Publishers can no more operate without a supportive and congenial ecosystem than a fish can swim on the surface of the moon. We can buttress the fish with life-support systems, the biological equivalent of copyright litigation and a strategy built on maintaining a market position through acquisitions, but the cost is enormous, and it doesn’t change the underlying situation. Swim within an established ecosystem or perish.
In the book world, we now have an unusual situation in that there are competing ecosystems for e-books, which are controlled by major companies. Amazon, with its Kindle devices and proprietary formats, is the clear leader; Apple is a good but not outstanding competitor. The problem with attempting to work with either of these companies is that they alone set the rules — which brings to mind the tech industry witticism:
A standard is a great thing; everyone should have one.
Amazon has taken its proprietary system beyond the dedicated Kindle devices to the world of apps. This is how I personally read most e-books, using the Kindle app for the iPad. With Apple the limitation (besides the utterly crazy limitations on pricing in the iBookstore) is that you can only read e-books purchased from Apple on Apple devices. Users of Android phones and tablets need not apply.
The options outside these ecosystems or closed networks have been few. But now we are beginning to see the emergence of a third network that imposes fewer constraints on its participants. It is difficult to put a name to this ecosystem because its leadership is distributed, but it has now begun to draw into its orbit such organizations as O’Reilly Media, Pearson, Barnes & Noble, and Microsoft. It is the nature of this network that it can bring in more and more participants because the ecosystem itself is designed not to be controlled by a single authority but to permit, even to evangelize for, as broad a participation as possible.
Here are some of the pieces of this ecosystem:
- Several years ago O’Reilly Media came up with the idea for a subscription-based e-book service for computer books. The O’Reilly organization approached the market leader in technical books, Pearson, and the two companies created a joint venture called Safari. Safari now includes the technical publications of most computer-book publishers in the U.S. The CEO of Safari is Andrew Savikas, a former O’Reilly executive.
- When the largest college publishers in the U.S. decided to create a joint venture for the sale of ebooks, now called CourseSmart, the publishers, led by the largest college publisher, Pearson, put the service onto the Safari platform. The CEO of CourseSmart, Sean Devine, is a former Safari executive.
- In order to assist in the financing of its e-book operations, Barnes & Noble has sought investment and strategic partnerships from such organizations as Liberty Media, Microsoft, and Pearson. Liberty Media brings with it a range of multimedia entertainment operations, which could benefit from access to Barnes & Noble’s Nook e-book system (anyone care to compete with Netflix or, for that matter, Amazon’s streaming options?), which currently trails Amazon by about three to one. Microsoft, in addition to capital, brings global distribution to the Nook services and possibly a platform play for mobile phones, PCs, and the new generation of tablets. Of certain interest to Pearson is the fact that Barnes & Noble controls the second largest college bookstore chain.
- Safari acquired Liza Daly’s Threepress, which had created what was arguably the first HTML 5 e-book reader. This is a strategically important development, as such a reader runs entirely within a browser and thus is not subject to many of the business constraints Apple imposes on third parties. Safari thus has an ebook subscription platform and a means to put e-books (or, for that matter, any other form of content) onto any and all devices that support Web browsers. Daly is Safari’s CTO.
- Safari has also acquired PubFactory, a unit of iFactory, a highly regarded software company in the Boston area. iFactory is arguably the finest developer of electronic reference works anywhere (the OED’s online version was developed by iFactory). Daly, incidentally, is an alumna of iFactory. Safari thus has a comprehensive suite of tools for digital book publishing. No one else has anything approximating this at this time.
- As readers of the Kitchen are undoubtedly aware, Peter Binfield, formerly the head of PLoS ONE, has started his own company, Peerj, with investment from the O’Reilly camp. Tim O’Reilly sits on Peerj’s Board.
This list goes on and on. It would take forever to note all of Pearson’s acquisitions in education technology or the significance of O’Reilly’s Tools of Change conferences, which are the learning camp for all publishers developing a digital strategy. Lest anyone think that these developments have little to do with scholarly publishing, I will note that in addition to the linkage to Peerj, Tim O’Reilly himself is the keynote speaker at this coming June’s gathering in San Francisco for the Society of Scholarly Publishing.
What are the characteristics of this evolving ecosystem?
- Small pieces loosely joined. This is the title of an influential book by David Weinberger (“Small Pieces Loosely Joined: A Unified Theory of the Web“). The relationships among the participants in this ecosystem are nonexclusive but often mutually supportive. Anyone can join this network, though some (e.g., O’Reilly Media) have preferred positions.
- No single controlling authority. This is of the essence. As is the case in any community, some participants are more vocal or play a bigger role, but there is no top-down source of power. There is nothing to stop a publisher, for example, from working with Safari on some items and then turning around and place books in the iBookstore.
- Skepticism about DRM. DRM (digital rights management) may be of little interest to journals publishers, but few book publishers create ebooks without it. Many of the players of this ecosystem, however, are outspoken about the limitations of DRM, especially insofar as DRM interferes with the utility of a book from the point of view of the end-user. Some elements of this network are likely to have conflicting views about DRM, however. For example, I think it unlikely that Pearson will allow its high-priced college texts to be sold without DRM unless the text can be locked into other Pearson platforms and services.
- Strong interest in social media. Tim O’Reilly himself is the author of the classic essay “What is Web 2.0?”, the defining piece on social media. For this ecosystem collaboration and sharing is as much an essential economic activity as expanding distribution and determining the gross margin.
- An interest in D2C marketing. D2C — direct to consumer — is a key attribute of the Web, but it is somewhat alien to most book publishers, which have historically sold most of their books through intermediaries. O’Reilly Media began as a D2C company and only later began to sell through channels.
It is hard to predict what else this network will draw in, but I would not be surprised to see an online bookstore to compete with Amazon, provided that Safari can persuade enough publishers to participate (which means dropping DRM). Nor would it be surprising for Safari to go head-to-head with organizations such as HighWire Press, Publishing Technology, and Atypon Systems, platform providers for scholarly journals — though it is probably most likely that Safari will first pursue book publishers. We have no clue what will be made of the link through Pearson to the Nook, though the Nook devices provide a useful hardware complement to the software-based solutions pursued by the other participants of this ecosystem.
I said earlier that there is no single controlling authority to this ecosystem, but there is a philosophical center based in Sebastopol, CA, home of O’Reilly Media. We can now see the O’Reilly group implementing a strategy to counter the aggressive and proprietary moves of Amazon and Apple. It is too much to call this the O’Reilly ecosystem, but Tim O’Reilly’s influence can be felt everywhere.