is looking for such things all the time.
A substitutive change, besides being hard to pronounce, is one that takes an existing revenue stream and replicates it with an innovation. In the journals world, for instance, the centerpiece of the print business model was the sale to academic libraries. In the digital era, the centerpiece is once again the sale to academic libraries. Thus, publishers had little incentive to make investments in digital technology unless they could rewrite the rules for this market in some way. And some did: lower costs through workflow engineering; higher prices from adding pages and issues to journals; and, most importantly, market dominance by bundling a number of properties together and selling them in a single package (the Big Deal). A small number of journals publishers, Elsevier preeminent among them, played this game with exquisite cunning, but for most journals publishers, the introduction of digital technology represented a new cost imposed on a flat or shrinking market. This is because for a product to be truly new, it must be additive; it has to find a new market.
An additive market leads to growth. This is where investments pay off, as they are not simply being used to hold onto an existing market. But where can you find additive markets in publishing, scholarly publishing in particular?
One of the most intriguing additive markets in the overall publishing industry is audiobook publishing. By some reports, for trade publishers audiobooks now constitute 8-10% of total sales. (E-books are two to three times that amount.) That’s a big number. Audio opened up a new market by tapping into situations where people could not read conveniently. While some people listen to audiobooks when they could be reading a book, and some listeners are visually impaired, that’s a very tiny part of the market. Most audiobooks are consumed by people whose eyes are otherwise occupied: when driving a car, walking the dog, or working out in the gym (“It is a truth universally acknowledged” — huff, puff, huff — “that a single man in possession of a good fortune” — huff, puff, huff — “must be in want of a wife” — huff, puff, huff).
That new market for audiobooks largely involves the same people who read books. The opportunity is not in finding new people but in developing ways to get access to people in new ways. As our society becomes increasingly mobile and mobile devices proliferate, the growth of the audio publishing market seems secure. Unfortunately, audio publishing to date has made few inroads into scholarly publishing. (Interestingly, public libraries are major customers for audiobooks.) Audio represents a wide-open opportunity for the clever entrepreneur.
In scholarly communications, the biggest new markets are international and in the author-pays open access model. The international opportunity rises with the growth of economies around the world; short of war or global economic collapse — or an inability to enforce copyright laws abroad — there is little to interfere with the ongoing growth in this area. The author-pays model, for which PLoS ONE is the most prominent avatar, very cleverly turns the traditional economic model on its head, tapping authors instead of readers, or readers’ proxies in the form of libraries, for a source of revenue.
It’s important to note that new markets often require some changes in the nature of the editorial product or in the processes that help to create that product. PLoS ONE famously changed the nature of peer review by focusing not on importance or originality but on methodological rigor, which significantly reduced the cost of the operation. PLoS ONE and other author-pays models also require highly efficient tools to produce its materials at a cost low enough for authors to pay for publication and a sophisticated set of practices to enhance online discoverability. The international opportunity would be much smaller if print volumes had to be shipped around the globe; digital technology opens up markets beyond borders.
I am myself particularly interested in interstitial publishing, which I wrote about before on the O’Reilly Radar blog; I also gave a presentation on this topic at the recent Charleston Conference. Interstitial publishing is publishing for the brief moments that lie in between the primary activities of the day. Think of the time spent waiting on line at the supermarket, waiting for a meeting to begin, or simply waiting for something. During the course of the day, those minutes add up. Many people (I certainly am among this group) reach for their smartphones when waiting around, looking at email or Twitter or Facebook. Publishers that create products designed for these brief snatches of time will be plumbing an entirely new market, one in which the amount of time someone can consume informational products rises substantially.
