What iTunes as #2 Retailer Might Mean for Publishers

Andrew Savikas
February 27, 2008 | Permalink | Comments (0) | Listen

The AP is reporting that iTunes is now behind only Wal-Mart when measuring sales by unit volume, putting it ahead of Target and Best Buy:

[Market research group] NPD said that iTunes moved into second place due to the amount of music it sold during 2007, which was based on a 12-track CD equivalency for song downloads.

There are lessons to be learned for publishers willing to take a closer look at what's happening in the music industry, and while DRM is certainly an important area, so is retail and distribution. It's probably no surprise that Amazon is one of our largest channels -- what's more interesting is that close behind is Safari Books Online, where our books exist only in digital form. For artists and record companies, putting music in iTunes is now hardly optional; we're approaching a similar point with Safari. When authors are reluctant to have their books included in Safari, we've found it persuasive when we say that it's essentially equivalent to saying they don't want their book in any Borders stores.

But it's not just about substitution (customers reading via Safari what they might previously have bought at a bookstore). While that's certainly at play, our evidence suggests much of the additional upside from a digital infinite bookshelf comes from titles that are barely registering print sales:

Fully 7% of page views in Safari is for books that are not selling at all in print; 20% of access is to books generating only 5% in print book sales; and 29% is to books generating only 9% of print book sales.

On the heels of my earlier post regarding discoverability, this is more evidence that obscurity is a far greater threat to authors than piracy.

$9.5 Billion of Online Books?

Andrew Savikas
February 25, 2008 | Permalink | Comments (0) | Listen

Global Industry Analysts says the worldwide market for online books will be just shy of 11 figures by 2010:

Driven by growing popularity of online shopping, lure of discounts offered by retailers, faster delivery, free shipments, and the convenience offered by home shopping, the market for online books is projected to reach US$9.5 billion by 2010.

It's important to note that "online book" does not mean "eBook" (though they do say "The emerging ebook concept is a lucrative offshoot of the online book industry"). When they say "online book" they appear to mean "book purchased online," making this a potentially more palatable projection than the infamous Arthur Andersen forecast of a ~$3 billion eBook market by 2004.

(As an aside, that Arthur Andersen link above is the first time for me that the best result from a Google search came from GBS. Somehow I don't expect it will be the last.)

Going to Free Online

Peter Brantley
February 24, 2008 | Permalink | Comments (0) | Listen

At Portfolio, Felix Salmon in his Market Movers blog writes in his post Why All Consumer Magazines Should be Free Online on why it is worthwhile for magazines to put their content online for free, and why free doesn’t mean a loss of revenue against print.

He cites an article in the Observer that quotes the Rolling Stone’s editor, Will Dana, and discusses the magazine’s decision to post only leaders on their web site. Felix writes:

The really depressing quote here is the one from Will Dana saying that he had absolutely no idea whether or not truncating pieces online results in fewer print sales, but that, well, he does it anyway. Clearly, if truncating pieces doesn’t cannibalize print sales, then it’s a no-brainer to publish everything in full online. And there’s no reason to believe that such cannibalization actually happens, in the magazine world. And yet editors still willingly give up very real web traffic for the sake of protecting imaginary marginal magazine sales which may or may not be lost as a result.

Publishing in full isn’t just about maximizing web traffic, either: it’s also about not pissing off your readers. When I read a great article in the Atlantic, I want to blog it; many other people in my position will at the very least want to be able to email it to their friends and colleagues. None of that is really possible unless and until it’s online. And since the internet thrives on the new, and hates the old, people want to link to you when the magazine comes out. No one wants to link to you weeks later, when it’s old news.

Taking this long view, that most content online should ultimately be free, and rethinking what readers actually pay for, forces a consideration of new services — exactly what will enable publishers and content distributors to survive.

Computer Book Market as Canary in the Coal Mine

Andrew Savikas
February 21, 2008 | Permalink | Comments (0) | Listen

Over on O'Reilly's Radar blog, Open Technology Exchange General Manager Mike Hendrickson provides some nice context and analysis of year-end computer-book sales data.

While this covers only computer books (across all publishers, not just O'Reilly), from experience we know the techies who buy our books are often the canaries in the coal mine for much broader market segments. Wikipedia founder Jimmy Wales touched on this at TOC 2007, where he noted that much of the earliest content on Wikipedia skewed heavily geek (video below, and linked here).

I've heard some publishers say, "my content won't migrate online"; in particular those producing things like glossy photography books. While it's certainly true that, for example, a selection of professional photographs of my hometown Chicago might look great on my coffee table, the top results for a Chicago search on Flickr, combined with my own shots into a custom book is now an affordable option for a truly one-of-a-kind product.

