The Industry’s Future

Digitization: New Responses to External Pressures
The reach of what some consider to be the most promising of the electronic alternatives to printed books, the e-book, is contingent on factors such as cost and reader acceptance. In the near term, expect the e-book to continue to grow in popularity among those who can afford the devices, Schroeder says. Faster growth, looking beyond five years in the future, may be enabled by cheaper devices.

Kichler points to the International Digital Publishing Forum’s report showing 75-percent growth in trade e-book wholesale sales in the third quarter of 2008 over the same period in 2007, “in [what was] not a great year for publishing,” as evidence that the market will continue to grow. As additional e-book solutions enter the market, she believes the format’s share of total book sales will surely increase.

Some smaller publishers may be at a near-term disadvantage because of conversion costs in embracing the e-book format, Madans says, although, in general, digitalization will “really level the playing field” as far as making books available to readers.

The Internet has significantly lowered the barrier of entry into book publishing (almost anyone today can “publish” a book—making it available online for POD), driving an explosion of new titles—over 400,000 last year alone, according to R.R. Bowker. This trend can be expected to continue with the proliferation of self- and vanity-publishing, says Frank Gromling, head of Flagler Beach, Fla.-based independent publisher Ocean Publishing and immediate past president of the Florida Publishers Association, who is concerned about the perception of quality this creates. “Booksellers are now inundated by so many new titles, even the review sources cannot evaluate them all,” he says.

Adding to the noise is the fact that the old, reliable “filters”—book reviews and advertising in magazines and newspapers—are steadily vanishing. “All of us are concerned about … lost review space in newspapers,” Schroeder says. “People are looking for new models.” She says she expects more marketing partnerships with Amazon and publishers teaming up on Web sites on the model of CourseSmart, a joint effort between five higher-education textbook publishers, including Wiley and Pearson, which makes thousands of textbooks in e-book format available for sale in one location.

Schroeder also predicts certain public policy decisions will have an impact on the way publishers do business. Near term, the economic downturn will affect school budgets as property tax revenues erode; a longer-term factor is the skyrocketing cost of higher education, which may lead educational institutions to demand more of publishers in that market—entire courses designed and published online, an increasing array of supplemental materials and activities (labs, etc.), even class and lecture notes produced as part of a course package.

Distribution: A Changing Landscape
In late August 2008, a member of the IBPA found himself in an enviable position—possessing the only title in existence about Alaska Governor Sarah Palin, who had just been announced as presidential candidate John McCain’s running mate. Demand for the book skyrocketed virtually overnight. “[The publisher] knew the business, and he know how to deal with it, and was able to turn the book around and get out thousands and thousands of copies,” Kichler relates.

In an industry full of troubling news, such stories are a breath of fresh air, made possible by the flexibility of on-demand digital printing. Book-at-a-time printing stands to become increasingly important to the industry as publishers strive to avoid returns and warehousing costs associated with traditional print runs, printing books only when needed in the quantity necessary.

As long as offset printing remains cheaper, however, publishers will continue to utilize that option for large initial print runs, but there seems to be general agreement that POD will become more and more important as production costs continue to fall and quality continues to improve.

“One of the things we can look to is every offset printer offering digital to survive,” Gromling says. “You must be able to offer flexibility to publishers.”

A potential “drastic change” within a few years, suggests Gromling, may come with the growth of nontraditional book markets, such as pet stores, supermarkets, gift shops and the military. This will affect both retailers and distributors, as these venues do not rely on traditional book distribution models and, in many cases, lend themselves to disintermediation—direct distribution of content by the publisher to a retailer.

Gromling also believes the practice of accepting returns will be challenged more and more frequently as electronic media and other competing distribution models continue to challenge the traditional distribution marketplace.

Daniels, however, believes there is an important place for distributors going forward. Because the technologies required to distribute print and electronic materials are complex, such a role “takes publishers away from their core business—content—and forces them to act as a technology company,” he says.

“We believe that intermediaries such as Ingram Digital will continue to play an equally as important or perhaps a more important role in helping publishers and retailers balance the distribution of both print and digital content,” he says.

Overshadowing all of this, though, is the question of the effects of digital media. “I think going forward it will be interesting to see how the definition of what a book is changes in the next 10, 15, 20 years,” Kichler says. “Will we even still call it a book? Maybe it will just be called a content container.”

The consensus seems to be that, for books, content is the key, and the format in which the content is delivered is secondary. While the marketplace may shift and new content-delivery platforms may rise and fall, the content—whether fiction, children’s stories, educational texts or religious teachings—will prevail. The bigger concern for the industry as it moves into the multimedia future may be competing in a world where people are spending less time reading.

“You read all the time in the [media]: The book is dead, the book is dead,” Kichler adds. “The book isn’t dead, but readers are going to be [a dying breed] if we don’t give them what they want, when they want it.”