Format change in action – a couple of examples from history:
1. Movies and TV: in the late 40s/early 50s, movie companies fought broadcasters to protect their industry against the upstart television. Their frontal attack failed, and consumption of moving pictures largely moved from the cinema to the home. TV developed wholly new formats (game shows, chat shows), but also reformatted drama (soap operas, seasonal series) beyond what the movies had ever been able to achieve. Much of the talent that had worked exclusively in the cinema found new ways to make new livings.
2. Counter service grocers and self-service supermarkets: another mid-century change. The economies of scale, and the ease with which savings could be passed on to the customer, rendered counter-service stores rapidly obsolete. Supermarkets sold bulk and sold convenience; as the years passed, they progressively improved product quality, all the time managing value.
In both cases, “big business” created the format shift – just as big businesses have created ereaders and tablets; but thereafter, they had to develop those formats as dictated by the customers. Publishers in the post-paper world will have to do the same.
Indeed, pbooks are set to join cinemas and small food stores on the junk heap of history – until they reinvent themselves anew for an ebook audience. But that will have to wait another 10-20 years – a cycle of decline, to be followed by a renaissance in a new and different form?
Hitch: http://jimberkin.wordpress.com; supermarket: business-school.exeter.ac.uk
Some Twittering this morning, inspired by a couple of articles spotted by Jellybooks‘ Andrew Rhomberg. One is a market report from Publishing News, the other a blog entry distributed by ebookporn.
Low prices are transforming ebook buying behaviour from “buying to read” to “buying to collect” http://ebookporn.tumblr.com/post/28845301698/why-publishers-are-having-difficulty-settling-on-a …
Collect, or just accumulate?
bit of both? Some is accumulate “wanted to read” (and then forgot), but also collect “don’t want to miss out” (deal!)
the post certain rang a bell with me in that ebook buying and physical book buying are evolving somewhat differently
you now have genuine impulse buying from the comfort of your home and at genuine “impulse prices”
Front list/back list ratio is 40/60 for print, books, but 20/80 for ebooks! http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/53430-what-happened-to-the-long-tail-.html …
Concepts like frontlist/backlist, based on print runs/reviews/marketing, increasingly redundant in ebook world.
PN notes that Nielsen Bookscan has reported a fall of 30%, almost one-third, in US sales of fiction backlist titles in printed book form, for the period ending 22nd July 2012, compared to one year earlier.
The shift in market shape is accelerating, not slowing down, with the article noting a significant fall in physical book space at retail outlets (over and above Borders’ US closure). One major American publishing group is reporting that 80% of backlist sales are now in ebook format – the pbook long tail is getting shorter and shorter. Assuming Amazon still accounts for a large part of those backlist sales, backlist bread-and-butter in bookshops must be looking very stumpy indeed. And without backlist sales to prop up the discounted frontlist, the book-specific store model looks very troubled. Booksellers need to diversify, and to recognise that the “general bookstore” is probably unsustainable.
But hell, you know that already. What’s piqued my interest today is the effect that all of this will have on publishers – and not so much on the grand strategies of media groups (many of which are quite forward-looking), but more on the basics of seasonality, range management and changing consumption patterns.
Amazon made one of their opaque announcements this week, proclaiming that for every 100 physical paperbacks and hardbacks they had sold in 2012, UK customers had downloaded 114 titles to its Kindle e-reader. Such is Amazon’s dominance in the UK book market that this was headlined “Readers are now buying more e-books than printed books“, ignoring the enfeebled minority of book-lovers who are doltish enough not to use Amazon.
Ebook customers aren’t behaving like pbook customers. Are you a traditional “heavy book buyer”? If so, how many books might you buy for yourself at a time – four, five? Any more, and the weight/bulk will be too much to carry, and once you get home, there’s the imputation that all those pages piled up at your bedside must be read.
Whereas ebooks – pah, easy. Click, download. Click, download. Moby-Dick – always meant to read that. Click, download. À la recherche du temps perdu, twelve volumes for £3.25 – no problem. Click, download. Having it on your Kindle is almost tantamount to reading the thing anyway.
