Joe Wikert's Publishing 2020 Blog

TOC Podcasts: Now in iTunes

A month or so ago we decided it was time to extend TOC's reach with industry news, interviews, etc., in the form of video podcasts. I've already featured many of those segments here on the 2020 Publishing blog but now you'll be able to retrieve them in a more convenient manner.

Head over to iTunes and subscribe to the TOC podcast series using this link. Four of the first sessions are currently available via iTunes and more will follow shortly. Going forward we plan to create 1-2 new segments every week.

We're always on the lookout for new and interesting people, products and platforms to cover via this podcast series. If you know of any be sure to send them my way and I'll make sure the TOC team follows-up on them.

Adam Salomone on Atomized, Rich & Free Content

The Harvard Common Press is a highly respected publisher of a variety of cookbooks and parenting guides. In this TOC interview (viewable here or below) we hear from their Associate Publisher, Adam Salomone, as he provides insight on curating, pricing and distributing content at its most granular level. Recipes are all over the web and many of them are free for the taking. Adam explains how publishers can not only compete with "free" but leverage it as well. He also shares his thoughts on ad-supported content and whether it's appropriate in the book publishing world.

Zite CEO Mark Johnson on the CNN Acquisition and Zite's Future

Every couple of weeks it seems yet another iPad news reader is released in the App Store. Many of them leverage your connections in Facebook and Twitter but only one of them learns what you read and serves up more related content to match those interests. I'm talking about Zite, of course. It's been my favorite iPad app since the day I downloaded it. I've tried others but I keep coming back to Zite. This TOC podcast features an interview with Zite CEO Mark Johnson. He talks about the recent CNN acquisition, what makes Zite special and how the platform might eventually be extended into book-length content.

Porous Paywalls and Book Publishing

Felix Salmon recently wrote an article talking about how the New York Times paywall is working because it's porous. He contrasts that to other paywalled sites who haven't enjoyed the same success as the Times. As I read Salmon's article I was thinking less about pourus vs. rigid paywalls and more about DRM'd vs. DRM-free books.

There are definitely some similarities here. At O'Reilly we believe in a DRM-free world because we trust our customers and we believe they value our content enough to pay for it rather than steal it. It would be naive of us to think this philosophy totally eliminates the illegal sharing of content though. We just happen to believe those situations shouldn't cause you to penalize all your customers. Shoplifting happens from time to time at your local grocery store but that doesn't mean the store manager should put everything under lock and key.

But it was only when I read Fred Wilson's follow-up post to Salmon's article that I realized what other connection this has to book publishing: advertising, sponsorship and other revenue streams. As Fred points out, the Times doesn't necessarily have to charge for each online page view since they run ads on every page served.

I'm not suggesting we can suddenly give away book content and make the exact same amount of revenue with advertisements. But what I am saying is that advertising and its close cousin, sponsorship (e.g., "This book brought to you in part by..."), can and will play a role in the future of book publishing. Every publisher won't necessarily experiment with that model but many will.

24symbols is a great example of how this can work. 24symbols offer both freemium (free, ad-supported content accessible only while online) and premium (for-pay, without ads and can be read offline) models. The customer decides which option they prefer. That last point is critical. 24symbols isn't just serving up free content and hoping that alone will somehow create a successful business model. They're also offering an ad-free offline option that some number of users will upgrade to. They key is to make the premium service feature set compelling enough that customers want to pay for the it.

Will 24symbols be successful? It's too early to say (although I'm a huge fan of Justo Hidalgo and what he's doing with 24symbols; if you missed it, check out his presentation at our TOC SneakPeek from earlier this year). But I'm convinced the future will bring more advertising-based book publishing experiments, not fewer. And as I've said before, I can see a future where Amazon offers two versions of many (if not all) Kindle titles: an ad-free version with pricing similar to today's models and a second one with ads but at a lower price. Amazon has taken the first step with the hardware itself by offering the lower-priced "Kindle with Special Offers." As Jeff Bezos mentioned in the 7th paragraph of Amazon's most recent earnings announcement, "Kindle 3G with Special Offers has quickly become our bestselling Kindle."

Customers are already voting with their wallets and overwhelmingly choosing the advertising-subsidized version of the device itself. These results will undoubtedly encourage Amazon to start experimenting with ad-subsidized content as well.

