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February 27 2012

Business models to monetize publishing in the digital era

At TOC, you're as likely to run into media professionals, entrepreneurs and innovators as you are publishers, booksellers and others working in traditional publishing. This, in turn, makes the underlying themes as varying and diverse as the attendees. This is the second in a series, taking a look at five themes that permeated interviews, sessions and/or keynotes at this year's show. The complete series will be posted here.


As traditional publishing is more and more disrupted in the digital era and deeper and deeper discounts in digital publishing become the norm, big questions about revenues — and where they'll come from — arise. Monetization was a major theme at this year's Tools of Change for Publishing conference. Discussions covered a variety of business models suited to monetize content, including subscription/access, freemium, and ad-based models, and models for moving the focus away from the books themselves to monetizing services, experiences and relationships with customers and readers.

In a keynote address, Andrew Savikas, CEO at Safari Books Online, talked about lessons learned at Safari and why digital subscriptions and access models matter for publishers.

"There are two reasons why subscriptions matter now for books more than they did 10 years ago when Safari first got started: First, we all know readers are much more comfortable with digital reading and other digital media. The percent of adults who own an ereader or a tablet doubled this Christmas — nearly 48% of adults in the U.S. own a tablet, an ereader, or both.

The second reason subscriptions matter more today has to with something Kevin Kelly talked about last year — the shift toward streams of information ... Streaming models are an important alternative and complement to purchase models, and consumers are growing more comfortable with them ... There's a growing product and service economy around access and membership models that reduce the up-front costs associated with things like buying a car; hiring an assistant; or buying enough music, movies or books to build a great library. In addition to reducing the up-front costs, subscription access models also offer on-demand convenience."

Savikas talked about what ebook subscription models look like and with what kinds of books such models work best. He said the model will work with more kinds of books than it's currently used and outlined three reasons publishers should consider the subscription/access model:

SafariSlide

He broke down the payment model and explained how — and why — it can be profitable. He said, "When a book is sold at retail, the publisher and the author get the same amount whether the book is read once, twice or 100 times. In a usage-based model, the publisher is paid only for what people actually read — but, they're paid every single time that page or book is read." Savikas said that at Safari, it's rare for readers to read books cover to cover, but pointed out that it's the aggregate behavior that matters and that brings in the revenue.

Savikas' presentation slides can be found here, and his entire keynote can be viewed in the following video:

Justo Hidalgo, co-founder of 24symbols, addressed the issue of monetization from a freemium model standpoint in the session "New Ways to Sell — Aggregated Content, Paywalls, Subscriptions, and More." He argued that just having free content or paid content alone is not enough — people aren't going to pay for content, he said, unless you have "extremely high-quality, differentiated content," as the Financial Times has, or you have "impressive brand recognition," as the New York Times has.

JustoSlide1

With a freemium content model, the reader gets something for free with the opportunity to get more content, services or a better experience for a price. Hidalgo shared an example from his company's model:

JustoSlide2

Hidalgo's presentation slides can be found here, and more of his thoughts on freemium, paywalls and subscription models can be found in this TOC interview.

The panel session "The Future of the Cookbook" addressed monetization specifically from a cookbook-genre standpoint, but the overall points could easily apply to other areas of publishing. Some monetization ideas that came out of the session included allowing advertising inside ebooks and finding sponsors or co-branding books, and also included subscription-based possibilities, as Andrew Savikas discussed in his keynote. Here are some of the major points the session addressed in the area of monetization:

CookbookSlide

The ideas of chunking — in this case, selling individual recipes — and bundling could be monetized in many genres of publishing. And as Savikas noted in his keynote, the subscription/access model can be applied broadly across publishing sectors.

The slides from "The Future of the Cookbook" session can be found here, and session panelist Adam Salomone, associate publisher at The Harvard Common Press, has further discussions on monetization, ad revenues and the importance of staying flexible in this TOC Podcast interview and in a post at Publisher's Weekly.

Literary entrepreneur Praveen Madan turned the monetization discussion away from content and books and toward partnerships, relationships and experiences in his session "Kepler's 2020: Building the Community Bookstore of the 21st Century." Madan, who is currently working with The Kepler's 2020 Project, said selling memberships isn't anything new but is a very important source of revenue today and an important way to engage a community around a local bookstore. He talked about diversifying the traditional revenue model, moving away from a focus on selling print books and toward a model based on selling memberships, services and experiences, such as charging small ticket prices for author events and educational classes. His monetization discussion revolved around four core principles:

KeplerSlide

Madan elaborated on the first principle and talked about separating the bookstore business into two business — one for-profit and one non-profit:

"More and more, what we find is all the excellent public education programming that bookstores do is really a non-profit activity, and it belongs in a non-profit organization. The community partnerships program — these 120 community partnerships Kepler's has, schools that they're raising money from — that's a money-losing activity. There are about six people on Kepler's staff who do that work all the time. I looked at that and thought, this is really a non-profit organization, but it's stuck inside a for-profit organization, and it's losing money. So, let's just take it out, call it a non-profit and run it separately and fund it separately."

