More Thoughts on the Future of Book Publishing

By the comments I have received to my last post, I think it might be helpful to clarify a few items.

First, despite my attention-grabbing title, I do not actually anticipate the death of traditional book publishing—at least not anytime soon. However, even a 5-10 percent reduction in sales would have a significant negative impact on the publishing industry as we know it today.

Remember, legally downloaded music sales are only 6% of the total music industry, yet the record companies are reeling. But, it’s only going to get worse for those who refuse to embrace the future. Consider the fact that total music sales (physical and downloaded) for the first half of 2005 were $13.2 billion. Legal downloads accounted for $790 million or nearly 6 percent of this total. However, download sales increased by 350% over the prior year. This is the really big news. Do you see where this trend is going?

Yes, traditional books will be available to bibliophiles for the foreseeable future. All I am arguing is that a shift will occur. A big enough slice of the book reading public will opt for digital delivery and that will have a significant, disruptive effect on the entire industry. Trust me, it won’t take much. This is not an industry awash in profits. A 5-10 percent reduction in sales would wreak havoc. It’s already happening with newspapers and magazines. On the other hand, publishing companies that anticipate this shift and prepare accordingly will prosper. But this must happen now, not after the shift occurs. By then, it will be too late.

Second, I don’t think it’s valid to argue that the current technology doesn’t replicate the user-interface of a traditional book. This is obvious—and irrelevant. Technology is changing exponentially. We are not that far away from displays that closely resemble paper and are more readable and easy on the eyes than paper. We can’t try to envision the future by merely extrapolating from the present. We have to think “outside the box.”

Similarly, we can’t afford to make the mistake of assuming that what is familiar to us will be familiar to our children and grandchildren. Yes, I too love books. I have rooms full of them. (That’s one of the reasons I got into the book business!) But my daughters are more comfortable with computers. Just walk into a room full of teenagers and watch what they are doing. You won’t find many reading books (to my dismay). They are more comfortable with computers and other electronic devices. That’s really all they have known.

In addition, the technology does not have to be better than the traditional book. The quality of MP3 files is not as good as the quality of CD tracks. Yet, customers are switching in unprecedented numbers. Why? Because MP3 (or AAC) is good enough. In addition, iPods offer something intangible. It is something that delights consumers and makes them feel hip and powerful. The thought of having 10,000 songs at your fingertips in a device that can fit in your pocket is intoxicating—at least to millions of people. All I am arguing is that a similar device will come along that makes books as readily accessible—and as fun—as an iPod does for music. It will be cool beyond what we can imagine today. It will be simple and elegant, and, like iTunes and iPod, provide a seamless, end-to-end solution that doesn’t exist in today’s eBook world.

Third, Amazon.com has proven that millions of consumers are willing to buy books online without the benefit of browsing through a physical copy in a retail store. No, this doesn’t mean that retail bookstores will go away. But they will have to prepare to compete with a new kind of online store (think iTunes) that will give them a run for their money. Five years ago, no one could have imagined a new startup competitor who could sell more music than either Tower Records or Borders. Yet, it happened. Seemingly, out of the blue. And it is growing beyond what anyone, perhaps even Apple, could have imagined.

Finally, I want to thank everyone who commented on my last post. I may well be wrong in the particulars of my vision about the future. All I am hoping to do is stimulate discussion and get us thinking about a change I believe is inevitable.

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  • Doug Smith

    Mr. Hyatt, I’m an outsider who occasionally visits this and your Working Smart blog. I owned a book publishing company for a number of years and would concur with everything you say. Of course, I always considered myself to be in the “words and pictures” business, and even then realized that those words and pictures could be marketed in different formats or using different delivery systems. (Parenthetically, one of the key advantages I see of tablet PCs would be for reading e-books and e-documents while on the go.) So unless you own printing presses (not smart) I don’t see that the advent of e-books will impact you adversely. It will mean a further erosion of sales for traditional booksellers as the Amazons sell more downloadable product and opportunities for you to sell direct to the end user via downloads from your web site.

  • Bill Reeves

    Mike,
    Another trend that supports your proposals is in education. Two things strike me…First, the education system is constantly looking for ways to ‘get money’. One way to do this would be for schools to require parents to send their kids to school with laptops (happening in California right now). The school system could provide electronic downloads of textbooks rather than pay to get hard copies, along with having to pay to store all those books during summer months. Second, home schooling is becoming bigger and bigger each year (I myself home school). And the cost to buy and store books at home is hefty. If I could provide one tool for my kids to store their books on (a PC tablet), it would save us space and money. And much like delivering music electronically saves money in the distribution channel for the music supplier, so it could with books, as well, providing cheaper books to homeschoolers than currently accessible.

