From hardbacks to Hot Bytes

Yesterday, thanks to a prompt from Neil Perkin, I attended Olswang and Rich Futures’ event on the future of books and publishing, entitled From Hardbacks to Hot Bytes.

NB: Original blog post has been updated with slides and AV from the event

Not having much (well, any) experience in books or publishing but having done some work on digital distribution with regards to TV and video, I attended more as an interested observer rather than an active stakeholder.

And I enjoyed it, for what it was. Given the above, Clive Rich’s talk on contractual and legal concerns with the Future of Publishing held little interest for me. But Dominic Pride of The Sound Horizon and, particularly, Gerd Leonhard had some stimulating observations and provocations.

Dominic’s talk was on the near future and so a lot of his material contained things I was already familiar with, though there were some useful nuggets. Gerd took a longer term view and, despite disagreeing with several of his contentions, his points were nevertheless well made and thought-provoking.

Gerd Leonhard’s talk

Gerd’s website contains a lot of his published work and presentations, and this was no exception. The Slideshare embed is:

He started his talk by saying we should beware of toxic assumptions (or mesofacts, to refer to an article I mentioned yesterday). For instance, paid downloads are now declining in number – suggesting they aren’t the future and that people are starting to reach the saturation point where they have “enough” music.

Gerd mentioned that his broad themes are in mobile, social, transparency, real-time and connectivity. But there were a couple of specific themes underlying this presentation

1. The decline of physical

He contended that in future digital copies will be first and physical copies second. He cited Texas Instruments as currently making a third of their income from iPhone apps, and games moving from hardware to software.

In my opinion, this is certainly a trend – though the games manufacturers’ current shift in focus to peripheries (such as Natal or Move) doesn’t rule out a return to hardware in future.

However, I do contend with the notion that “friction is fiction”. It is not certain that, in the long term, all obvious trends are fulfilled. For instance, Gerd suggested that the TV industry is lucky that people still watch TV – it is only because the content is currently good and that people don’t know about internet TV. I would argue – and have done – that the nature of TV means that it will always continue to exist and be paramount in people’s viewing experience. This is because the notion of TV is adaptable – whether satellite, interactive, via a hard disc, 3D or indeed internet-enabled.

People generally like to stick with what they know, and the desire for familiarity can persist. Why else do digital cameras have the superfluous shutter sound, other than to reassure those that the photo was indeed taken?

2. The value is in more than the product

Gerd cited Starbucks as an example of a brand that successful moved from commodity to product to service to experience. Experience and relevance are the keys to future value, not the content itself.

The key to monetizing is to be immersive. The price per unit of content may decrease but content is now a service and can be passed on to a much larger audience. In order to do this, organisations need to find the new generatives (or assets) that people will pay for.

The value of a book is now distributed across

  • Content
  • Context
  • Curation
  • Social
  • Interactive
  • Packaging/format

This means that the role of a publisher – which will still exist due to strengths in scale, access and logistical expertise – becomes one of

  • Curation
  • Collation
  • Culling
  • Contextualising
  • Connecting

Moving away from product to service feeds into the third theme

3. The importance of access

“Making it available is the key to growing your business”. Distribution was missing from the value chain above because it can be bypassed. Any person in the industry – such as Edgar J. Bronfman – who thinks that consumers can be “educated” in the best way to access material will be mistaken

A crucial requirement in this is to trust the users – they cannot be punished into purchasing something. Ubiquity must be assumed, and business models developed from there.

Ubiquity is within the cloud. Gerd made the interesting point that digital rights management is not needed in the cloud, since it effectively has in-built copy protection – we won’t share our mobile, password or profile information.

Again, I’m a little sceptical about this point as it comes back to friction. I agree that incumbents shouldn’t take their position for granted. But the key to distribution isn’t necessarily to be the best. It is to be the easiest. And that benefits the incumbent, since it has already standardised the behaviour – something that is incredibly hard to do.

This is why I think physical books will remain. I can see how all-you-can-eat subscription models with open access can work for TV/video and music/audio – diverse content is consumed in large volumes on a frequent basis. But books tend to be consumed one or two at a time, over a longer period. Indeed, many people will only read the latest bestseller on holiday over the entire year – something they can either borrow from a friend or buy from Tesco for £3.74. Why would they want to invest in digital hardware (such as an iPad) or an open-access subscription?

I suppose, to twist another of Gerd’s points, the answer is that the business model is “they pay”, rather than “I pay” of “we pay”. Books are too low frequency for paid for subscriptions, but services can be funded or subsidised by companies who gain marketing benefits. Though whether they gain enough brand equity or customer information from low-frequency readers is another matter.

Dominic Pride’s talk

What different companies seek to gain from publishing was something that Dominic touched upon

  • Digital retailers want volume and margin
  • Consumer electronic companies want a USP
  • Access partners want retention and ARPU
  • Agencies and brands want advertising inventory and audience engagement

In this, revenue isn’t always the primary return. It could be access or data, for instance.

These feed into Dominic’s ecosystem, in which he argued that the previous linear model is no longer valid due to the proliferation of competition across the distribution and retail aspects. This ecosystem also helps to break out of the notion that the customer is just an end user. Instead, they can add value by recommending, sharing or reviewing. These all feed back into a service model, where value is more long-term than for a mere product.

The crux of Dominic’s talk was that e-readers shouldn’t seek to recreate the book format, since digital is not a format substitution (such as moving from LP to CD). Digital is completely different environment and so companies should look for sustained innovations that improve technologies.

A 3 C framework was proposed, whereby content, context and community help lead onto service and experience. Two potential models for this are;

The Cloud Model – where success factors are

  • Accessibility
  • Value in service/access content
  • Optimisation for device
  • Abundance of content
  • Highly personalised
  • Social elements

The social model – where the characteristics of reading are capitalised upon

  • Personal experience – reading is formative and provides social capital
  • Social – We share and talk about what we read
  • Emotional – we want to share at the point of inspiration

The Slideshare for Dominic’s presentation is

There was a short panel session at the end of the morning where the speakers were asked to name the key challenges to overcome. I think they’re relevant to all industries, not just publishing

  • Discoverability
  • Recommendations
  • Personalisation
  • A quality experience

Audio and video of the event can be found on Gerd’s site here. Each of the talks lasted around 45 minutes, with around 25 minutes of questions at the end.

sk

Image credit: http://www.flickr.com/photos/shifted/3360687477/

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4 Responses

  1. Greetings Simon, thanks for your kind review of this event (www.books20.net) and for joining us. I agree with you 100%: TV is not going away; I just think that the complete convergence of TV & the Web will produce some very challenging future scenarios for the incumbent broadcasters, as ‘being a network’ is totally different than ‘being networked’, and the ecology is upside down. We’ll see! I also agree with your view on the benefit of the incumbents – and this is, of course, their real chance, going forward. I will have audio and video versions of my talk up on this blog post http://gerd.fm/az1L3s very soon, today, btw. Cheers!

  2. Thanks Gerd – I’ve updated the blog post with your AV, and Dominic’s slides. I also like the phrase about “being networked” vs being a network” – I’ll be remembering that!

  3. Hi Simon,
    Appreciate your coverage.
    Having seen both of our presentations summarised here, one more point is working its way to the top.
    The issue is not whether, how or when digital books will replace physical. It’s about how digital reading will filter into the existing content stream and sit alongside it and interact.
    Many thanks once again for coming along.

  4. re. paid downloads – was this a US figure, UK, global, or what? Interesting!

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