Entries tagged with “business” from Tools of Change for Publishing

Content is a Service Business

Andrew Savikas
July 13, 2009 | Permalink | Comments (25) | Listen

I've been a fan of Trent Reznor's music since first hearing Pretty Hate Machine in junior high school, but in the past few years I've been increasingly impressed by his attitude and approach to the economics of the modern digital media business. His release of Ghosts I-IV is a case study in how to do exactly what Kevin Kelly outlines in Better than Free : "When copies are free, you need to sell things which cannot be copied." Notice that even though the Free Download option is right there at the top, the $300 "ultra-deluxe" version is sold out (and was sold out within 24 hours of being released).

On his forum a few days ago, Reznor posted advice to aspiring young musicians eager to make it in the music business, and the advice is just as applicable to writers and other artists working in almost any digital medium and attempting to compete with the vast content available on the Web:

[W]hat you NEED to do is this - give your music away as high-quality DRM-free MP3s. Collect people's email info in exchange (which means having the infrastructure to do so) and start building your database of potential customers. Then, offer a variety of premium packages for sale and make them limited editions / scarce goods. Base the price and amount available on what you think you can sell. Make the packages special - make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters... whatever. [emphasis added]

This is not just about using free digital content to sell physical goods. It's an acknowledgment that what you're selling as an artist (or an author, or a publisher for that matter) is not content. What you sell is providing something that the customer/reader/fan wants. That may be entertainment, it may be information, it may be a souvenir of an event or of who they were at a particular moment in their life (Kelly describes something similar as his eight "qualities that can't be copied": Immediacy, Personalization, Interpretation, Authenticity, Accessibility, Embodiment, Patronage, and Findability). Note that that list doesn't include "content." The thing that most publishers (and authors) spend most of their time fretting about (making it, selling it, distributing it, "protecting" it) isn't the thing that their customers are actually buying.

Whether they realize it or not, media companies are in the service business, not the content business. Look at iTunes: if people paid for content, then it would follow that better content would cost more money. But every song costs the same. Why would people pay the same price for goods of (often vastly) different quality? Because they're not paying for the goods they're paying Apple for the service of providing a selection of convenient options easy to pay for and easy to download.

This is not new to digital content. Why would the price of admission to see a given year's Razzie Award winner be equivalent to the price of admission to see the year's Best Picture? Because the price of admission is not for the content. It's for the privilege of seeing it early, and doing so on a big screen in a social environment -- movie patrons pay for the service provided by the theater, not for the movies themselves (here's a counterpoint on movie pricing). That's the point that Reznor and Kelly are making: think long and hard about what your customers want, and provide the service of giving that to them.[1]

"But people are still buying content when they buy a book or an album," the argument goes. Yes, they are. The same way that you're buying food when you go to a restaurant. You are purchasing calories that your body will convert to energy. But few restaurants (especially those you visit frequently) have ingredients any different from those you can get yourself at the corner store, for much less money. So it can't be true that your primary goal is to purchase food; you're purchasing a meal, prepared so you don't have to, cleaned up so you don't have to, and done so in a pleasing and convenient atmosphere. You are paying for the preparation of the food and the experience of eating it in the restaurant, not the food itself [2] (beyond the raw cost of the physical ingredients, which in the case of digital content is effectively zero).

This came up during a discussion on Peter Brantley's email list recently, in the context of what someone is paying for when they buy one of our Cookbooks (which contain "Recipes" for how to accomplish specific tasks with a particular computer language or technology, often culled and curated from material and techniques previously published in blog posts, mailing lists, or help forums). I asserted that rather than the content itself, people are paying for the preparation of that content, to the extent that it helps them solve their problems more quickly and conveniently. When you think about what we do as a service business, then it makes perfect sense: readers are paying us for the service of finding a bunch of great and interesting stuff, and putting it together in a convenient package. It's the convenience of not having to find it themself, and the concise package that saves them from having to dig through a bunch of web bookmarks or search results. I didn't buy "Home Buying for Dummies" last year because I wanted a book on home buying; I bought it because I didn't want to screw up something really important (buying a house) and was willing to pay someone to spell out all of the stuff I needed to worry about in one place. People don't buy Jim Cramer's books because they want Jim Cramer's content -- they buy his books because they think it will help them get rich, and they think paying him is a great shortcut alternative to acquiring his knowledge (knowledge, not "content") themselves. These are services, not products.

The recent (and absurd) notion put forward by European publishers to "strengthen copyright protection as a way to lay the groundwork for new ways to generate revenue online" is intimately tied up with this issue of the value of content (and therefore the value of various players in the content value chain, like authors, publishers and the latest bogeyman, aggregators and search engines). Arguing that you need to beef up copyright protection to make sure there are ways to generate revenue online incorrectly assumes that what people are paying for is the copyrighted content itself. People do not care about content, they care about themselves and their problems.

