Big Idea: Growing the Book Industry's Pie
Book Business asked industry thought leaders to discuss the big ideas that are changing the book industry. We are excited about the future of publishing, and we hope these essays invigorate you with new and illuminating perspectives on that future. View the complete essay collection here.
There's a school of thought that contends the publishing market is a "fixed pie," in which total revenues are flat and unlikely to change. While the marketplace has reached a limit when it comes to traditional book buying, publishers can still grow the pie by capitalizing on the opportunities digital media and platforms present to package, distribute, and sell content in new ways. These opportunities include:
- Offering access, not just products
- Promoting components; and
- Providing content as part of workflow
The Traditional Plateau
According to the Bookstats database, unit sales of books published in the United States grew about 4.8% between 2008 and 2013-a compounded growth rate of a bit less than 1% a year. Over that same period, prices dropped 2.5%, eroding any notion of growth in the market. While unit sales of digital formats, mostly ebooks, are up almost 1,200% since 2008, they largely replaced sales of physical formats, which declined almost half a billion units in the same time frame.
With prices falling and unit sales increasing only slightly faster than the overall population, book publishers might understandably think of the market as something close to a zero-sum game. That perspective could change if we look at publishing through some different lenses.
Platforms like Safari Books Online (O'Reilly Media) and VitalSource Bookshelf (Ingram Content Group) offer users access to book content targeted at specific audiences. By working with a range of publishers, these platforms combine digital access with content breadth and depth.
Safari has grown the market for its content by selling site licenses to companies and government entities that historically have been hard for trade publishers to reach. Safari offers these institutional customers cost-effective ways to make sure that their employees are well-trained and have immediate access to the information they need.
To be sure, some cannibalization of print or ebook sales takes place, but it can be offset with the revenues derived from providing access to new markets. Few publishers are big enough to sell directly to the institutional market, but many have content that would be valuable if it were part of a comprehensive offer.
Not long ago, I learned the story of a publishing business that includes newsletters, magazines, research, and a subscription database. The database includes much of the content that appears in other formats as well as original content relevant to the businesses that buy it.
Early efforts by this publisher to convince institutions to buy database subscriptions were unsuccessful. But when they started offering users the ability to download high-quality charts, graphs, and analyses, demand for site licenses began to rise. They remain strong today.
The charts had always been part of the database. The only change in their offer was unbundled content, offering components that users could import and present on their own. The publisher's clients found great value in being able to borrow directly from the archive. In a competitive marketplace, the visibility of these components amplified awareness and willingness to buy the publisher's data service.
Providing Content as Part of Workflow
For several years, Thane Kerner of SilverChair has talked about the importance of providing content "as part of workflow," available when and where STM professionals need it. While STM publishers have been pioneers in this regard, almost every publishing category has opportunities to deliver content where readers are looking to obtain it.
In the trade space, the significant investments that platforms like Google, Yahoo, and Yelp have made in travel, dining, and related content shows how far demand for such information has migrated away from traditional formats. While the platforms here are often competitors, any publisher can use an understanding of its audiences to reshape how and where its content is discovered and consumed.
These are just three examples of how publishers can expand the pie. Platforms like Wattpad suggest that there may be opportunities in fostering direct conversations between writers and readers. The opportunities are out there, and they point to a market that is far from fixed.
Brian O'Leary is the founder and principal of Magellan Media Partners.