What’s the biggest obstacle facing Oyster, Next Issue, Spotify, et al?

I used to buy ebooks from Amazon but now I read almost exclusively on Oyster Books. Years ago I subscribed to a bunch of magazines and now I read all but one of them through Next Issue (The Week is the only exception). It wasn’t that long ago that I bought CDs and music tracks but now I’m mostly streaming through Spotify.

Since I’ve wholeheartedly embraced the content rental model, what’s preventing me from dumping Oyster for Scribd, Next Issue for Zinio or Spotify for Rdio?

The answer is “almost nothing.” All of these rental services face the enormous challenge of building customer loyalty. Since I don’t own the content and I’m on a month-to-month agreement with them, I can easily leave at any time. And when I switch, I leave almost nothing behind.

Contrast that with the likes of Amazon, where they focus on walled gardens and making it hard to leave. If you’ve built a large Kindle ebook library you probably don’t want to abandon it for another retailer and another reading app, particularly since you can’t bring your old books with you.

You might figure this is no big deal as customers who leave for a similar service will be offset by ones who go the other direction and switch from the competition. As with pretty much any business today though, it’s generally far more profitable to maintain an existing customer than it is to acquire a new one.

So how will these rental services deal with this? The most obvious answer is to expand their catalogs. But they’re all doing that and we’ll eventually reach a point of equilibrium where catalogs are almost identical between the services. Publisher exclusives could impact this, of course, but I’d like to think publishers learned their lessons from walled gardens and won’t make a similar mistake with exclusive distribution deals.

Another way rental services can distinguish themselves is to create more unique features in their apps. The competition will likely copy those features though, so any gains here will be short-lived.

Lower pricing isn’t an option either as that can be quickly copied and is nothing more than a dangerous race to the bottom.

How will this all play out? As much as I hate to admit it, I think all of this only further strengthens Amazon’s position. Amazon specializes in customer loyalty. That’s why so many of us first look to Amazon when buying almost everything these days. They’re also terrific at linking services together. Look at how Amazon Prime has evolved from free two-day shipping to now include Prime Photos, Prime Music and the Kindle Owners’ Lending Library. Critics will argue that none of these add-ons are as good as what consumers can find through other competitors; the difference is Amazon offers them for free, as part of Prime, and you can bet these add-ons will continue to improve over time. Lastly, when it comes to low prices and losing money, well, Amazon is the king.

The lesson here is that while consumers will continue flocking to the rental model, the lack of customer loyalty means the leaders today may not even be relevant tomorrow.


How crowdsourcing will ultimately add value

Most publishers cringe at the thought of crowdsourcing. Publishers often believe they exclusively own the art of content curation and they feel threatened when they sense others encroaching on their turf.

It’s hard to argue with that logic, especially in our disrupted world where the publisher’s role is under attack from self-publishing, free content and authors with their own platforms. That’s why every publisher should rethink the role they play and determine how to remain relevant in the years to come.

I believe crowdsourcing will eventually be a very powerful tool for all publishers. One of the key problems with crowdsourcing today is that it’s little more than a buzzword and most crowdsourcing efforts are poorly coordinated and leveraged.

Imagine this scenario in the future: A newspaper publisher allows members of their community to create remixes of the paper’s original content. Additionally, they not only allow, but they actually encourage the community to integrate it with content from other sources, including the “competition”. These derivative works will benefit from the interests and curation skills of highly passionate community members. It’s a blend of bloggers and “professional” content, for example. 

What’s in it for the community curators? If the publishers are smart, they’ll create affiliate programs where the publisher sells access to these crowdsource remixes and the curators earn a share of the resulting revenue. This also helps those curators build brand names of their own, potentially ones the newspaper might want to hire full time. Think of it as a feeder system for new content talent.

