Friday, 30 November 2012

2013 trend #4 - the decline of print

My predictions for 2013’s TMT trends have so far covered wearable computing, 4G and self-driving cars. In this fourth installment I’ll look at the emergence of truly digital business models in the book market.

What it is: the speed at which ebooks have come to prominence as a viable alternative to print seems to have taken the publishing industry somewhat by surprise. So far the business model by which these digital books have been sold has been a carbon copy of the physical book market: titles are priced and sold individually, often for the same or a higher price than the physical version. But many of the models that have driven the growth – and death – of other media in digital markets are also feasible for print. And it’s these that I expect to come to prominence next year.

My prediction: 2013 will mark the largest shake up in the business model and structure of the trade (aka consumer) book market since the paperback book. 

  • The number of large publishers will halve
  • eReader penetration in the UK will exceed 40% of the adult population by the end of 2013. These single function devices will be supplemented – but not substituted – by applications on tablet computers and smart phones
  • In volume terms, half of the UK trade book market will be delivered electronically.
  • In value terms the trade book market will contract by £100Mn

Why I think this: like the music industry, the book market has endured for many decades based on the nature of the relationship between publishers and creators. The dream of the creator is to receive a healthy advance, for which they deliver a finished manuscript to the publisher for editing, preparation and distribution. The publisher does a lot of useful things – co-ordinating the process of printing a physical book, organising its distribution into channels and marketing it with readers. They also apply a little of their reputation equity so that the reader has the confidence to spend £7 or more of their Earth pounds on a relatively unknown pleasure.

Of course it wasn’t always like this. Dickens wrote a number of his greatest works episodically for publication in newspapers. Limited time between creation and publication meant that the role of the editor was more limited then than it is now. Likewise, the total expenditure by the reader was rather lower – certainly relative to the then high price of books – so there was an easier trade off between price and quality. There was more reader choice too, again relative to the smaller number of titles then readily available to readers.

Low quality, low priced self-published titles consumed on eReaders are a modern re-imagination of a value equation that the traditional book publishers have hitherto believed favoured curation and high cover price. My thesis is that the availability of heavily marked down physical books in supermarkets has already commoditised the book for many readers and that eReaders will simply continue that trend.

My prediction is that the eReader and the tablet computer will be the varsity present of Christmas 2013. My “field work” on Putney High Street uncovered the fact that eReaders are now not just a product for electronics stores and book shops but are also worthy of shelf space in the hardware store and a high street clothes retailer. At £50 and below they could well be the new DAB radio – a present that the recipient probably won’t have, is expensive enough to feel special but not overly so.

More eReaders, more tablets and more smartphones means more places to view ebook content. And wherever there are screens and content, there’s innovation. Amazon are already offering a couple of new business models aimed at both professional and self-publishers: serialisation and loans (bundled into their Prime subscription service). Others are at it to, with “pay what you want” or "pay what you read" and book club based models coming into the market this year. There have also been early attempts at “Spotify for books” services.

New models are probably mainly for early adopters. The mass market, newly screen equipped, are more likely to dip their toes in the water. I suspect that the first thing most of those receiving a Kindle, Nook, Kobo or any other reader will do is download free classic books to begin the process of filling their virtual shelf space. So the journey into this new experience will start with free.

Most new self-published content is pretty bad. But I wonder whether people who pay 99p for it really care all that much. Many readers will simply read books to pass the time, in the same way that they read a cheap gossip magazine. Also remember that most readers are relatively undiscerning (the average IQ is 100...) so they might not notice plot holes, poor editing and so on. They’re just looking for a bit of escapism. 

I’ll mention 50 Shades here, because I feel I should. It’s not the only self-published title pushing huge volumes, but it is the most public. I also love the parodies – here’s two of my favourites: 50 sheds of grey and, for the football fan, 50 shades of Andy Gray.

Implications: I’m not suggesting that the traditional publisher will imminently disappear, merely that their influence will decline. As with record labels, large publishers are the best way for popular creators to monetise their wares, in that they offer reduced risk for reduced return. What will continue is polarisation of the market. 

Mid-market fiction titles could well disappear from the publisher catalogue as the economics of producing them degrade. This could be seen as a long term “dumbing down” of literature; however my view is that the high brow titles may simply find themselves part of subscription services targeted at a particular niche. The movies versus TV analogy which works so well in games also applies here – the big authors will still make big bucks, but most written content will be (and to an extent already is) filler.

Is any of this for 2013? Not much, but we’ll see the trend developing in terms of volumes moving rapidly to electronic and an upsurge in UK self-published authors. I’d be surprised if there wasn’t a UK equivalent of EL James in 2013. Habitual behaviour will mean that the print book will soldier on for a decade at least. But soon it’ll be the niche product and that will open up a world of exciting business and creative opportunities.

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