You don't get an "A" for effort just by spending time and money creating content (and you are not entitled to your business model -- you have to earn that money every day by doing something that people find worth paying for -- and they decide it's worth paying for, not you). Content only has value to the extent that someone will pay for it because it accomplishes something they'd rather exchange money for than do themselves -- and when was the last time you said "Gee, I really need some content. I could write some of it for myself to read today, but I'd rather pay someone else to do it." [3] Google and other aggregators haven't stolen any value from the creators of the content they are aggregating -- they have done what intermediaries have always done, which is create new value based on doing for customers what those customers cannot or do not want to do themselves -- the service of sorting through all that content to find the thing that solves their problem. (I use "problem" loosely -- it may be boredom, loneliness, a tax audit, an idea for a first date,...) Again I'll return to Kevin Kelly, who elucidated the role of aggregators in relation to content creators far more eloquently than I ever could:

The giant aggregators such as Amazon and Netflix make their living in part by helping the audience find works they love. They bring out the good news of the "long tail" phenomenon, which we all know, connects niche audiences with niche productions. But sadly, the long tail is only good news for the giant aggregators, and larger mid-level aggregators such as publishers, studios, and labels. The "long tail" is only lukewarm news to creators themselves. But since findability can really only happen at the systems level, creators need aggregators. This is why publishers, studios, and labels (PSL) will never disappear. They are not needed for distribution of the copies (the internet machine does that). Rather the PSL are needed for the distribution of the users' attention back to the works. From an ocean of possibilities the PSL find, nurture and refine the work of creators that they believe fans will connect with. Other intermediates such as critics and reviewers also channel attention. Fans rely on this multi-level apparatus of findability to discover the works of worth out of the zillions produced. There is money to be made (indirectly for the creatives) by finding talent. For many years the paper publication TV Guide made more money than all of the 3 major TV networks it "guided" combined. The magazine guided and pointed viewers to the good stuff on the tube that week. Stuff, it is worth noting, that was free to the viewers. There is little doubt that besides the mega-aggregators, in the world of the free many PDLs will make money selling findability -- in addition to the other generative qualities.

I love his metaphor of the internet machine ("a very large device that copies promiscuously and constantly"), and it's one worth keeping in mind if you think you're in the business of selling "content," because you are probably wrong.

Update: Jim Lichtenberg kindly reminded me he gave a presentation [PPT] on the same topic at the 2008 TOC Conference. Worth a read.

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1. Many publishers have actually been doing the same thing for years with hardcover, trade, and mass-market editions of the exact same content at different prices.

2. This is why celebrity chefs aren't particularly worried that doing TV shows and selling cookbooks describing exactly how to make the food they serve in their restaurants will harm business.

3. There are people who do in fact want to pay someone to write content for them as a service. They're called publishers.

Computerworld: The Coming Ebook Revolution

Andrew Savikas
February 7, 2009 | Permalink | Comments (2) | Listen

Last week I linked to a phenomenal piece over on ArsTechnica on the future of digital books (and in the process neglected to thank Peter Brantley for the link). Today Mike Shatzkin (a co-author on the StartWithXML Report) passed along a pointer to another great article, this one from Computerworld's Mike Elgan listing six reasons that ebooks are about to explode . His reason #5 mirrors the theme of this year's TOC Conference, which starts on Monday:

5. A rise in books written for electronic reading. The shift from print to electronic will change the nature of the book itself. Many books will be shorter. They'll be more timely and culturally relevant. They'll be more colorfully and engagingly written. And they'll go after young readers like nothing before.

Elgan left off what I believe is the most important aspect of writing for electronic reading, which is hyperlinking, but the thrust here is that all publishing is becoming digital publishing, and existing publishers ignore or delay dealing with this at their peril. Or as Elgan puts it:

Like the move from silent pictures to "talkies," the transition to electronic publishing will prove fatal to laggards. Those aggressively pursuing and developing e-books will rise to take control of the publishing industry.

I agree completely, and am reminded of a line from Michael Porter's seminal article, Industry Transformation:

Because early experiments can be highly influential, companies that hope to be eventual industry leaders must think carefully about the precedents they set during this period.

Related Stories:

• Ars Technica: "The once and future e-book: on reading in the digital age"
• Digital Experiments and Useful Analytics Must Go Hand-in-Hand
• Newspapers Pursued New Tech with Wrong Intentions

For a Workflow Change, Support from the Top is Required

Mike Shatzkin
November 5, 2008 | Permalink | Comments (1) | Listen

Last week Laura Dawson and I spoke about StartWithXML to a group of IT and operations people from publishers at the User Group meeting for Global Turnkey Systems, a company owned by one of our lead sponsors, Klopotek.

