There’s an issue I’ve been exploring on this blog and elsewhere for some time. It’s about digital change and what it does to large and small markets, especially when the rates of change in these markets differ. I’ve called it the differential rates of digital change problem and I think it is time I put a solid definition on it.
So here it goes. The Differential Rates Of Digital Change Problem occurs:
When a large publishing market undergoes a more rapid shift towards digital delivery and consumption of books than a smaller publishing market.
This change has many significant implications but the three I want to focus on here are:
- Rights pressure on small market publishers
- Sales pressure on small market publishers
- Growing disparity between ACTUAL digital change in small markets and OBSERVABLE digital change
Let’s look at these one by one.
Rights Pressure
I’ve highlighted how larger market publishers increasingly have an incentive to acquire global digital rights in works, whereas, as of yet, smaller market publishers have little incentive to hold on to those rights, though they know that in the future they will need them. I’ve pointed to one possible way to meet both needs here.
Sales Pressure
This is almost a bigger deal for small markets. And it has a few forms.
- Digital sales of titles not necessarily available in the smaller market to customers in the smaller market recorded as sales in larger markets (eg Kindle Sales to Irish customers via Amazon.com or .co.uk)
- Digital sales of titles available in smaller markets physically AND digitally but made through sites that record those sales in the larger market (eg titles published by local publishers or foreign publishers available on Amazon.com Kindle store)
- And of course, if a small market publisher sells global digital rights to a book they publish, then the digital editions of locally published books will sell through the larger market
- The quietest form is of course digital sales to residents who have retailer accounts in other territories, ie English Address for Amazon.co.uk Kindle sales (small I’d wager but without the stats who knows)
These sales are starting, slowly but surely, to leak sales from small markets to large markets. The levels are unquantifiable right now in anything but the most sketchy way, but they are surely growing with each Kindle, Kobo reader, iPad, iPod Touch, iPhone and Android device sold into a small market. The proliferation of devices offering ebooks sold through large market retailers MUST be driving sales from those markets. When those retailers start sharing their data (and how likely is that) we will know for sure.
Over time the sales impact will become pronounced, especially if the small markets don’t develop a local infrastructure for selling ebooks. Imagine for instance if all digital sales in Ireland were made through Amazon, Apple, Google and Kobo with maybe a small share for the rest? If the system remains as now, no digital sales will ever be recorded and the market for books will shrink dramatically OR at least it will seem to.
Actual Vs Observable Data
This is a bigger issue than it sounds like and is deeply relevant. As digital change moves on, small markets get a false idea of how rapidly their market is shifting, or at least publishers native to that small market do. If sales are happening in the estores I’ve already highlighted then the local market doesn’t see them. If 20% of the market shifts to digital, but buys its books from foreign retailers, then the market will fall by 20% and it would still look like digital has no presence.
Clearly there are offsets here. For instance, if a local publisher starts putting their titles on those outlets they will start selling books and will realize that the digital shift is ALREADY happening, or perhaps they will realize that even if it isn’t happening, they can sell some of their books to a global customer base.
What’s more, local offices of large publishers (quite a few of which exist in Ireland) will be able to see their rising ebook sales through their corporate parents and will know well enough how quickly digital sales are growing.
But even so, the data for the smaller market as a whole will be fractured and patchy, controlled by outside forces whose good will cannot be relied on and all the time digital will seem, because there is little reliable evidence to the contrary, to be a marginal market.
In this strange scenario, local publishers remain unwilling to invest in digital because they feel the market is small but equally the market to them remains small because they have not even invested to get a few titles digitized and for sale on these foreign platforms. The only way to see beyond the apparently tiny size of the market is to take the leap and invest a small amount, but companies, in the absence of data, are rightly reluctant to do so.
Conclusion
So there it is, the Differential Rates Of Digital Change Problem. It’s not a problem for larger publishing markets of course and I don’t see any real way of addressing it until figures for digital sales begin to be shared more freely by the large companies like Apple, Amazon and Google who are not really minded to share it.
The only way beyond it is to accept on faith that digital is growing in smaller markets but in hidden ways, then to step beyond that and start offering your products digitally. This doesn’t have to be a huge investment (and if you doubt that, spend some time online reading about ebook creation from text files) but it does need to happen and it needs to happen soon.
