B&N has had a good Christmas, in direct contrast to Borders, their main US rival, and HMV the UK music and film retailers (which own’s Waterstones) which yesterday reported some terrible results and proposes 60 store closures including 20 Waterstones.

What’s clear from their press release today is that much of this growth is driven by ereaders and ebooks. They have smartly developed their own device (though they face a lawsuit over the design) and are selling digital content through their website.

In store sales were boosted by those buying the devices in store. Which suggests that while the digital content business is healthy, the future of the physical stores might not be so rosy.

In addition, strong device sales helped drive eBook content sales that have significantly exceeded forecasts.  Barnes & Noble.com comparable sales increased 78% compared to last year’s holiday selling season.  Total sales at Barnes & Noble.com totaled $228.5 million, an increase of 67% as compared to the period a year ago.

William Lynch, CEO, Barnes & Noble, Inc., stated: “NOOKcolor was one of the most sought-after gifts this holiday season and has quickly become the bestselling device at Barnes & Noble.  And, even more encouraging to us, NOOK’s popularity is helping to drive new sales at both our stores and online, where 60% of NOOKcolor owners are new customers of our Barnes & Noble digital bookstore.”

via Barnes & Noble Booksellers.

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Berger said that the name of the game in this space is SEO: writing content “that search engines want to present their users.” Like the Demand Media CEO when I questioned him about their business model, Berger claimed that his company’s model is not competing with traditional journalism. Rather, Berger said that Suite101 and others compete with “non-fiction publishing.”

For example, he said, in the past if you were re-modeling your house you’d go buy a book on that subject. But now, people just Google it. He claimed that traditional publishers have “not woken up [to this] at all.”

I asked what traditional publishers could do to ‘wake up’? Berger replied that there has been “no response from publishing houses” to topic-based sites like Suite101. The best that traditional publishers have come up with, said Berger, is ebooks. However “the questions of the users are so much more specific” than what ebooks can address, he continued. “What rules in this space is topic expertise” – which he noted is what Suite101 is a platform for.

Content Farms 101: Why Suite101 Publishes 500 Articles a Day

Apologies for starting this post with one extensive quote and then following it, almost instantly, with another, but it will make sense very soon.

The potential of Google Books is that by supplying information from a vast accessible anywhere database you reduce the overall demand for new or fresh paid content. What’s even more frightening is that Google is a private company and access to that enormous database will be, for all intents and purposes, at their whim.

Things Publishers Fear: #2 ~ Google

I read the ReadWriteWeb post with interest today and it reminded me of why publisher fear Google. It reminded me too of a thought offered up by Tim Spalding in response to another very interest blog post (comment, post):

I haven’t made up my mind about the net effect of all the change. What bothers me about ebooks is that, so far, the positive effect is not very substantial. So far, ebooks feel mostly like a change in medium, with some minor gains for portability and instant access, not a true leap. Then again, computers at first looked like better slide rules, so I expect some leaping to take place.

All told, I worry in two directions:

First, the “treasures to come” may not be treasures at all. Was the TV a net gain for society? I’m not so sure. On average, it made us less social, less happy, murdered many richer forms of entertainment and made us fat and, until very recently, limited our options to a scary degree. I don’t see anything so bad coming for ebooks, but I am worried that ebooks will merely collapse into the internet. The internet is great, but there’s a lot to be gained from what will come to seem the boring limitations of a book. Maybe I’m wrong.

That idea of books collapsing into the net, that intrigues me. It intrigues me because Google is doing that right now, it’s Editions product will be cloud based blurring the difference between book and web.

Suite101 is also doing it too, but in a different way. Instead of relying on the old content from books that may or may not be useful, as Google is, it is following the Demand Studio model of creating cheap content in vast amounts designed to answer specific question.

Suite101 is creating the same kind of beast as Google is creating with its books database, a searchable and relevant database of content that answers questions and reduces the demand for new generic published material. Even if we imagine that the demand might increase it is clear that the value of new content where relevant content exists is certainly lower than before.

Reframe this debate
There is lots of talk about how curation is a key tool for publishers in the modern era and I agree, but we underestimate the ways in which curation can happen. Suite101 is curating the Cognative Surplus that Clay Shirky talks about and harnessing it to its own advantage and it’s reader’s demands.

Publishers could be doing that for niche subjects as easily as Suite101. Publishers, with experts in certain fields already on their books on niche subjects, SHOULD already be doing it.

