F+W Media CEO David Nussbaum and DBW conference chair Mike Shatzkin opened the 5th annual Digital Book World meeting with a look back over those five years and the vast changes in book publishing wrought by the transition to digital media. Nussbaum pointed to “a near total transformation” of the book industry, not to mention his company F+W Media; while Shatzkin sketched out a “before and after” portrait of a transformed trade book sector that now features “a single dominant e-tailer, a single dominant physical retailer and a single dominant publishing house.”
Nussbaum presided over the transformation of F+W Media from a traditional publishing company to a digitally driven venture now organized around online niche communities that support 21 direct to consumer F+W Media e-commerce sites. Nussbaum said more than 20 million consumers visited the 21 F+W online stores in 2013, “We’ve taken books in many new directions and we’re lasered-focused on our customers.” Indeed Shatzkin, outlined a time around 2009 when “finding tech skills at publishing houses was a challenge, the Kindle had just started and the iPad was about to come.”
Today, Nussbaum pointed to “major changes” in an industry where self-publishing and Print On Demand have become powerful factors, and “our customers are our competitors.” Noting that “today, Amazon, with a little help from the Department of Justice, is more powerful than ever,” Shatzin outlined a book industry that has gone from six big traditional publishers to an industry that faces more competition in niche areas from nonpublishers. The industry has traveled from a time when “there was no question about what a book was,” to today’s constant effort to redefine the book.
In today’s transformed book market, Shatzkin asked, "are the publishers of novels in the same business as publishers of art books or kids books?” Sales, he said, continue to move online, and publishers need “new ways to get books in front of customers.” Amazon’s market share “continues to grow and there are more players to tempt authors to switch to self-publishing.” Shelf space for physical books to continues to shrink and even big brands are focusing on self-publishing, denying their mass-market-focused content to traditional publishers; and book discovery and discoverability “remain unresolved but with lots of research going on.”
But Shatzkin also said that publishers now have “new tools” available to mine data, without having to sell direct,” and publishers are exploiting shorter content that in the past wouldn’t have worked for books. There’s also issues around dynamic pricing—although he was quick to joke that if he asked a publisher to be on a panel about e-book pricing today, “they would leave the room.”
Despite industry challenges, the CEO panel that followed Nussbaum and Shatzkin's presentations, painted a picture of an industry chastened in the wake of the Apple price-fixing ruling, but acting on new opportunities in the digital transition and making money despite the disruptions. Moderated by Publishers’ Lunch’s Michael Cader, the panel featured four CEOs—S&S’s Carolyn Reidy, O’Reilly’s Tim O’Reilly, Sourcebooks’ Dominique Raccah and Nussbaum—whose companies are all reporting growing profits. Nussbaum continued to elaborate on F+W’s transformation to a direct to consumer e-commerce driven house that also partners with third-party retailers, even comparing his strategies to, well, Amazon. “Like Amazon we’ve built services around our content and our direct sales are 10-1 over sales from our third-party retail partners.” Nussbaum said F+W has had “double digit growth since 2009 and it’s accelerating.”
Reidy said the international sales of English language books and digital were the biggest growth areas at S&S; Raccah said Sourcebooks had a big year in physical books as well as e-books, “our kids business doubled and we expect that to continue.” Tim O’Reilly also invoked Amazon—the online retailer was never far from the discussion and today’s opening session will be totally fixated on the retailer—noting that “we’re taking a leaf from Amazon and dividing up our technology to offer new services.” I
The panel offered a mixed reaction to the rise of the subscription e-books services. Reidy said the jury was still out, “is it sustainable, does it cannabalize or destablize sales there are no answers just yet.” Nussbaum said F+W is “bullish” on the subscription model and cited their involvement in the Amazon lending library, “our mantra is to try things, experiment and learn and we have.”
O’Reilly pointed to his own Safari Books subscription service, launched in partnership with Pearson, as an example of a successful subscription e-book service though one focused mostly on business and IT content. He said, subscription services were “better if you run them than if you’re a small part of it,” but emphasized that “the story is still not done on subscription and you should be looking at it," citing in particular its recurring revenue model. “Customers want it and there are different flavors of subscription. Publishers need to get over their fear of subscription services.”
