Joe Wikert's Digital Content Strategies

A Nate Silver book recommendation engine

It's NCAA tournament time here in the U.S. and plenty of bracketologists are turning to Nate Silver for his statistical expertise. Silver, of course, is known for his book, The Signal and the Noise, as well as predicting presidential elections and Major League Baseball player performance. I'm not aware of any statistical analysis he's done in the book recommendation space but I know someone who has applied Silver's thinking to help us figure out what book we should read next.

I'm talking about Stephanie Sun and a terrific article she wrote called Nate Silverizing Book Recommendations. I encourage you to read the entire piece, even if it's been awhile since your last statistics class.

As you read Stephanie's article, think about how book recommendation engines are likely to get better and better down the road. As she also points out, it's not just about helping consumers discover their next great read. This same analysis can also be used to help editors prioritize their time when faced with a stack of manuscripts to review.

Many will cringe when told that this sort of curation and serendipity can be reduced to an algorithm. That's not what anyone is suggesting though; the algorithm can simply be one of many tools to help improve discovery. And although it will never be perfect, look at how search engines have evolved since the early days of the web. Today we're often limited to the very simplistic "people who bought X also bought Y" type of recommendation. We're still in the early days of solving the discovery and recommendation problem in our industry and we need smart people like Stephanie Sun to drive improvement in our search and recommendation results.

The Kirtsaeng ruling: What’s your opinion?

Wow. I’m very surprised by the Supreme Court’s ruling in the Kirtsaeng vs. Wiley case. I figured it would go the other way. Here’s a nice summary of the majority opinion from the Supreme Court (you’ll find more detailed analysis here):

Putting section numbers to the side, we ask whether the “first sale” doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad. Can that buyer bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner? Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?

In our view, the answers to these questions are, yes. We hold that the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.

Read more...

What devices and formats do your customers prefer?

Most publishers create ebooks in all formats figuring it doesn't matter whether mobi is more important than EPUB or if the content is read on an iPad more frequently than on a mobile phone. That approach means these publishers have no idea how their content is being consumed. It also means they probably don't have a direct channel to their customers or some other way of polling them on their preferences.

At O'Reilly we like to stay on top of our customer reading habits and preferences. We monitor device and format trends through surveys and download statistics (from our direct sales channel). For example, here's a chart showing which primary and additional devices our customers read our books on:

As you can see, a computer is the O'Reilly customer's preferred reading device and the Kindle family is a distant second. What I find interesting here is the fact that Android tablets are much more popular reading devices for O'Reilly content than an iPad is. In fact, for our customers the small-screen iPhone/iPod combo is also a much more popular reading device than the iPad. Another interesting tidbit is that the iPad's popularity is almost exclusively as a second option, not the primary reading device.

Now let's look at preferred formats:

Here we see PDF still dominates; we learned long ago that most of the reading taking place on the computer is with PDFs, not EPUB or mobi files. This is a trend we've seen for years now and PDF doesn't seem to be any closer to relinquishing its format leadership status now than it was back in 2009, for example. And despite the Kindle's popularity EPUB is preferred much more so than mobi.

That begs the question: If the Kindle is such an important device for O'Reilly customers (see first chart), why is mobi a distant 3rd in format popularity? Is it possible our customers are loading their Kindles with PDFs? Sounds like a great question we need to add to our survey...

These charts reflect the preferences of the O'Reilly customer. Unless you also happen to publish technology books I'm pretty sure your results will look different from ours. But are you even taking the time to ask your customers these questions?

Reverse showrooming

This past weekend a friend asked me to pick up a couple of books for them. Print books, btw, and they needed them later that day. That meant it was time to head to a local bookstore, something I'm doing less and less of these days.

B&N was the closest and when I walked in I immediately realized why online shopping sometimes offers such a better experience than in-person. My local B&N moved all their categories around from the last time I was there and I must have circled the entire store three or four times just to find the two books I needed.

Then there's the reviews and top-seller lists I'm so used to seeing online. They don't exist in the brick-and-mortar world, so I decided it was time to do some reverse showrooming.

