The Tipping Point

 

Waterstones will hopefully have a new dawn and flourish on the high street but so much needs to be done to redress many of the inherent issues plaguing the industry from over-ordering through to distribution and needless third party handling of stock, which lead to delay, add to cost and reduce profits for stores, authors and publishers. eBooks are still a part of the equation and a very important part which allows both authors and publishers freedom to cut out some of the factors which have seen physical book stores placed under threat.

Publishers want to support book stores but elements of the current business model need to change. Yesterday I received a potential order by a major high street chain for 500 copies of a book at a 60% discount. This book will be ordered through a third party distributor (let's say Gardners) who will take anywhere between 20 and 30% for doing nothing more than acting as a middleman, delaying the order to fulfilment process, adding to the handling and potential damage of stock. Of course if the store placing the order continues with this process they will want to ensure they make a profit on the order, if our normal wholesale rate applied this would leave the chain with little profit to make the venture worthwhile. Hence the top line addition of a further 30+%. These books are given to the chain on a sale or return basis. Here is the dilemma. Each book sells at £7.99 rrp, we use POD and have a high print cost per unit, say £3. £7.99 -60% = £3.20. Leaving us 20pence per copy to design, promote, pay royalties, pay ourselves and any other extraneous costs and still run the risk of having returns which we have to then pay back and decide what to do with the returned stock. We can opt for a larger print run to reduce print costs but this will not be a significant reduction for a relatively small run of 500.

If the chain orders direct from our printer/distributor and has the books shipped direct they can save the middleman distribution costs increase their own profit line through increased wholesale discount % and make the order profitable for us. Will they? The answer is probably no. So, for a small publisher such as Caffeine Nights we potentially lose the opportunity see one of our titles in stores across the country at a sustainable level.

eBooks simply do not press these problems. So who will win out, eBooks or physical books? If this current business model is not changed the answer is sadly very, very simple and inevitable.

World eReading Congress – So Cordially Invited...

Well in the end I was very cordially invited to join the World eReading Congress by the event organisers and help host the opening sessions on Tuesday 10th May with BBC’s Technology Correspondent, Maggie Philbin chairing the event. In fact it was a surreal moment for me to be introduced by Maggie.

The event itself cannot be criticised for its lack of scope, quite the opposite really, as the world of digital publishing came together from newspapers, magazines and books. Sometimes this mix was a little frustrating for the delegates who represented each of these sectors as it was also clearly obvious at times when they tuned out. Having said that, 2½ days away from the office was a big ‘ask’ of the delegates with such a crammed agenda.

In trying to offer something for everyone it could be argued that the organisers ran the risk of delivering nothing of substance to each of these disparate sectors. The interesting thing about digital publishing in all its forms is that inevitably there was enough cross-pollination to keep most delegates happy that they were either learning something which could be applied to their own sector or which could be adapted.

Events such as this rely on innovation, thought leadership, and discussion to provide a basis to determine success and for delegate to leave thinking their investment (anyone who read my previous blog about this event will know it wasn’t cheap) was well spent. There can be no denying that the event attracted industry leaders from each sector represented and in this sense the congress delivered. The CEO of Harper Collins, Victoria Barnsley OBE and Deputy CEO of Random House, Ian Hudson stepping up to the lectern to deliver some thought leadership from the world of books on the shape of digital publishing today.

Victoria Barnsley’s offered little new during her presentation and no real insight into Harper Collins approach to eBooks. She drew attention to Amanda Hocking and her independent approach to selling over 400,000 eBooks after numerous rejections from an industry which didn’t care about her or her writing until she became financially fuckable by the big boys. Barnsley argued that Hocking chose a major publisher over Amazon, who had joined the rush to snap Hocking up, because it was the right alternative to go with a traditional publisher offering the widest possible platform for distribution. I think whatever the outcome of Hockings career; Hocking will be having the last laugh. Victoria Barnsley closed with the comment that “We may not be able to control our destiny but we do have the means to influence it.” Here I agree.

Ian Hudson talked about our love affair with books and spoke of Cupid and emoted about our passion and romance with the printed word, and that it did not matter if that word was digitally printed. The main object was to connect with readers. At the romantic beating heart of Hudson’s address was a series of industry stats which reflected those of Victoria Barnsley. Each showing a huge year on year growth – no surprise here as we are starting from ground zero and most stats are going to show a spectacular rise and this will continue for some time. Both Barnsley and Hudson talked about authors going it alone with self-publishing and both gave examples in their own way, why going it alone doesn’t work. I detected an underlying sense of worry in Hudson and Barnsley, even though it was shrugged off.

The main concern for publishing though was largely ignored and that is the fall of paper book sales. There is a correlation to the rise in digital sales but it is not enough to account for the slump. Of course we are in the long tail of a global recession and leisure spending is decreasing but with two speakers from the largest publishing houses in the UK it would have been nice for a little more insight.

The content of the day seemed hell bent on not rocking the boat until Cliff Conneighton from Elastic Path Software presented. Conneighton presented the liveliest and one of the most thought provoking session of the day and actually threw out challenging questions to the gathered delegates. Cliff told us to forget everything we knew or thought we knew about digital publishing as basically we knew nothing anyway. This brought a smile to my lips but many delegates sat stoney faced, some even scribbled this down, either they had no concept of irony or humour. But at the heart of Conneighton’s statement was some truth. We are stepping into unknown territory and writing the rule book as we go.