Services like 24symbols and the Kindle platform are one thing, but the next logical step after that is for publishers to expose more of their content to the major search engines. How long will it be before some of the current New York Times bestsellers are fully and freely readable online with ads? If the stories are good enough and the premium alternative offers a significantly better reading experience (e.g., no ads, can be read offline, includes other features/services, etc.), some number of customers will upgrade, just like they're doing with Times subscriptions.

Ads in eBooks Are a Good Thing. Deal with It.

Amazon is introducing an advertising component to the Kindle platform.  I love it.  Kudos to Jeff Bezos & Co. for their forward thinking on this initiative.  I'm talking about the less expensive ($114) device currently known as "Kindle with Special Offers & Sponsored Screensavers."  (It's not the sexiest name but it certainly describes the product!  Still, I wonder what Apple would have named this...)

I've blogged before about how advertising and its close cousin, sponsorship, will take on a larger role in the ebook world and most people have criticized that logic.  They say "books aren't magazines", "the book reading experience needs to remain free of ads", blah, blah, blah.

Why?  What makes books so special?  More importantly, who's to say there can't be two flavors of a book?: One without ads (higher-priced, for purists) and one with ads (lower-priced, for everyone else)?

Before I get too far ahead of myself, I need to point out that what Amazon introduced with this new Kindle isn't what I'm describing.  They're not talking about including ads in books.  Yet.  At this point, all this new device offers is a slighly lower price ($25 less), periodic offers from Amazon (e.g., a discount on an Amazon Gift Card) and "sponsored" screensavers.

Wait a minute.  I recently bought a $139 Kindle without Special Offers & Sponsored Screensavers and now I feel gypped.  So I paid $25 more and I won't get any of these nice discounts Amazon plans to offer owners of the new Kindle?  That stinks.  I wonder if they'd let me opt in after the fact.  Seriously, this makes no sense.  They should let all Kindle owners opt into this program, not just the ones that paid less than the rest of us.

I know prices are always subject to change but I really wish Amazon would have initially priced this new device at $99 or less.  As soon as the Kindle gets below $100 they'll have a mass market hit on their hands.  I can't believe I'm saying that, particularly since I gave up on the Kindle a year ago.  Amazon has done some smart things since then though and this is just one example.

Don't think this new Kindle is the furthest Amazon plans to go with ebook advertising though.  They're playing it smart by taking one small step at a time.  There's no point rushing into this, but one day ads will be presented as splash screens when you open an ebook and even somewhere on the screen as you read.  It's OK.  The world isn't going to stop spinning on its axis when this happens.  We'll all be fine.  In fact, this model will put more content in front of more people than could have been reached without advertising.  That's a good thing.  And if you want to pay more to avoid ads I'm sure that option will exist (just like it does today, where you can pay $25 more for a "regular" Kindle.)

Here's where it all gets very intriguing: Will Amazon (and other retailers) compensate authors and publishers for this advertising/sponsorship income?  I'm not convinced they have to, but think about the revenue-sharing models this could present.  Amazon could ask for additional discount points from a publisher and offer that publisher a cut of the advertising/sponsorship income.  Interesting.

The Truth About Paid Models, by Matt Mitchell, Founder & CEO of MediaPass

The following is a guest blog post written by Matt Mitchell, Founder & CEO of MediaPass.  I love what he has to say about the importance of balancing free vs. paid content as well as making sure advertising is a component of the overall revenue picture:

The process of launching, running and attracting paid subscriptions isn't a competency that online publications generally have. This was one of our assumptions when we started MediaPass but we had no idea the extent to which it would prove correct. We also had no idea that some of the smartest publishers in the world would commit some of the most egregious subscription strategy offenses. So I've decided to point out a couple of the more basic mistakes being made and also discuss the way publishers should be thinking about paid subscriptions.

Please Tease Me!
One of the greatest myths about charging for online content is that a publication will lose traffic. This is not to say that declines in traffic aren't possible. There are actually many ways to lose visitors and the Times of London picked perhaps the best: they ignored the fact that users need to be drawn in by the actual content. Go to their site and click on one of their sections such as Business or Life. The site will immediately take you to a subscription wall before you even see if there's an article you’d like to read. I'm not kidding. Check it out. This is not a good conversation to have with your readers:

Times: "Please pay us."
Visitor: "Why?"
Times: "Because we're the Times."
Visitor: "What articles are behind your pay wall?"
Times: "Pay us and find out."

