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«A Report Prepared for the Association of Canadian Publishers By Diane Davy President Castledale Inc. Association of Canadian Publishers 174 Spadina ...»

-- [ Page 4 ] --

Google’s corporate philosophy -- “to organize the world’s information and make it universally accessible and useful” – is a compelling one from a consumer point of view.

Google presents the industry with both an opportunity and a huge challenge.

On the one hand Google Book Search offers a Publisher Partnership Program that publishers can join on a non-exclusive basis. Member publishers can choose which titles and how much of any title to include. Once Google receives a title, it is indexed. Then, whenever someone uses words and phrases appearing in that book in a Google Book Search, it shows up in the search results. Publishers get a link to their own website, positioned adjacent to their titles. A short list of large, on-line book retailers also comes up adjacent to the title under a Buy this Book heading.

There is no cost to join and no fee is paid by Google. The business model is ad based. Google gives publishers a share of revenue from contextual ads, placed next to the book pages, that are actually clicked on.

Then there is the challenging aspect. Google Book Library Project is working with some major libraries (e.g. New York Public Library, universities of Michigan, California, Virginia, etc. ) to digitize their entire collections, including the works of publishers whose books are in the collections but have not given their consent. A group of American publishers, as well as the Author’s Guild, has launched a lawsuit against Google based on infringement of copyright.

Google claims that it is covered under ‘fair usage’ in as much as it only allows ‘snippet’ vs full text views. It is anticipated that the court case will take some time to resolve.

In the meantime, many of the same publishers who are part of the lawsuit continue to include their books in the Partnership Program.

It is difficult for publishers to determine what the ‘right’ approach to the Google fact is – as it is for other sectors.

The reality is that, like their American counterparts, Canadian publishers, particularly those with larger lists (e.g. university presses), are joining the Partners Program and are receiving regular, although not substantial, monthly cheques for monies generated by the ads positioned adjacent to their books.

Apparently the reports generated by Google, which include maps of where orders come from, are also useful in helping understand the marketplace.

–  –  –

In a time in the industry where every possible penny counts, I think it would be appropriate to continue to advise and educate publishers as to the situation but to leave it to them to determine whether to participate or not.

As previously stated, educational efforts should emphasize that publishers are best served if they own their own digital files, that Google does not give publishers a copy of any file that they digitize and that the Google file is not of superior quality. They should also be told that they may provide lists of copyrighted material they do not want included in the library program.

Also see Appendix B.

PROFESSIONAL DEVELOPMENT OPTION:

• Include regular Google update panels/seminars that monitor and explore what is working and not working with Google.

• Offer regular seminars/workshops that feature other digital asset distributors and publishers who are using their services. Specifically focus on the business deals, what’s working best for publishers, what isn’t.

In addition, perhaps the ACP could perhaps develop a ‘statement of support’ for the American lawsuit rather than launching an action of its own, which would obviously be very costly.

BUSINESS MODELS

Publisher Exploitation Task Force Q: How will publishers market books in digital form?

Should this be done collectively or should publishers carry out this work themselves?

In addition to selling through third party companies as outlined above, publishers have the option of selling their own product (analog and digital) onon-line directly to consumers (e.g. Harlequin, HarperCollins, Wiley – see further details below).

Traditionally most trade publishers have not aggressively marketed directly to customers for a variety of reasons: the difficulty of finding their target market, the cost of direct mail marketing to broadly based consumer groups and the fear of alienating retail accounts.

–  –  –

The digital revolution coupled with eroded margins and reduced retail sales has changed the landscape. Most publishers are offering consumers the opportunity to buy on-line, especially backlist. However, in general, this is passive marketing involving minimal efforts to actively seek out customers and pursue a proactive, on-going direct marketing campaign.

The on-line environment offers the opportunity to vastly reduce the cost of accessing potential customers (email blasts, e-newsletters, etc. all supported by a website). However it can require considerable expertise and significant marketing dollars to get people to a visit a site and to collect and manage customer data.

There are however many inexpensive ways to promote books on-line using blogs, links, cross-promotions, contests, etc. Most publishers are at least getting their feet wet by experimenting with on-line marketing and may be prepared to share successes and failures.





One of the most recent innovations is the development of ‘widgets’. Widgets offer functionality similar to Amazon’s ‘Search Inside the Book’ but, unlike Amazon’s Search Inside which is restricted to the Amazon website, they are designed to be used on almost any website, including social networking sites like YouTube and MySpace.

Both HarperCollins (‘Browse Inside’ – see more below) and Random House (‘Browse and Search’ – includes a text search feature) have launched their own book widget services.

Both are designed to offer protection against piracy and unauthorized copying; to provide statistics on the number of sites displaying any particular book and to allow access so they can be modified or adjusted at any time.

Ultimately, publishers will be able to establish flexible business models around how much of a book can be viewed and at what cost. Some day these book widgets may be the way consumers access digital book content.

–  –  –

PROFESSIONAL DEVELOPMENT OPTIONS:

• Direct Marketing Seminar perhaps working in partnership with Magazines Canada: Presenters could include representatives from the magazine industry, the direct marketing service industry (e.g. Indas), Harlequin, some of the multi-nationals.

• eMarketing seminars: publishers’ successes and failures, blogs, viral marketing, cross-promotions, latest innovations such as ‘widgets’, etc.

• Offer eMarketing specialists as part of the mentorship program.

Task Force Q: What business models are most appropriate for book publisher who are entering the digital marketplace?

Following are examples of three large international book companies and how they are approaching the digital marketplace.

