Part 1 of a 3 part series exploring publishing’s biggest challenges in 2016: how to sell more eBooks. This series will look at 3 key barriers for publishers – Market channels, Technology and Innovation.
As a veteran of the digital publishing era (slightly depressing at my age) one question has persistently bothered me. It’s about the limited routes to market for publishers. It’s not, “why does Amazon have such market share?” That answer is pretty obvious – innovative, aggressive, admirable focus. Instead, we should be asking is: why Apple and Google (two of the biggest companies in the world) only sell somewhere in the region of 8% of book publishers’ eBooks?
It has consistently seemed odd to me. Both have incredible platforms of more than 1.4 billion devices each in active usage, and both are major media players. They could immediately have a significant, positive impact on the industry, but don't. Why?
In 2007 and 2010 Apple released the iconic and genuinely groundbreaking iPhone and iPad devices. Heralding an era of unforeseen mobility and connectivity, these devices would immediately redefine personal communication and computing.
With an intense focus on quality and the customer experience, Apple has emerged as the premiere luxury brand in the world. They may produce fantastic hardware but in many ways they are selling a lifestyle, as evident in unprecedented consumer demands and queues, as well as socio-economic trends.
(Customers waiting to buy latest iPhone)
But the key here is that Apple has always been about selling hardware and devices that enable creativity and progress rather than content. Apple’s current mission statement starts with the line, “We believe that we're on the face of the earth to make great products and that's not changing.” Content is important to Apple only insofar as it helps to sell and sustain hardware. (This may change as Apple moves towards subscription based models, but historically it’s true.) So for Apple, there is not a compelling, core reason to sell books. They are happy to let others sell eBooks through their app store – and gain 30% commission on sales for little effort.
(It will be interesting to see if Apple at some points attempts a subscription model combining different media types – Music, Movies, Magazines & Books. I suspect they might, particularly with increased pressure from shareholders to invest in recurring revenue models amidst declining hardware sales performance.)
Google on the other hand is the company I expect more from. Their official, oft-quoted mantra is “Do no Evil,” but it’s mission is actually stated to be “to organize the world’s information and make it universally accessible and useful.” Google’s philosophy is a world of transparency and collaboration– open source, the collective, the universal struggle for betterment and progress. As part of that mission there are now over 1.4 billion active android devices worldwide.
Yet why does more than 1 billion devices worldwide, in all socioeconomic strata and often most dominant in emerging markets, only account for 6% of publishers’ sales typically? Unlike Apple, Google does not have a compelling reason to prefer hardware over content. They do benefit greatly from Android license fees, but they generally suck when it comes to hardware (note the poor performance of the Nexus lines of phones and tablets as well as the failed Google Glass).
In actuality, their fierce defiance on the Google Book Library project and their willingness to battle for what they believe to be the necessary accessibility of humanity to knowledge and education seems to further contradict their poor bookselling performance. (They have openly said they want to digitize every book ever written.)
In many ways Google’s entire business model is based on the collection, curation and accessibility of content (Web search) so there should be an intrinsic need, nay compulsion to be at the forefront of books, the very pinnacle of semantic knowledge and education.
In my time in the industry I’ve come to this somewhat depressing conclusion: Neither Apple nor Google really care about books.
What I mean is that part of Amazon’s success and dominance is predicated on Jeff Bezos’ genius, his uncanny ability to see “a bookstore as a means to world domination.” In Apple and Google’s case books are a small line item for companies focused on hardware and advertising respectively.
Tweet: Neither Apple nor Google really care about books. http://ctt.ec/wta74+ @vearsa #ebooks
Yet, ironically both companies’ core businesses are being disrupted by Amazon’s in stealthy fashion. Products such as Amazon Echo, a hardware device I personally love, ventures perilously close to Siri & iTunes. Amazon’s inexpensive fire tablets threaten the large market share of iPad-like tablets.
Equally, Amazon’s growing app stores, search capabilities and leverage in cloud computing and mobile both directly and indirectly challenge Apple and Google. Not to mention the wildly successful and crucially important Amazon Prime model that eats into both companies subscription ambitions.
Ultimately, what Amazon achieved through Kindle was to give those people who are educated and have disposable income a simple entry point to e-commerce: books. Way ahead of its time, Amazon focused on gaining market share ahead of exclusivity, prestige or a higher purpose. It wanted user’s credit card details because it believed it could build a better commerce experience and value proposition on the back of loyal customers and scale.
Apple have been focused on your point of sale dollars for hardware. Google by its very DNA doesn’t generally share this aggressive, mercurial streak. Amazon’s next move could very well (and probably will) be aimed at a next generation search engine, probably based on voice commands orientated around their echo and fire devices. Already, most commercial queries on google.com end in an Amazon page or product. Yahoo is in a terminal decline and recent Bing gains through Windows 10 free installs are negligible in an overall context. Amazon could quite quickly become the no.1 competitor to Google’s core business.
Now that Google has won the Google Books library case, it is entitled to generate useful, public interest excerpts from any book. Google could now combine that with its search capabilities to create an unprecedented and enviable infrastructure of knowledge.
Why that is important to Google is complex.
I firmly believe that the future of the non-fiction, academic, STM industry lies in an incredibly complex, yet flexible system of licensing. Content will remain king, but its context or form will be fluid.
Most literature in the medium to long term future will not be read in a form we are used to today. Shortening attention spans and instant gratification require information and facts to be available immediately and in increasingly complex ways. For example, my 10 year old son isn’t a great book lover but will spend hours reading about video games online in blog or video environments. So how can publishers manage that complexity? Either in-house or more realistically, through a partner of some sort.
Tweet: Future of non-fiction industry is in complex, yet flexible system of licensing http://ctt.ec/V1c54+ @vearsa
Google’s potential ability to facilitate such a complex, granular view of nonfiction materials is unparalleled. Instead of fighting authors, agents and publishers, Google could and should be actively looking for ways to engage and excite content producers with a long-term, less mercurial vision than Amazon. They have the opportunity to be publishers’ best friend in an era where a publisher’s best channel is also their worst enemy--Amazon.
The upside for Google is that they gain almost immediate, willing access to a lexicon of data and reference tools that help their core product--search--as well as providing a platform for future, exponential growth. It could provide short term content and dollars as well as an invaluable long term strategic value. At a very basic level it reinforces its core search product which generates the bulk of its revenue through advertising. Logically, it could then dramatically slow Amazon’s product creep into search.
With a combination of Google search, Google books, Google docs and flexible content licensing, there’s no reason why a college professor could not create a custom reading list for their classes, quickly and cost effectively.
Equally, students could create and distribute their own ideal revision material. Parents could gather their favorite childhood stories together and companies could access research materials to substantiate their latest product claims. The potential is genuinely huge.
Fiction publishing also has considerable potential here. The rise of shorter formats or consumable ‘chunks’ and e-bundling all benefit from a coherent structure. Add Print on Demand to the mix and the outlook becomes exciting.
So what can the publishing community do to enable a company like Google to help the industry and also enable the cultivation of collaborative and open practices?
I think publishing has one significant flaw that is holding the industry and its potential partners like Google back.
Gareth Cuddy, Vearsa CEO & Founder
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