As the graph above shows, the alpha geeks are already doing this with content they previously would have looked for in our books:

To: WebDesign-L List 
Subject: Re: [WD]: Book Recommendation
Date: Wed, 5 Apr 2006 07:33:47 -0700
> What is the best book to learn JavaScript. I am looking for one that
> has examples and if possible a method reference. I am also looking
> for books on php and CSS. If anyone knows of any good books let me
> know.
	Paul, the O'Reilly books are excellent and the Javascript book 
        holds many gems as far as syntax is concerned. But I find the web 
        a way better resource for JavaScript and my favorite link 
        is www.google.com

Your customers could be next.

PW Parent Reed Business Information on the Block

Andrew Savikas
February 21, 2008 | Permalink | Comments (0) | Listen

Via PaidContent comes word that Reed Elsevier is seeking a buyer for Reed Business Information (parent of Publishers Weekly and Variety among others).

Two interesting items pulled from the 2007 earnings results:

• Online revenues now contribute 30 percent of RBI’s revenues.
• Advertising revenues grew rapidly across community sites, up 31 percent.

The commentary from the section "Strengthening the Portfolio" reinforces some of the challenges we've noted earlier in building a substantial online ad-revenue business:

Although RBI has had considerable success in developing high-growth online services, its advertising revenue model and its inherent cyclicality fit less well with the subscription based information and workflow solutions focus of Reed Elsevier’s strategy. ... Advertising accounts for approximately 60% of revenues.

Book publishers looking to advertising supported models during a digital transition would be well served to both consider the cyclicality inherent in advertising, as well as whether there are alternatives to advertising that might make as much (or more) sense for online publishing.

Monkeys and Marketing: An E-commerce Fable on Unintended Consequences

Andrew Savikas
February 20, 2008 | Permalink | Comments (0) | Listen

Updated with response from HBSP.

Among the signs of my background as a publishing technologist here at O'Reilly is a list of tech and programming blogs that I still keep an eye on (among them the excellent 37Signals, Joel on Software, and Norm Walsh's blog). Another favorite is The Daily WTF, which is primarily a place for IT workers to amuse each other by (a.) poking fun at co-workers/bosses/customers, and (b.) poking fun at each other. Dilbert definitely reads it.

A recent entry crossed over into the publishing arena: while a bit dense with technical detail, it describes an amusing story from Harvard Business School Publishing, which offers a lesson in the pitfalls of designing marketing efforts based solely on e-ecommerce data -- in this case, sales of a 1974 article titled, "Who's Got the Monkey?" (full text here):

As part of the aggressive testing strategy mentioned earlier, the HBSP logistics team would fill their down time by executing test cases. ... Then they'd add that single result -- Who's Got the Monkey? -- to their shopping cart, create an new account, submit the order, and then fulfill it. Of course, they didn't actually fulfill it -- everyone knew that orders for "Mr. Test Test" and "123 Test St." were not to be filled. That is, everyone except the marketing department.

When HBSP's marketing department analyzed the sales trends, they noticed a rather interesting trend. Oncken's 1974 Who's Got the Monkey? was a run-away best seller! And like any marketing department would, they took the story and ran. HBSP created pamphlets and other distillations of the paper. They even repackaged those little plastic cocktail monkeys as official "Who's Got the Monkey monkeys".

Then again, one could argue that in this case those oft-maligned marketing folks did precisely what they're supposed to do: generate and cultivate demand...

Updated: Bill Damon, Findability and Metrics Analyst at HBSP offers his take on the matter, via email:

I just saw your "Monkeys and Marketing" post on the TOC blog and thought I'd give you a little more information on the TheDailyWTF post. I was a technical lead on the new web site we rolled out in 2002 and we did not have test orders feeding our live order system. We set up a test order system specifically to handle these requests. No testing orders made it into the sales data marketing was working with.

I also just went back and looked at e-commerce sales for the "Who's Got the Monkey?" and found no extraordinary impact on reprint sales levels at the time we began testing.

Setting up these test environments can be complex and expensive. But if you don't do it right you can end up with a lot of problems including bad data. Fortunately for us we made sure we had a good environment to protect us against these issues.

P.S. -- Speaking of HBSP, Paul Michelman has kindly shared the video his folks shot of their Gadgetopia II session at TOC:

Considering how we shot it, it didn't turn out half bad. ... In case it's anecdotally interesting, we shot this on a $160 Flip Video camera.

(If you're reading this in a Feed Reader, you may need to click through to the blog to see the above video).