We got some great questions afterwards. On reflection, we realized that they touched an important theme: the need for CEO-level support for the change initiatives to put XML into the workflow. There are savings of time and money to be made by doing this, but that's not the immediate result. In the short run, the changes require more work, more effort, and, sometimes it would seem, generate a less desirable result.

This echoes what we've heard from Andrew Savikas of O'Reilly. Instead of characterizing the two elements of a publishing organization as "hard (production, accounting, ops) and "soft" (editorial, marketing), Andrew says that for XML change they are "hard" and "harder." Trying to get the most creative people in a publishing company to do something that is "harder" requires a top-down understanding that doing it is important to the business.

That's why we asked David Young, the CEO of Hachette Books in the US, to deliver our keynote address. He'll be speaking on the topic "XML: Why Bother?" That's the question every CEO must answer to get the collaboration up and down an organization that large and systemic change requires.

Related:

• See more StartWithXML posts

TOC Recommended Reading

Mac Slocum
October 9, 2008 | Permalink | Comments (0) | Listen

The Future Is A Foreign Country (Timo Hannay, Nascent)

As with my journey to Japan, my personal response to all this internet-enabled weirdness was one of almost unadulterated joy. The fact that it is disrupting publishing is, I think, the single most important reason that I've come into the industry. How boring the last 550 years since Gutenberg have been. Until now.

Ok Entrepreneurs, Time to Step Up (Brad Feld, Feld Thoughts)

When I look back at the dotcom apocalypse that was 2000 - 2002, I realize some of the best companies I've ever been involved in were created during that time. In the midst of this, I remember the endless stream of "the Internet is over" and "the information technology business in now a mature business and there will never be innovation again." Yeah - whatever.

Watching Books (Richard Curtis, TeleRead)

As successive generations accustomed to being diverted by watching, rather than by reading, enter the editorial workforce, impatience with printed text is demonstrably increasing, as we can see in the sharp decline of newspapers and magazines. Books require a commitment of time and attention that we either don't have or aren't willing to give. The temptation to skip or skimp is strong. One editor confessed to me, "I tend to scan manuscripts on screen rather than read them the way I do a printed text." We must therefore ask ourselves whether instead of reading books on screen, we are watching them.

Related:

• See more TOC Recommended Reading

The Inertia of Digital Turf Wars

Mac Slocum
April 24, 2008 | Permalink | Comments (0) | Listen

Two recent news stories touch upon a core question in the conflict between established businesses and digital creators: what's the point of a turf war when the turf keeps shifting?

First up is a New York Times story that examines the murky relationship between professional sports teams, bloggers and multimedia coverage:

Mike Fannin, the president of the Associated Press Sports Editors and the managing editor for sports and features at the Kansas City Star, said the dispute was the result of traditional news organizations redefining themselves in a changing technological environment.

"Ten years ago newspapers weren't in the world of video and audio," he said. "We were in the world of print. The leagues don’t have a print product. Their view of this is that we entered their world."

That is one point both sides agree on. "I'm all for selling newspapers and magazines," said Bob DuPuy, the president of M.L.B. "What I'm not for is them branching off in to other enterprises."

The second story comes from the publishing world. Author JK Rowling and Warner Bros. sued to block publication of the Harry Potter Lexicon, a book derived from Steven Van Ark's Harry Potter fan site. From the Associated Press:

The author and her lawyers said they were stirred to action by the proposal to move the Potter lexicon from the anything-goes Web, where it was available for free, into book form, where it would compete directly with a Potter encyclopedia that Rowling plans to write herself.

In short, by deciding to sell his material, Vander Ark was stepping across a line. He was no longer just an enthusiastic fan, but a professional and potential competitor -- fair game for the lawyers.

The conflict between digital envelope pushers and traditional businesses will take years to subside (or move on to a new skirmish on a new platform). But isn't there a better way? Rather than throwing huge resources at lawsuits and posturing, especially when you're confronting a gray area, why not allocate some of that time, energy and money toward trial runs and acquisitions? Digital initiatives don't require abandonment of established business models, and the knowledge gleaned from experimentation -- knowledge that could lead to new revenue -- is far more useful than a turf war.

Related Stories:

• Industry Questions Raised by "Potter" Encyclopedia Suit
• Do Publishers Have the Stomach for Innovation?
• Experimenting for the Sake of Experimenting
• Digital Rights Management vs. Enforcement

Roundup: Borders Mulling Sale, Blogs to Books

Mac Slocum
March 20, 2008 | Permalink | Comments (0) | Listen

Borders Considers Sale
The Wall Street Journal says Borders is exploring business options, including a partial or full sale. Barnes & Noble is considered a top suitor, notes DealBook.

Fractal Press Taps Blogosphere for Anthologies
Fractal Press is working with personal finance bloggers to develop a print anthology. The final product, expected in April, will be a print-on-demand book that aggregates best-of-the-blogosphere posts. Fractal Press co-founder Navanit Arakeri says authors will receive a percentage of book sales.