Now let’s look at the opportunity for book publishers. What if the publisher allowed the community to create their own editions of books? Let’s say you want to read that new blockbuster book about marketing strategies. What if a marketing guru read it before you, highlighted all the critical elements and inserted additional, relevant notes from their years of experience? Now you have a book that has significantly more value than the original edition. The publisher can probably charge more for this edition and pay the marketing guru a portion of the incremental revenue. Over time you’d see multiple digital editions of books. Would you pay more for the “Seth Godin Edition” of that marketing strategy book, where Godin didn’t write it but he highlighted the important stuff and inserted a bunch of related insights?

Most existing publishers will balk at all of this, worrying about the additional layers of complexity, a modified review process, etc. As the incumbents reject it we’ll see yet another new chapter of The Innovator’s Dilemma unfolding right in front of us as startups will fill the void; after all, startups don’t worry about new processes and whether it’s OK to break the old rules.


Revisiting Pew’s view of digital life in 2025

The Pew Research Center released a report last year called Digital Life in 2025. You’ll find a summary of it here and the downloadable PDF is here. I should point out that the report is now almost a year old, but since the vision is for ten years out, it’s still quite relevant and an interesting read.

If you don’t have time to read the entire 60-page document I’ll summarize it for you with two bullets:

  • The Internet becomes more like electricity and,
  • It’s all about access, not ownership

You could argue we’re already living out the first point today. The web is ubiquitous and thanks to inexpensive, powerful sensors and embeddable devices, the Internet of things that we’re rapidly heading towards means everything will soon be connected and burying us in even more data.

I think it’s terrific that my home’s thermostat can now be accessible from my phone. I’d love this concept even more if it meant that digital content operated more like electricity.

Today, however, I need a variety of apps to consume and manage all my content. Here’s a short list of some of the content apps I use on a daily basis: web browser, Oyster ebook app, Kindle ebook app, Next Issue magazine app and Evernote. If electricity operated this way you’d need a set of international travel adapters and converters to work with all the different plugs in your house, at the office and on the road.

I’d like to think that one day we’ll have a universal digital content app that lets you do it all. I’m not sure that will happen by 2025 though, not when all the major players insist on building and reinforcing their walled gardens.

The second point, about access, not ownership, is already playing out in the music world. iTunes helped break the chokehold record labels had when they used to force us to buy entire CDs. In the next stage of disruption, services like Spotify are helping tear down the dominance Apple built with iTunes.

More recently we’ve seen the same phenomenon in other digital content areas. Next Issue gives me access to dozens of magazines, including their archives, as long as I keep paying them every month. Then there’s Oyster and Kindle Unlimited, which offer similar broad, unlimited reading options for ebooks. As I mentioned last week, these ebook services will undoubtedly expand in the next 12-18 months, becoming your all-access pass for the topics and genres you love most.

If you have the time, I recommend reading the entire Pew report. The two items I covered here are the ones that resonated most for me but the report is loaded with plenty of other insight and perspective from quite a few industry experts.


What to expect in 2015 (and beyond)

Publishing is a pretty slow-moving business. That statement is solidly supported by the fact that the Kindle is now more than 7 years old and the majority of digital content revenue still comes from “print under glass” format. We’re still basically consuming dumb content on smart devices, regardless of whether it’s a book, a newspaper or a magazine.

Because the industry moves at a glacial pace I don’t think we’re likely to see any earth-shattering breakthroughs in 2015. What I do think we’ll see are some seeds of change being planted and a few of the next steps in the industry’s evolution. 

With that in mind, here are five important developments I expect to see in 2015 and beyond: 

Content expansion in all-you-can-read subscription models – No, I’m not just talking about more book publishers participating in services like Oyster and Kindle Unlimited. That’s a no-brainer. What I’m referring to here is that these book reading services will expand into other types of content, including newspapers, magazines and born-digital content that currently sits behind a paywall. And as this happens, watch topic-based, vertical subscription options sprout up within the platforms (e.g., all-you-can-read subscriptions for sports enthusiasts, fiction fans, hobbyists, etc.) In short, these services become your all-access pass to all paid content forms for your particular area of interest.

Content becomes smarter – Publishers have allergic reactions to phrases like “enriched content” or “content enhancement”. That’s largely because of failed experiments with native apps and tools that force a publisher to abandon their existing editorial and production workflows. Just as TV didn’t stop with radio shows in front of a camera, the way content is produced, distributed and consumed will evolve and begin to leverage the smart devices consumers already own. Soon the e-editions will be more than just a cheap alternative to the print edition.