People generally buy a subscription because they are interested in a specific article. When you're at the airport shop deciding which magazine to buy, do you pick one because every article in the glossary is something that interests you? No, you pick a magazine that has one or two articles that grab your interest. You do this because you are guaranteed to like at least something in the suite of content you paid for – even if the rest of the magazine isn't so great.

"Switching" to a Paid Model
Whoever said that free and paid models had to be mutually exclusive? Publishers don't need to "switch" to a paid model. Subscription elements should simply be added to better monetize the website as a whole. The key for any publication is finding the optimal mix of free vs. paid content that is right for their site. And it's rarely 100% one or the other.

Why Remove Advertising?
Some sites are now offering a paid model where users won't be forced to see ads if they are a subscriber. There is no benefit – either financial or usage related – to doing this. The core reason why online ads don't monetize well is that people have evolved over the last 10 years to the point where their brain doesn't even see ads anymore. Unless the ad is incredibly intrusive, users don't mind it being on the page. By taking the ad-free route, publishers lose additional revenue and get little-to-nothing in return. Advertisers will also pay much more for subscribed users because they are more engaged. So, publications that do this are getting rid of ad real estate that has doubled in value.

Many publishers are surprised when we tell them not to abandon their advertising. We think of advertising as a "why not." Ad monetization is very low but every little bit helps. There are actually many good ad networks and other companies trying to improve the poor performance of advertising. We're glad they are continuing their efforts because we all have the same goal of improving publishers' revenue.

Ads to Oranges
Forgive me for the cheesy title, but initial subscription results can't be compared perfectly to advertising monetization. The reason is simply that subscription revenue builds on itself over time through renewals and ads don't. The WSJ.com had only a few thousand subscriptions when they launched a decade ago. They now have well over a million. Luckily for the WSJ and others starting to charge for content, subscription monetization is usually so much better that it beats the performance of ads even when handicapped in the first few months.

There is a lot of speculation and commentary on initial numbers of large sites like the Times. They've been making the mistake of giving their great content away for a long time now. Unfortunately for them, they don't get to simply press a button and immediately recapture all the money they lost. They have clearly made some subscription process mistakes but luckily they are all errors that can be fixed. They have at least made the right move this year by beginning to charge for content. Now it's time for them to refine their approach and grow their subscription base the way the WSJ has. And I think they will.

Matt Mitchell is Founder and CEO of MediaPass, a service which helps online publishers increase revenues through the use of customized subscription model.

Where Are All the iOS Magazine Subscription Apps?

Sports Illustrated is the latest big-name magazine publisher to offer an iPad edition.  It's a nice looking product, btw.  The app itself is free and it includes a sample of what's to come.  It joins the likes of Time, Wired and Newsweek...but they all currently have the same limitation: You can only buy individual issues, not sign up for a one-year subscription.  Worse, most of them seem to think they can charge the full print cover price for each iPad edition.

I bought the initial Wired edition for $4.99 but I'm not buying the second one.  Over the weekend I realized I played around a bit with the Wired iPad edition but never finished reading it.  In fact, I'm more likely to read the print copy that's sitting on my desk than the iPad version.  And since I get the print version for $10/year, why in the world would I even think about paying $4.99 per iPad issue?

I'm certainly not the first to blog about this and I doubt I'll be the last.  What I can't understand though is why, after Apple made in-app subscriptions possible months ago, are none of the big guys selling their magazines that way?

Does it have to do with Apple's 30% cut?  Are they all trying to find a way to get around this and sell direct?  That's what Amazon does.  When you buy a Kindle edition via the iPad app you're actually just going direct through the browser, not buying through iTunes.  I'm assuming Amazon therefore doesn't have to pay Apple a cent on the transaction.  Why wouldn't magazine publishers want to do the same, especially on longer-term subscriptions?

Of course, with magazines and newspapers we're talking about publishers who aren't exactly on the cutting edge when it comes to technology solutions.  They're still clinging to their print models as much as possible.  Why else would I get at least 2-3 "please come back" snail mails from BusinessWeek every month?!  So all these magazine/newspaper publishers are probably operating independent of one other, each trying to come up with their own direct sales app/tool.  I wonder how much time and money is being wasted because they're not working together on this.

Here's a crazy idea: Maybe they should consider pushing it all through Amazon.  If Amazon were smart, they'd pull an end-around on Apple and tell the magazine/newspaper publishers, "hey, sell your subscriptions through us...we won't charge you 30% like Apple...how about 20%, or maybe even 10%?"  Amazon already has the infrastructure in place to push content to the iPad as well as a terrific customer service operation, so why shouldn't they leverage their platform for something like this?