I chose the Amazon app on my Android phone, mostly because I know Amazon tends to have far more customer reviews than B&N. So I found myself flipping through the Amazon app while standing in the middle of a B&N store. I kept waiting for a store employee to walk past and make me feel guilty, thinking I was just buying the books from Amazon instead, but that never happened.

The whole experience made me realize, once again, that a chain like B&N needs to build a mobile app to make the in-store experience more pleasant and, dare I say it, rewarding.

The only mobile app B&N has is for the Nook. They offer nothing to help you navigate your local superstore. How about simple store maps so I can find the sections I'm looking for without walking all over the place? Yes, I know this has to be done store-by-store and updated regularly. And yes, I'm sure they like it that we're all walking through the store since maybe that means we'll stumble across something we weren't even looking for. I wasn't interested in serendipity on this visit though. I was on a mission and pressed for time.

Once they create this in-store app, how about adding some other features like deals-of-the-day? Base them on my purchasing habits. Make me a deal I can't resist and customize it for me. Feel free to mix the offers between print deals and ebook deals. Let me know about upcoming events and anything else I might be interested in, especially if it ties in with my buying habits.

All I'm asking is that they give me a reason to come back. Without any of this it will probably be a few months before I return. And when I do, the experience is likely to be as frustrating as this last visit. If Mr. Riggio is serious about buying the brick-and-mortar part of the business you'd think he'd want to implement something like this to improve the shopping experience.

Join the ebook subscription model movement

The ebook revenue stream has much more potential beyond simply selling standalone titles, one by one, to customers. If you're not already offering your content in an ebook subscription program you need to. I'm not talking about a broad program like Amazon's Kindle Owner Lending Library model; publishers and authors should focus instead on genre-specific vertical subscriptions that pay content creators based on the title's performance, not some portion of a flat licensing fee assigned for an entire collection of titles.

Safari Books Online is one of the oldest and most successful genre-specific models to learn from. Next month I have the honor of moderating a free TOC webcast with Safari CEO, Andrew Savikas. During this webcast Andrew will cover the following:

• The original thinking behind the subscription model for technology books
• The user data Safari provides publishers and what they can learn from it
• Why the pay-for-performance model is crucial for publishers and authors
• The opportunity in creating new genre-specific verticals to include your content

The webcast takes place at 1PM ET on April 26th. If you'd like to join us be sure to register here, but sign up now as this one will fill up quickly.

Automated ebook summaries

Yesterday I wrote about the opportunity to rethink the used book in the digital world. One option I suggested is for the community to create summaries of ebooks and sell them as bundles with the original work. Now I'm thinking about how the summary process could be automated and built into the ereader app.

I recently discovered a Chrome plug-in called CruxLight which highlights the key elements of a web page. If you're pressed for time and just want to quickly scan the page CruxLight helps you out by highlighting the important pieces and providing a list of keywords.

Is the technology perfect? Of course not. Will it improve over time? Absolutely, whether it's CruxLight or some other service. And if this works for web pages why can't it be a viable option for longer works, like ebooks?

This is exactly the type of functionality someone like B&N should look to integrate with their Nook devices and apps. It's a way of distinguishing themselves from Amazon and everyone else. I can see the headline:

Nook, now with automatic ebook summaries to shorten your reading time

Customers who don't want to use it can easily turn it off. But those who warm up to it are likely to buy and read more ebooks faster than they ever have before. Sounds like a win-win to me.

Used ebooks: Why your assumptions are wrong and the opportunity is huge

Amazon has a patent and now Apple does too. I'm talking about the techniques both companies might use to let you resell your digital content. They join ReDigi, who already offers a platform to resell your digital music.

Ebooks are next, of course, and the concern I hear isn't so much about the legal aspect but rather the risk of cannibalization. Most publishers seem hung up on the notion that a used ebook sale will mean one less original sale for them. And even if they participate in the used ebook revenue stream, they're concerned that the selling price will be lower, so they'll make less when cannibalization happens. I think that's a very shortsighted view of the opportunity.