Back to that ebookporn piece. As the writer notes, people are downloading “huge chunks of content that will never be read”. The piece concludes:
If your download 70 books at $0.99 each you are spending $70 and acquiring years of books to read. Very soon this reader stops purchasing and that sales bubble bursts.
If instead they were to spend not $70 for 70 books but $7 a month for access to 7 million books this reader spends $84 a year, year in and year out. Knowledge is light and it stands to reason that access to all books can be sold like a utility such as electricity, water, and internet access.
This is what might be described, broadly speaking, as the Spotify principle, and it’s one that slashes through publishing, bookshops and libraries as we know them. Which has more value to a reader who has no desire to surround him/herself with dead tree content – 70 ebooks, most of them unread and never-to-be-read, or an almost infinite quantity of content, from classics to trash, all available from the cloud at a moment’s notice?
This brings us back to frontlist and backlist. I can understand how new ebook content can break through and succeed, whether a title starts with word-of-mouth build, typical of self-published hits, or is driven by a professional marketing campaign. However, that approach divides ebooks into Monster Hits and Everything Else. When publishers were putting out a few dozen pbook titles each season, they were reasonably certain that most bookstores would carry/display/promote most of those titles. The books would get their place in the sun, and then (if they’d sold a few copies) earn a position in the backlist, where sales could tick over unto eternity. They would move from frontlist to backlist; most of them heading ultimately to oblivion, and few lasting for lifetimes.
There is no straightforward translation of this old world into the land of ebooks, where hits will be bigger and faster, but will probably also be forgotten more swiftly. The solution, of course, is not to try and force a frontlist/backlist pbook mindset on the ebook world, but to adapt methods that works best for readers – who now have the freedom to behave in a totally different, less considered way.
Note, methods. Sales will fluctuate; surge, recede and return again. Content will no longer be defined by its copyright date, but by its relevance to a particular reader’s needs. Publishers will require a whole range of different sales tactics which are reliant on understanding the end customer. This is best achieved through partnership with sellers, sharing sales data and market understanding, though it runs counter to Amazon’s established strategy – Seattle is determined to hold on to its data and control the customer relationship.
The “Spotify” approach is a rational response to the hangover that will follow downloading excess; alternatively, publishers may have to assume that a high proportion of ebooks will be sampled, but never read, and price them accordingly. Neither solution represents a straightforward “format shift” (in the way that hardcovers were succeeded by paperbacks in the mid 20th century). Consumers aren’t thinking in those terms, so publishers are going to have to change their model fundamentally. And because the book has been such a successful object for so many centuries, that’s a difficult shift for people and corporations alike. Ask any old bookseller – we know…
And to close, a gratuitous photo of about seventy pbooks, all of them pretty well-read…
If you’re in the UK and have any interest in books, publishing and digitisation, can I commend the Bookseller’s FutureBook Conference to you.
There’s a packed day of activity on Monday, 5th December, at the QEII Conference Centre in Westminster. There’ll be keynote addresses from Stephen Page, Dominique Raccah and Evan Schnittman, and about 40 of the sharpest minds associated with the trade participating in discussion sessions throughout the day. Sessions will be covering digitisation, start-ups, gamification (no, me neither), and international opportunities.
You can read a full programme here – I understand some tickets are still available, but hurry.
I am chairing a discussion on the theme of “The new retail landscape”, with an excellent panel:
Jeremy Brinton, publishing consultant and former CEO of Dubai-based booksellers Magrudy’s
Robert Clark, Senior Partner at Retail Week’s Retail Knowledge Bank
Cameron Drew, head of Vendor Relations at international eReader developers Kobo
Julie Howkins, Commercial Director at Gardners distributors, responsible for the launch of the Hive
Alan Treadgold, Head of Retail Strategy at global creative agency Leo Burnett
It should be an excellent session. Hope to see you there.
I flitted in and out of a busy Frankfurt last week. For anyone who hasn’t been to the Messegelände, the scale is spectacular – vast hall after vast hall, interconnected with numerous escalators, corridors and security checks. A dead whale full of Audis and antiquarians was parked in the centre of the complex, and wifi support (notwithstanding the BlackBerry Crumble) was lousy. Earls Court is being demolished next year, but if it ever saw Frankfurt, it would die of shame.
