Vista Looks at the 21st Century
Paul Hilts -- 12/18/00
Conference unveils Author2Reader, defines challenges of the digital era
... Plus, U.K. E-Publishing Revs Up Slowly

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 d sn'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.

U.K. E-Publishing Revs Up Slowly

Next year looks to be a decisive one for e-publishing in the U.K. So far, U.K. publishers have lagged behind their U.S. counterparts, but this looks set to change as some of the major players prepare cautiously to take the plunge.

Random House UK has announced plans for an initial program of about 100 titles from the RH/Transworld lists, featuring authors such as Roddy Doyle, Irvine Welsh, Louis de Bernieres and Ruth Rendell. Academic publisher Taylor & Francis has Versaware busy digitizing all its
Random House UK, BBC Worldwide
and Online Originals are looking to
electronic publishing.
titles, including the backlist, and recently reached an agreement with ebrary. Penguin is planning a major e-publishing announcement, and BBC Worldwide is actively exploring the market with its first e-book, On the Edge, the novelization of a TV series about a Web site. HarperCollins, which had hoped to be first in the market with a mainstream e-book, has been delayed by the sale of its software provider to Adobe Systems, but it, too, has exciting plans.
It is Online Originals, a small online publisher, however, that has stirred the reading public's interest in e-publishing with its scoop of five new short stories by Frederick Forsyth, published monthly online at £1.99 each and downloadable from a WH Smith site.

What e-publishing in the U.K. urgently needs is more generous telephone rates for access (there are tempting packages in the pipeline) and cheap, attractive devices on which to read e-books. The present alternatives--a PC screen, laptop dedicated reading devices or PDAs--offer few benefits over a conventional book. Microsoft may believe that e-books will reach 28 million consumers by 2004, but there's little sign of it in the U.K. as yet.

But if it's difficult to imagine preferring an e-novel to a paperback, the same is not true of online encyclopedias, reference, educational and academic books. All sorts of tags, route maps and links that help the reader to make connections are seen as valuable enhancements. Jeremy North, business development director of Taylor & Francis, sees T&F's digitized list as aimed at students and researchers using PCs rather than hand-held devices. He feels they will want the kind of functionality that require a keyboard, and he foresees academic libraries welcoming the chance to gain access to a vast amount of backlist material that will enable them to clear their shelves of the more cumbersome paper versions.

It is not clear yet what the financial rewards for authors of e-books will be, but RH has raised expectations with its offer of 50% royalties. Taylor & Francis has written to some 11,000 authors, asking for electronic rights (not always included in backlist contracts) and offering royalties similar to those paid on print books. This is likely to be a more modest 5%. North defends the low rate on the grounds that the cost of digitizing books is not negligible. As he told PW, "All our titles have to be scanned, tagged and proofread, which is very labor-intensive. There is no point in our producing the kind of straight facsimile that would be fine for fiction."

The approving response to T&F's letter, with most authors apparently happy to accept the terms, is in line with their longing to have their work available for as long as possible. Storing it in a digital warehouse could be a kind of immortality, though only a small proportion of the books are likely to be in demand.

While trade authors will certainly want a larger slice of the cake, the less successful and little known are likely to welcome e-publishing as an opportunity to get a foot in the door. William Amos, whose novel The Seed of Joy has just been published by Online Originals, flew over from the U.S. to tell a recent e-publishing conference in London (another sign of the increased interest) what it meant to him. With no track record and no agent, Amos had been accustomed to rejection--until Online Originals, which prides itself on choosing books of literary worth, took him on. He d sn't know yet how many readers will download his novel and d sn't expect to make any money from it, but, nevertheless, feels he has made a start. And who knows, perhaps a conventional publisher will see it and be tempted.

Despite the reluctance of many U.K. publishers to disclose their e-publishing plans, there is no doubting the behind-the-scenes activity. As BBC Worldwide put it, and its words were ech d by all the other publishers PW spoke to, "We really don't know how this market is going to develop, but as with many other technologies, we want to be in there from the beginning."
--Jean Richardson