The (Online) World of the Economist

Peter Brantley
February 12, 2008 | Permalink | Comments (0) | Listen

In New York for the O’Reilly Tools of Change for Publishing conference, I had the opportunity to speak with Wendy Elman, the VP of Marketing at The Economist’s economist.com. Ms. Elman’s background is in book publishing, and she joined The Economist in July 2007.

Ms. Elman commented that the driving goals of The Economist are to earnestly seek change, while carefully maintaining a highly-regarded and identifiable brand. It believes that seeking and embracing innovation is the surest way of ensuring its relevance as a destination and a source of thought-provoking dialogue.

The Economist’s web site has been relatively innovative for a publisher many might suppose would be rather conservative; e.g., it offers not only traditional RSS feeds but podcasts; and it is beginning to develop and provide access to video content. They are also cognizant that the world — particularly outside the U.S. — is mobile, and they are enhancing their delivery options to a diverse range of handheld devices.

Interestingly, The Economist recently supported online, moderated debates on the future of education, one of which specifically caught my eye, on the impact of social media on education.

The online debates deepened the magazine’s interest and engagement with its reading community; they were a purposeful entry into online, interactive dialogue. They produced a tremendously enthusiastic response, with well thought out posts from a variety of contributors, with no or very little spam. The engagement was so vigorous that requests for additional functionality were rapidly put forward. Readers, for example, have petitioned for the persistance and continuance of the debates in an economist.com venue, something under consideration.

Harvard Business and Chapter Sales: Over 60K Served

Andrew Savikas
February 12, 2008 | Permalink | Comments (0) | Listen

The news on Monday from Random House that they'll be selling individual chapters may be the first program of its kind for one of the big houses, but as I noted on Monday, other publishers (ahem) have been doing it for some time.

Last night during a conversation with some of the guys from HBSP during the TOC Conference, Paul Michelman, the director of content for HarvardBusiness.org, mentioned some impressive numbers from their chapter-sale program, which he's graciously allowed me to share. Via email:

As promised, here's the sales data on our chapters program:

Over 60,000 chapter sold. We started with 5 books in november 2006, now over 60 books available in chapters and adding 20 books (new and [backlist]) every quarter.

It's worth noting too that HBSP's chapters, like O'Reilly's, are DRM-free.

P.S. -- Paul is also the host of the excellent IdeaCast podcast.

Harlequin as Innovator

Allen Noren
February 11, 2008 | Permalink | Comments (0) | Listen

The Future of the Book

Allen Noren
February 11, 2008 | Permalink | Comments (0) | Listen

New Publishing Models

Allen Noren
February 11, 2008 | Permalink | Comments (0) | Listen

Random House Announces Chapter-Sales Pilot Program

Andrew Savikas
February 11, 2008 | Permalink | Comments (0) | Listen

At last year's TOC Conference, Tim O'Reilly unveiled a program making individual chapters available for purchase from hundreds of O'Reilly titles. Today Random House becomes the first major publisher to follow suit, announcing a plan to sell chapters from Made to Stick: Why Some Ideas Survive and Others Die for $2.99 each. From the Wall Street Journal:

Customers will receive a digital link via email enabling them to download the chapter onto their computers. Random House expects that eventually users will be able to download chapters onto other devices, such as BlackBerries.

The a la carte approach has been in play for a while in the textbook market, including our own SafariU and over at Cengage Learning's iChapters (which may be facing some DRM blowback, according to Teleread).

Our own experience at O'Reilly has been mixed with chapter sales, but we do believe that customers will continue to demand content in more atomized formats, in part to foster the ability to mix and match chapters and other segments into new forms of content.

We expect more announcements to come while here at TOC 2008.

HarperCollins Announces Handful of Books Available Free Online

Andrew Savikas
February 11, 2008 | Permalink | Comments (0) | Listen

Timed with the first day of the 2008 O'Reilly TOC Conference, HarperCollins has announced that it will be offering free electronic versions of several titles for a limited time on their website. From today's New York Times story:

Brian Murray, president of HarperCollins, said that the free electronic editions would be available only for one month, and readers would not be able to download them to laptops or to an electronic reader like Kindle from Amazon.com. The print function will also be disabled, but readers will be able to link to retailers like Amazon.com to buy copies of the books.

Brian was one of our keynote speakers at last year's TOC Conference, where he talked about their efforts to build a digital distribution infrastructure (video below and available here):

As part of their digital strategy, Harper has also acquired a stake in LibreDigital, and while some may balk at those DRM restrictions included with the free titles ("Free" is a hot topic lately), this is definitely an important step for publishers to watch as they rethink their own digital initiatives.

Stay tuned for more announcements coming out of the TOC Conference.