Managing the complexity of the new business models

One of the main conclusions of the II Annual European Digital Distributors Meeting, held last June in Madrid at Casa del Lector (organized by FANDE and FGSR), was that publishers had to speed up their understanding of the dynamics of the new digital economy to embrace as soon as possible the business opportunities derived from them. It was a clear to the four that participated in the “New Business Models” roundtable speakers (Per Helin from Publit – Sweden; Susan Breewsma  from CD Digital – Netherlands; Giovanni Ambrogio from Bookolico – Italy and David Fernández from Lektu – Spain), held at this book professionals only one day conference, that the evolution of the publishing business models in the digital age will become increasingly more and more complex.

Speakers indicated that selling single unit e-books on online stores like Amazon, Apple, Kobo or Google is a relatively simple business model for publishers, as well as digital distribution platforms such as Bookwire or Numilog, among others. Other speakers indicated that determining the most appropriate business conditions and pricing for a public library license or a subscription service such has Nubeteca is a little more complicated, but more and more publishers are already offering their content under such business models. There was also a good debate on more innovating business models such as Slicebooks or Blendle that allows publishers to fragment the contents of an e-book by chapters or pages to allow later remix in the sales process. There was also a lot of discussion about the benefits and risks derived from licensing content to platforms with a “pay for what you read” which entails a higher degree of management complexity. Many publishers don’t want to see that reading will be economically treated as a utility, but it seems that’s where the new economy dynamics is taking us. We don’t pay in advance for the water or electricity we consume at home; we pay for whatever we consume. Why should reading online be different? Why should readers pay in advance for a book they don’t finish reading or don’t even like after a couple of pages read? Imagine you read only forty pages of a new e-book… under the new “pay what you read model” you will only have pay for forty pages read and not the whole book. In the days of the print book world, it was natural to be charged the same price to read a whole book even if you had only read part of it. Nowadays, thanks to dynamics of the digital technology there is no chance that publishers can maintain the same sales model. Speakers pointed that history indicate us that most of the times new and disruptive business models stir up heated debated based on fears of the unknown. Later on, these initial fears are quickly forgotten once the advantages of the new model become clear.

During the debate, the speakers agreed that many publishing houses across Europe are experimenting with new models, but many still fail to have an open-minded and entrepreneurial mind-set. It was also clear to them that no one has a roadmap with a perfect outline on what the business models will last are or which ones are the most sustainable, etc., but this lack of a clear roadmap should not delay the testing and implementation of various business models. The only way to move forward, however, is to assume a long-term trial-and-error mind-set.

We know that each different cultural industry (film, music, books, etc.) has its own dynamics, but we should also assume that the new digital era is generating singularities that cut across the entire cultural sector and should not be ignored. The music industry, which also failed to pay attention to the changes that were taking place in society, has seen its turnover plunge 80% in barely two decades. After years of trying to curb an unstoppable reality, music downloads and streaming already make up 42% of the turnover. Against this backdrop of social transformation, the book industry should start working to create a broad market of on-screen readers as soon as possible. Print book sales are clearly slowing down across Europe, and only the digital sales are growing, even if the growth is slow for now.

To help publishing professionals better understand the evolving digital landscape, has recently published the “New Business Models in the Digital Age Report” sponsored by CEDRO, a nonprofit association of authors and publishers of books, periodicals, and other publications published in any medium, which aims to protect and collectively manage their proprietary intellectual property rights. This report includes a review of more than 15 Internet-based business models, which the publishing industry can use to determine where their business opportunities lie, including subscription models, direct selling, micropayments, fragmenting and slicing their content,  e-lending licenses for public or school libraries, bundling to in-app purchases, among others. The aim of this report is to help book professionals reflect on how to incorporate these emerging models into their company’s strategy, whether they are publishers, libraries, universities, bookstores, or distribution platforms.

Looking beyond the turnover generated by the different business models, the real added value that comes from backing digital publishing is getting to know readers directly, seeing their behaviour in the process of discovering and buying books, and analyzing their reading. Anybody who keeps an eye on new developments in digital analytics will be amply familiar with headlines that announce the big data boom or rise in any cultural sector worth its salt that wants to know all about its customers and provide the best service. Until relatively recently, publishers could only access limited information about the sale of their books, such as which bookstores stocked them and the number of copies sold of each title. Now we have moved on to the possibility of getting to know readers and potential readers, sometimes without middlemen. In this redefinition of new business models, one of the main income streams for publishers will be by-products of published content. There is a long list of possibilities: publishing services, marketing services, promotion, recommendations for future reading based on real affinities or previous purchases, archiving of purchased material, note storage services, access to communities of people with similar interests, etc. Publishers and booksellers should not forget that Internet users do not just pay for the content they want to consume, but also – and above all – for related services.

In the society of limited attention that we now live in, authors and publishers need to understand that reading a book competes with a huge amount of free content (open and free of copyright) and millions of entertainment options on the Internet. If we want the book world to play an important role in digital society, we have to improve the experience of discovery, purchase and reading on the Internet, compete with more competitive prices in line with other entertainment options, and offer the possibility of sharing the reading experience – which is not the same as sharing the product itself – with other people who share similar cultural interests.

DOI: 10.17400/SB-2015-09-02

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