Touching the Bases at Digital Book World

From corporate consolidation to book discoverability, to how books are produced and bought, to the proliferation of new devices to read them on, this year’s Digital Book World was a whirlwind tour of the industry’s changing landscape. Inkling, the software developer that creates multimedia content for the iPad, used DBW to launch the Inkling Content Display Platform, which the company describes as both a new technique to enhance discoverability and “an end-run around Amazon.”

ICDP is product of a collaboration between Inkling and Google that essentially allows Inkling-developed content to be indexed by Google and retrieved by Google searches. But ICDP content is more than a snippet in Google Books, and when a link to an Inkling title comes up in a Google search, that link takes the consumer directly into an online version of the multimedia title. Once inside the book, users can navigate through a limited range of pages, but they can use all the book’s features, including video, sound, and animation. Best of all, once inside the content, consumers can buy and download the entire book, or they can buy it in chunks—either in chapters or bundles of chapters. ICDP really targets nonfiction, such as guides, travel books, cookbooks and the like, and “shifts the advantage away from Amazon,” according to Inkling CEO Matt MacInnis. “Search is the new the storefront,” he said. “The future is monetizing the Web.”

Wednesday’s CEO panel (“CEO’s View of the Future”) covered almost every topic from the growth in sales of tablets (“great for children, you can showcase full art,” said Karen Lotz of Candlewick Press) to apps (“We have a small number of apps, they don’t produce much money but they’re good for marketing,” said Marcus Leaver of the Quarto Group) to selling direct (“We sell direct, but its modest and we struggle with its value; [book] consumers look for authors not brands,” said Houghton Mifflin Harcourt’s Gary Gentel). While Thursday’s “Looking Back, Looking Forward” panel addressed issues like the coming merger between Penguin and Random House (see article, p. 21) and new business models, agent Simon Lipskar was blunt about the Penguin/Random merger and its potential to sell books in the postbookstore book market: “I would be shocked if they didn’t enter book retail, either physical or online. They can maximize huge distribution capabilities.” On the same panel (moderated by Idea Logical’s Mike Shatzkin), Lipskar sparred good-naturedly with HarperCollin’s Chantal Restivo-Alessi and Osprey’s Rebecca Smart over the likelihood of a subscription model gaining traction in the book market. Restivo-Alessi made the point that it helps book discoverability and that a younger generation “is used to access over ownership.” Lipskar was skeptical: “[I’m] not sure it’s viable... I don’t understand how the financial model works; big publisher contracts don’t have the granularity to divide up the dollars.”

Book discoverability took up most of the morning on Thursday. Peter Hildick-Smith, CEO of the Codex Group, offered a presentation on book discoverability—essentially engaging a reader—and conversion: getting the reader to buy the book that he or she is engaged with. But his presentation focused on the fact that while online retailers are great for buying, physical bookstores, despite their decline, remain the best vehicle for both discoverability and conversion. “Discovery is not conversion, you need them together,” said Hildick-Smith. Jim Hilt, Barnes & Nobles’s v-p of e-books, also weighed in on book discoverability, noting that in today’s world of perpetually wired online consumers, it “happens in a lot of places beyond media channels, in restaurants, airports, childcare centers and the grocery store.” Indeed he also emphasized that “bookstore categories will not work in the future. Discovery is about interests, it’s not the categories we come up with for stores. We have to find out readers’ interests and create personal ways to interact with them.”

The best snapshot of the impact of e-books and other digital content on the industry came from Bowker Market Research’s presentation on trends. Through its PubTrack Consumer service, Bowker has been following changes in consumer book-buying behavior since 2009, and those changes are especially evident in the formats in which consumers now buy books. Bowker’s consumer survey for July through December 2009, the period when e-books were just taking off, found that e-books had a 2% share of unit sales. In the third quarter of 2012, that jumped to 23%. According to Bowker, e-books took the most market share from hardcovers, whose slice of the book-sales pie fell to 25% of units in the most recent period, from 35% in the last half of 2009. The Bowker data shows the gradual increase in e-books’ penetration of the overall book market: 5% of units at the end of 2010 and 15% in the same period in 2011. While the number of e-books sold has steadily increased, the average price of e-books has declined. From an average purchase price of a little over $10 in 2009, that price was just under $6 last year. During the same period, the average price for print books held relatively steady, rising from $12 in 2009 to about $12.40 in 2012.

The impact of digital piracy, always a contentious topic, may be heading for some resolution. Michael Smith, a professor at Carnegie Mellon University’s Initiative for Digital Entertainment Analytics research center, offered data on the vexing question of whether digital piracy impacts sales. His research addressed what he called the three myths of piracy: that piracy doesn’t really hurt sales; that you can’t compete with free; and that antipiracy regulations don’t work. The results of his research challenged all three myths. He showed data that challenged much-cited studies which suggest that piracy doesn’t hurt sales. Using a 2007 dispute between NBC and Apple, in which NBC pulled all its content from iTunes, Smith’s study showed that people turned to digital piracy when they found that was the only way to get the content they wanted, leading to an increase in the piracy of NBC’s content, as well as the content of its competitors. “Once pirates learn to steal, they continue to do it,” Smith said, emphasizing in his conclusion that delaying e-books to protect print sales leads to a rise in piracy and a decline in e-books sales when they are finally released. In much the same way, he showed that publishers can “use antipiracy laws to make pirated content unattractive,” using an example from France where legislators instituted a “three-strikes” antipiracy law with much public fanfare—it entailed first sending a warning to the alleged pirate, then a registered letter warning, and then initiating court action. Smith said, “Most pirated genres increased legitimate sales after the law was announced.”

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