The challenge for most publishers is first to realize there IS a challenge and that responding to it is less about social media, ebooks and fancy apps (though they all have a role) and more about rethinking the way you conceive content and how and where you deploy that content to engage and build an audience.

It would be a shame if the companies who have cultivated quality content for so long don’t grab the opportunity that exists and instead allow newcomers to usurp their role, but if that is what they choose …

photo credit: Max Braun

About This Series
Things Publishers Fear is an occasional series about the realities of publishing in the modern era. For the record, survival is not guaranteed, nor is it always deserved.

Google

Where to start with the fear of Google. The 12 million scanned books. Yes that will do for now!

It is not just that publishers are rightly pissed at the fact of Google’s actions (and the gall they have shown in continuing with them throughout the process of first suing and then reaching a complex and variously hated/despised/grudgingly accepted settlement) they fear the implications of Google’s actions.

Fearing the fact

When I say the fact I mean that Google has, at the very least, stretched the idea of fair use to the limit and in doing so created a tool of great value. A searchable database of all the works they can. Nothing will now put the genie BACK in the bottle. The database exists the power of publishers as possessors of that POTENTIAL database is gone, broken forever by the reality of Google Books. Search there and you’ll see its amazing capacities even if only partly, and in a hampered way, realised.

You may not think that this is important but it has created a database that publishers do not:

a) control
b) understand and
c) know how to profit from

If publishers had been involved in the creation of such a database they might have built in any number of changes, made any number of demands and would in any case have had different interests from each other, so much so that they probably would never have made this a reality (and why should they if does not benefit them?). But now they are presented with a fait accompli and one that, even with a settlement, leaves them disadvantaged and with a database that hardly favours them.

Maybe these things are their just deserts, perhaps you feel they have created this situation by failing to move with the times and invest in technology and rights databases, but this series is designed to take the publishers viewpoint and from that perspective, those three things are very worrisome indeed and justify some fear, regardless of the historical reasons for their existence.

Fearing the potential

Any sensible publisher, though, reserves their real fear for the potential of Google and its database. Google are very well placed to benefit from every digital trend you can envisage. The massive textual database they have built compliments this in innumerable ways. Mobile results can be enriched with tourist info from books, history texts and restaurant reviews, not to mention news stories from newspaper and magazine publishers (as if any content producer will escape). What is more so much of the database will contain books that singly have little of value but as a whole collection and cross-referenced are worth considerable sums (public domain works, government publications and the like).

The database brings the reality of competition with EVERY SINGLE BOOK EVER PUBLISHED into sharp focus for publishers as new books face increased real challenges from books published 10, 20, 300 years ago and in every conceivable context, on a phone, laptop, desk computer, iPad, iPod, wi-fi enable device, anything that connects to the cloud and has a screen (not to mention an increase in POD). So if the web enabled a flood of amateur (and let’s face it not always terribly good) content, Google’s books database enables a flood of real professional content that rings true with quality and which at a time when being published was harder than it is now has the stamp of publishers approval. This onslaught threatens directly the lifeblood of all publishing, the new book trade, in ways that all publishers rightly fear.

The potential of Google Books is that by supplying information from a vast accessible anywhere database you reduce the overall demand for new or fresh paid content. What’s even more frightening is that Google is a private company and access to that enormous database will be, for all intents and purposes, at their whim.

How do you like them apples? Well, as a publisher, I don’t like them much, but as William James said: “acceptance of what has happened is the first step to overcoming the consequences of any misfortune.”

“It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” he said. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.” Steve Jobs in interview with David Pogue & John Markoff of the New York Times

Maybe it’s the slew of prediction posts and the ease with which one can now review them over at George’s blog, but whatever the cause, I have been thinking about publishing, what it is, why we do it and how it has changed and how it will change over the next decade or so. Mostly that is because I plan to stay in the industry and function as a publisher, but also because I’d like to have a sense of where we are headed so I can help authors and publishers adapt to the flow of change.

The Platform
If I was to put the question in context for people I would quote the following from Paul Saffo (who is, by any analysis, a genius):

Rule: Change is never linear. Our expectations are linear, but new technologies come in “S” curves, so we routinely overestimate short-term change and underestimate long-term change. “Never mistake a clear view for a short distance.” From the Long Now Seminar: “Embracing Uncertainty: the secret to effective forecasting”

Why do I quote that piece? Because people have become so used to the power of the internet and the world wide web that they tend to see it as an innovation whose impact has happened and is already understood. I think most people are wrong. The Internet IS the platform and we are still struggling to accommodate the long term implications of that.

