The Architect of Innovative Publishing
Technology is fundamentally transforming publishing. From generating ideas to packaging information to delivering products and beyond, everything is changing. Tim O’Reilly, the founder and CEO of O’Reilly Media, the renowned Silicon Valley-based computer/technology publisher, believes that many publishers are woefully unprepared. His company, one of the leading computer-book publishing companies in the world, is at the forefront of the technologies that have directly shaped publishing of the past, present and future.
When I spoke with O’Reilly, he was getting ready to board a plane to New York City to keynote Google’s “Unbound” conference on Jan. 18. The conference was billed as “a day for examining how the book business has changed and how it will continue to evolve.”
Google isn’t the only one knocking down his door for speaking engagements—the company’s founder makes for the perfect expert to talk on the industry’s ongoing evolution. Though sometimes, his cutting-edge insights can be a little challenging for some to follow.
“I spoke recently at The Stanford Publishing Course, and O’Reilly editor Sarah Milstein, who attended, reported back, ‘They loved your talk, but in follow-up conversations during the rest of the week, I realized that many of them didn’t really know what you were talking about,’” he says.
At O’Reilly, the employees tend to be ahead of the curve in their way of thinking, but not so far ahead of the curve that they believe they can do it all alone. This is one of the reasons why they are trying to bridge the gap and help educate others.
“We’re far from always ahead of the curve. But when we are, it’s because of a philosophy that I call ‘watching the Alpha geeks,’” O’Reilly says. “That is, rather than chasing ‘the hot topic du jour,’ we find interesting people, and ask them what they are finding new and interesting.”
He enjoys repeating a quote by science-fiction writer William Gibson: “The future is here. ... It’s just not evenly distributed yet.” So O’Reilly believes you have to find people who are living in the future. When his company finds these people, it spreads the information.
The O’Reilly Radar
According to O’Reilly COO and CFO/EVP Laura Baldwin, Tim O’Reilly inspires others with his vision of the future.
“He’s a synthesist who finds insight and meaning hidden in seemingly disparate facts and phenomena, and then crafts it into a compelling story. He sees the possibility of a better world ahead, and believes that everything we create at O’Reilly should be helping to bring that world into being,” says Baldwin.
In 1992, O’Reilly Media explored the Internet when there were just 200 Web sites in existence.
“We had a sense that technology would one day be ubiquitous, so we wrote about it in ‘The Whole Internet User’s Guide and Catalog,’ which went on to sell a million copies, and played a key role in the development of the Web and the commercial Internet,” O’Reilly says.
In the ensuing decade and a half, the company and its omnipresent leader have not veered from its place on the leading edge of technology and publishing. Today, his insights are increasingly sought after.
“Over the past year or so, I’ve been asked to give a number of talks focusing on the application of Web 2.0 ideas to publishing. It’s a natural for O’Reilly,” he says. “We’re an innovative publisher. … We’re the originator of the term Web 2.0. … But more to the point, publishers large and small are realizing that the ground is moving under their feet, and that the industry will never be the same again.”
O’Reilly and other members of his staff share this knowledge through blogging on http://Radar.OReilly.com, a site that transmits what they call “The O’Reilly Radar.”
“We have a pretty good record at having anticipated some of the big developments in recent technological history. … For instance, we launched the first commercial Web site, GNN [The Global Network Navigator], in 1993; we organized the meeting at which the term ‘open source’ was first adopted; we were early investors in Blogger, which helped launch the blogging revolution; and more recently, our Web 2.0 conference launched a worldwide meme,” according to the blog.
“We are now helping other companies to understand how to apply our insights and use our trendspotting tools, rather than just using them internally,” O’Reilly says.
However, this radar is not the only key to O’Reilly Media’s success.
“An even bigger part is that we ask the question: What do people really need to know? … We really want to add value, and that means holding to certain standards,” he says. “So we don’t just rush out yet another book on a subject. ... We try to do books that live up to our internal mission statement: ‘Changing the world by spreading the knowledge of innovators.’”
Often, however, the company doesn’t just spread the knowledge, it also plays an integral role in creating it.
The Future Looks Bright
Tim O’Reilly thinks of his company, which he founded in 1978, not just as a publishing company, but as a kind of technology-transfer company.