This isn't just about lower-priced versions of the original work. It's time to think about the added-value aspects of a used digital content platform.

I've written before about how consumer might be able to resell their highlights and notes. Let's take that a step further. What if someone reads a 300-page business ebook and condenses the key lessons into 10-20 pages? Think of it as the Cliffs Notes, summarized version. Let's further assume that reader bundles their summary with the original ebook they bought and sells it via a used ebook marketplace. Could they charge more for their version? Absolutely.

You're concerned about this being more attractive than the ebook by itself? You should be. But what if the publisher owns this platform? What if all these sales were done directly by them, so they're capturing 100% of the revenue stream and sharing the appropriate cut with the author? Now let's take it another step further... What if that reader isn't just able to sell the one copy they bought, but an unlimited number of copies that come bundled with their summary? The consumer price of this version would be higher than the version with the ebook by itself and the reader who created the summary would receive a portion of the difference between those prices, essentially making them a royalty-based author on the bundle.

Btw, there's no reason the original author couldn't create this summary instead of or in addition to whatever is created in the reader community. In fact, why not open this up to all readers to create their summary of the ebook and let consumers decide which version they want? Use a voting system so that the best summary writers build a reputation and generate the most income.

These summaries aren't limited to written material either. There's no reason video couldn't play a role here. There's also plenty of room for an idea I suggested a couple of years ago: The "VIP Notes Edition." The key is to create a model where author, publisher and summary writer all share in the revenue stream.

So let's stop thinking of the used ebook market as yet another step towards the race to zero content valuation. This is different from the used print book market and it represents some very interesting opportunities for publishers who are willing to embrace a new model.

Moving from industry brand to household brand name

At last year's BEA I heard a Big Six executive state that her company didn't want to build a direct consumer channel because they're totally happy with their retail partners. She said it as though the two channels are mutually exclusive. They're not, of course, and any publisher that isn't working on building a robust direct-to-consumer channel is missing out on an enormous opportunity.

One of the reasons I think so many publishers haven't moved forward here isn't that they want to be reliant on retailers but rather because they don't have a household brand name. They have one the publishing industry knows, but not one consumers are talking about. As the saying goes, nobody goes into a bookstore looking for the newest book from Macmillan, Random House, Penguin, etc.

Authors and, in some cases, series, are the household brands here, not the publishing house. That was OK in the old days but the more our industry goes digital the more every publisher has a terrific new opportunity to build and leverage a household brand name.

It's not just about capturing 100% of the revenue. That's just part of the benefit. There's also the ability to engage directly with your customers, something you can almost never do when a third-party retailer is involved. In the direct-to-consumer world you finally have a chance to speak with your customers, learn what they like and don't like, discover new ways to serve them and create new revenue streams.

You'll never be able to do that unless you have a household brand name. And you won't simply build that overnight. That process begins with a commitment to community.

Btw, it might not make sense for the bigger publishers to try to turn their industry brand names into household ones. They need to go more granular based on target audience. I don't see much of that happening today though either, or at least I'm not seeing the fundamental building blocks required here: community engagement. You might have a website for your author/series, but what reasons have you given consumers to come to you rather than Amazon? If you've got nothing more than a collection of catalog pages you haven't given me a reason to buy direct.

What's going on with readers today?

You might recall an article from our TOC site a few months ago that asked the question, "What do readers want?". It was a call for publishing types to submit questions that Goodreads could ask their members. Your questions ultimately formed the basis of the Goodreads member survey.

I was fortunate enough to join Goodreads CEO Otis Chandler on stage for his presentation of the survey results at TOC NY a couple of weeks ago. The presentation featured a good deal of Q&A between Otis, myself and the audience, making it one of the most interesting sessions I've recently sat in on. I wanted to highlight a few of the more noteworthy takeaways from it in this article. The entire deck is embedded below, so you'll want to flip through it as you read my commentary.

Slide #6 -- As an industry we've long wondered just how influential social media is for book discovery. Take a peek at this slide and you'll see, at least for the two titles in question, the answer is "not very influential." Facebook and Twitter both fall well below most other forms of discovery while the timeless option of a friend's recommendation (presumably outside of Facebook) still ranks at the top.

