Thad McIlroy (The Future of Publishing) and I are still talking regularly about the publishing business, natural language processing, machine learning, and other bright, shiny, attention grabbing things. Our last post focused on The Bestseller Code. This post gathers some of our enthusiasms, thoughts — and fears — as we approach the end of 2016.
Cliff: Thanksgiving, Black Friday and Cyber Monday are behind us, which means that it’s time for another year-end tradition — the annual procession of “Best Of” lists. Let’s add another float to the parade! Starting off, my top publishing-related book of the year… It’s Kevin Kelly’s The Inevitable. In keeping with the focus of our recent discussions, the book is an exploration of the twelve “inevitable” technological forces that are shaping our lives today and will define our world for the next thirty years.
Gutenberg (a hacker) modified a winepress and launched the book business. Publishing and technology have been intertwined ever since, so understanding where technology is taking us is critical to understanding where publishing is going. Here are three of the forces identified in Kelly’s book that the publishing industry needs to pay close attention to:
- Screening: The evolution of all surfaces into screens
- Accessing: The shift from owning assets to paying for persistent access to services
- Sharing: Collaboration and self-publishing at mass-scale
Kelly, a founding editor of Wired magazine, makes frequent comments on how the technology drivers he’s identified relate to books and publishing. It’s a stimulating and fun read. I’ve come back to it often over the last few months.
For those who don’t want to read the book (a mistake), here’s a link to a 50 minute talk by Kelly that covers three of the forces he has identified.
What’s your top book recommendation for 2016?
Thad: Kelly’s book is smart and exciting. I’ll go with a book that’s pragmatic rather than visionary. How to Market Books by Alison Baverstock. It’s an excellent book, current and comprehensive (428 pages + glossary). It truly lives up to its title as a how-to. The first hundred pages dive deep into the business issues of book marketing. Part II is called “putting it into practice” and includes direct marketing, online marketing, publicity and PR, as well as effective copywriting and high-quality design. Part III drills down into specialized markets, including children’s books, libraries and academe. As I say, comprehensive. It’s the fifth edition of a book published first in 1990, so Baverstock has had plenty of time to figure out the best way to present her advice. It shows.
At the same time the book stands alone. There are lots of good books that look broadly at the business of publishing. I don’t know of another current guide focused just on book marketing, written by an industry professional. There are lots of sales & marketing tomes specifically for self-publishers, some very good. But I’d argue that marketing for self-published authors is a subset of the marketing practices at traditional book publishing companies.
Cliff: A wise selection. The October Author Earnings report shows a surprising decline in the market share of indie published books. The reasons aren’t clear just yet (a topic for a separate post), but what is clear is that indie authors will have to level-up their marketing skills.
On to the next category: top publishing story of 2016. Nominees include the above mentioned surprising slump in indie sales, the not surprising shrinking revenues at the major publishing houses, the also not surprising continued self immolation of Barnes & Noble, and my winner… The impressive (and frightening) maturation of Amazon as a media conglomerate.
Amazon capped off 2015 with three Emmy awards for Transparent. In January 2016, Mozart in the Jungle won two Golden Globe awards. The newly released Amazon Studios film Manchester By the Sea is an early Oscar contender. Macquarie Research estimates that Amazon is spending over $3 billion a year on streaming video content. The Amazon Unlimited music streaming service was successfully launched a few months ago and is getting good reviews. They opened their first physical book store here in Seattle, launched Prime Reading in October, and they are finally figuring out how their publishing imprints fit in — culturally and internally.
Most users discover and consume Amazon’s original content and licensed content on Amazon devices and in Amazon apps. Amazon is amassing the world’s largest database of consumer shopping, purchasing, and media consumption habits. In the same way they have become the dominant online shopping platform, and the dominant ebook platform, and the dominant self-publishing platform, and the dominant cloud computing/web services platform, it seems likely that they will become a (if not the) dominant subscription media platform — and that they will open their platforms to self-published music and video just as they opened the Kindle platform to self-published books. We knew they had these ambitions, but we didn’t know if they could execute. They have. Look out Showtime, SoundCloud, and YouTube (to name just a few vulnerable brands).
(While Amazon has been successfully executing its strategy on multiple fronts, Google has been struggling to do the same, as reported in this recent article from Bloomberg.)
Amazon looms large here in Seattle. The Seattle Times just reported that they are on track to occupy 12 million square feet of downtown office space — ”enough to fill a skyscraper that would stretch more than a mile high.” That’s a big shadow, but perhaps I’m overstating the case? Does the situation look the same from your vantage point? What’s your top publishing story for 2016?
Thad: Amazon scares me. At the same time I’m breathless when I watch the sweep and scope of their relentless execution. They appear to be truly unstoppable. There was a point, not many years ago, when Amazon was just a big online retailer. Analysts used to worry if they would ever show a profit in two successive quarters. How quaint that concern seems now. Jeff Bezos has been vindicated in his disdain for profitability as a metric. This is a $100 billion company that’s still growing at 30% (in its latest quarter). Net income increased from $80 million to $250 million. The company is apparently unstoppable.
