Saturday, November 10, 2007

The King is Dead! Long Live the King!

In his book, Print is Dead, Jeff Gomez, an industry insider, argues that technology is transforming the publishing process in ways that we haven't seen since the printing press was invented. (Ironically, the e-book version of this book does not exist yet.) I can buy that argument to some extent, but there was also this thing called a 'paperless office' that was promised at the advent of business systems - starting back in the 70's - that hasn't yet occurred. The use of the paper and printing has been transformed, but I still carry a lot with me, and HP still sells a ton of printers.

In talks given at both BEA, and at Tim O'Reilly's Tools of Change Conference, Brian Napack, President of Macmillan, presented very insightful comments - that I have been repeating to whoever will listen - that publishers need to transform themselves from 'Title Development' companies into 'Author Services companies'. This argument was borne out from the fact that they have understood that the vast majority of their sales come from a very low percentage of their authors. So, investing in those 'superstars' and developing a stable of up and coming 'players' is what a publisher needs to do. I get it. I agree, but.... I don't think its far enough. Brian also said that publishers need to look at how people are reading - and he quoted studies that showed how the 'book buying public' was just a small percentage of the 'reading public'. So, he says, they want to leverage technology to be where the readers are.

I would argue that publishers need to become - or re-emerge as - 'Reader Services companies'. They need to facilitate the styles and habits of the reader in whatever form or fashion that reader is, and to lower the barriers that exist between the brain of the recipient and the ideas of the author.

Why do I think the role of the traditional Publisher is dead? Well I think they are because the very premise of their existence is what is really being transformed by all the new technology - the markets they serve. this whole transformation in publishing today is about markets transforming not the products .

In the 70's, 80's, and 90's as book publishing companies converged and became behemoths, they did so mostly under the premise that their markets - Education, Trade, Mass Market, Religious, STM, Professional, etc. - were stable and definable. Their products all followed similar distribution mechanisms, and publishers could grow by gaining economies of scale in back office functions such as accounting and fulfillment. And the largest publishers had a finger in all those markets - and they still do.

But since the late 90's we have seen how those markets have caused major schisms in publishing houses as the needs of those different 'divisions' become more and more obvious. From my personal experience, I see this all the time, where the 'front office systems' needs of different divisions are so different, yet they all need to get on the same tool. Look at the major houses, Random House, S&S, and HarperCollins - all got out of the education business in the 90's - as it was so different. Pearson erected a Chinese wall between their education group and their consumer group. At Harcourt and Houghton, the Trade division is considered a 'necessary evil' - there it seems to bring some brand identity to the larger parent. Elsevier and Kluwer focus on the similarities between education and STM markets. Even University Presses are developing more and more 'trade-like' books.

Then there is the role of the publisher in the overall media conglomerate... but that could be a whole post unto itself.

Now these markets are no longer stable. Today's technology is definitely blurring the lines between them and transforming them. We don't even really know what the markets are anymore in some cases. That is considering only today's technological innovations. What will tomorrow's technology do? I dare say it won't bring them back to where they were in the 70's.

Publishers have always followed the needs of their markets, and they will continue do so. It's just that now those needs are really going to go off in different ways, and the schisms in the large companies between the divisions is only going to grow larger and more acrimonious.

In my view, we are going to see more divestiture, as these schisms become irreconcilable. At the same time, the smaller, nimbler, companies will be the leaders in identifying and monetizing the markets developing new products and business models as they go. I expect that to last for maybe another 3 - 5 years. Then the tide will change, and the need for economy of scale will cause another period of consolidation, with many of these smaller companies getting sucked up into larger parents.

The question that remains is who will do the consolidation? Will it be the 'Media' companies, the 'Content Hungry, Technology' companies, the 'Financial community', or some other player that is just starting to emerge....

My money is NOT on the Media business.

The King is dead! Long live the King!


Joe Wikert said...

Hi Fran. Another great post. I agree that publishers need to evolve, and the sooner the better. The role publishers fill is rapidly changing. Although the big chains are likely to focus on the big houses for the foreseeable future, at some point you're likely to see more self-published products making their way onto shelves at B&N, Borders, etc. Cheaper print-on-demand systems will also turn your local bookstore into a long tail manufacturer, without the need for an infinite amount of square footage.

I think publishers need to figure out what new services and voids they're going to fill in this ecosystem. What can publishers do to add more value to the equation? What unique assets and benefits can they bring to the table? Sitting down and honestly answering and addressing questions like these will lead to success in the future.

If the big houses don't start heading in that direction soon they'll face the reality presented in one of my favorite books, "The Innovator's Dilemma". IOW, some guy in a garage will come up with a better solution and put the big guys out of business!

Fran Toolan said...

Thanks, Joe.

At the end of the day, in my opinion, there are only three functions that differentiate big publishers from self publishers:

1. Strategy - having senior management with a vision.

2. editorial - these are the talent scouts, coaches, and cheerleaders of the authors.

3. Marketing and Sales - understanding the needs of the customers and putting the right works in front of the right people at the right time.

The publishers who will survive are the ones that will gather the best talent in these three areas and leverage that talent. It's the really rare bird - and I won't say they don't exist - that can perform those three functions and write at the same time.

Truly, in today's technical environment, every other function is commoditized and can be outsourced - even production.

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