    Bill

  • Bill Reeves

    Mike,
    Another trend that supports your proposals is in education. Two things strike me…First, the education system is constantly looking for ways to ‘get money’. One way to do this would be for schools to require parents to send their kids to school with laptops (happening in California right now). The school system could provide electronic downloads of textbooks rather than pay to get hard copies, along with having to pay to store all those books during summer months. Second, home schooling is becoming bigger and bigger each year (I myself home school). And the cost to buy and store books at home is hefty. If I could provide one tool for my kids to store their books on (a PC tablet), it would save us space and money. And much like delivering music electronically saves money in the distribution channel for the music supplier, so it could with books, as well, providing cheaper books to homeschoolers than currently accessible.

    Bill

  • Michael DiMarco

    After seeing your post mentioned in today’s Publisher’s Lunch eNews, I stopped by for a visit. As an early adopter in the area of technology, former radio broadcaster, former representative for a large bible software company, and presently an executive(?) for a growing ‘independent imprint’ of print books, I hope my comments are welcome.

    While all this could be one killer delivery device away from happening, I think it’s probably closer to 1,000 interesting-but-not-close-to-replacing-a-book devices away. IMHO, this is due to some missing pieces in the digital audio analogy.

    Simply put, mp3 audio (or digital video for that matter) is purchased, delivered, and stored differently than its predecessors (CDs, cassettes, LPs, 8-tracks, et al) but the method of enjoying the medium still only involves, essentially, one sense- hearing. And for most, mp3s sound virtually the same as CDs. And for those still wanting to use CDs, you can burn one yourself and you’re smack dab back in the 90′s. However the music is purchased, delivered and stored, the way it is listened to is EXACTLY the same (through headphones or speakers.)

    Reading, on the other hand, involves sight and touch. A digital print model would have to overcome its biggest hurdle in how the reader digests the content, not how it’s purchased, distributed or stored. For many bookphiles, the tactile issue will be difficult to overcome and even how the ‘book-bot’ looks.

    As for younger generations, yes, they will likely embrace ones and zeros over wood products more quickly. But as a mile marker check, ask your daughters the last time they bought a teen or fashion magazine. Chances are it was recently and chances are also good they’ve never visited that magazine’s website. Most teens don’t read because they don’t have anything to read that connects with them.

    It’s fun to think back to the first episodes of Star Trek and see Captain Kirk using a Tablet PC (or was it a Newton?) Are changes coming in how we consume text? It’d be silly to ever think they weren’t. Bible software programs have shown that digital reference works and downloading content into your digital library is far more efficient than a paper reference library (I have over 2,000 ebooks in my program.)

    I love chewing on where business and the world is going. There’s no doubt that this post is prophetic, it’s just not likely that it’s right around the corner or that there’s much anyone can do to prepare for it right now. I’m only afraid for some in the book business (writing, selling, or consuming), this subject might sound like someone yelling “FIRE!!….eventually.”

    Thanks for letting me share my $.57 & Merry Christmas. Go Seahawks. Beat the Titans!

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  • http://michaeldubruiel.blogspot.com Michael

    Have you thought at all about doing a Catholic imprint? With 70 million Catholics in the US and no real “large” Catholic publisher–this seems like an untapped mine.

  • http://www.michaelhyatt.com Michael Hyatt

    Yes, we have thought about a Catholic imprint. We are still studying the market. As you probably know, it is very broad.

  • http://generatornetwork.com Mike Rapp

    Mike, one quick note about mp3s. The reason many customers are okay with lower quality is because of the much lower cost.

    This is where I think the book business is very exposed. It costs far too much to offer a printed book for sale, and the margins are razor thin. That's a scenario that is screaming for a market-based solution.

    I still believe that audio books will be the killer book app. The technology already exists (iPods), audio quality is inconsequential, high production values are easy to attain, and delivery is essentially free. So, you have a scenario where a book, in audio form, could be offered at a price that drastically undercuts paper books.

    The vast majority of authors can't get a traditional book deal. But they can all press the record button.

    We have experienced this first hand when we had one of our clients, Wayne Watson, record an audio book for his grad book "For Such a Time As This." He LOVED doing it, and we gave it away at his web site to push physical book sales. We did an ecard that anyone could send to a friend, and the download itself is redeemed only via the store product page — so everyone is one click away from buying the book.

    It's been such a success that we are planning to duplicate the promotion with his brand new book, "Turning Into Dad," which was printed on demand.

    http://waynewatson.com/Default.aspx?p=26060&n