So let’s bring it back to books. There are a couple of useful metrics. Amazon controls 25% of new print sales, online and off, 65% of ebooks and 75% of online print sales. For most publishers Amazon is their single largest customer. If Amazon went bankrupt many U.S. publishers would go bankrupt soon after. While Amazon isn’t going bankrupt anytime soon this illustrates just how unhealthy Amazon has become for the U.S. publishing industry. It’s business 101 that if you have a single customer whose failure could bring your company down, you’ve got to diversify. And quickly. But how can a publisher diversify from Amazon’s stranglehold?
And the moves that you describe above just make things worse for book publishers. Once Amazon is bringing me groceries the same day I order them why would I even pause to place a book order instead at Apple or Barnes & Noble?
I’m consulting to a publisher that wants to claw back business from Amazon. What’s the point of that? My recommendation to this publisher is to try to further enhance their Amazon relationship. The margins suck, but Amazon is their fastest growing customer. Raise retail prices by 10% and suck it up.
This same client has another line of online education products that are highly regarded in their field. Amazon doesn’t play in this territory (and may never: the products are specialized and non-commodity and have a high customer service requirement). The margins are great, even via resellers — the product is 100% digital. Now that’s the basis for a moving beyond-Amazon strategy.
Book publishers are going to have to diversify their product beyond book “containers”. They should have done it years ago. Now they have no choice.
Cliff: By unanimous vote Amazon takes the top spot! I will hand-deliver this year’s “Claddie” award to Mr. Bezos myself. (The Claddie award is a hollowed-out copy of Mark Twain’s collected works. The inner cavity is suitable for storing your legal marijuana, keys to your electric car, punctured liberal bubble and other cherished accoutrements of West Coast living.)
Looking ahead to 2017, the annual Digital Book World (DBW) conference is coming up on January 17th and 18th in New York. DBW is the first of two annual events that bring the U.S. trade book publishing community together (the other is BookExpo, formerly BEA). Ted Hill has taken over programming for the conference and is focusing the event on the practical concerns publishers are facing instead of the strategic questions that were the primary focus over the past five years. (Ted has also added a day-long event focused on indie publishing on January 19th). We’ve both been invited to participate…
I will be speaking about big data, machine learning and publishing. My talk is an introduction to the basic concepts and technologies that drive big data and machine learning, and a look at how these tools are being used in publishing-related applications.
If you aren’t attending DBW, but are interested in big data and machine learning, take a look at the book The Bestseller Code, by Jodie Archer and Matt Jockers (the subject of our last exchange). Archer and Jockers used these tools to analyze 5000 New York Times bestsellers to determine what, if anything, the books share in common. It turned out that they have a lot in common. I think it’s a must-read for anyone involved in publishing. Even if you don’t agree with their conclusions, the book provides a good overview of how big data and machine learning are being used to analyze book content.
Another must-read is the recent New York Times Magazine article “The Great A.I. Awakening” by Gideon Lewis-Kraus. It’s a fascinating look at how a small team at Google made a quantum leap forward in machine translation.
A.I. is the big technology story that we will be talking about throughout the 2017, starting at DBW.
Thad, you’re also presenting at DBW… Do tell!
Thad: I’m offering two sessions, both intended to be immediately practical. The first is hands-on, 5 Publishing Tools You’ll Wonder How You Lived Without. The impetus for the session struck last year when I stumbled on a Microsoft Word plug-in called PerfectIt. After a decade of being lectured by Microsoft’s grammar tool that I was overusing passive phrasing I was looking something more nuanced (oops: “being lectured” — passive phrasing!). PerfectIt has a nifty feature: it detects whether an abbreviation is defined the first time it’s used in a manuscript. This is a basic task every copy editor faces with every non-fiction book. But error is prone to being overlooked. PerfectIt also spots spelling variations, inconsistent use of hyphenation, inconsistent punctuation in lists, that sort of thing. Nothing fancy, but tremendously useful. Among other things it’s a simple illustration of machine learning applied to raw manuscripts.
The second session is called How to Thrive in an Era of Constant Change. Would you suggest to a niece or nephew entering college today that they consider a fascinating and remunerative career in book publishing? No, I thought not. The book business hovers between flat and shrinking. Big publishers are shoring up profitability with layoffs and buyouts. But taking a defensive posture only singles you out as a dinosaur. In this session I want to uncover the secret of not only maintaining a career in publishing but also having fun while you’re at it.
Central to the future of publishing is understanding where A.I. intersects with traditional book publishing. Which is why I’m looking forward to your session in New York.
So with that, best of the holidays to you. I’ll see you in New York.