Joe Wikert's DisruptorFest

Debunking the discovery problem

Ever since ebooks gained traction the publishing industry has obsessed with what’s typically referred to as “the discovery problem.” The common wisdom is that discovery of the content will lead to fame and fortune.

What's next, now that ebook sales are flattening? Join me at a free webinar on April 28 to see how to drive revenue growth. Click here to register.

I believe digital content’s main challenge is more about efficiency, less about discovery, and my inspiration for this point of view comes from a totally unrelated business: the coffee industry.

A recent Businessweek article noted that single-serve pods (e.g., Keurig) have eliminated coffee’s biggest consumer: the kitchen sink. (Btw, Businessweek apparently doesn’t worry about content discovery as that article can’t be found on their website; it’s only in the print edition but I found a related version of it here.)

It turns out that with Mr. Coffee and other drip systems a great deal of product ends up going to waste. The net result is that as the single-serve devices gain momentum we’re creating a climate where total consumption is lower and excess inventories are leading to lower prices for coffee beans.

In short, the article notes that while Americans still drink a lot of coffee, they do it more efficiently. Each cup in the single-serve model is more expensive but in total we’re consuming and wasting far less coffee now.

What in the world does this have to do with digital content?

I don’t think anyone would argue with the fact that we have an excessive amount digital content today. A great deal of it is being produced but in many cases nobody is reading it. This has led to an overabundance of free and cheap content which is being both professionally published as well as self-published.

Wasted coffee goes down the drain but wasted content simply goes unread. In some cases, hoarders like myself have moved the content from online to local devices, but much of that content is never actually consumed.

Here’s a parallel from yet another completely unrelated industry: service provider recommendations. My wife and I recently cancelled our Angie’s List subscription because we discovered the Nextdoor social network. As you may already know, Angie’s List is battling allegations of fraudulent and deceptive practices and its reviews are typically posted by complete strangers. Meanwhile, Nextdoor offers reviews and advice from people you know or could easily introduce yourself to: your next-door neighbors. I’ve found these local reviews on Nextdoor to be much more reliable. In fact, I’ve hired two service providers in the past week based on Nextdoor recommendations. Best of all, Nextdoor is totally free.

Compared to Angie’s List, Nextdoor feels like a more highly curated and relevant service. Discussions and recommendations come from people you might already know and everyone lives right there in your neighborhood. In fact, many of Nextdoor’s members are going through the same situations you are (e.g., hail storm, wind damage, down trees, etc.)

Nextdoor offers what I refer to as a better “content efficiency” experience than Angie’s List. It’s what I’m looking for and the content is presented when I need it.

Just as nobody walks into a bookstore asking for the latest book from Macmillan, nobody is sitting around saying, “gee, I wish I could discover more content.” What we really need is more efficient delivery of content that’s highly relevant to our specific needs and interests. 

We’ve mostly given up on RSS feeds and let’s face it…Twitter is yet another fire hose that’s next to impossible to effectively manage.

At some point content efficiency will improve. I’ve referred to this before as the need for a “content concierge”, resulting in much better recommendations, tailored content streams and, yes, it will come at a higher price, just like the single-serving coffee pods.

We may end up spending just as much time reading efficiently delivered content but it will be highly targeted and we’ll pay more for the privilege of others (human curators and well-tuned, automated algorithms) helping us find the precious needles in the overwhelming haystacks.

Lessons from one publisher’s aversion to ebooks

I recently did something that I haven’t done for more than five years: I bought a physical, print edition of a book. For myself. I didn’t want to, but I had to. The publisher made me do it. The story behind my purchase offers lessons for all book publishers, but especially those who have yet to embrace the ebook market.

I’m a huge baseball fan and when I heard that Hal McCoy, a legendary sportswriter, recently published a book about his career covering the Reds, well, I had to have it. If you take a quick look at that link to the book on the publisher’s website you’ll see they only sell a print edition there. A quick look on Amazon shows that print is the only option online as well.

What's next, now that ebook sales are flattening? Join me at a free webinar on April 28 to see how to drive revenue growth. Click here to register.

