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4 posts from July 2014

How print is slowly killing publishers

It’s a textbook example of The Innovator’s Dilemma. The crazy part is we all know it’s a big problem and yet very few publishers are taking evasive action.

I’m talking about the reliance on print, even at the expense of digital transformation and growth. Here are a few reasons why print is a publisher’s silent killer:

Presentation style – A newspaper is pretty much defined by what appears on the front page as well as how everything else follows it in each edition. Books aren’t that different; they have a beginning, middle and an end. Digital content, on the other hand, isn’t as rigidly defined. Have you ever reached the end of a Google News feed, for example? Publishers who have deep roots in the print world are often too focused on how the print product is presented, often allowing it to drive their digital product.

Workflow – Presentation style is, of course, closely tied to workflow. A publisher who built their editorial and production models around print is likely to apply the same existing model to digital. This is the main reason many publishers evolve from static to dynamic content. And when they experimented with digital they often overhauled their workflow with disastrous results. The problem wasn’t due to a new workflow. Rather, a product nobody wanted was created and the new workflow got tossed aside with the failed product.

“It’s all we know, what we do best” – Editorial teams that have perfected print delivery often have problems adapting to digital. It’s foreign to them and outside their comfort zone. One publisher recently told me they’re pulling digital strategies out of editorial and into a small, centralized team; publishers and editors are to think about print and print only. Meanwhile, print revenues continue to decline. It might make the editors more comfortable but it’s also got to be pretty demotivating. Now is not the time to revert to comfort zones.

Opens the door to startups – As The Innovator’s Dilemma teaches us, disruption is great for the startup and often not so kind to the incumbents. It’s actually an excellent opportunity for established publishers to engage with startups but that rarely happens. As one startup founder recently shared with me, “I get the impression the publisher wants to simply copy our technology, not partner with us.”

Print defines your brand – This is probably the biggest killer of all if your brand is directly associated with print. When consumers hear your brand name all they can think of is a print product. There’s no association with digital whatsoever. Newspapers struggle mightily with this one. The solution is tough to swallow: Create a new brand that’s built around and tightly aligned with digital. It’s OK to say “Powered by old-print-publisher”, but the main brand needs to be detached from your existing, print-centric name. 


Unlimited subscriptions: Five things you need to know

One of the worst kept secrets in recent history was finally unveiled last Friday when Amazon announced their Kindle Unlimited program. It has the potential to become yet another terrific service for consumers but many publishers and authors are less than enthusiastic about it.

Here are five important points everyone in publishing should keep in mind when analyzing Kindle Unlimited and the other all-you-can-read subscription services:

  1. Amazon just legitimized the model – I signed up for Oyster several months ago and I love it. When I mention Oyster and the all-you-can-read model to publishing industry friends they treat it like it’s a fad that will soon disappear. Now that Amazon is in the game it’s time for everyone to realize that the model is here to stay, regardless of what the naysayers think.
  2. It’s not for everyone – The industry’s 800-pound gorilla just showed up but I don’t expect a major impact in the short term. Amazon’s title assortment is pretty limited, particularly with no Big Five participation. That’s why I have no plans to ditch my Oyster subscription for Kindle Unlimited. The other important fact here is that a large percentage of book buyers will prefer to own their content, not rent it. Everyone didn’t stop buying tracks on iTunes when Spotify took off, so don’t look for any seismic shifts here either.
  3. The pioneering startups are now on borrowed time – Even though others are probably also sticking with Oyster (for now) I do worry about the long-term prospects for them as well as Scribd. Neither of those startups has been able to create a household brand name yet and now they face competition from one of the most well known brands on the planet. I figure both of them have about 18 months to either come up with a unique value proposition or fade away. Anyone could have predicted Amazon’s entrance in this space and since competition is always a good thing I’m hoping both Oyster and Scribd have something special up their sleeves.
  4. Publisher financial models will evolve – This is the most interesting aspect of all. The business models vary among the providers and some publishers are undoubtedly getting better terms than others. In general, a publisher gets paid when the consumer reaches an agreed-to reading threshold in a book. Those percentages are as low as 10% and 20% in some cases. In some models the amount paid to the publisher is the same they would have received if the ebook were purchased, not rented, so it’s a function of the title’s digital list price. In other models a percentage of total revenue is placed in a pool and paid out to publishers based on consumer reading frequencies and thresholds. I have no doubt Amazon will sweeten the pot to lure more publishers into Kindle Unlimited. Publishers need to remember that that once the Kindle Unlimited platform gains traction Amazon will do what they always do, renegotiating so publishers receive less and Amazon keeps a bigger piece of the revenue pie. Sound familiar?
  5. Publishers can control their own destinies – Many of the bigger publishers who aren’t participating in Kindle Unlimited already realize the point I made in item #4. But what they might not realize is that they have other options. Just because they’re concerned about Amazon doesn’t mean they should avoid the all-you-can-read subscription model. In order to ensure future competition in this space I hope these publishers will sign up immediately with Oyster and/or Scribd. In order to keep Amazon honest we need at least one of these startups to survive.

