April 26, 2006

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getAbstract: A Book Summary Service that Really Works Their tagline is “compressed knowledge”. I once tried a competing book summary subscription program and was highly disappointed, so I approached getAbstract as a full-fledged skeptic. I’ve now read 6 of their summaries and I was wrong. This is a great service and a real time-saver. I firmly believe that most of the good information you find in the typical business book can be boiled down to 4 or 5 pages. That’s the model for getAbstract. They carefully read each book, taking note of the key points and condense it down to three headings: Take-Aways, Relevance (What You Will Learn/Recommendation) and the Abstract itself, all in 5 pages. To convince myself that I’m not missing anything in a summary, I started off with a couple of books I already read from cover to cover. Sure, there were a few memorable stories or bits of background information from the book that didn’t make it into the summary, but overall I truly felt the summary covered all the critical highlights. On a long flight to the west coast yesterday I wound up reading the Clayton Christensen trilogy: The Innovator’s Dilemma The Innovator’s Solution Seeing What’s Next I had already read the first one but the summary was a good refresher before I moved on the other two. I’m a slow reader, and even more so with these summaries because I want to make sure I spend some time thinking about each of the take-aways, etc. Despite taking my time, I managed to get through all 3 in about an hour (total). Although I was seriously considering buying a copy of Seeing What’s Next, I’m glad I didn’t – the summary showed that it’s mostly a rehash of the first two books. getAbstract’s summaries are available on a wide range of topics and in many formats including PDF, PocketPC and Palm. Quite a few are also available in audio format, enabling you to “read” a book on your drive home from work. The subscriptions aren’t cheap ($299/year for an unlimited Gold subscription and $89/year for a 30-summary Silver subscription), but you’ll probably find the timesavings more than makes up for the subscription price.
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Scott Karp on the Profitability of Media 2.0 Scott has a wonderful blog called Publishing 2.0. If you appreciate my blog you’ll really like Scott’s. One of his more recent posts is entitled “What If Media 2.0 Is Less Profitable Than Media 1.0?” He talks about the reduced costs (and profitability) of advertising online vs. via traditional (mass) media. I suspect his short-term observations will hold true in the long term as well. There are parallels between Scott’s points about advertising and the model in book publishing. For example, I believe that a successful e-book model would probably have to feature products that are lower-priced than their print equivalent. Some publishers are trying to play up the value of the intellectual property and say that the price should be the same for every format. Given that the manufacturing cost of a typical book is approximately 10% of the cover price (rough approximation, no nit-picking on this, please!), you could argue that the e-book price should be approximately 10% less than the print book’s price. (I’m oversimplifying this a bit, ignoring things like DRM costs and the benefit of no excess inventory write-off – to keep things simple, let’s assume these are all a wash.) Is a 10% price differential on an e-book vs. a physical book significant enough to make the model work? I don’t think so, not as long as the e-book is nothing more than a digital image of the printed book, which is what we see today (e.g., a simple PDF of the physical book). Regardless of the author’s credentials or the unique value of the content, the world has grown accustomed to e-content being fairly inexpensive if not free. Plus, physical books have the benefits of portability (you can read them just about anywhere) and re-usability (after you’ve read it, you can give it to someone else) – these are two key attributes that cause physical books to have a higher perceived value than e-books. Let’s next assume that the publisher has the ability to sell these e-books directly, cutting out the retailer middleman. This creates a significant savings since the average book in a store is selling for approximately twice the price the store paid for it. (The problem here is that the typical publisher simply doesn’t generate the website traffic levels to compete with Amazon, for example; they also don’t have the depth and breadth of product offerings that you can find on Amazon.) Combining the 10% manufacturing cost savings and the 50% retailer savings results in a model where the e-book sells for 40% of the price of the printed book. So a $30 physical book has a $12 e-book equivalent, for example. This sounds good and leaves publishers with roughly the same margins they’ve enjoyed up to now. The big assumption here is that publishers can truly establish a direct selling relationship with their customers. That’s a pretty big leap of faith, at least when considering how the model works today. A better model is one that allows for a new middleman, one who specializes in e-book sales and doesn’t require the same margins as a physical bookseller. Perhaps they would need as much as 20% of the pie to make their business profitable. Now you’ve got a scenario where that $30 printed book has an $18 e-book equivalent, which is still a pretty good pricing spread…or is it? Don’t forget that the $30 physical book probably sells for about 35% off on Amazon. Now we’re talking about a $19.50 physical book on Amazon vs. an $18 e-book. The prices just got too close again, unless the e-book reseller is willing to offer everyday discounts like Amazon. One possible solution: The publisher has to live with a lower price so that the e-book is more of a bargain relative to the printed book. One way to avoid this outcome is for e-books to be something much richer than a simple PDF. The content would have to be reworked in a manner that takes advantage of the e-book device/platform. Links are embedded throughout to related topics elsewhere in the book. Video is integrated to provide a visual way of driving home a point. All this requires more effort by both the author and the editor/publisher, likely causing the publisher to still make less in the long run.

Joe Wikert

I'm Chief Operating Officer at OSV (www.osv.com)

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