It wasn't so much what was said at Jupiter Research's recent media forum on electronic publishing, but who was saying it. Laurence Kirshbaum, chairman of Time Warner Trade Publishing, sounded very much like one of Jupiter Research's digital analysts, pointing to the benefits of building an in-house digital infrastructure and citing the potential for direct selling and the need for lower priced e-books. Other publishers followed, hailing the potential of digital publishing: S&S president Jack Romanos suggested giving away e-books to prime the market, and even Scholastic, wary of the e-book market until recently, announced that it will launch its own e-book venture very soon.
Kirshbaum gave the keynote speech at Jupiter's seminar, "Publishing in the New Economy," held in New York City, and in it he also pointed to the gradual transformation of traditional book publishers into "end-to-end technology companies." Kirshbaum, who is overseeing the imminent launch of iPublish.com, Time Warner's new digital publishing venture, has shown particular savvy about what a publishing company might look like in the future. Publishing houses, he said, are being transformed by "increasingly complex" dealings with software developers and device manufacturers, industries that they've never had to deal with before.
Kirshbaum said the Internet is "growing rapidly" as a consumer marketplace. Consumer book-spending is growing "modestly," led by spending growth in the juvenile publishing sector. In five years, the consumer e-book market (according to figures from Accenture) could be roughly 10% of the $22 billion consumer book market—not counting print-on-demand, he said, which could double the total. Major publishers, he said, are "casting their P&Ls aside... to invest in the e-book market," and he pointed to more than $100 million in investment by the major publishers into e-books and the digital infrastructure required to store and retrieve them.
"This is still a costly industry," said Kirshbaum, who nevertheless acknowledged, as some publishers are loathe to do, that e-publishing costs are cheaper. But he also pointed out that e-publishing costs "are also undetermined in some areas." Manufacturing costs go down, he said, but the costs of distribution and the fulfillment of multiple e-book formats are high. Text conversions are often "full of errors" and lead to longer proofreading and production cycles. And, of course, publishers and agents remain at odds over fair contract terms. Editorial, selling and administrative costs remain more or less the same. But digital technology "works across the business and helps us to manage the entire publishing house," he said, "and helps us serve customers better and faster. There's a larger lesson to be learned."
And, while "bookstores will still be the primary retailer," Kirshbaum was quick to point out that other sectors of the industry chain are "roaming all over the field," encroaching on the delivery of content. "Publishers may be forced to expand their operations, if other parts of the food chain expand into publishers' areas."
E-publishing, said Kirshbaum, is "not a fad; it will not replace print, agents or retailers. It will support print publishing and help us reach consumers and new writers directly."
Kirshbaum wasn't alone prophesying new opportunities for publishers. S&S's Romanos emphasized that publishers are "unlikely to stay in their niche. Now we can contact consumers directly. We can't turn down that opportunity." David Steinberger, v-p of corporate strategy at HarperCollins, was emphatic: "we're not skeptical. We're upbeat about consumers and e-books."
Barbara Marcus, president of children's publishing at Scholastic, described the Internet as a "direct market to consumers," and described e-books as an extension of Scholastic's direct-market book clubs. Pointing to her teenage daughter's ability to use a horde of digital gadgets simultaneously, Marcus said that "preteens will drive" the e-book business. She also pointed to shorter books, illustrated content, the library market, reference, travel publishing, e-book serials and lower promotional pricing as key elements in an e-publishing strategy.
Disintermediation—supplanting a traditional business role or player by using technology—came up repeatedly during the panels. Steinberger even noted, "We need to offer an array of services to authors. We need to learn how to be our authors' best friend." But publishing maverick Mike Shatzkin, president of Idea Logical Co., pointing to the ease of setting up Web sites to sell or promote books, declared that book publishers are most likely to be disintermediated by their own unhappy authors. "Most publishers give very little attention to most of their books," said Shatzkin.
He was critical of publishers (the RH suit against Rosetta Books had just been announced) who "want all the rights but aren't doing anything with them. They are disintermediating themselves." Shatzkin even provoked a bit of a debate with a member of the audience (Byron Preiss of iBooks) after claiming that "the net cost of producing e-books is zero." He urged publishers to "do all their books as e-book editions; drop the selectivity. The costs are insignificant. It will help sell print books."
Shatzkin was also unimpressed by the much-expressed need for e-books to be more than simply digitized text. "I don't know what these new enhanced e-books will be or who will do them," he said. "Everyone knows a book is about the reading experience. We already know how to do that."
Speaking on the final panel on book buying, John Ingram, chairman of Ingram Book Group, said that "consumer demand is driving web evolution." Tami Heim, v-p of Borders and Borders.com, noted that 14% of all book buyers will likely buy online and that 60% of all buyers will at least research their purchases online. Lynn Blake, general manager of Amazon.com, agreed: "We're in the baby stage. We need more data, a better browsing experience. We need to make it easier to shop."