From the perspective of this blog, the big buzz was eBooks, and the point at which their penetration of English-speaking markets will extend to the rest of the world. Kobo’s new partnership with Fnac (as well as their new relationship with WHS as a UK-exclusive partner) suggests both that Europe will start to feel the eBook hurricane through 2012, and that there may be some alternatives to the Amazon hegemony starting to emerge.
My presentation at Tools of Change has been extensively (and sometimes sensationally) reported, though my determination to rouse my audience with touches of revivalist preaching meant that I got what I deserved – anyway, I thought it would be useful to reprise my key points, then we can move on to the next chapter of this brave new world.
1. Bookshops cannot survive as economic entities
UK bookshop chains, a few years back:
Progressively, most of the businesses on the first slide disappeared over the past ten years – they were acquired and subsumed, or they failed and closed down. In a more benign economic environment (less price competition, less online competition, less severe banking crisis) more of them might have survived; of course, some were more robustly structured or better managed than others.
These bookshops (and the hundreds of indies that have also folded) didn’t disappear because no one wanted to buy from them any more; however, in a world of upward-only rent reviews, rising utilities costs, and very tight net margins, bookshops can only survive losing, say, 20% of sales before they become uneconomic, and plugs get pulled.
This leaves the remaining 80% of their customers unhappy and disenfranchised; it speeds the drift to Amazon and supermarkets (and in due course Kindle), or it causes those customers to stop buying books altogether.
The “eBook Revolution” (one for the cliché file) will accelerate this process. I’ve never prophesied the death of the physical book (or pBook, as the eBook-people prefer), but publishers need strategies for a bookshop-free world, and I’m not yet convinced they’ve found them. One strategy might be to support bookshops with more equable terms, of course, but retailers and publishers would have to be very honest with each other about outcomes, so that publishers’ profits weren’t ploughed into supporting failing enterprises, or bookshops given a false sense of their own robustness. Interesting to read Hachette Livre Chief Executive Arnaud Nourry’s views on these matters.
2. Retailer diversity matters
Regular blog readers will have seen my “Amazon takes over everything” sketches before. Click here for the Fantastic Dystopia. I used these old sketches to illustrate the peculiarly British phenomenon, whereby Amazon has emerged as the sole credible online bookshop, and the sole credible eBook seller, in the UK. I’m concerned that the publishing community hasn’t done enough – collectively? – to ensure that there are alternatives to this level of domination.
There is a limit to the amount of business you can do with a “frenemy”. John Ingram, whose family owns the dominant American book wholesaler (and much more) defined his company’s relationship with Amazon – on a Tools of Change panel discussion – something like this:
Amazon will make use of our services and expertise for as long as it makes sense for them. But as soon as they can do it themselves, they’ll shoot us in the head.
I had something of a Damascene conversion over the summer, shopping for books in the regulated French market, where book discounting is limited by law to 5%. I saw a greater choice of books in mass market stores, and a greater choice of interesting bookshops. It started to look as though price protection might be assisting plurality, and helping to keep good bookshops in business. Consumers may pay more for their books – but (beyond academia) no one has to buy books. More realistic pricing would be a benefit to everybody.
Here’s a table of pricing that Rüdiger Wischenbart presented at the TOC wrap-up. Rüdiger calculated the average RRP and discounted price of six major nations’ top ten fiction books, and benchmarked them against their eBook equivalents. The results confirm that we get cheap books in the UK – though we have got ourselves into a “high RRP, big discount” mentality that favours the most powerful merchants, and disadvantages the small specialist.
3. Keep books special:
I’m worried about books being subsumed into “the seduction of colour, movement and noise” represented by tablet devices. My slide showing all the things you can stuff into an iPad looked like this:
Of course, the tablet environment is ideal for many non-narrative formats, but I fear for the distinctiveness of long-form narrative if it is left to fight all of this miscellaneous (and often more seductive) content. I believe that standalone eReaders are important – indeed, I’d like to see the focus move away from what is a fairly basic and straightforward piece of technology, to a point at which the eReaders are free of charge, and the content – the stuff that really matters – is ascribed the value it merits.