More information on Madan's session can be found here, and a video with further details about Kepler's 2020 Project can be found here.


If you couldn't make it to TOC, or you missed a session you wanted to see, sign up for the TOC 2012 Complete Video Compilation and check out our archive of free keynotes and interviews.


Related:

August 18 2011

Leaky paywalls and ads: What publishers can learn from the New York Times

This post originally appeared on Joe Wikert's Publishing 2020 Blog ("Porous Paywalls and Book Publishing"). It's republished with permission.


Felix Salmon recently wrote an article talking about how the New York Times paywall is working because it's porous. He contrasts that to other paywalled sites that haven't enjoyed the same success as the Times. As I read Salmon's article I was thinking less about porous vs. rigid paywalls and more about DRM'd vs. DRM-free books.

There are definitely some similarities here. At O'Reilly we believe in a DRM-free world because we trust our customers and we believe they value our content enough to pay for it rather than steal it. It would be naive of us to think this philosophy totally eliminates the illegal sharing of content though. We just happen to believe those situations shouldn't cause you to penalize all your customers. Shoplifting happens from time to time at your local grocery store but that doesn't mean the store manager should put everything under lock and key.

But it was only when I read Fred Wilson's follow-up post to Salmon's article that I realized what other connection this has to book publishing: advertising, sponsorship and other revenue streams. As Fred points out, the Times doesn't necessarily have to charge for each online page view since they run ads on every page served.

I'm not suggesting we can suddenly give away book content and make the exact same amount of revenue with advertisements. But what I am saying is that advertising and its close cousin, sponsorship (e.g., "This book brought to you in part by..."), can and will play a role in the future of book publishing. Every publisher won't necessarily experiment with that model, but many will.

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24symbols is a great example of how this can work. The company offers both freemium (free, ad-supported content accessible only while online) and premium (for-pay, without ads and can be read offline) models. The customer decides which option they prefer. That last point is critical. 24symbols isn't just serving up free content and hoping that alone will somehow create a successful business model. They're also offering an ad-free offline option that some number of users will upgrade to. They key is to make the premium service feature set compelling enough that customers want to pay for the it.

Kindle with special offersWill 24symbols be successful? It's too early to say (although I'm a huge fan of Justo Hidalgo and what he's doing with 24symbols; if you missed it, check out his presentation at our TOC Sneak Peek from earlier this year). But I'm convinced the future will bring more advertising-based book publishing experiments, not fewer. And as I've said before, I can see a future where Amazon offers two versions of many (if not all) Kindle titles: an ad-free version with pricing similar to today's models and a second one with ads but at a lower price. Amazon has taken the first step with the hardware itself by offering the lower-priced "Kindle with Special Offers." As Jeff Bezos mentioned in the seventh paragraph of Amazon's most recent earnings announcement, "Kindle 3G with Special Offers has quickly become our bestselling Kindle."

Customers are already voting with their wallets and overwhelmingly choosing the advertising-subsidized version of the device itself. These results will undoubtedly encourage Amazon to start experimenting with ad-subsidized content as well.

Services like 24symbols and the Kindle platform are one thing, but the next logical step after that is for publishers to expose more of their content to the major search engines. How long will it be before some of the current New York Times bestsellers are fully and freely readable online with ads? If the stories are good enough and the premium alternative offers a significantly better reading experience (e.g., no ads, can be read offline, includes other features/services, etc.), some number of customers will upgrade, just like they're doing with Times subscriptions.

Associated photo on home and category pages: Black Mountains, Wales: rock wall by markhillary, on Flickr

Related:

July 29 2011

Publishing News: Apple's new in-app rules cause a minor dustup

Here's a few highlights from this week's publishing news. (Note: Some of these stories were previously published on Radar.)

In-app drama: All's well that ends well

AppStoreLogo.jpgThis week Apple began enforcing its ban of in-app outside retail links — those "Buy" buttons that take users to web-based retail storefronts. Minor chaos ensued following the change, with the Google Books app and the Barnes & Noble app temporarily being removed from the App Store. Both reappeared once they were updated to adhere to the new rules.