One potential pitfall is that Apple might decide it was OK for Amazon to sell their books for the iPad without getting a percentage, but if they're going to be magazine/newspaper distributors for the platform they'll cut off Amazon's iPad access.  Let's hope not.  After all, if Amazon could take this on, it would create a very healthy competition with Apple, and that would likely be a good thing for consumers.

Reaching New Audiences

After 5 weeks of iPad use one thing has become crystal clear to me: Magazine, newspaper and book publishers are too focused on applying the same old, tired business rules.

Maintaining your current customer base is critical to any business, but the number of existing customers is generally a fraction of the total potential base.  We're somewhere in the midst of an inflection point in the content business.  This is a stage where existing models are challenged, new ones are created, leaders can be toppled and the proverbial "guy in a garage" can completely reinvent things.  So why are so many publishers trying to apply all the old rules?  Here are a few examples:

Magazines at $4.99 an issue.  This one's just too easy to pick on.  Are you kidding me?  The product is nothing more than a quick-and-dirty print-to-e conversion.  Were these guys not paying attention to the book industry when they saw nobody could sell their quickie p-to-e books at the print price? Curiosity is driving some sales now, but that's not a long-term strategy. Look at some of the comments about Time's app:

Only $260/year to get content freely available on the web or delivered to your door in print for a fifth of that.  Idiots.

If each issue was a dollar I'm sure more people would buy this mag.  $5 is silly.

Time notes that they're only selling single issues right now and that a subscription model is coming.  Fine, but in the mean time how about doing something more creative?  If not a dollar an issue how about giving me the last 5 issues for $5.  Just because you can sell print copies at a newsstand for $5 each doesn't mean you should charge the same for single digital issues, especially when there's little to no value added.

I really want these guys to succeed and I'm more than willing to pay a reasonable amount for an issue or a subscription.  They should use this opportunity to come up with models that help them reach new customers, not just squeeze the early adopters because they know they have more disposable income.

P.S. -- It seems so obvious but I can't help think these guys have forgotten that they make a good deal of money on advertising, so if they go with lower prices and expand their audience they'll increase their reach...without the cost of printing and mailing.

Newspapers are still asleep at the wheel.  The New York Times seems afraid to commit.  Their Editor's Choice iPad app is OK but it's more of a teaser than a viable, long-term product strategy.  As I mentioned in this earlier post, these guys are just training me to find workarounds to get the content I want.  And although I'd love to pay for a subscription they don't even offer one.

USA Today is doing a better job but only going half way to a total solution.  Their iPad app is nice and it's even free.  I only read USA Today when I'm on the road but I'm starting to read it more thanks to this app.  That said, they need a model that pushes the content to me every day, not one that forces me to open the app for updates.  Go ahead and charge...it's OK!

My local newspaper is more typical of the larger problem though.  We've been paying subscribers for almost 20 years and every month we're one step closer to canceling.  Want to know how they could keep me on board?  Offer an iPad app version of the paper for free with my print subscription.  And please, make sure it includes every bit of content that's in the print version.

The focus there is on customer retention, not reaching new ones.  To solve that problem, how about forging alliances with other newspapers so that the app provides much broader access?  So if I'm heading to Seattle today I can open my app on the flight west to catch up on all the local news.  Sure, you can accomplish all this in a browser for free...if you're willing to grab the pages in advance.  But we're talking about convenience, which often comes at a price.  And don't forget about the additional advertising reach for all those non-subscribers today who could become customers tomorrow.

Lemmings waiting for the next channel to open.  Why does it seem like publishers are all sitting around waiting for channel equilibrium to happen on its own?  I have two words for everyone: Go direct!  Sure, you'll want your products in iTunes, the iBookstore, etc., but why is everyone so leery of creating a direct relationship with their customers?  Yes, some existing accounts will complain, but if you're not building a direct strategy you'll lose in the long run.  Despite Apple's "closed" model it's remarkably easy to add epub books bought elsewhere to your iBooks library.  And look at Amazon.  Even though they have a Kindle app for the iPad, any purchases you make for it are untouched (and untaxed) by Apple.  Why wouldn't you want to capture 100% of the transaction by building a direct channel, especially since the choices aren't mutually exclusive?  The more storefronts your products are in, including a storefront of your own, the better!

