The chief executive of Vista Computer Services, which develops a wide range of publishing systems software, predicted that within five years, 50% of all publishing products will be in digital form or salable only through digital outlets. John Wicker, executive v-p of Vista, made these and other far-reaching predictions at a final presentation capping the company's semiannual Publishing in the 21st Century conference and also used the occasion to unveil Author2Reader, a software application for reporting publishing data.
For the last nine years, Vista Computer Services has been running a series of conferences in the U.S. and Britain that examine the impact of digital information on publishers' editorial, production and financial systems.
Bumps in the Road
Wicker explained that while many pundits have identified problems in the digital publishing industry, solutions would come only through an integrated, holistic approach, which in the early years, especially, was not easy to see, or explain. Wicker named 10 challenges to publishers moving toward a digital world: the network economy; digitization; the speed of change; capacity constraints; partnership choices; author power; customer power; information reliability; and business as usual.
The network economy, according to Wicker, describes a world in which an information-based economy supplants a physical economy, making information flow more important that physical logistics, which were the drivers of the manufacturing/distribution-based publishing industry. Digitization creates the network economy (by making products and back-office systems flow quickly) but requires a fundamental shift in publishers' perceptions of their products and their business. "The speed of change exacerbates the digitization issue," Wicker explained, "because the hardware and software required are often obsolete before they've earned out their cost."
Capacity constraints represent the problems that arise from the rapid obsolescence of technology and budget limitations. With only so many dollars available for investment, publishers still have to cover current production and system maintenance, and prepare for future products and systems. Partnership choice is an issue that grows out of the speed of change and capacity constraints. Because digital processes are so complex, most publishers need technology partners to help move in that direction. In theory, the partners help publishers adapt faster and more efficiently, but evaluating the possible partnerships is a difficult business itself.
Author power was explained as the gains in contract-bargaining power an author gets by threatening to use the Internet to go directly to his readers, circumventing the publisher. Given the capacity constraints of the budget, publishers need an efficient way to work with authors on these issues. Customer power represents the demands from consumers for digitization of products, services and delivery methods. Whether publishers want to become digital is irrelevant, according to Wicker; the combination of author power, customer power and the network economy will force all publishers to move in that direction or lose out.
Global reach points to the effect of the Internet on publishers' international business. "The worldwide, instant character of the Internet gives consumers all over the world access to a publisher's products," Wicker said. "That forces the publisher to deal with the international issues, including multiple languages and currencies, and differing ideas on intellectual property rights."
As for the business as usual challenge, Wicker noted that few publishers can quickly go entirely digital, abandoning traditional, physical products and distribution. Thus, the publisher is left in a bind: the old formats cost a great deal to support, and while they are producing the only revenue stream, it is growing smaller all the time. Meanwhile, the digital market is growing, but doesn't yet produce enough revenue to justify the product's cost. This "big squeeze," as Wicker termed it, means that the publishers' internal systems must be made as efficient as possible, to lessen the strain on both sides of the publishers' business.
At the end of the conference, speed of change, customer power and network economy were rated as the top three issues.
And looking to prod publishers to adapt, Wicker offered his predictions about publishing in the immediate future. "Within three years, 50% of all published products will be available electronically; within five years, 50% of all published products will only be salable if there is an electronic version; within 10 years, 50% of all published products will only be available electronically; and finally, within 20 years, electronic versions will represent over 90% of revenue for all published products."
Noting a somewhat skeptical buzz, Wicker added, "And these are conservative estimates; [publishing consultant and Vista Editorial Board member] Mike Shatzkin would say most of these will happen within five years."
The company also used its new product, Author2Reader, to address Wicker's series of challenges. Author2Reader is described as an "applications framework enabling publishers to optimize their data reporting systems through the power of Publishing Intelligence." The central idea of A2R is to have the publisher's customer, product and rights databases accessible to employees through an intranet, to business partners through an extranet, and to customers through the Internet, controlled by differing rules moderated by A2R in a single portal. A2R integrates functions in product definition and metadata (ONIX and DOI), rights and royalties tracking, scheduling in editorial and production, fulfillment capabilities for tracking subscription and other product transactions with customers, customer service and tech support, automated inventory control and accounts receivable and sales analysis.
In closing, Wicker (speaking on the 107th floor of the World Trade Center) asked attendees to remember that "publishing is unique as an industry: Ask any publisher if they would like returns in the 5% range; of course, they'd all love it. But if any manufacturing business had returns as high as 5%, the executives would be jumping out of these windows."
Wicker emphasized the need for publishers to balance the risks foreseen, the resources available and the benefits to be gained, and then choose the path that works.