“We do that through books, magazines, conferences and online. The fastest-growing areas of our business are conferences —face-to-face knowledge distribution, online publishing initiatives like Safari, and our new magazine publishing division, which includes two quarterly magazines called Make: and Craft. These divisions are all growing 30 percent a year or more, and we actually expect that to accelerate,” he says. “Our computer book publishing divisions are relatively slow-growth, 10 percent—but that’s pretty good in a market that is itself growing only about 2 percent a year, if that.”
In computer book publishing, the hottest topic areas for O’Reilly the past year have been Web development and digital media—everything from digital photography to the iPod and digital music.
“But 2007 should be a very good year for many more traditional computer book publishing topics as well, because it’s a year in which there are major software releases expected,” he says. “There are always new technologies that are lighting up the future, and we try to follow that light wherever it leads. It usually turns out to be somewhere very interesting.”
In 2003, in the middle of the dot-com bust, during a brainstorming meeting with O’Reilly Media and the company MediaLive (now owned by CMP), Dale Dougherty, co-founder of O’Reilly’s publishing business and now general manager of its Maker Media division, coined the term Web 2.0. It was evident in this meeting that the Web was experiencing a renaissance of innovation and enthusiasm.
“In particular, Dale focused on the idea that there was a kind of ‘2.0’ phenomenon going on, where many of the pioneers were being supplanted by new approaches,” O’Reilly says.
As O’Reilly Media staff brainstormed ideas for (what would later become its first Web 2.0 Conference), they realized that Web 2.0 encapsulated all of the themes that O’Reilly had been exploring for many years.
“So we wrapped the first Web 2.0 Conference in 2004 around these themes, and when I wrote the paper ‘What is Web 2.0?’ (www.OreillyNet.com/go/web2) for the second conference, the new movement had its manifesto,” he says.
This phrase, “Web 2.0” swept the Internet and the publishing world, leaving publishers at all levels hungry to take advantage of leveraging the Internet as a content platform.
“The key idea of Web 2.0, as I think about it today, is this: What distinguished the companies that survived the dot-com bust, and many of the successful new startups since, is that, in one way or another, they have learned how to leverage the Internet as a platform more powerfully than their competitors,” O’Reilly says. “And chief among the characteristics of that platform is this: You gain competitive advantage by using network effects to build applications that get better the more people use them.”
He uses the phrase “harnessing collective intelligence” as a type of shorthand for this idea.
“Amazon’s increasing distance from other competitors like BarnesandNoble.com was driven by their relentless pursuit of user annotation on their site,” O’Reilly says. “While competitors imitated obvious features, like reviews, Amazon tirelessly asks users to contribute in literally hundreds of different ways and, as a result, their site has become progressively better than those of its competitors.”
So if Web 1.0 represents the original dot-com boom, and Web 2.0 represents using the Web as a platform, will we see a Web. 3.0 sometime soon?
“Well … I don’t really see a ‘3.0’ until we get beyond the Internet, and we’ve got a long way to go before we’ve finished exploring the power of the network to transform our information businesses,” he says.
“Things that would seem significant enough to really change the game include a true 3-D Web, in which Internet-enabled manufacturing supply chains and personal fabrication machines are driven by user-generated designs, such that the things that are being shared over file-sharing networks are not songs, but stuff. … This may seem far out, but you can already see signs of that future—3-D immersive worlds like SecondLife, and perhaps more importantly, Google’s acquisition of Web-based CAD firm Sketchup, and its integration into Google Earth, are important signposts,” says O’Reilly. (In the world of SecondLife, participants—or residents, as they are called—actually build a new society and economy online; it is “inhabited by a total of 3,139,060 people from around the globe,” according to the site.)
Safari Books Online
In the area of digital book sales, O’Reilly still utilizes a service that it created in 1999. Safari Books Online is an online book-subscription service where customers pay a monthly subscription fee to be able to search across and use all of the more than 4,000 books in the library, including almost all of the most important books in software development, Web development, graphics and digital media.
Safari is actually no longer a division of O’Reilly. “Early on in its history, we spun it out into a joint venture with Pearson Technology Group, our biggest competitor,” he says.
Microsoft Press also contributes titles to Safari, as well as a number of smaller publishers.
“We realized that for online books to take off, we needed an industry-wide approach,” O’Reilly says.