4. A couple of contentious observations:
a) Publishers need to promote more, younger firebrands to positions of real responsibility. My generation grew up with paper (and telephones, vinyl, 35mm film and all the rest), and we are inevitably “translating back” – subconsciously – much of the time. The bigger the publishing house, the more disruptive new media will be to their established business model, and thus the more disruptive the people they should be hiring to ensure they prosper. We’re saying goodbye to our bookshops; professional publishing is economically and culturally essential.
b) It’s great coming to Frankfurt, and talking books, books, books, to all and sundry. But most book buyers (the actual customers that publishers need to get much closer to) don’t eat, sleep and breath books. They have other things to worry about. Publishers will have to fight for their attention, so they need to ensure the public still value what books give us, and their fundamental role in a strong society – the ideas, the knowledge and the power that they ultimately confer on us all.
If you want to talk to me directly about any of these matters, you can contact me at email@example.com.
Afterword: Apologies to the long-established and very fine booksellers John Smith & Sons, whose name should have appeared on both of the “bookstore” slides above.
I’ve just reminded myself that The Bookseller published an earlier blog from me, which arose from a splendid July day at the Chalke Valley History Festival. It went live while we were away, and it’s a bit more mellow than some of my industry overviews – mind you, I’m writing a presentation for Frankfurt at the moment, and the scope is overwhelming.
But we’ve got a little breath of Indian summer in Middlesex this afternoon, so here is an opportunity for you to read the piece.
There appears to be much apocalyptic talk in Edinburgh this year. I’m in London, so I’m reliant on The Guardian copiously recording all the key events. Ewan Morrison discusses a “bleak vision of a publishing industry in terminal decline“, which won’t help to cheer up a wet, end-of-summer Tuesday afternoon – but if you haven’t read these arguments, you should now. Are books dead? Can authors survive?
The comments merit closer scrutiny than usual, because they run the full range of opinions, argued passionately. Somebody called Joe McCann opines as follows:
I think publishers are in far more trouble than they imagine. The change is not going to happen in a generation, we’re talking months.
The biggest Christmas gift last year was the Kindle. The average person is a little slow, but they catch on. Once they figure out how they can get any book they want for free, they’ll never pay for another one. Out of curiosity (not really criminality), a few months back I downloaded a few book bundles from Pirate Bay. I now have in my possession something like 30,000 books. You can get anything. People assemble the entire New York Times best seller list and you can download it in a few minutes.
What we’re about to see is the catastrophic collapse of the publishing industry. We’re literally talking a few financial quarters away from all our bookshops being shuttered up. We’ll be left with soulless mobile phone shops.
Good books, music, film, are essential to the quality of our lives. Without them, or with poor substitutes, our lives are a lot poorer.
I spent a delightful thirty minutes in Richmond-upon-Thames’s excellent Open Book shop this afternoon. A small, corridor-shaped space packed to the rafters with interesting books, new and old. I don’t doubt that Richmond will be able to sustain The Open Book for a while yet, perhaps for longer than it can Waterstone’s, but as I riffled through book after delightful book, I did wonder if we really knew what we were doing, laying waste to all these welcoming places, full of such good, valuable and important things.
The BBC’s World at One news programme has been running a series of interesting interviews with book trade notables, allowing them the opportunity to consider the state of the business. At this quiet time for book news, trade papers and bloggers have been picking up and sharing their comments. To give you a flavour, here’s The Bookseller on Kate Pullinger (these are exciting times, think “storytelling” rather than “book”); James Daunt (booksellers will be OK if they do a better job than Waterstone’s has been doing and the publishers raise their production standards); Victoria Barnsley (hold tight for the digital revolution and a world of “frenemies”), and here’s blogger Paul Carr on Graham Swift (we’re all doomed).
Of this group, Victoria Barnsley is the real change-maker, and her predictions for a digital future assume that change is going to substantial. 50% of fiction sales may be in digital formats within two years (up from what, 8-10% at present? No one really knows). Amazon (which Barnsley believes controls 90% of the online market in physical books, and 70% in eBooks) is a direct and powerful competitor for HarperCollins, and its advances into publishing are a significant cause for concern.