With the proviso that access is neither free (though it is cheap as in beer) nor, for many in the world, easy (but getting easier as mobile internet spreads with mobile technology an associated and fascinating technology), the internet has made publishers out of everyone on the planet.

The means of publication and distribution have been opened up to many, many millions. Digital printing has been slowly but surely reducing the barriers to print publishing and the impact of that has been felt mostly at the bottom of the publishing ladder as self publishers flourish and wither, succeed and fail not always because of merit or flaws but with impressive determination and in large numbers. But digital PUBLISHING, using the Internet as the platform, this is quite a revolutionary thing.

It is my view that all the efforts by various parties to create ebook readers that part the reader from their hard earned cash and set up some variant of the iPod/iTunes power punch for books, are hopelessly misplaced.

Why re-create the wheel? The challange is not to invent the future (it’s here) the challenge is to make it pay and as to that, I spotted a great description of where we are over on David Worlock’s blog (another very smart man, who I have seen speak previously but never realised he has a blog) last week and I think it offers a clear vision:

We are working within a new continuum, every technology we will use in the next 15 years has already been invented and patented, and what remains to be seen is only the way in which consumers react to which combinations of hardware/software/content to solve which problems in what contexts. And nothing is lost by experimentation.

What This Means For Us?
This reality though has several disconcerting elements:

1) Value is flowing out of traditional print cash-cows as the economics of those markets change. This is especially clear to newspaper publishers, magazine publishers and to hardback imprints. I suspect that paperback imprints will begin to feel the pressure from the web much more keenly in 2010-2011. This will happen as more heavy book buyers begin to engage with web reading driven as they will be by more mobile access (especially when Google Editions launches) and better, more compelling offers from technology companies and publishers.

2) Total value is spreading across a lot more players. In some cases this is driving revenue per unit towards zero as competition drives down the value of each individual piece of information or content. As players with little hope of getting paid anyway charge little or nothing for their content, the overall value of the market is reduced.

3) The emerging supply chain structure does not favour content oriented companies who do not have scale and efficient ways of delivering that content cost-effectively or a specialist niche that makes their content more valuable. If you are not one of the newly emerging content power houses like Demand Media (Some thoughts on demand: Poynter – ReadWriteWeb – Wired) unless you don’t charge the economic cost of your content, in which case you are lifestyle business, or your content has another purpose than making you money directly. On the other hand, there is no new normal and the supply chain will surely be a web rather than a chain, with room for all kinds of innovative structures.

4) As the volume of content explodes, the average quality drops. This seems to me incontestable, if only because many people are not good writers and many more are only mediocre at best. I do not exclude myself from these groups. This will provide opportunity.

5) Most people will not make money from content.

Do I Have Any Predictions?
A few but they are not confined to 2010:

1) Ultimately ebooks and ereaders will fail in favour of access to content paid or free over the internet, perhaps through apps on multi-use devices. That content will be text, graphics, video, audio, games and maybe new formats I’ve never even thought of it, won’t really matter, what will matter is what the customer wants to spend their attention (and possibly money) on.

2) At some point, ISPs will be forced to share more of the money they are making in the back of all this content with the content producers, just like they have been forced to by ESPN (Wired story). It amazes me that they have escaped this for so long.

3) Quality and curation will deliver rewards (so firing editors may be self-defeating) in the long-term, if you survive the shakeout. Given the proliferation of poorly written/created content, acknowledged quality will be a valuable feature as will good filtering capabilities (as we can already see).

4) Survival is by no means certain for publishers, because the system does not EXPLICITLY need us to operate, we need to create a new ecosphere or at the very least a new reason for existing. I don’t think this is impossible. For an interesting analysis of how supply chains change and adapt read this article by Paul Saffo.

5) Big authors and small authors will become vibrant self-publishers in digital and print, the middle ranks of writers will suffer frustration and pain as they exceed small ambitions only to have their larger dreams dashed on the mountain of content and the inability to scale it (I say writers but I believe this will be true of everyone who creates content of any type).

This may seem gloomy, and perhaps it is, but facing the facts of the digital revolution in the face put you in a better position to think strategically about how to react and how to change. Failure to change has only one outcome and I don’t believe that extinction would be to my liking.