Bundles and sponsorships drive more revenue – Consumers have been trained to expect lower prices for digital editions. Publishers like to blame Jeff Bezos for this but I believe there’s plenty of blame to go around. After all, how many e-editions actually have less functionality than the print version? For example, have you ever tried sharing an ebook, digital newspaper or digital magazine with a friend after you’re finished with it? Prices aren’t going up anytime soon and publishers are anxiously searching for new income streams. Look for bundles and sponsorships to fill the void. That next money management ebook you buy might include an offer for a discounted (or free) subscription to Fortune magazine, for example. Or perhaps that same ebook is offered at a lower price for the month of April thanks to a sponsorship from Charles Schwab. The possibilities are endless.

Successful brands will no longer defined by containers – What are the first things that come to mind when you think of the ESPN and Sports Illustrated brands? I’ll bet it’s “television or cable channel” for the former and “magazine” for the latter. This, despite the fact that both have thriving websites, apps and other digital properties. But that’s precisely why a brand like Bleacher Report can come out of nowhere and draw so much interest and traffic. Yesterday’s brands are often tightly coupled with containers like books, newspapers, magazines and TV while the most popular, highly valued brands of tomorrow will have no particular container affiliation. In fact, being tied to a specific container will be a major drawback in the future.

Content reuse surges – Today it’s almost considered a gimmick when content can be redeployed in new manner. Book content is sold in pieces and collections of short-form articles get remixed, becoming long-form content products. This is a tiny revenue source today, but that’s largely because content isn’t being acquired and developed with reuse in mind. Eventually every piece of content will be looked at through the lens of reuse. This means that every piece of content will be part of multiple products from the start. Compare that to today’s model where reuse is typically an afterthought and redeployment doesn’t happen for months or years after the content was first published.

What do you think of these five items? Agree? Disagree? Are there other areas I’m overlooking that you believe will strongly influence the publishing industry in 2015 and beyond?


Anticipating change in the myopic publishing industry

Have you ever heard the quote, “everything that can be invented has been invented”? It was once believed that a U.S. Patent Office commissioner uttered those words but that claim has since been refuted. Regardless of whoever said (or didn’t say) it, I’m convinced it’s a view many in the publishing industry strongly believe in. 

Let me provide a few examples…

In 2006 the ebook marketplace mostly consisted of PDF files. There were a few other formats but none showed any signs of broad consumer adoption. The industry seemed to be growing weary of anticipating the ebook explosion that was always “just around the corner”.

I remember working at a large book publisher in those days. One of my former colleagues was very outspoken, noting that books aren’t like music (which had already made the shift from physical to digital), there’s no device that makes a digital version more interesting than a print version, consumers like holding and reading a print book, etc.

Then, in late 2007, Amazon launched the Kindle and everything changed.

Let’s fast-forward a few years for the second example… In 2011 I was co-chair of the Tools of Change publishing industry conference. One of the messages we communicated to attendees was the need for them to diversify their channel strategy and focus on the one channel they totally control: direct-to-consumer. Our pleas were met with rolling eyes, yawns, and responses like this one from a very high-level executive at one of the Big Six: “We don’t need to create a direct channel…that’s why we have retail partners like Amazon, for example.”

My how times have changed. Today we even see the big guys focusing more on direct-to-consumer strategies, particularly as Amazon becomes more dominant and pushes for an ever-bigger piece of the pie.

For my third and final example, let’s look back to 2013, when some were suggesting a “Netflix for books” model would emerge. Most scoffed at the idea, suggesting books aren’t like movies and an all-you-can-read option would never take hold.

Earlier this year we saw the launch of Oyster Books, featuring that all-you-can-read model. Some publishers opted to experiment while consumers (like me) flocked to the service. Even Amazon has copied the model with their Kindle Unlimited program. 

