Speaking from three diverse perspectives—film and TV, the music business, and publishing—the morning speakers kicked off Sunday’s London Book Fair Digital Conference with some common observations: platform is key, distribution will be a challenge, but the digital numbers are finally beginning to live up to the hype.
“2011 will be a tipping point,” said the morning’s first speaker, Michael Comish, from U.K. video provider, Blinkbox. Citing smartphones and tablets, Comish said consumers were shifting from a culture of “ownership” to one of “access,” and they are now likely to pay for content on their devices. He stressed the benefits of offering a mix of free and paid content. Most digital businesses cannot survive on ads alone, he noted. But ad-supported free content is a great way to underwrite “customer acquisition,” and is also how consumers come to know, like and trust new products.
Paul Brindley, CEO of digital music provider MusicAlly.com, characterized the history of the music business in one word: resistance. But Brindley cited a wave of innovative new digital businesses and deals refocused on providing music as a service. While revenues are still down, they are coming back, he suggested. Unlike the music business, which was at the tip of the digital spear, he suggested book publishers were in an excellent position in their digital transition. The timing is great, he noted: the devices are here, books are not easily “ripped,” and the “unbundling” of books is an opportunity for publishers. In addition, digital adds new value, such as the ability to take a library on vacation, search, and networking capabilities.
Bloomsbury’s Evan Schnittman closed the morning keynotes with a look at the surging U.S. e-book market, echoing some of the opportunities and challenges raised by Comish and Brindley. A device may have jump-started the market—the Kindle—but the market is not device driven, he stressed. Rather, platform is the key. On that front, each speaker alluded to the challenges of distribution. Schnittman suggested there loomed “a tremendous channel problem,” for publishers as the dominance of the closed platforms from Apple, and Amazon, is essentially a tax on reaching your customers. “Apple is not your friend,” Comish earlier warned. “Content is king, but not forever, as distribution power concentrates.”
In a later presentation, Kindle Europe director Gordon Willoughby told publishers that they would lose significant revenues unless they made available on the Kindle store backlist titles by their leading authors. Willoughby showed graphs demonstrating the uplifts in Kindle e-book backlist sales triggered by the release of authors' new titles. Before the release in January of Jo Nesbo's new novel The Leopard, Amazon had been selling about seven Kindle editions to every 10 copies of Nesbo's print editions. After, the backlist Kindle sales had leaped ahead of the print sales. Simon Kernick's Kindle/print book sales ratio had been about 50/50, Willoughby noted. Willoughby avoided making contentious remarks about pricing. Amazon is campaigning strongly against the publisher-set prices of the agency model, currently under investigation by the U.K.’s Office of Fair Trading. To the Conference delegates, Willoughby said merely that that it was "too
simplistic" to compare e-book prices to those of printed books. E-book prices had to be put in the context of the prices of all the other kinds of entertainment available to the web surfer, he said.
While publishers believed that they were protecting their revenues by selling e-books under the agency model, authors were being disadvantaged, literary agent Brian DeFiore told the conference at an afternoon session. If authors received royalties of 25% of net receipts for e-book sales of their books, they tended to get the equivalent of 12.5% of the hardcover list prices if the e-books were sold under the wholesale model (under which retailers set the prices). Under the agency model, authors tended to get the equivalent of 8% to 9% of the hardcover prices. "So publishers are making as much as they used to under the agency model, and authors are making a third less."
Pay authors fairly, was one of DeFiore suggestions to help publishers counter the increasing perception that self-publishing or upstart digital efforts were a better option for authors. Also, "market effectively" he urged, particularly by using direct-to-consumer marketing; "Curate the best content" and give “real” editorial help. “These are things that publishers used to do, but have wandered away from," DeFiore said.