The Cambrian Explosion
Around 520 million years ago there was an event which would reshape the world. Until that point life forms had been simple and relatively limited. Biodiversity was constrained. Then suddenly, in a short space of time, there was a revolution in life itself. Most of the animal phyla we now take for granted exploded into being. Evolution massively accelerated, increasing by an order of magnitude in a geological blink. The world would never be the same again.
According to The Economist we are witnessing something similar today, but with companies rather than life forms. This is what someone will inevitably call ‘Cambrian Explosion 2.0’. It will affect every industry and every job. The world will not be the same. Start-up businesses are mushrooming like never before and their ability to harness technology to disruptive ends mean they have a massively disproportionate impact. Media and information businesses like publishing are in the vanguard of change.
Publishing start-ups are, right now, flourishing and changing the industry.
The roots of this shift go back to the dotcom boom. A new wave of Silicon Valley entrepreneurs, coders, chancers, hackers and bloggers, fuelled by a user base doubling every month or so and huge hot money flows from New York and around the world, were making history. IPO valuations of fledgling tech stocks were beyond frothy. Start-ups were making news and money.
At the same time a new service like Napster made it clear how vulnerable ‘old media’ was. Created by Shawn Fanning when he was just 18, Napster’s peer-to-peer mechanism single handedly upended the entire multibillion dollar record industry. During the late 1990s web start-ups, proliferating around the Bay Area and elsewhere, were making history twice over.
That changed with the dotcom bust. However, now, with hindsight, we can see the bust for what it really was – a blip. The boom is back. Tech isn’t now just a frothy top on the analogue cappuccino; the whole thing is driven by digital. When one start-up (Whatsapp) can be acquired by another (Facebook) for $19bn, when that start-up has under 100 employees and is only four years old, you have to take notice. The truth is we are witnessing the apotheosis of the dotcom boom. It never really went away.
Hence the Cambrian Explosion. I keep a list of digital publishing startups which attracts tens of thousands of viewers a month. Every week I add new companies from around the world, start-ups setting out to transform the aged and, some would argue, sclerotic business of publishing. As with the original Cambrian Explosion it’s both the speed and scale of new forms and new companies that matters.
And as with the original explosion, it will be many years before we know where things will settle.
Publishers should strap in for the ride.
Publishing always changes. From it’s earliest beginnings in ancient China, publishing has been in a constant state of evolution. For my book about publishing, The Content Machine, I researched a huge variety of historical publishers: from the first printers in the Quattrocentro, to the earliest rights magnates in seventeenth and eighteenth century Britain, to America pioneers of the steam press, to the French and German conglomerates of the late twentieth century. Each in its own way was a new and different kind of publisher, reshaping books and the industry in it’s own way.
What’s different this time?
Digital technology. Digital tech has some unique features. They mean we are witnessing a greater variety and pace of change than ever before. Innovation itself is changing:
- Permissionless innovation. The barriers to entry are much fewer on the web. For most of history, media and publishing have been capital intensive. While they still can be, to be a publisher or service online requires only basic tools and offers more powerful and sophisticated outcomes. You don’t need a web of contacts and a huge pile of money anymore, although of course they still help.
- Disruptive innovation. The web plays havoc with old business models and that presents an opportunity. As the Harvard Business School guru Clayton Christensen has discussed in depth, existing firms often struggle to perform innovation which is disruptive to their existing clients or business. But someone is going to do that innovation, able to survive on slimmer margins, able therefore to take market share and ultimately eradicate older companies. It’s what the economist Joseph Schumpeter called ‘creative destruction’. On the web, it’s supercharged.
- Lean innovation. Digital contexts are data rich, strategically agile and flexible in product. You can get information, pivot and enact changes much more quickly, cheaply and easily in digital than in physical. This means web start-ups can constantly learn and iterate, refining their proposition with a speed older, slower organisations can’t hope to match. Put simply, they can get better, faster.
This trinity of innovations explains the opportunity. It explains the why. The Internet is a leveller, an opener, what the digital thinker Kevin Kelly describes as a ‘possibility factory’. Start-ups are the possibility. Publishing is the opportunity.
On the Scene
Have a look at my digital publishing start-up list to get a sense of what is going on out there. There is far too much activity, diversity and commercial imagination fermenting away to be summarised in a book, let alone short review. Explore. Get a feel for it; speak to the company founders on Twitter, they will be delighted to hear from you.
Broadly speaking I see publishing start-ups falling into several groups. First are service providers who want to help new and existing publishers. They are companies like Net Galley, who create secure digital proofs, or Slicebooks, who offer an easy way to break EPUB files into parts, or Get Contentment, who create apps and digital publication workflows.
Then there are the new kinds of publishers. The CEO of Faber, Stephen Page, once gave a talk about the New Publisher. Publishers were, he argued, not so much makers of books as ‘a creative interface between the writer and the reader’. This is the spirit of the New Publisher and hence they often look nothing like an old publisher. We might call classic web start-ups like Tumblr, Buzzfeed or Medium New Publishers, but equally more specialised or bookish services from Scribd to Flooved, Frisch & Co to Byliner or The Atavist.