(Btw, as I’ve said before, the current all-you-can-read ebook models are unsustainable. How long can these providers keep paying publishers more than they’re earning from most subscribers in top-line revenue? Amazon is the only player with enough resources to pull that off, and based on their stock’s performance in 2014 it looks like Wall Street is becoming impatient with Amazon’s loss-leader philosophy.)

I mention these three examples because I believe we’re in the midst of yet another shortsighted moment. Ebook revenues have plateaued for many book publishers. Some believe the market has reached equilibrium and that a roughly 75/25 split between print and digital is the future.

These publishers are quite comfortable living in the “print under glass” world, where they drive incremental revenue from digital editions that are identical to the print editions. They don’t like it that consumers expect to pay less for the digital edition (vs. the print edition price), but they’re growing comfortable with the model. Many of them briefly experimented with native apps and enriched ebooks; for the most part, their expenses exceeded revenue on these failed projects.

This is largely why these publishers have an allergic reaction when someone mentions the phrases “enriched ebook” or “enhanced ebook”.

In the early days of television most shows were simply radio programs in front of a camera. There were probably quite a few executives back then who figured that was the future and radio-plus-camera was as good as it would get.

I firmly believe that quick-and-dirty digital editions of print books are not the endgame. Some consumers are and will be perfectly content to read digital replicas of print products, but many will crave something that’s much richer though, especially once they experience it.

We won’t be stuck eternally in today’s “print under glass” world. In the not-too-distant future I’m convinced at least one model will emerge to take us out of this rut. Publishers would be wise to continue experimenting with content enrichment and enhancement (yes, we need better a better term for this!) so they’re not caught flat-footed when the movement takes hold.


Lifelong learning looms large

You’re probably familiar with Moore’s Law, which states that computing power doubles every couple of years. I think there should be a similar law for the amount of information and expertise most workers have to acquire in each generation.

In my own career I’ve had to invest a lot of time keeping up on technology, business trends, etc. My generation has faced a bigger challenge with this than my parents’ generation faced. But the hill I’ve climbed, and continue to climb, is nothing compared to what my children and their generation will have to deal with throughout their careers.

Technology is largely to blame, or thank, depending on your point of view. But there’s simply no mistaking the fact that each successive generation will have to embrace lifelong learning more than the generations that preceded them.

This represents an enormous opportunity in the content creation and distribution space. Being a lifelong learner today means you’re staying up-to-date in a variety of ways. Most of that is likely self-paced and informally structured. I see that changing dramatically in the future. 

There’s no single leading brand or platform for lifelong learning but that will change. Think corporate continuing education, catering to individuals and organizations alike. Certifications will become more meaningful and extend well beyond the ones that are mostly limited to IT professionals today.

All of this will be built around a solid foundation of content. How-to and training content for every type of job will become even more valuable than it is today. But where will that content come from? Startups will provide some of it, as will those existing publishers and content creators who are willing to move beyond today’s container-based model…and that’s the key. 

If you’re in the business of publishing books, newspapers or magazines and you’re wedded to a particular container model you’ll miss out. The successful publishers will be the ones who are willing to think outside their current container(s), granulize and tag their content for reuse and offer it in new streams and formats.

As I’ve said before, containers are slowly fading away and they’ll be less important in the future. Now is the time for publishers to plan, acquire, develop and manage their content for the container-less opportunities, like the lifelong learning boom, that are just around the corner.


Evernote as a content distribution channel

I’m addicted to Evernote. I use it throughout the day to capture my meeting notes and other thoughts. I was recently joking with a fellow Evernote user and colleague about how the tool makes us smarter and dumber; smarter because we now have a record of everything but dumber because that record lives on a device, not in our heads. 

Evernote is an interesting platform to study from a content distribution point of view. There are plenty of users like me who rely on Evernote and interact with the tool a dozen or more times every day. Evernote realizes that and they’re creating an entirely new content discovery ecosystem to make the tool even more useful.

I’m talking about the Context service Evernote added to their Premium version. Buried deep in that announcement is a note about how Context integrates The Wall Street Journal with your notes. It’s a brilliant idea and a content discovery and reuse pattern we’ll see much more of in the future.

