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.

1. 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)
2. 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)
3. 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
4. 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.

I wonder how long Google will keep plugging away at Google Ebooks, I suspect they are in for the long haul. After all, their Google Books product is bound to provide a competitive advantage at SOME point!

Google is accelerating its push into the e-book space by acquiring online publishing company eBook Technologies in a move aimed at improving the reading experience on devices such as tablets and e-book readers. The acquisition comes just weeks after Google launched its own e-book store, called Google eBooks, and highlights the firm’s efforts to gain a foothold in the digital books business. The e-book market, which is valued at close to USD1bn and tipped to grow dramatically in coming years, is currently dominated by Amazon.

via Google buys online publishing firm eBook Technologies :: StrategyEye – Industry Intelligence.

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.”