That made me stop and double-check the pub date. It’s 2015, after all, and surely every publisher offers e-editions of their frontlist, right? I’ve apparently stumbled across one of the remaining publishers who is still stuck in the 1990’s. 

Not to worry… I figured I’d just run out to one of the many local brick-and-mortar stores and buy a copy there. No dice. There’s not a single copy of this book to be found at any of the local stores.

Amazon offers it at 21% off the publisher’s list price though, and since I’m a Prime member I’ll get it in a couple of days. So here we have a small boutique publisher who is contributing to their own market limitations. In this world of digital abundance they prefer to live in the era of physical scarcity.

Why print-only? It’s hard to assume they haven’t found a viable way to quickly, easily and inexpensively create EPUBs and mobi files. Not only are there a variety of simple tools for this but there are dozens, if not hundreds, of outsource providers willing to do it for a song.

Is it fear of cannibalization? Perhaps. But is that such a bad thing? I’d argue in this case that the number of potential customers who aren’t buying the print edition because it’s not available far outweighs the number of customers who might opt for a cheaper e-version over of print.

Here’s a radical idea: Charge 50% more for the e-edition. So that $19.99 print book lists for $29.99 as an ebook. Even after Amazon applies their consumer discount the publisher still makes more than they do on any print copy sale. Btw, I paid almost $16 for the print edition through Amazon but I would have gladly paid $29.99 for an e-edition, if only they’d offer one.

The publisher wouldn’t have to stick with a permanent digital list price that’s 150% of the print list. Maybe they could just have it set that high for the first 30 or 60 days, for example. The key is to measure the results, see what can be learned from the combination of print and digital sales and adjust accordingly.

Here’s another radical idea: Sell the ebook direct exclusively for 30 or 60 days. After that initial period offer it through all  theother ebook channels. (Yes, I realize this means the publisher has to renegotiate terms with distributors.)

As a consumer I admit that I’m not a fan of paying more or having to go through some crazy DRM process on a publisher’s website when I buy direct. But in this case I’d be willing to live with both of those situations.

At the very least, how about this?: Offer me an e-sample on the publisher’s site so I can start reading the book while I wait for the print copy to arrive. And please don’t lock that sample…make it easy to copy and send to others; after all, it’s a marketing tool for the publisher and the author.

Why Oyster now sells ebooks too

Oyster started as an all-you-can-read ebook subscription service but they recently decided to expand their reach by selling individual ebooks as well. There’s been plenty of speculation on why they made this move, including catching up to competitors like Scribd and Amazon. While the competitive point is valid, I think there are two more important reasons for this move: sustainability and customer loyalty.

What's next, now that ebook sales are flattening? Join me at a free webinar on April 28 to see how to drive revenue growth. Click here to register.

Regarding sustainability, Oyster’s business model is a tricky one. Even though Oyster only earns $9.95/month from a subscriber they’re undoubtedly paying publishers more than $9.95 each month for certain subscribers. It all depends on how many books that subscriber reads in the month.

A subscriber doesn’t have to read the entire book for a publisher payout to occur, by the way. Each publisher has negotiated a percentage threshold, so once a subscriber reads past that agreed-to point in the book Oyster pays the publisher as if the entire book was read. In short, some (and perhaps many) subscribers are triggering full publisher payouts for partially read books.

That sounds like a great way to build a large subscriber base but if you’re losing money on many of them it’s hard to make it up in volume. This is precisely why Oyster needed to diversify their business model. They already have the platform, the reading application and they’re building a nice brand. All they had to do was add the option to buy rather than subscribe. It’s also a smart way to add more recent and popular publications to their offering, which tends to be pretty shallow in many subject areas.

The other enormous challenge I see for these all-you-can-read subscriptions is customer loyalty. Since I never own the content I’m reading, and one service’s library starts to look same as all the others, there’s no reason for me to stick with any one provider. The service with the lowest price and other gimmicks eventually becomes the winner. That’s not exactly an attractive long-term strategy.

