“No more gatekeepers” – where do Publishers stand?

NB This article was first published here in 2010 

I was asked to speak at an eBook event last week in Cork and there was some great debate before during and after as is the wont at these types of events. I also read an interesting article by Bryan Appleyard in the Sunday Times examining the iPad and publishing. (I cant find a link to the article online so I’ll do my best to be accurate to the printed version.)

Both the event and the article raised some interesting questions and had much in common. I’d like to add my take on them here.

eBook Potential
Bryan quotes Bloomsbury’s estimate of eBooks attaining a ceiling of 30% of the book market. He states ” I think the answer is higher than 30%…..An electronic reader is not a different thing from a book, it simply delivers books in a different way. If people like that way, then the sky is the limit.”
That's a really interesting point. I have been arguing for some time now that the real value of a publisher or authors title is the content, not the context and I think Bryan is arguing along the same lines here.
A smart publisher I spoke with last week has been converting their titles to ePub/xml over the past number of months. They aren't about to make any earth shattering moves in the market, but they are getting prepared for a future when the dust settles. Having your content in xml allows you to slice and dice your content in any way you like in the future.
While I think their move is a good one in the current scheme of things, I wonder if such a conservative policy will pay off in the long term. Do you need to act decisively now and back a format/model or do you hold back, ready but uncertain and perhaps lacking a little direction? Is it possible to move forward while standing still? It is hard to run a business with no definite goal, however temporary that target may be. These are just some of the pressing questions facing publishers today.

Publishing Irrelevance
Another concept proposed last week was that publishers are moving towards a future of granting and maintaining licenses rather than traditional rights packages. Many cannot afford to hire in or outsource the required technical knowledge to produce apps, interactive eBooks and the likes. So they might as well grant the license to a third party who can. While there seems to be a short-term economic reasoning to this, I cant help but think that receiving as little as 15-20% of the revenue from your content before paying expenses and authors is a large slice of the pie to be giving away. I’m basing the 20% on several real world examples I know of.

I’m no economist, but lets look at it logically;

Option one;
An app costs a publisher $5000 to produce. (less if its in-house)
They retail the app at $5.99 in the app store. Give or take, that's at a profit of 4.00 or so. Recouping their initial investment requires sales of 1250 eBooks/Apps, but means an income in the interim.
Next 1000 sales earns publisher $4000
Total income over 2250 units = $9000

Option 2:
3rd party developer licenses title at 20% net to publisher.
Cost of development to Publisher – $0
20% of net as above – .80c – (often only earned after cost of development re-couped)
Sale of 1250 titles earns the publisher max $1000.
next 1000 sales earns publisher $800
Total income over 2250 units = $1800

Is $1000 in the short term really enough incentive to give away your content to a 3rd party over whom you have virtually no editorial or artistic control? I appreciate that few titles willl sell in the volume above, but its still a valid comparison.

Jon Reed quotes Kate Wilson of Noisy Crow in his blog “If we don’t produce digital content, there are plenty of men in basements in Basingstoke in their pants who will.” The argument is “publishers can learn a lot from other industries who have engaged sooner with digital” and that they must act or “Those publishers not doing this – well, your author can do it anyway and disintermediate you.”

No more gatekeepers
This leads me back to another point I raised last week – that Publishers are no longer the gate-keepers of the industry and must adapt to become the facilitators or risk irrelevance. What do I mean by this? Well, Publishers can no longer decide what or who is and is not published. Self-publishing platforms such as Smashwords. Lulu and even Amazon are allowing Authors to take control of their own content, distribution and marketing, both physical and virtual. The internet is awash with content including blogging which may become its own art-form in time and we are all producing writing of some sort online.

I’m not saying that there is no place for publishers – I believe they will remain crucial for many authors over time. I do feel however that they have to adapt both mentally and economically to the role of facilitators – managing, guiding, encouraging and advising authors about the best route to market for their titles. While Publishers do much of this already, the way in which they will do it will change. Rather than retaining their current levels of control over the entire process, the best publishers will assume agent-like roles, taking a much smaller share of the pie in return for close guidance and service-based products in a few or more of the production steps. Very few will take a title from concept to market in the future. Some will specialise in certain aspects – marketing for example – while others will continue to generalise, but all will change.

Both Bryan and Jon ended on similar notes – “Jargon equals insecurity…the lack of a clear road ahead” and “Responding to what the market wants – how people want to consume and pay for content – is what is needed, rather than reacting to the ‘threat’ of digital.”

They are both right. Rather than fearing what is coming,(there’s no point- its already here!) Publishers need to identify their customers, create what they are willing to pay for and believe that their own content and flexibility is the key to successful value creation.

Let me know what you think!