50% by the summer of 2013, eh? On that basis:
– Amazon’s share of the total fiction market might hit about 60% (35% eBook and 25% pBook)
– Waterstone’s fiction share will drop to somewhere between 10-15% (many shops will have to close)
– Supermarkets will drop below 10% (supermarkets will seriously destock books in favour of other products)
– Everybody will be piling in to try and share in the eBook gold rush, though it’s hard to see in the short/medium term who can provide a comparable service to Amazon’s.
I’ve been trying to imagine a world in which the physical book and the eBook co-exist as fiction channels. I’m struggling to think of other instances of old and new technology happily co-existing when both deliver the same fundamental offer. If the difference between the two formats is sufficiently distinctive, then perhaps there is a future for both, but I can’t imagine Bernard Cornwell, Clive Barker or Cathy Kelly having dual lives for very long – the simple economics of book production will count against them.
Now, I appreciate that the printed book has been around since Gutenberg – this isn’t the Sony MiniDisc that we’re talking about, this is a technology entrenched in every aspect of our lives. And yet, and yet. Let’s take a look at music and video technology. Well, you knew I would.
1905: the market for recorded music is split between gramophone records, and Edison cylinders. Despite massive manufacturer and consumer investment in cylinders (which provide better and more consistent sound reproduction), the market chooses discs, and the cylinder is effectively dead by WW1.
Early 1950s: long-playing records are introduced. The 45 rpm single directly replaces the 78 rpm disc. The first Elvis Presley singles on Sun sold at least as well at 78 as they did at 45, but by 1958 the 78 rpm disc, dominant for half a century, is all but finished.
Late 1960s: the market splits between static music (records) and portable music (8-track cartridges, quickly superceded by cassettes). Each fulfils a different role, at the limit of what technology can achieve.
1980s: CDs are introduced in 1983, and supplant LP records by the end of the decade. Audiophiles and DJs cling to the format, but as a consumer product the disc-and-stylus are over, after 90 years.
1990s: CDs progressively supplant cassettes, as the challenges of managing lasers in a moving environment (car stereos, personal stereos) are overcome.
Late 1990s: MP3 downloading starts, initially a wholly illegal activity. Following the launch of iTunes and the iPad, the cassette is killed off, and CDs decline towards extinction.
Each time new technology is introduced (and we could have gone down the Betamax/VHS/DVD/streaming route instead), early adopters are followed by mass market acceptance; there then follows a point at which a significant proportion of the market has to be disenfranchised. Retailers and manufacturers don’t wait for demand for old formats to decline to zero, but move the market along. Once 70% of your album sales are on CD, it’s time to drop LPs (having progressively stripped back range and commitment over the previous couple of seasons). As downloads form an increasing part of the singles market, retailers progressively gave up on CD singles. Dixons always makes great PR play on its killing off old technologies, as this press release on CRT TVs emphasises.
The venerability of the book format counts for little – particularly when the true comparison for eBooks is with the mass-market, popular fiction paperback. Penguin launched in 1935, but the mass-market explosion dates from the 1950s. 60 years isn’t a bad innings for a format. Paperbacks have little or no parallel existence with hardcovers – the former eliminates the latter from the market. Why should mass-market paperback fiction continue in a supporting role to eBook formats?
Finally, a thought on “storytelling”, as mentioned by Kate Pullinger. eBooks can do everything (tactile objections notwithstanding), that paperbacks can do; but they can of course do much more, as the “pure” eBook elides into apps, participative content and a hundred other variations. Stories can be told through acting, music and visual art, and new technology can bring these elements together in new ways. We have a new technology that can replace the paperback. Why on earth would it not?
Last word to The Observer, which ran this editorial yesterday (and appears to believe there is only one eReader on the market):
Popular Kindle reading has reached a tipping point. The average UK shopper now spends £4 per month on ebooks and 53% of Kindle users say they are now reading more books than ever before. Better still, grumpy bibliophiles are falling in love with the Kindle’s sleek, reader-friendly lines, its lovely facsimile of the printed page and, yes, its literary chic.
Pictures: Cylinder player: http://www.cylinder.de; Goldfinger: Wikipedia; Rebecca: retrobookshop.com; Christie: bearalley.blogspot.com