Cliff Conneighton shared his 30 minutes with CEO of Lulu, Bob Young, a man who could impersonate Woody Allen with ease. Young brought the same sense of awkwardness to his presentation that watching a Woody Allen film would bring when you hope to watch a comedy on par with the Sleeper and get Match Point instead. Bob had a presentation prepared and decided not to use it for reasons which remain unknown. Instead he decided to wing it. Consequently there was no structure to Bob’s 15 minutes. I won’t guild the time by calling it a presentation. The upshot was that Lulu is not a publisher; Mr Young obviously feels this exonerates him from publishing some of the shocking books that grace his platform. I do wonder if the irony of ‘publishing a lulu’ is lost on many that use the platform. Personally, I actually think Lulu is doing a great service and providing a platform which gives access to anyone to become published, which is fantastic in this new publishing democracy. Bob imparted the knowledge that self-publishing including his Lulu platform accounted for about £500m global sales against £3.2bn for ‘traditional’ publishing, the inference being that platforms such as his were not a threat to Harper Collins or Random House. Lulu will be offering apps to their customers/publishers as well as eBooks, Paper books CD’s photo books etc. Never underestimate the small guy with specs. The world is a more colourful place thanks to Lulu and Mr Bob Young. I just wish we knew what was in that original presentation.

The other notable presentation of the morning was Alex Ingram from Waterstones. Ingram, eBooks and Development buyer was clearly more comfortable talking about Waterstones eBook strategy than the company’s at present uncertain future. Waterstones own eBook offering is supported by Sony and Elonex readers and one ponders the question if a new owner may back a more aggressive approach to the market to take on Amazon, at least in the UK, by announcing a dedicated Waterstones reader linked to its eBookstore. Amazon’s predicted announcement of a hybrid tablet, which has the best elements of the Kindle with an Android OS, could put further strain on the chain if Waterstones do not respond or pre-empt with a strategy to reposition its place in the eBook market.

A welcome discussion from Paul Gathercole of Universal Music on how publishing can learn from the mistakes of the music industry was the only time during the day when piracy was broached apart from privately during breaks at lunch and networking. Gathercole told how the music industry alienated itself by over-reacting and becoming heavy-handed with individuals as it panicked to find a solution to piracy once it had closed Napster. In fact, by closing Napster the industry had moved piracy from an area where it could easily trace each pirate using a single server to a massive underground network hiding behind more sophisticated hardware and software. As we contemplate Spotify for books or Bookify its clear that the challenges facing the industry are many, how we react, as the music industry has shown, is important because one wrong move can lead to a multitude of problems. Gathercole put it that the music industry thought that by slaying Napster it has killed the beast but in its place a many headed monster rose.

I attended the congress with a personal agenda and hoped to be given time during the Q&A sessions to raise some of the issues I feel are relevant in the industry. A selfish agenda admittedly, but one I still felt needed airing. Areas such as the imminent arrival of ePub 3, media rich content vs text, DRM, library eBooks and loans, Amazon and loans, mobile phone publishing, cloud computing, digital publishing and the old business model, social media, the Hargeaves report and the threat posed by literary agents becoming publishers were not even mentioned, or if they were it was nothing more than a passing comment. Sadly, each of the morning’s five sessions resulted in only one single ten minute opportunity to address all of the speakers on the content of their presentations and to try to touch on anything remotely contentious. Far too short a time than do anything but rub the veneer, let alone scratch the surface of the impact of digital publishing.

The main criticism of the Congress, as mentioned earlier is that the ambition of the event over-reached its capabilities to deliver anything but a snapshot of the industry, and by trying to cover too much content, too little depth was achieved. Ambition should not be criticised if the event organisers learn from this inaugural event. At least a third of the presentations could be dropped in favour of extended Q&A’s and possibly a congress which was not trying to be all things to all people. In its bid to attract as many industry elements as possible we ended up with a mongrel of an event. Maybe by hosting separate events aimed at each sector, such as a World eBook Congress, a World eMagazine Congress, and a World ePublishing Congress, the focus for specific industry questions and innovation could be directed more easily, giving more time and allowing for more scope for each sector. Nothing would stop a book publisher from attending an eMagazine Congress, nor vice versa.

One other presentation of note caught my attention and that was ‘Maximising success with web and mobile publishing from Richard Stephenson, CEO of Yudu media. Richard had some pretty impressive statistics concerning the loyalty of subscribers to digital magazines published on the Yudu platform. Some 64% renew through an automatic renewal system and talked of the importance of cross platform access and content providers developing content with different platforms in mind. One of the areas of interest for publishers must be the container app, especially for building brand loyalty. If publishers believe that product is more important than brand, rather than ‘as important’, then a container app may just be the tool to persuade them of the importance of developing a strong brand with great product.

Another important point given during the congress was a reminder of producing good metadata. This should be a given but sometimes it’s easy to neglect the importance of this tedious job. In fact one of the quotes of the day was “Metadata in the digital arena is going to replace the bookseller in the physical arena.” I hope the industry is actually planning to support the physical world more than just placing reliance on metadata as a substitute to recoup physical losses from the digital world.

I also think a lot of unnecessary energy is going to be spent on determining a winner in the battle of the eBook readers. A discussion at the end of Tuesday while amusing only highlighted the fact that some people like red wine and some people like white and some people don’t like wine at all. As with the music industry there is room from more than one format. Fiction readers will see the benefits of both Amazon’s Kindle and the bells and whistles of the multi-media offered through tablets, non-fiction and magazine/newspaper readers will benefit from ePub3 and the burgeoning tablet market. So this face-off on finding a winner is a pointless exercise. Readers will migrate to their chosen formats and there is plenty of room in the market for both.

The event had strong delegate representation from Europe, especially from the newspaper and magazine sector; at times this seemed to manifest itself with a very quiet and subdued audience unwilling to engage with the keynote speakers or presenters. Yet in contradiction to this, most questions posed came from people with strong European accents, so maybe it was the British who were reserved and quiet.
On the whole the World eReading Congress did deliver in some areas and I am sure that the organisers will make improvements moving forward. I look forward to seeing how this event develops.