But if I’ve built a library of books I actually own on that platform it starts to look more like the walled garden Amazon built. Once you’ve bought a lot of Kindle editions it’s hard to think about moving to another ebook platform. That’s undoubtedly what Oyster hopes to do by adding the purchase option to their service.

Will it make a difference? Perhaps, but the biggest threat to Oyster and Scribd is, of course, Amazon. Fortunately for Oyster and Scribd, Amazon is now much more focused on drones all the other non-book consumer product areas. That’s enabled Oyster and Scribd to build some buzz and momentum. The problem is that if someone at Amazon decides to make subscriptions more of a priority both of these little guys are extremely vulnerable. It’s just too easy for consumers to switch to Amazon and gain all the other benefits an ebook-only service simply can’t offer.

Lessons learned at Book Business Live

The team at Book Business recently hosted a one-day, invite-only event in NY. I had the pleasure of attending as well as moderating the first panel of the day, Transforming Your Company for the New Era of Book Publishing.

The day was filled with highly engaging discussions featuring panelists from McGraw-Hill, Pearson, Hachette, Cengage, Perseus, Rodale, HarperCollins and Scribd. Here are a few of the most interesting points I took away from the event:

Direct-to-consumer (D2C) and competitive pricing – Towards the end of my session an audience member asked our panel the following question: How is it possible to build a direct channel when Amazon is always going to at least match, if not undercut, your prices? Clancy Marshall of Pearson provided a terrific response. She noted that her team is focused on creating a broader, more compelling learning environment, not simply trying to sell a book at the lowest price. This is perhaps the most important thing for publishers to keep in mind as they build out their direct channels: It’s all about creating a reason for consumers to come to you, not simply trying to offer the lowest price. You’ll lose 100% of the time if you’re trying to build a D2C channel based solely on low prices.

What's next, now that ebook sales are flattening? Join me at a free webinar on April 28 to see how to drive revenue growth. Click here to register.

What are you going to do with that data? – Tom Breur of Cengage told an interesting story of a correlation they noticed between text highlighting and student performance. They looked at the performance of students using a particular title and tracked how often the student tended to use the ebook’s highlighting feature. It turned out that students who highlighted more often generally got lower grades in the class. Their conclusion: Students who highlight are just skimming, not closely reading the text. The real question here is this: As you and your organization gather more data from ebooks, what will you do with that data? It reminds me of those registration cards that used to appear in the back of print books. I once worked for a publisher who had an office with stacks and stacks of those cards, carefully filled out and mailed in from their readers. The cards were just sitting there, taking up space and collecting dust. Gathering the data is just the first step. In the Cengage scenario, I’d like to think they’re developing ways for their platform to help highlight-happy skimmers become more engaged readers.

The lean model is alive and well – I almost stood up and cheered when Mary Ann Naples of Rodale mentioned their use of the lean startup model. We first started talking about the lean approach at Tools of Change several years ago and it’s great hearing that at least one publisher has fully embraced the concept. If you’re not familiar with the lean approach you’ll find all the resources you need here.

Indirect and direct can coexist and thrive – Mary Ann Naples also helped explain how a publisher’s D2C efforts don’t have to conflict with indirect/retailer channels. She talked about the importance of building community, something I believe is critical for publishers to create consumer brands, not industry brands. Further, she pointed out that a publisher’s community-building efforts help establish a compelling D2C solution while also helping their product stand out in the crowded indirect channels. In short, community can be leveraged to build a stronger consumer brand across all channels.

Focus on your biggest fans – I loved this point made by Rick Joyce of Perseus. He talked about how the music business is so good at selling more products to a band’s mega-fans. A broad consumer approach is fine but what about that portion of your list that tends to have the strongest following? It might be a particular series or author, for example. Are you creating the deluxe editions, the boxed sets, the must-have versions that those fans crave? And are you working with that part of your customer base to build the community foundation of your D2C efforts?

Kudos to Denis Wilson of Book Business and all the speakers who were remarkably transparent in their discussions and audience Q&A. If you ever have a chance to attend one of these Book Business events I highly recommend you make the time for it.