Some were hoping that because the rules weren't enforced on the June 30 deadline, that perhaps Apple had further softened its position on the in-app subscription rules. Not so, but once the dust settled, everything worked out fine. Even Amazon decided to play nice.

TOC Frankfurt 2011 — Being held on Tuesday, Oct. 11, 2011, TOC Frankfurt will feature a full day of cutting-edge keynotes and panel discussions by key figures in the worlds of publishing and technology.

Save 100€ off the regular admission price with code TOC2011OR


The U.S. joins World Book Night 2012

WBNlogo.jpgWorld Book Night (WBN) founder Jamie Byng moved a step closer to his goal of making WBN a global event when the United States hopped on board for WBN 2012. Additionally, the organization announced that Carl Lennertz, VP of retail marketing for HarperCollins, will be the chief executive for the U.S. arm of WBN starting in September.

At the inaugural WBN event in the UK last year, 25 titles were selected and one million books were given away. The U.S. has adopted the same one-million-book goal for the 2012 event, which will take place on April 23.

Book nominations for the 2012 event are underway, with "To Kill a Mockingbird," "Pride and Prejudice," and "The Book Thief" leading the polls. Readers can nominate their 10 favorite titles to help the committee choose the final 25 titles for the April event. Nominations will continue through August 31.

The publishing world can learn a thing or two from tech startups

Todd Sattersten (@toddsattersten), founder of BizBookLab, argues in his new book "Every Book Is a Startup" that authors and publishers need to be more entrepreneurial and treat each book like a startup business. His conviction on this point is so strong that he's using the startup model itself to publish his new title. In the interview below, I talk with Todd about the specifics of the model and how he's applying it.

What parts of the traditional publishing model are limiting opportunities?

ToddSattersten.jpgTodd Sattersten: There are several things that limit opportunities. Most traditional books take two years to write, publish, and distribute, and risk increases with time. Editors ask themselves more often today, “Will the point of view presented still be applicable and relevant?”

Additionally, product marketing as a business practice has evolved, while books continue to be published as a singular product without regard for alternate use cases and price points. For example, only the biggest of bestsellers warrants a premium edition. Enormous opportunity lies in versioning.

Your personal definition for a "book" can limit your opportunities as well. If you limit that definition to, say, 224 pages of paper in a 6-inch-by-9-inch trim size, you just made your world a pretty small one.

How does your book map out the new publishing model?

Todd Sattersten: My argument starts with the idea that entrepreneurship needs to be brought back to book publishing. As an industry, we introduced over 3 million new products to the marketplace in 2010. Each one of those books start in the same place: in search of an audience. Startups face the same problem.

The core set of ideas I plan to present will look familiar to people who work in publishing. The way I approach them will be very different. I dispel some myths and identify some trends that are important to understand as we search for new business models.

This story continues here.



Related:


  • Intellectual property gone mad
  • Release Early, Release Often: Agile Software Development in publishing
  • Ebook pricing power is undermined by perceived value
  • More Publishing Week in Review coverage

  • May 13 2011

    Publishing News: How to improve ebook marginalia

    Here are a few highlights from the publishing world. (Note: Some of these stories were published here on Radar throughout the week.)

    Pete Meyers on ways to improve ebook note-taking tools

    Marginalia by Cat Sidh, on FlickrIs anyone happy with today's ebook note-taking tools? I'm talking about what you get with Kindle, Nook, iBooks, and so on. You can highlight passages and add notes, but that's pretty much where things start and stop.

    Think about how limited that is, compared to what you can do in a print book:

    • Jot notes anywhere you like (e.g. blank pages in the back) to keep track of your overall reaction to the book.
    • Highlight non-contiguous phrases on a page, editing out all the boring bits and spotlighting the author's best points.
    • Draw arrows, circles, and all manner of geometric curlicues, reminding you of how this section here relates to that point over there.
    • Construct simple diagrams (e.g. tree-like structures), if you're the type who likes to think about ideas in terms of hierarchies.
    • Easily review all this stuff by flipping through the pages of a book.

    None of that's possible on any mainstream ebook reading system today.

    So here are some suggestions, which, incidentally, I think would be perfect for an eager-to-experiment underdog (Kobo, are you listening?). Add a beefed up note-taking system similar to what I describe below and soon, I bet, you'll get more business from serious readers.

    • This story continues here.