Here's an example of how we should all be thinking: The Elements, from Touch Press.  Why would a tightwad like me spend $14 on a subject I dreaded in high school and has nothing to do with my job or personal interests?  Because it encourages discovery.  I don't know the difference between Dysprosium and Holmium but this crazy app makes me want to learn more about both.  So while most chemistry publishers would have done quick-and-dirty p-to-e conversions, these guys took the time to make the topic fun and interesting.  As a result, they're reaching far more new customers than a dusty old periodic table ever would have.

So if the periodic table can be completely rethought to encourage discovery and reach a totally new audience, what about the topics you specialize in?  How can The Elements inspire you to approach your business differently?

Payment Models

I thought the micropayment model was dead.  Back in the '90's and early 2000's it was simply too much of a hassle to pull out my credit card for any one- or two-dollar transactions.  Then came iTunes.

Now I'm amazed how quickly I'll make a 99-cent purchase.  Part of the reason is the seamless way iTunes is integrated into the overall iPhone/iPad ecosystem.  Apple has created a model where payment is too temptingly simple.  Amazon may have patented one-click payment but Apple is perfecting it.  A quick check of my recent AMEX statement shows I paid Apple more last month (for mostly sub-$5, including a large number of 99-cent, transactions!) than I paid Amazon.  That wasn't the case 6 months ago.

There's still a huge difference between grabbing a free app and paying for one, even if it's only 99 cents.  I'm still pretty stingy here and I want to feel confident I wasn't snookered into paying for something that's not even worth a dollar.

The problem in the book publishing world is that we haven't found a good content model for the sub-$5 purchase.  Customers don't want to buy chapters, so don't kid yourself about that model.  And sure, you can do the quick-and-dirty print-to-e conversion and sell it for a fraction of the print price, but that's not much of a future.

We need to create more product entry points that appeal to the masses with low initial prices that offer a great value proposition as well as upsell opportunities for additional irresistible content and/or services.

What can we learn from other experiments in the app world?:

• First, don't assume the quick-and-dirty p-to-e conversion model is more viable just because the iPad offers a large, full-color screen.  I still refuse to pay $4.99 for a single iPad issue of Time, for example.  (You'd think the magazine folks would realize that's no way to attract new customers.  What about the free trial subscription to let me see what's special and get me hooked?)
• Second, and perhaps most importantly, think about rich content, not just quick-and-dirty conversions (see my earlier highly relevant posts here and here).  A chemistry textbook publisher creates this while a visionary creates this.  The former is a yawner while the latter, even as a fairly high-priced iPad app lures me in because it's so tempting to explore and discover with it.  Question: How many customers would describe your e-products with words like "tempting", "explore" or "discover"?
• Third, think about subscriptions, not just one-time payments.
• Fourth, think about selling the network, not just an individual product.
• And finally, don't ignore the advertising and sponsorship worlds.  Yes, I know many people say they won't stand for in-book advertising.  That's fine.  Offer two different versions, including the higher-priced one for those folks who won't tolerate the ads.

In-Book Advertising

Apple's upcoming iPhone OS update will include an option for in-app advertising.  The iAd service is just the next step Apple is taking to beat Google in what will surely be a very lucrative mobile advertising market.

Does this represent an opportunity for book publishers and authors?  Absolutely.  Hear me out, even if you're one of those purists who insists on books existing as they always have, without ads...

Let's start with the fact that you could always sell two versions of your products: one with ads and one without.  The version without ads is priced higher than the one with the ads.  Test, measure, rinse, repeat.  Why wouldn't you want the opportunity to study real world data from your customers to see whether ads have an impact on product acceptance and sales?  The results might just surprise you.

Or, how about all those free samples you have floating around?  I'm talking about the excerpts you distribute in the hopes that you'll convert some number of browsers into buyers.  Your conversion rate is something less than 100%, so why not find other ways to monetize that experience?

This is yet another one of the Kindle platform's shortcomings.  Amazon never built a model content owners could leverage to drive some additional revenue.  They didn't offer it with books but I'm even more amazed that they never figured it out for newspapers and magazines, especially since we're all quite used to seeing ads throughout those products.

In case you haven't noticed, most customers feel ebook prices should be lower than print prices.  That pricing pressure alone should cause every author and publisher to experiment with services like iAd.  What have you got to lose?

P.S. -- If Apple is smart they'll build iAd into the iBooks app.  You'll tell them whether or not you want iAd service included every time you provide them with ePub files for your next book.  Hopefully they'll also let publishers try out that two-pronged approach where the book is available both with and without ads, at two different prices.