Digital change in the US market really began with Amazon selling physical books in 1995. The ebook component, although it has grown by leaps and bounds in the past five years, didn't really become important for more than a decade. And Amazon, and then Barnes & Noble, as giant players, were able to drive both innovation and market trends in a way that may have been unique.
In this talk, Mike Shatzkin will review the changes that occurred in the US marketplace and English-language publishing, including the undermining of the retail bookstore network. The changes in Latin America and Spanish will be different, of course; far more devices at far lower prices are on the market and there is a much bigger support infrastructure in place for publishers to manage a digital business than US publishers had a decade ago. So there are lessons to be learned from the US and English-language experience, but a different trajectory of change -- one which Shatzkin believes will be much faster because it is starting later -- is to be expected.
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Lessons Learned on the Digital Road: How digital change developed in the US bookmarketplace and the English Language
1. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Mike Shatzkin
Founder & CEO, The Idea Logical Company, Inc.
EspacioTendencias
Buenos Aires Book Fair | 26 April 2013
LESSONS LEARNED ON THE DIGITAL ROAD
How digital change developed in the US book
marketplace and the English Language
LECCIONES EN EL CAMINO
Qu辿 podemos aprender del cambio digital en el
mercado editorial angloparlante
2. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Some stipulations about the
history lessons
Were talking primarily about consumer
trade books, not all books
US: No borders, mostly 1 language, 1
currency
US: Tilt to online growth (no sales tax)
US: Ubiquitous credit cards, robust
infrastructure for delivery
3. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Where are we now in the US market?
25+% ebooks; about 50% for fiction
Print in stores probably under 50% of sales
Stores disappearing
Amazon power and leverage and margin
increasing
Paradoxically, and temporarily, B&N has
more leverage too
6. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Three seminal developments
in the 1990s
Desktop publishing made pre-press cheap
Amazon began selling; unlimited shelf space
Ingram created Lightning Print; no minimum
print runs
7. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
So launching new books got
progressively more difficult
Nothing went out of print
Publishers without sales forces could
compete
8. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Amazons special position;
Amazons brilliance
No sales taxes on Internet sales; national
policy
Huge Wall Street investment in Amazon
Relentless consumer focus
Use of deep pockets to ward off competition
(I2S2)
9. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
1998-2007: Amazon consolidates,
ebook attempts dont take
RocketBook and SoftBook in 1999 or so; too
few titles and no traction
Microsoft and Palm become the market;
Amazon buys Mobi
BN gives up on ebook business in 2002
Amazon relatively unchallenged in online
print; share just grows
Sony Reader launches in September, 2006
10. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Reasonable to think in mid-2007
(not so long ago)
The eBook idea just wont catch on
Investments in digitization can slow down
At that point: more ebooks in PDF than any
other format
11. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
And then the game changer: Kindle
in November 2007
Amazons all-out targeted marketing
Content downloads directly into the device
Huge push to increase title count
$9.99 pricing (not initially seen as a threat)
12. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Very quick outsized impact
Early adopters ($400 device) were heavy
readers
By mid-2007, sales are eye-catching
(relative to prior ebook sales)
Amazon begins to own an obviously-
important market
Combined online print and ebook hegemony
marks Amazon as a threat
13. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Publishers already getting nervous
Windowing introduced by Sourcebooks in
2008; others follow
Protecting print sale and bookstores
become priorities
Amazon selling many ebooks at below their
cost
Publishers worry about getting the call
14. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
B&N wakes up; Kobo also plays
B&N crashes a Nook program in
2009, launches in October
Indigos Shortcovers becomes Kobo, takes
Borders business
But it still appears that Kindle is 90% of the
market
15. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Apple joins the game; introduces
agency pricing
Q1 2010; 5 of Big Six move to Agency
pricing on April 1
Apple requires it; B&N and Kobo support it
Amazon share starts to decline, perhaps
below 60%
Random House introduces agency pricing in
March 2011 (a year later)
16. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
US government alleges collusion
around intro of agency in Apr 2011
Three publishers settle quickly
Random House not charged; Penguin and
Macmillan hold out
Eventually, all settle
Discounting (with minimal controls) is
legitimatized
17. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Since the dismantling of agency
Amazon share has risen; B&Ns has
dropped
Prices of ebooks have steadily declined
(DBW bestseller list)
18. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Other facts about the ebook
market
Only narrative reading has really worked
Juveniles beginning to sell; illustrated and
reference dont
Enhancement not proven commercially
viable
New tools arriving for illustrated to cut costs
(Apple, Inkling, Vook, others)
19. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
US publishing over the next few
years
Bookstores disappearing
Random-Penguin merger will have
enormous market impact
Future for illustrated is cloudy
Amazons power grows, including as a
publisher
20. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Guessing about the future, three
things really matter
Scale
Verticalization
Atomization
21. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Startups seem to focus on things
that really dont so much
Social reading (must be vertical to work)
Subscription (must be vertical or have scale
to work)
Services to authors (rather than to
brands)
22. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Scale
Publishers live in a world of Amazon, Apple,
Google
Barnes & Noble didnt have necessary scale
Scale is a moat: what Random Penguin
could do
23. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Verticalization
Selling content alone will probably not be
enough
Internet inherently fosters depth by subject
rather than breadth
Audience-finding is inherently expensive;
cant be done book by book
Rebecca Smart (Osprey) remark on
audiences
24. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Atomization
Any entity that touches stakeholders should
and will publish
Profit will be a tertiary consideration to these
players
They drive down prices and splinter markets
Much more of a challenge to publishers than
self-published authors
25. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
A business model is ending
Owning copyrights for profit a diminishing
business
Providing publishing skills to non-publishers
a growing business
As things change: being more audience-
centric promotes efficiency, buys time
26. LogicalIdea
The
Company
息 2013 The Idea Logical Company, Inc.
Happy to talk some more
Questions?
Email me at mike@idealog.com
See my writing at http://idealog.com