Let’s say you’re prospecting for new customers and doing some homework prepping for a meeting with one of them tomorrow. We’ll call them XYZ Corp. You do Google searches, review the XYZ Corp’s website and research new XYZ Corp. contacts on LinkedIn. As you’re doing this you’re gathering details and placing them in Evernote as a cheat sheet for tomorrow’s meeting. Evernote Premium now sees that you’re recording information about XYZ Corp. and pulls up relevant articles about them from The Wall Street Journal; all this takes place within Evernote turning the tool into a new content discovery and consumption resource.

This isn’t rocket science and it’s not anything new. Google’s Gmail scans your inbox and has been serving up related ads for years. But now we’re seeing tools like Evernote take it to a new level: Rather than simply serving links to random sites, Evernote feeds users content from a highly trusted source and brand, The Wall Street Journal.

The key, of course, is to serve this content in an unobtrusive manner. Evernote is a productivity tool and the last thing I want is to be faced with a bunch of popups and annoying interruptions, forcing me to click close buttons so I can focus on the work at hand. Privacy advocates will once again freak out, but over time they too will realize there are benefits to services like this.

This is just the start. Look for tools like Evernote to add more content streams to their Premium version; maybe they’ll even have vertical editions of the tool (e.g., Evernote for Investors, Evernote for Marketers, etc.). Publishers should jump at the opportunity to participate because it extends their reach and helps keep their brands in front of readers, both old and new.


Unlocking the hidden value of archives

The cost of scanning, converting and digitizing content seems to decline every year. As a result, we’re seeing all sorts of print archives being converted to digital products. The problem is that too many publishers are applying the “if you build it, they will come” approach to these archives.

Simply creating the digital archive might be good enough for a small market of professional researchers, but it will never attract the larger consumer audience; flipping virtually flipping through stacks of old content loses its appeal fairly quickly.

Curation is the important step required to make these archives interesting to the largest potential audience. It’s all about the many stories the archive content has to tell. Some of these stories will be interesting to one audience while another story appeals to other segments.

Let me give you a couple of examples. I grew up in Pittsburgh during the years when the Steelers and the Pirates were dominant teams in football and baseball, respectively. The Pirates last won the World Series in 1979 and the local papers featured coverage of every game in the regular season and postseason. I’d love to read the story of the season from spring training through the final game of the World Series.

Roberto Clemente was one of my childhood heroes. He played for the Pirates from 1955 through 1972 and was killed in a plane crash on December 31, 1972. The local papers had hundreds of pages of content about Clemente and his career between 1955 and early 1973. I’ve read a few books that were written long after his death and while they were generally quite good they’re not the same as reading the articles that were written as his career unfolded.

That’s an important point. Plenty of books have been written about historical events, global leaders, celebrities, etc. No matter how much research is done by the authors on those topics, there’s nothing that compares to reading the articles that were written when those events took place, when those leaders took action or when those celebrities did whatever celebrities do.

The curation opportunity exists in at least two formats. The first format is the collection. This is where the curator collects the relevant pieces of content and stitches them together to tell the story. The results can be put in front of the paywall to attract eyeballs or maybe serve as a teaser for a paid product. They can also be placed behind the paywall as part of a premium subscription option or as a separate paid product.

The other format involves ebooks. Those collections can be quickly converted into the popular formats and placed in ebook distribution channels. This represents a completely new distribution model for some publishers (e.g., newspapers and magazines); it’s an incremental revenue opportunity of remixed content for those already participating in the ebook channel.

One of the concerns I hear from publishers is that they simply don’t have the resources for curation. Their teams are already stretched too thin and they can’t justify adding to staff.

I have one word for publishers in that situation: crowdsourcing. Think of your most active users, fans, readers and subscribers. How many of them might want to help curate your content to create new products? Also, can you use the Wikipedia model, where the crowdsourcing work happens for free? If not, can you create an affiliate program for curators to earn some income from their efforts?

