Publishing House 2.0
If you haven’t been following the fight that has been brewing between Amazon and publishers over the profit of Kindle ebook sales, author Charlie Stross has a great breakdown of it here.
Charlie nails the point home – this is all about profit.
Amazon is collapsing the supply chain and the publishing houses see the writing on the wall. Of course they didn’t have to look any further than the music industry to see how things might play out. In that industry, Apple’s iTunes, became the number one retailer of music in less than 5 years putting them in a position to dictate pricing and promotion to record companies that had been used to calling the shots.
More to the point, the change to digital consumption of music caused most record companies to shrink to just a shell of their former size in order to retool their cost structures to meet the realities of declining revenue and unit profit.
So the big question on everyone’s mind is: will what happen to the music industry happen to the publishing industry?
I think so.
Amazon’s Jeff Bezos recently revealed that for every 10 print books sold, Amazon sells 6 Kindle ebooks. Pretty good for a new format, but it’s even more impressive when you take into account that those sales are on an estimated 2-3 million Kindle user base.
If these number are correct, the ebook revolution could be even faster than the iTunes revolution. Now that Apple has entered the ebook game with iPad and ITunes, I am betting that book sales will tip digital inside of three years.
If I’m right then publishing houses need to reinvent themselves fast and become experts on creating, selling, and marketing digital content on the Internet.
Why? Because like iTunes, centralized distribution means centralized channel promotion. If there are only one or two distributors left in town then everyone is going to be fighting for the limited promotional areas that exist within their channels. This is exactly what happened with record labels. For a solid two years, while album sales were in free-fall, the only online marketing move most record labels could fathom was securing a tile on the home page of the iTunes music store. And since the iTunes home page is only so big, you can imagine how long labels had to wait to get their shot at it.
However, if you know how to drive buyers into the store to buy your product, then you are not beholden to the distributor for promotion. This is why its critical that publishing house 2.0 becomes an expert with blogs, social media, search, email, and internet marketing in general. These are the new marketing tools of the trade.
Let’s hope that publishing houses are reading the music industry’s history books.