Slide #9 -- If a friend is best for discovery it stands to reason that they'll also influence you to actually read a book. That's exactly what this slide shows. Even Amazon's powerful review platform only ranks in the bottom half of these choices. Also, note how low both "book blurb" and "cover" rank here. Even though those blurbs typically end up in the online description for the catalog page it makes you wonder just how influential they are.

Slide #21 -- Still in denial about whether ebooks are read on mobile phones? Almost 40% of cell phone owners read ebooks on them for all the typical reasons, but mostly while commuting or stuck in line. (Btw, how do your books render on a mobile phone? You might want to check into that...)

Slide #25 -- 73% of ebook readers shop around for the best price. So that would imply they're willing to buy from different retailers, either using different devices or apps on a tablet. More on that in slide 26.

Slide #26 -- OK, here's the most fascinating slide in the entire deck, IMHO. It more or less destroys the notion that platform lock-in is a problem. How else can you explain that 18% of Kindle ebook readers also read via iBooks and 15% also read Nook books? The other charts on this slide show just how much crossover there is going in the other direction. So not only is the e-reading lock-in problem overrated, it's also clear there's quite a bit of reading happening on tablets rather than dedicated e-readers.

Slides #27 and #28 -- These two should be a wake-up call for anyone in marketing. When they get to the end, a whopping 83% of readers want to see what else the author has written. But, as slide #28 shows, we don't exactly make it easy for our customers to discover and purchase that next book. 

What's Going On With Readers Today from Goodreads

Why B&N should abandon hardware

The ebook retailing business consists of three elements: hardware, content, and selling model. Dedicated e-readers (think eInk devices) are losing momentum to tablets. Content is mostly quick-and-dirty print-to-e conversions, or "paper under glass", if you will. The typical selling model is to buy one ebook at a time. Pretty simple. And not a whole lot of innovation happening in any of the three areas by the major players.

Recently there's been speculation that B&N is about to ditch the hardware part of their Nook business and focus instead on content and licensing. If true, that's probably the wisest thing I've heard from Riggio & Co. in a long time. Hardware has been, and will increasingly become more of, a fool's game for B&N.

They can't possibly steal Apple's mojo, so why try? I'll bet more people are reading B&N ebooks on an iPad or iPhone than they are on the Nook tablets.

On the Amazon side, B&N simply doesn't have deep enough pockets to lose money on both hardware and ebooks as long as Bezos can, so it's time to cut bait. Plus, Amazon's goal is to turn the Kindle Fire into a gateway for purchasing much, much more than ebooks. Amazon has a significantly larger product catalog outside of books, so Amazon can afford to lose money on the device if they make it up on the sale of electronics and other goods B&N doesn't sell.

So if B&N completely gets out of the hardware business what can they do to compete in the ebook world? Think app functionality, reader experience, and content sales model.

Today's e-reader apps have pretty much the same functionality as yesterday's. There's basically no innovation happening with the user experience in any of these apps, whether they come from Amazon, B&N, Kobo, etc.

Now is the time for B&N to shift all those resources they have in hardware onto the team that develops their Nook apps. What features are customers asking for? More importantly, what features have readers never even envisioned but would love to have? Channel Steve Jobs. We were all pretty content with our MP3 players back in 2000 and then in 2001 the iPod hit the scene. What a game-changer. What will be the "iPod moment" for e-reading apps?

And while they're working on that, be bold and work with publishers to develop some genre-specific, all-you-can-eat, ebook subscription programs. Romance is a good place to start but look at other verticals as well. What kind of package would compel customers to pay a subscription rate of $5 or $10 per month? They'll need to find the publishers who are willing to experiment here but that's why you focus on just one genre to start and build a success story to create others down the road.

At the end of the day B&N should continue to let Apple, Google, et al, distribute their Nook apps. They don't need to lose any more money selling devices that are viewed as commodities. They should instead focus on dramatically changing the reading experience and content acquisition model. After all, once hardware is eliminated, those are the only two other elements of ebook retailing that matter.