Thriving as econtent prices fall

Last week I wrote about why I believe econtent prices will continue to drop in the future. The feedback I got in a couple of LinkedIn groups and via email was mixed. Some readers agreed and others seemed to think it was the craziest thing they ever heard.

Regardless of where you stand on this, there are a number of things you can do to prepare…just in case I’m right. Here are a few strategies to consider:

Sponsorship – Why force the consumer to pay the full price of your content? Think about a multi-pronged revenue strategy instead, where a sponsor pays part of the price. The end result is an ebook, newspaper or magazine that features a “Brought to you by ‘xyz’” banner somewhere on the cover and probably includes a sponsorship message and maybe even an offer for the sponsor’s products/services inside. You first need to think of which prospective sponsors might be interested in an affiliation with your content. Are they looking to get their name next to your brand? Do they want to include a message to your audience? Whatever the reason, identify a short list of sponsor prospects and start the discussion. Be sure to think long-term, not just one title or a single day’s/month’s edition. And be creative: Rather than just asking the sponsor for a fixed fee, can you get a cut of the revenue generated by the leads you’re providing them?

Premium+exclusive+direct – This is rapidly becoming one of my favorite concepts. Book publishers in particular are seeing their prices pushed downward by Amazon’s desire to give customers the best deal possible. There’s nothing wrong with that, till it starts to cheapen your brand. You can try to go direct at a higher price but what consumer wants to pay more when they can get the same product from Amazon for less? That’s why you have to think about creating premium versions of your products that are available exclusively on your site. What value can you add to your standard products and how can you deliver those only on your website, in a B2C manner. Yes, it means investing more in that premium content, but if it helps preserve your price point and enables a direct relationship with your customer it’s definitely a model worth building. 

Bundles and partnerships – What are some of the adjacent businesses and products that complement your offerings? How can you bring them together to create a bundle consumers can’t resist? And are some of those companies looking to extend their reach, particularly into your customer base? If so, they’ll have an incentive to discount their product in order to partner with you.

Despite the grim outlook of declining prices there are still new business models to be invented. The beauty of this is that these three options are not mutually exclusive; they can all co-exist with your existing channels and pricing models as well.


Why econtent prices will erode even further

If you think econtent prices are too low today, well, in the immortal words of Bachman Turner Overdrive, you ain’t seen nothing yet. In fact, “nothing” is precisely where more and more econtent prices are heading. Here are a few reasons why:

eInk dies while tablets reign – It’s no secret that sales of dedicated e-reading devices, mostly featuring the eInk display technology, are fading. eInk was terrific in the pre-tablet days, particularly since it was so lightweight, you could go weeks between charges and the price was right. More consumers are opting for multi-function tablets these days though and that means publishers are no longer simply competing with each other; on a tablet you’re also competing with games and other addictive time-wasting apps. As publishers struggle to maintain relevance and eyeballs many will undoubtedly become desperate and experiment with lower and lower prices.

More and better free content competition every year – Look around and consider all the terrific free content options out there. Whether it’s long-form like Wattpad or breaking news like countless websites, every year consumers seem to have less and less reason to open their wallets for econtent. Today you have more free options than you did a year ago and a year from now that number will only go up further. 

New, lower pricing models driven largely by startups – Even if your competitor’s content isn’t free it’s still often much lower-priced than traditional publishers are comfortable with. Startups don’t have all the infrastructure and fixed costs of a traditional publisher so it’s easy for them to experiment with lower pricing models. Look at what Oyster and Scribd are doing in the ebook marketplace. These two startups are bringing the music subscription model into book publishing Consumers (like me) love it because they’re spending far less and able to read so much more for one low monthly price.

Digital first, print never – Most traditional publishers are still operating with a print first mentality. They view e-version sales as incremental, a way to drive a bit more ROI for their print product. The market is already starting to favor digital first publishers though and that trend isn’t going to change. Digital first publishers tend to be younger, more aggressive organizations, ones that are looking for volume, not necessarily top-line revenue or even profitability (in the short term).

Kids and freeAs this recent survey notes, the younger generation thinks your content should be free. Content sharing is their way of life. Good luck changing their thinking as they gradually become a larger part of your target audience.

Are you discouraged yet? Don’t be. There are plenty of ways to combat this trend and even turn it to your advantage. Stay tuned…that’s the topic of next week’s article.