To almost no one's surprise, Book Tech East 2001, the book production conference and expo sponsored by publishing services provider North American Publishing and held last month in New York City, was largely devoted to e-publishing. But while file formats and handheld devices were frequently discussed, it was publishers' business models and attitudes toward the new e-world that were at the heart of every panel.

New Attitude

Keynote speaker Michael Ross, executive v-p and publisher of World Book, discussed the new attitude required in an electronic world. Communication with readers is paramount, he said; publishing can no longer be a matter of simply pushing the properties already in-house. "If content is king," he declared, "service is God."

Several speakers stressed the patience and determination needed to build a new publishing business based on the market that exists; it has been, attendees were reminded, only 11 months since Stephen King's Riding the Bullet demonstrated the existence of an e-book readership.

Kirstie Chadwick, president and CEO of DigitalOwl.com, revealed installed-base numbers of e-book devices garnered from electronics retailers following the Christmas season. Palm OS machines dominate the market, with 10 million Palm units, plus three million Handspring Visors. Next is the PocketPC format, with 750,000 units from several manufacturers; and finally, Gemstar has about 100,000 REB 1100 and REB 1200 devices in readers' hands. Consensus: while the screens are small and the reader experience not the best, it is no surprise that Palm-compliant formats such as Peanut Press are the current bestsellers.

For complex graphics, of course, the Adobe Acrobat Reader for desktop and laptop computers is still the leader, with 160 million users worldwide.

Royalty-Free Reading

The need to tailor digital rights management strategies for these markets was a popular topic, with much of the discussion centering on two recent pronouncements: Forrester Research's forecast of $1.5 billion lost to piracy over the next four years, and the comments of Pat Schroeder, president and CEO of the AAP, on libraries as a source of publishers' pain over lost revenue.

Matt Moynahan, v-p and GM of Reciprocal's publishing division, brought much-needed light to a dark outlook with a new concept for e-book marketing. No single pricing structure would be acceptable for all types of e-books, he said, or even for all the markets for one e-book. Some e-books would be more expensive than hardcovers, because of added functions; some would be given away free, as loss-leader marketing tools. The key, he noted, is to track and exploit the actual use to which readers put these books.

"Pass-along readership," Moynahan said, "is a concept familiar to magazine publishers, but essentially new to book publishers." Rather than attempt to control pass-along, Moynahan said, magazine publishers claim the extra readers as evidence of the influence of their publications, and charge advertisers more for the powerful brand vehicle.

"If the pass-along for books averages one," he claimed, "then one billion books are read royalty-free each year. The 9,000 US public libraries add approximately 1.7 billion royalty-free reads each year."

The secret to success, according to Moynahan, is not to look on pass-along readership as lost revenue, but a marketing opportunity. "One of the fundamental problems of the book space today is the opaqueness of book transactions," he said. With a combination of good DRM for tracking all readership, including pass-along, and careful attention to reader feedback and building this relationship, Moynahan feels there is no reason publishers can't make the most of e-distribution and build a strong brand with a loyal readership.

Ed Marino, head of Ingram's Lightning Source arm, had a similarly upbeat message in the panel on the future of e-books, noting that e-publishing is still in early days. Though financial reports seem gloomy now, he said, "This is the worst it'll ever be." Already Lightning is delivering more than 10,000 e-books per week, and that number is growing. "We have just begun to scratch the surface of e-book capabilities; the reading experience is getting better with each successive device. And digital content and commerce models will have a profound effect on publishers' infrastructures—publishers are not built for e-business yet; this is still the front of the digital wave."