Finally, think outside the box and don’t limit yourself to just one type of content. For example, one of my favorite books is FDR, by Jean Edward Smith.  The author meticulously researched Roosevelt and provided an amazing story of his life.

But what if the ebook edition provided access to the newspaper accounts of the most noteworthy decisions Roosevelt made in his life? It would have been wonderful to veer away from the book every so often and read the accounts of the events that were written when they actually took place, from the point of view of the journalists in the midst of it all.

A hybrid product like this represents a new opportunity for book publishers and newspaper publishers. Properly curated, this sort of product could easily command a much higher price than the traditional ebook on its own. I’d like to see book publishers venture out of their comfort zone and start exploring new concepts like this. It’s a terrific way to unlock the hidden value of archives and give consumers more of what they want to read.


Disney shows how to tear down walled gardens

Tired of dealing with the fragmented mobile marketplace that iOS and Android represent? The imagineers at Disney have come up with a terrific way to address that problem. It’s both a much-needed solution for consumers and also a clever way for Disney to maintain a direct relationship with consumers who buy indirectly.

I’m referring to the Disney Movies Anywhere initiative, which lets you buy a movie on one platform and watch it on either platform. Imagine a world where all those ebooks you bought on the Kindle platform could also be read now on the Nook platform, and vice versa. You’d be free to choose the lowest price, no longer worrying about ebook library lock-in, where you’ve bought so many titles you can’t imagine abandoning that retailer.

Sounds like a nightmare for the big retailers but a huge win for consumers and publishers.

Of course, how many publishers have the Disney muscle to force retailers into such a model? Very few.

But wouldn’t it be cool if one or more of the Big Five book publishers pushed for something just like this? The first thing a reader would see when they open that ebook from Amazon, B&N, or anywhere else is a message from the publisher thanking them for their purchase and showing the steps necessary to register the purchase with the publisher so the book can be read on any ebook platform.

The publisher not only does the reader a service, they also establish a direct link to all their customers. That leads to a better understanding of customer interests and trends as well as the opportunity to upsell other products directly.

Every retailer except the largest should support this concept as well. If you’re the distant #2 or #3 ebook retailer, you should totally embrace the opportunity to level the playing field with this; you’ll suddenly gain more relevance as all those books bought on the #1 retailer’s platform could now be read on yours.

Here’s another interesting byproduct: How long would the #1 retailer continue selling ebooks at a loss when every sale no longer reinforces consumer lock-in and, in fact, becomes yet another ebook the consumer can read on competitor platforms?


Ebook subscription services as publisher affiliates

I was at an event last week where an attendee described the following scenario: She discovered an author on the Oyster unlimited ebook subscription service, she read one of their books and then realized the author’s other books aren’t included in Oyster. She was then forced to buy the author’s next ebook somewhere else. The end result is the publisher still has no relationship with the reader and Oyster earns nothing from the sale of that next book.

We’re going to see more and more of this as publishers dip their toes in the ebook subscription waters, adding portions of their list but not their entire catalog.

This is a significant missed opportunity for the publisher...and the subscription provider (Oyster).

Here’s how the publisher and subscription provider can alter the model and both come out ahead: The subscription provider becomes a publisher affiliate, leading these interested and engaged readers to the publisher’s site where they then purchase that next book that’s not in the subscription plan. Maybe the publisher even sweetens the deal, giving the reader a special discount for being an Oyster subscriber. This requires the publisher and Oyster (or Scribd, for that matter) agree on affiliate terms, but wouldn’t they both prefer this sales model vs. losing that reader to some other retailer?

The publisher could take this a step further and have the purchased book placed in the subscription provider’s reader application. So now when I use my Oyster app I’m sometimes reading books rented through my subscription, and other times I’m reading books I own. The beauty here is that I’m using the same application in both situations so I don’t have to remember the idiosyncrasies of multiple apps.

If I was still a book publisher this is something I’d pursue immediately. The subscription model is here to stay and the startups in this space could use some help to stay afloat and not get crushed by the 800-pound gorilla.

For the sake of competition and keeping the dominant player honest, let’s hope Oyster and Scribd extend their services by implementing something like this.