    Ask for data and you'll get it

    New Yorker appIt turns out all the publisher hand-wringing of late about Apple not sharing consumer data was largely for naught. In a post on Forbes, Jeff Bercovici pointed out that publisher concerns that consumers wouldn't share their data if given the choice were off base:

    As things stand, if you buy a subscription to The New Yorker or Popular Science in the iTunes store, you will get a little dialogue box asking if it's all right if Apple shares some of your personal information with the publisher. Initially, publishers were worried, reasonably enough, that users would overwhelmingly say no. But they don't. In fact, about 50 percent opt in.

    And that opt-in statistic isn't the only good news — some magazines also are showing impressive growth in new readers. And it looks like newspapers might be finding common ground as well.

    American Booksellers Association partners with On Demand Books

    The American Booksellers Association (ABA) announced this week that it would team up with On Demand Books to market On Demand's Espresso Book Machine (EBM) to ABA member bookstores. An announcement post described the machine:

    Essentially an ATM for books, the patented EBM and its EspressNet software system links to a vast network of content, enabling the instant distribution of books, on demand, at point of sale. With the push of a button, the technology prints, binds, and trims a bookstore-quality, perfect-bound paperback book, in any language, with a full-color cover, in minutes. It is an environmentally friendly technology since it eliminates shipping, returns, and the pulping of unwanted books.

    Big news, but as Mercy Pilkington pointed out in a post for Good eReader, it doesn't come cheap:

    The licensing of the software per store is in the neighborhood of $25,000, and although the ten percent discount to ABA member stores will mean a massive savings, it just might not be enough to compete with the other so-called future of publishing, the digital e-reader.

    To see exactly how the EBM works, check out this demo video:

    Got news?

    Suggestions are always welcome, so feel free to send along your news scoops and ideas.


    Photo: Marginalia by Cat Sidh, on Flickr


    Keep up with Radar's latest publishing news and interviews with our publishing RSS feed.




    Related:


    March 24 2011

    Four short links: 24 March 2010

    1. Digital Subscription Prices -- the NY Times in context. Aie.
    2. Trinity -- Microsoft Research graph database. (via Hacker News)
    3. Data Science Toolkit -- prepackaged EC2 image of most useful data tools. (via Pete Warden)
    4. Snappy -- Google's open sourced compression library, as used in BigTable and MapReduce. Emphasis is on speed, with resulting lack of quality in filesize (20-100% bigger than zlib).

    February 23 2011

    Developer Week in Review

    Live, via satellite from around the world, it's Developer Week in Review, with your correspondent, Buff Overflow.

    Apple policies rile developers (again)

    Developers certainly seem to be getting fed up with Apple's dictatorial control of the App Store, and the new subscription and in-app purchase restrictions may push them over the edge. If Apple wants to avoid appearing to play favorites, they will need to apply the policy uniformly, which could put some very popular iPhone apps in jeopardy. For example, you can purchase and download audio books with Audible's app, and I can't see them agreeing to give up 30% of their gross income to Apple for the privilege. With companies big and small screaming for blood, and the FTC threatening to take a closer look, this may be one App Store policy that needs to be put back on the shelf.

    Meanwhile, Google is rolling out their own subscription model, but it's unclear who the intended audience would be. Android apps?

    Oh yah, and there's evidently an announcement about something called an iPad 2 happening next week ...

    Ubuntu: Distribution on the edge?

    All eyes (well, some eyes ... ok, my eyes) were turned this week toward Canonical, as some reports indicate that the formerly peace-loving Linux distro may be on a path toward more business-minded actions.

    Agree or disagree with the premise of the article, but it's a good jumping off point for a conversation about just where the future of Linux distributions lie. With Ubuntu and Red Hat the two most public symbols of Linux, has the "pure" roots of Linux (such as Debian) been lost? Is Linux just another commercial operating system now, with an open source development model?

    Is obscenity ruining our developers?

    Your twenty-something PHP developer sits alone at a terminal, reviewing git commits. Seems innocent enough, but do you really know what your programmer is looking at? The answers may shock and disturb you.

    Here's an interesting analysis of git commit messages (not comments in code, as Slashdot erroneously reported), looking at swear frequency by programming language.

    C++, Ruby and JavaScript all had about the same amount, roughly twice that of C and three times that of C# and Java. PHP and Python programmers evidently don't swear much at all. The results were normalized, so the popularity of the languages didn't influence the weightings. Mind you, the total percentage of commit messages with any kind of swear at all was a tiny 0.022% (210 total swears), so it's not like it was a bar full of sailors.

    That was the developer week that was. Please send tips or leads here.

    February 22 2011

    The competition for app subscriptions

    Google One PassAs Apple's subscription policy not only continues to rile publishers and developers across industries, but also adds new depths to a federal antitrust investigation into the company, competition is emerging.