Lastly there are reader focused start-ups. These take many forms, from nascent bookish social networks like BookSwarm or Goodreads or Glose, to new retailers from Valobox to Zolabooks. Direct exposure to the end customer, the user, the reader, is of course a primary advantage of start-ups. Unlike many traditional organisations, from textbook publishers to book chains, they have close relations with the reader baked in from the beginning. Everyone else is left scrambling to catch up, keen to collect the data and ‘own’ the one relationship that really matters.
If you look in specific verticals the change is just as a great. In academic publishing for example, there is an enormous amount of activity. The debates and possibilities around Open Access, a whole new model and concept for publishing moving away from the copyright and unit sales model that dominated for centuries, is creating a host of new organisations. Each of these for example has real presence and a unique (and new) business model: Knowledge Unlatched, PeerJ, Open Library of the Humanities, PubMed, arXiv, Open Book Publishers, Uniquity Press, Public Library of Sciences, the OAPEN discovery programmes… Remember, all this activity is at a tangent to well established academic publishers and potentially enormously disruptive.
Or think about the new wave of app publishers out there – people like Touch Press, Exact Editions and Inkle Studios to name just the one’s I have recently worked with.
Publishing isn’t being left behind by the Cambrian Explosion and it isn’t escaping the knife edge of digital innovation. On the contrary, as these start-ups show – it’s part of the knife edge.
Barriers to Entry, again
It’s a brave new world. Permissionless innovation has rewritten the rules and expanded the scope of who can play the publishing game.
One thing hasn’t changed though: there’s no such thing as a free lunch.
Digital publishing start-ups may be founded at an ever increasing rate, but they also fail fast, as the Silicon Valley phrase has it. As many of them soon find out, publishing is a far more difficult, fiddly, entrenched, even brutal, world than they thought. On the face of it publishing is wine fuelled lunches and horn rim glasses. But underneath, around the world, there is a ferocious struggle to survive. Start-ups included.
In my experience of talking to and working with a wide range of digital publishing start-ups there are a few common barriers that keep cropping up. One is the big beast of the publishing world: Amazon. The fact is, when it comes to online and e-book buying Amazon is the immoveable object, having achieved a huge degree of customer lock in. If you want to sell e-books you have to get round the fact an aggressive and effective company already has millions of customer accounts and offers them a good service. There are many ‘moats’ around its offering and disincentives for customers to switch (for example, you cannot export your digital content outside the Kindle ecosystem). None of it is insuperable for a startup but it requires immense thought and ingenuity.
Then there is that favourite gripe of digital publishing start-ups: publishers. Start-ups should never forget that publishers can be difficult, lazy, intransigent and short sighted. Get over it. It’s life. If your business relies on getting all the content of the Big Five on exceptionally favourable terms, you are possibly out of luck. Here I would equally make an appeal to publishers. Start-ups will be the lifeblood of a renewed industry as we are thrown helter-skelter around the digital maelstrom. Let’s support them and grow with them. Too often start-ups are constrained by difficult relations with the very people they will rely on. In the digital age the value of content, despite reports of its demise, has not gone away – if anything it has increased. Both sides need to remember that.
Floating around all this, not so much a barrier, more a pitfall, is a common miscalculation. Start-ups forget most media sell in small quantities. Selling a product is very different to gaining a follower on Twitter, or hits on a website. The payment barrier is vast. Sales are small. Audiences are difficult to crack. Publishing is a big opportunity for start-ups, but that doesn’t mean it’s easy.
Perhaps the best way of thinking about this is to return to the Cambrian Explosion. That huge efflorescence of life was subject to the laws of Darwinian evolution. Nature did what it does best: throw out a huge variety of stuff and see what works. What doesn’t, doesn’t. It’s not around for long. What does work stays around, keeps evolving. Keeps throwing out new variations, which are then also whittled down to the best.
Something similar is already taking place in the publishing start-up revolution (and I believe calling it a revolution is not too strong). We are still in the heady days of growth. New ideas and business models are being explored. VC money is, in the wider context of the tech boom, plentiful. Start-ups appear on the list with a pleasing, sometimes thrilling, regularity. The difficult nature of business and those barriers mean many of them will fail.
That’s fine. If we’ve learned one thing from the Valley it’s that failure is fine. Nature likes failure.
Some of those start-ups will survive though. Like post-Cambrian life, they will grow fast and reach levels of scale, power and complexity far beyond what came before. We are already seeing this with the super-centralisation and large investment of a company like Google.There is a huge opportunity out there, despite the risks. The innovation triple whammy is a very real effect.
You can’t stop evolution; you can only alter its direction. Change happens. The question is – do you embrace or resist it? For publishing today the world of start-ups is the frontline of change, part of a wider technological transformation reshaping our society and building the future. That’s worth investing in, in all senses.