Publishers have been slow to adapt to the digital future that has yet arrived. Both the movie industry and the music industry have in the end -and not without fierce and still ongoing battles- accepted the new digital reality of Youtube and Spotify. The oldest mass medium, print, is still struggling to get to terms with the digital era as they keep hanging on to their traditional business model based on subscriptions and advertising.
But the decreasing number of copies sold per book against the explosion of new books and the constantly decreasing newspaper and magazine subscriptions sends a clear message to the industry: time is up.
While the publishing industry has not yet been able to get a grip on digital its foundation is quickly eroding and accelerated by new entrants and business models that aim to fully capture the digital opportunity. There is an increasing number of signs that change is about to happen. Just of few of them that hit the headlines lately:
- Fixed book price is undermined. Dutch government has ruled that the first year book prices are fixed. However cashback systems as introduced by Splinq have the potential to undermine this law. Fixed prices of Dutch books have kept the publishing industry from real competition. Digital books do not have fixed price as they are considered a service. They do however have the 21% VAT instead of the 6% for hardcopy books, although the EU intends to lower the VAT on e-books to 6% as well.
- Amazon’s entry into the Dutch market. Rumors are getting louder that Amazon will enter the Dutch market this year. Already Dutch titles can be bought from Amazon UK while at the same time the Kindle can be acquired through Amazon.com. A Dutch Amazon subsidiary will follow the steps of Google Playbooks , and Kobo e-books and will certainly add to the disruption the Dutch publishing market.
- All you can read subscription model. eLinea just introduced a flat fee subscription for a range of papers, magazines and articles of journalist, writers and cartoonists for 10 Euro a month. Although the site claims to sell articles from over a 100 periodicals and authors, most entries are still empty. But the introduction of the all-you-can-eat model shows at least creativity in selling digital information by (re)bundling content for target groups.
- Matchbook. Amazon will be rolling out Matchbook in October; buy a paper book and get the e-book copy for (almost) free. It is an interesting initiative that will surely benefit Amazon as they charge an extra 3$ (which is way lower than the average 10$ for e-books) for the electronic copy. Slowly but steadily the price point of e-books are pulled down. Someday you buy an e-book for five Euro and be charged an additional three Euro for a paper copy.
- One million e-readers and four million tablets. Currently there is an installed base of almost a million e-readers and over four million tablets in the Netherlands. These numbers were released during the GAU (Groep Algemene Uitgevers)marketing meeting. It shows the growing maturity of e-reading and e-content. It was also argued that e-ink readers are by no means being replaced by tablets. What it does mean is that there is every reason for publishers to cater to this increasing base of readers with attractive subscription forms and at the same time come up with a workable solution towards the copyright issue that is still frustrating the business.
The publishing industry’s answer to the digital future so far seems to be to keep the boat afloat as long as possible. They have been keen to cut into their cost structure on the one hand and to stretch their traditional revenue stream for as long as possible b publishing more (books) and/or pleasing more (newspapers). The result is a tsunami of pulp titles and newspapers pre-occupied with copying the competition and ever more hooked on sponsored content. Needless to say that cutting cost can only go so far and that more pulp and more of the same is the best way to make yourself redundant.
It is not easy for traditional book and newspaper publishers to cope with the digital reality and still be profitable. But instead of crying over copyright infringement (only 12% of the e-books residing on e-readers is paid for) they should accept that their position is one of legacy. This does not mean they have no reason to exist. Print will exist for decades to come, just like the TV and the radio. Print has not been replaced by the radio or TV in the past and it remains to be seen if the web will be able to. Print will have its place alongside the other media and it may turn out to become more like a premium medium as opposed to its digital counterpart that is aimed at the masses.
Moreover, publishers should realize what their added value is in the digital age. This does not only concern print but publishing in general. Traditional publishing activities such as cover design, photography, editing, distributing, marketing, production, have been subject to consumerization of the publishing process creating a new layer of competition. At the same time publishers are being disintermediated at the wholesale/reseller end of the value chain by companies such as Bol, Kobo, Google and Amazon that are becoming content hypermarkets. Finally, the reading of books, papers and magazines is becoming a much smaller part of a person’s media consumption. Content may be exploding but there is still only 24 hours in a day…
It is these fundamental changes the publishing sector is up against. As the signs, of which some are mentioned above, are becoming more clearly every day, the time for the traditional publishing industry to come up with an answer is running out. The change is happening already but the real transition may be sudden and swift. Time to grow, focus, innovate or perish.