    Hewlett-Packard, which will launch its new tablet later this summer, has forged a subscription agreement with Time Inc., and now Google has announced its Google One Pass. The new system offers a cheaper subscription alternative for publishers — 10 percent compared to Apple's 30 percent — that users can access on any device connected to the internet.

    The increasing competition has sparked much discussion as to the fairness of the pricing models. The battle, as always, will likely come down to platform and consumer adoption, and the price will work itself out.

    February 11 2011

    Publishing News: Week in Review

    Lots of publishing news this week. These are some highlights that caught my eye. (Note: These stories were published here on Radar throughout the week.)

    Highlights from mobile app news this week

    ACS.jpgThe Professional and Scholarly Publishing Division of the Association of American Publishers recognized the American Chemical Society (ACS) mobile app in two categories: Best New eProduct/Innovation in ePublishing and Best New eProduct in Physical Sciences and Mathematics.

    I'm not a scientist, and the news might have filtered into the if-only-I-were-a-math-genius pile, but the ACS mobile app is actually pretty slick. It not only gives scientists and scholars access to archives, databases and current content in all of ACS' journals, but it also offers a live-stream update of new research as it's published. Applications of this type of platform could work across all academic disciplines, of course, but news organizations and other content providers shouldn't dismiss it as a scholastic-only platform.

    Also in mobile app news, Conduit announced its move into mobile apps. The new Conduit Mobile Platform will allow publishers and developers to create one app that will work on all major platforms. What's more, the company claims the apps can be created by anyone — not just skilled developers — and it's free. Ina Fried at All Things Digital smartly pointed out the issue of profitably remains unclear. Functionality will be interesting to watch as well. The platform will be launched at the GSMA Mobile World Congress next week in Barcelona.

    Bloomsbury's change in vision brought the issue of rights sharply into focus

    bloomhome_0301.jpgPublisher's Weekly reported on Monday that UK publisher Bloomsbury is dropping its previous geographic model and going global, setting up worldwide divisions structured around publishing categories. As part of this move, they're looking to gain worldwide rights to titles as well.

    In an e-mail interview, Dana Newman, a Los Angeles lawyer and literary agent, said Bloomsbury's move is a sign of the changing times and that there's more to come:

    I think the Bloomsbury restructuring reflects the rapid transition underway to a global publishing model over traditional territorial markets, and that we'll see a similar disruption in the way rights are licensed — publishers will be seeking world rights, including digital, whenever possible.

    These shifts in how publishers approach rights also need to be noted and analyzed by rights holders. "The issues rights holders face in this environment are ensuring that when they grant such expansive rights the publisher is in a position to fully exploit them, and, as always, arriving at fair licensing terms; royalty rates still vary widely among publishers, especially for foreign digital rights," Newman said.

    As digital platforms grow and morph, it's getting harder to understand who owns what rights. In the Publisher's Weekly piece, Bloomsbury's Richard Charkin said "Bloomsbury won't do a deal that doesn't include digital rights." This concept of including digital rights will become even more important as publishers such as Harper Collins start packaging digital rights with audio rights.

    Hewlett-Packard got the tablet wars underway

    HP TouchPadHewlett-Packard announced the launch of its TouchPad tablet, which is scheduled to hit stores sometime this summer — no pricing information has been released, however.

    The announcement was timely, as Apple is in a bit of a battle with publishers over subscription and in-app purchasing policies. HP is taking Apple head-on, even hiring one of Apple's senior directors to help draw developers.

    Also notable is that HP has signed on Time Inc., allowing the publisher to provide magazine subscriptions under agreeable terms. The European Newspaper Association (ENPA) is likely taking note as its concerns over Apple's subscription policies intensify.

    Got news?

    News tips and suggestions are always welcome, so please send them along.



    Keep up with Radar's latest publishing news and interviews with our publishing RSS feed.

    February 10 2011

    Let the tablet wars begin

    HP TouchPadYesterday, Hewlett-Packard announced the launch of its TouchPad tablet, which is scheduled to hit stores sometime this summer — no pricing information has been released, however.

    The announcement was timely, as Apple is in a bit of a battle with publishers over subscription and in-app purchasing policies. HP is taking Apple head-on, even hiring one of Apple's senior directors to help draw developers.

    Also notable is that HP has signed on Time Inc., allowing the publisher to provide magazine subscriptions under agreeable terms. The European Newspaper Association (ENPA) is likely taking note as its concerns over Apple's subscription policies intensify.



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