Harlequin Harlequin has always been an anomaly in the book business. It is one of the few true ‘brand’ names in book publishing and its customers are attracted as much to the brand as they are to individual titles. In addition, Harlequin has a long tradition of and expertise in direct marketing that it has taken into the digital world. Harlequin’s website is a destination site for fans of the brand which is rare in the publishing world.

Harlequin has entered the ebook world with gusto and regularly tops the ebook bestseller lists. The company has mined its backlist and offers a wide variety of both front and backlist titles on its own website for direct sale to customers. It even offers some content that is only available in electronic format. It also sells through the various ebook distribution sites like eBook.com. Customers who buy directly from Harlequin’s site get a discount off the regular or list eprice offered on other sites.

Task Force Q: How do on-line retailers of digital content deal with their suppliers?

The business model for selling through an ebook distributor like Mobipocket is much like selling through a ‘bricks and mortar’ store: Mobipocket takes 50% of the list eprice set by the publisher and remits 50% to the publisher. In addition, the ebook distributor pays 10% of the list ebook price as an affiliate fee to the publisher for every purchase that is referred from the publisher’s website link.

–  –  –

Harlequin makes it very easy for consumers by offering free downloads of various ereader software and an easy-to-use shopping cart function. It also offers on-line book clubs, enewsletters, contests, etc. designed to engage and entertain its customers.

HarperCollins (HC) HarperCollins is also aggressively pursuing the electronic market, with the Canadian branch participating fully.

The company has its own internal, globally accessible, digital warehouse and also works with search engines like Google and Yahoo and on-line retailers like Amazon to direct consumers to its own site.

In addition to offering ebooks on its own website, HC offers its products through other digital distributors like the Sony Connect store. It is interesting to note that a recent title, At the Center of the Storm, is offered at the same price on both the HarperCollins and the Sony Connect site. Even more interesting is to compare the price of the print book, $27.95, and the discounted ebook, $15.96 (list eprice $19.95).

HC also offers consumers an array of other on-line marketing initiatives including sample pages of select titles and podcasts of author interviews.

Their latest innovation is a ‘Browse Inside’ widget, which they describe as ‘… the digital experience of flipping through the pages of a book to get a sense of it. Ultimately, each book in the HarperCollins catalog will have the Browse Inside link. Until then, this page will present noteworthy books as they become available with Browse Inside digital pages for you.’ Their widgets are designed to be easily picked up by other sites, thus encouraging viral or word-of-mouth marketing. They allow any website to add ‘search inside’ functionality to its pages. No special permission is required.

Browse Inside doesn't show all content of a book generally just the Table of Contents and front matter, the first three pages of the first few chapters, and front and back covers. It is intended to give readers a sense of the writing and what the book is about, similar to what a customer might sample in a bookstore.

Wiley Wiley, a leading publisher for the scientific, technical, and medical communities worldwide, is another example of a publisher using the digital environment to market and sell its books. Like Harlequin and HarperCollins, Wiley markets and sells directly to its customers on its website as well as

–  –  –

through other digital asset distributors like NetLibrary and Google. Leading textbooks are available in Wiley Desktop Editions (downloadable ebooks) at 60% off the print cost.

What can be learned from these example and others is that publishing companies need to get into the marketplace to find out what works and what doesn’t for their particular circumstances. It is also apparent that it is not incompatible for a company to control and manage its own digital asset distribution internally while also working with other digital asset distributors.

Other industries Task Force Q: Business models for the distribution and sales of digital works in other industries. Which aspects of these are appropriate for the book publishing industry? Which are inappropriate?

The book publishing industry is not alone in grappling with the impact of technology.

The music industry (‘the canary in the mine shaft’) has experienced a complete and massive change in its business and is still evolving and innovating to meet the challenge. It was the first industry to bear the brunt of electronic change, with film/tv/video and print predicted to follow in that order.

It is interesting to note that the iTunes store now offers downloadable music, movies, tv episodes, audio books and games.

Following are some of the ways that the music industry has evolved to cope

with the market revolution:

• Unbundling of content (consumers can now buy downloads of individual songs vs whole albums)

• Very affordable costs (downloads for iTunes have been at.99 for awhile. Recently there have been some experiments by music companies (e.g. EMI) to get that price up to 1.29 by offering unrestricted downloads that are not protected by anti-piracy/anticopying technology.)

• Easy, user friendly and appealing legal downloading (e.g. iPod/iTunes)

• Added services/diversification (offering everything from artist management services to custom compilations for commercial use) Perhaps most importantly, the sound recording industry’s experience is a cautionary tale in the perils of ignoring profound change in the marketplace and consumer expectations.

–  –  –

Even as it has adapted to the new market realities, the music industry still continues to fight the copyright/ piracy battle. Recently the Recording Industry Association of America sent letters to hundreds of university students threatening to sue for copyright infringement unless they paid a settlement of up to $7.87 per illegal download.

iTunes does claim that it is having a positive impact on piracy, citing recent inhouse research that shows 36% of US teens bought music using online stores in 2006, up from 28% in 2005 and 20% in 2004.

PROFESSIONAL DEVELOPMENT OPTIONS:

• Offer focussed workshops/panels that feature speakers from other cultural sectors (e.g. music, film/TV, gaming, etc.) who speak to topics relevant to book publishers (e.g. ownership, exploitation models, automation of internal processes, direct marketing to consumers, etc.).

There would need to be some prepatory work done prior to such sessions to ensure that the speakers were briefed and had some understanding of what would be relevant to the audience.

POSSIBLE PARTNERS



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