When O’Reilly started Safari, there were several other online book services, but according to Tim O’Reilly, the economics of their services didn’t cut it, and they were positioned like book clubs.
“But I tend to take the long view, and I believed that one day, online books would be a large part of our future, so we needed an economic model that would survive once the online channel became primary,” he says.
And that is exactly what it has done.
“For O’Reilly, Safari is now our third largest reseller, behind only Amazon and Barnes & Noble,” O’Reilly says.
Safari also provides the platform for O’Reilly Media to exhibit its innovation in a relatively new hands-on service for its customers. In the service, Rough Cuts, customers can buy access to a series of PDF downloads of snapshots (or “builds” to use software parlance) of a book that is currently in development. And because the book is still in development, this allows readers to make comments and suggestions directly to the author during the development process.
The company is noticing some interesting statistics in this area of downloadable books. Sixty percent chose PDF only, 36 percent chose the PDF + print bundle and only 4 percent chose print only.
“Over the years, we’ve done a number of projects to allow our customers to participate in the development of our books, O’Reilly says. “But we also wanted a mechanism to give people early access to books under development.”
Rough Cuts is also an example of how O’Reilly is working together with Pearson to advance Safari.
“Even though we’re competitors, we look at areas where we think we can grow the market better by cooperating rather than competing,” he says. “So Rough Cuts was our idea, and we could have done it only through OReilly.com, but we realized that if we offered it through Safari instead, and got Pearson and other Safari publishers on board, there would be more books available, and market acceptance would come more quickly through critical mass.”
In terms of book distribution, O’Reilly expects Safari to go from their third largest distribution channel to No. 1.
“Even for print books, online resellers are increasingly important,” he says. “Technical books are probably earlier in this trend than others, but it’s worth noting that last year, Amazon passed Barnes & Noble as our largest reseller.”
He also believes they are far more efficient with very few returns.
“I’m not saying that these results would be duplicated for all types of content, but I am saying that any publisher who doesn’t take online delivery seriously will likely be out of business eventually,” says O’Reilly.
Fear Obscurity, Not Piracy
Of course with cutting-edge computer-based technology there also comes great fear of piracy of publisher’s products. In 2002, O’Reilly wrote an essay called “Piracy is Progressive Taxation,” where he argued that obscurity, not piracy, is the biggest threat to publishers and authors.
“If you’re lucky enough to matter, you ‘might’ lose some sales to piracy,” O’Reilly says. “But more likely, the increased exposure from free redistribution will increase awareness and sales for most authors. In that sense, free online distribution is a bit like the progressive income tax we have in this country—in theory, taking a bit from the rich, and giving a bit to the poor.”
He says this redistribution of attention is what he has seen on Safari.
“In studies comparing Safari usage with print book sales, we’ve noticed way more [online] usage of books on ‘the tail’ (to use Chris Anderson’s ‘Long Tail’ metaphor), and somewhat less use, on a percentage basis, of the books that are best-sellers in print,” he says. “In fact, there’s a kind of spike out at the end of the tail, a bit like a Stegosaurus tail, where people find really old books that are out of print, and not selling at all any more, but still valuable.”
Some of these could profitably be brought back into print via print-on-demand.
“And of course, that’s why I came to Google’s defense around the Google library scanning project. There are only about 1.2 million books in print, yet there are more than 30 million unique books in libraries,” he says. “It seems to me that we have data that argues pretty compellingly that search will help people find new value in old, abandoned works.”
O’Reilly says another major trend is the widespread availability of used books online.
“This is now an efficient marketplace, and used books are real competition for new books,” he says.
According to O’Reilly, search is one of the things that you can do online much better than you can do in print, and as Google has shown with the Web, it can drive enormous value, not just for the search engine itself, but for the whole ecosystem.
Another one of O’Reilly’s services exposed to the threat of piracy is its “PDF or Print” service that allows customers to purchase a book online at a discount, and either read it on screen or print it themselves.
“And so, with our PDF downloads, we watermark them, as a kind of moral deterrent, and to remind people that they aren’t for free redistribution. And we do play whack-a-mole with sites that redistribute our copyrighted content that is not under free redistribution licenses,” he says.
However, he feels confident that O’Reilly consumers understand what happens when content is stolen and redistributed.
“They know what happens if you kill the goose that lays the golden eggs,” he says. BB