How big is the interstitial opportunity? My own experience suggests that it is very large. I read e-books on three devices: an iPad, a Kindle Touch (e-ink display), and my Android smartphone. My preferred device is the Kindle. I like the size and the fact that there is no backlit screen. But at night the backlit screen of the iPad may become desirable. During the course of the day, however, when I am waiting around for whatever, I open up the same book on my phone. I was surprised to find that at the end of a week, I had made the most progress on my phone. In other words, my interstitial reading time exceeded my dedicated reading time. Which raises the question: How should publishers design products specifically with the circumstances of interstitial reading in mind?
On the other hand, we have all these whiz-bang suggestions for how to improve books and other texts. In the print world, you were mostly stuck with text with some illustrations thrown in, but with e-texts you can add video, animations, audio, social networks, and just about anything else. The question is, Does this bring in new customers? Does this persuade existing customers to pay more or read more? Or are these new techniques simply serving the same market as the old, providing no new income streams — even as it raises production costs and complexity?
The real innovation for digital media is not in technology or in enhancing products. The real innovation is in marketing. The successful publisher is one that can study new technologies and see the inherent marketing opportunities before others do. Management is foresight, first and always.
10 Thoughts on "New Media and New Markets — Making Sense of the Possibilities in Publishing"
I looked at audio-publishing awhile back and it is potentially a huge market, perhaps more for audio news than books but that is a different issue. Americans alone spend many billions of hours a year just commuting in cars. Three technologies would help. First a sophisticated voice controlled reader for selection, search, backing up, etc. Second would be structuring the content to suport these features. Tables of contents for example. Third is computer reading (text to voice) to eliminate the cost of human readers. This might be at the publisher end or at the in-car reader.
I wonder if there have been any experiments with eBook and audio (done by a reader, that is). Do you know of any?
One obstacle to consider, is that audio rights are often sold by publishers to third party retailers such as Recorded Books, who are thought to be able to reach a broader direct direct market. So, the publisher and the audio rights holder would have to see mutual benefit to bundling a product in this way. I’m a bit doubtful the economics work as audio products are going to be the more expensive component of the bundle. Publishers would have to withhold audio-eBook bundling rights to exploit the opportunity, which depending on the pricing constraints put in place could dramatically effect their ability to sell audio-only rights.
I’m not sure that PLoS ONE’s peer review process significantly reduces costs. From the editorial side of things, you’re still managing the same peer review process, you’re just asking the reviewers to use a different set of criteria for their reviews. What it does do is massively open up the main revenue stream of the journal. If one accepts 70% of what is submitted, then one gets paid twice as much as a journal with a 35% acceptance rate. I suppose that the economies of scale this creates do drive down prices somewhat, but that’s more of a secondary effect.
“The real innovation for digital media is not in technology or in enhancing products. The real innovation is in marketing.” I like the article’s insights but debate the conclusion, which I think offers a false distinction between product development and marketing. To me the real innovation (evolution) will come in the business model – in monetizing knowledge (in some combination with its delivery system) even as its value falls as a gross commodity because of greater access and distribution. If we can take the analogy that knowledge=freedom, we can look to the last 500 or so years of history (in the West at least) to see how a premium product (freedom) has become an inherent right and what this framing has meant to its practical value…
Really interested in the concept of interstitial reading because we’ve just launched a new ‘Read’ service for our content (books, chapters, journal articles and working papers) which delivers content in html for any mobile device. It’s free to all – even those stuck in a supermarket queue. We launched it a week ago and have added 800 new readings a day (but I bet not many are really in a supermarket queue). Why have we done this? Because we think a key part of a publisher’s value-add is to find more readers for our authors; because we think the new delivery option will be valuable for subscribers because their patrons are increasingly using mobile devices. Why free to all? Because we think it will help build our brand value and audience awareness, which will feed through to winning new subscribers to the added value services offered by the main publishing platform. Will it work? Ask me in a couple of years!
You’re a noted fan of interstitial reading, and I’ve read before comments about PAN (Personal Area Network) on your posts… Guessing you believe publishers should be 1. catering to 2. developing towards and 3. thinking of opportunities within interstitial/PAN/cloud reading? Out of interest.