THE FUTURE OF PUBLISHING

With the full knowledge that we are plunging headlong into a confusing and bipolar introduction, let’s just say it: Publishing is concurrently dying a slow death, and exploding in growth. The traditional magazine, newspaper, music, and book industries are all seeing the same cultural shifts influence their environments. It doesn’t take a qualified futurist to predict the further decline of the publishing industry as we know it, but it also is supremely apparent that the act of publishing, that is the origination of content for the purpose of distribution and consumption, is alive and very well. Of course, it is little consolation to the 17,000 newspaper journalists who have lost their jobs since the beginning of 2009, that there are now 500 million people on Facebook, daily adding status updates, notes and photos.

There is no need to repeat all the woes of the industry, but as Clay Shirky writes, “When a 14 year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.” The traditional business model has faced significant and irreversible disruption, as the broadcast model of publishing has been swept away by an open, socially-connected, and internet-enabled revolution of content creators, curators, disseminators, and readers. The publisher no longer has control. The publisher no longer delivers ideas to a passive audience. And publishers that retain their sense of entitlement to past roles are fighting a ‘death-by-a-thousand-cuts’, as readers start blogging, brands start mass-publishing, and independent communities start gathering, not to mention the myriad of upstart commercial competitors that have leaped into action as barriers to entry have evaporated.

So in this disrupted environment, how can we make sense of the chaos? There are several suggestions, some would consider them now truisms, that are worth pondering. Without these fundamental perspectives in place, it is very difficult to build for the future.

Before we start, let’s get one thing straight: There is little useful purpose in looking backwards and wishing for the ‘good old days’. It seems every few months, a publishing executive steps out from behind the parapet to rant defiantly like the proverbial ostrich. OK, I’m being harsh. But the trouble is that “you get what you pay for” is not economics. It’s just debatably wise consumer advice. Unfortunately, “you’re going to miss us when we’re gone” has never been much of a business model.

Understand the emerging authorities

One of the most significant risks to publishers, much more important than a fall in demand for traditional products, is that their position in the value chain could be removed entirely. Publishers take a financial risk to manufacture, distribute, and promote content. But as this financial barrier to entry disintegrates, competitors start to abound. And not just from new commercial publishers with lower cost bases. Those that publishers previously considered to be “consumers” are now producing content; some curate news via tweets, some inform with blog posts, and some entertain through video. The community gathers around its self-created experts, and with little cost structure to manage, a quality content origination process is activated. It might seem impossible that the value that publishers create will be completely removed, but as we see more and more authors, musicians, and industry experts choose to set up without a ‘publisher’, the likelihood increases. Even beyond these emergent experts, we have an ocean of what is popularly called ‘user generated content’, which is of varying degrees of quality, but on aggregate poses a substantial risk to traditional publishers. This information oversupply reveals the inconvenient truth that many consumers are satisfied with this type of content, for much of their content diet. It might not always be edited and factually accurate, but it is relevant, social, living, spreadable, and everywhere.

Beyond user generated content we find another emergent ‘publishing non-publisher’: brands. As the saying goes, every company is now a media company, and brands are realising that content is a powerful sales and customer service tool. And the budgets that brands can bring to bear are often substantially higher than publishing model can afford. Big brands spend millions of pounds on print magazines, video shoots, white papers, and information sites – which are often then delivered for free.

These factors mean the traditional publishing model is being eaten from inside, as those who would previously have chosen a publisher go it alone, below, by an abundance of user generated content, and from above, as brands get into the high-quality production game.

Go direct to the consumer

So, a major opportunity, or rather necessity, for publishers is to jump the supply chain and build direct-to-consumer relationships. The vertical systems of the past have left many publishers devoid of actual consumer contact, and in a world where consumers are identifiable, trackable, transparent, and easily accessible, publishers must build those relationships. It might sound soft, but relationship is the right word. Long-term, stable consumer relationships where the publisher consistently provides value to the end-user is the only form of competitive advantage.

This means that you already have the audience before you even make the book, or album, or magazines. Getting a review in the New York Times is a shotgun approach to marketing, and paid mass-marketing is a very expensive shotgun approach to marketing. But reaching out to your current community, who have already given you permission to communicate with them, is relatively cheap and very effective. This transition leads to a reduced focus on launch-based sales and marketing activity, and a new appreciation of ‘lifetime customer value’.

Bet on ubiquity not scarcity

Publishers have grown to huge scale based on an acquisition of content assets that are both scarce, and controllable. The physical nature of content in previous decades, has allowed publishers to own, manage, distribute, and carefully throttle, the volume of content. The trouble is that the internet has brought about a new paradigm to replace scarcity: ubiquity. Publishers that still operate under the rules of scarcity are finding they are not even playing the same game as those that have transformed their thinking. There are now no limits to the number of pages of a newspaper. The more stories published, the better. There is no sense to think of a quantity of books, as they become an instantly replicable, and copyable, product.

The interesting thing is that when someone moves from being a book buyer to being a Kindle owner, purchases go up by about 3 times. The same happens with music, where physical product sales are now back below the level of the 1960s and still falling, yet music consumption is going through the roof. A similar effect is seen with news. But the marginal cost of manufacturing and delivering those extra purchases is negligible. So the prices associated with scarce content are not tolerated where infinite shelf-space occurs.

Understand marginal distribution costs

The new content format, digital, has a near-zero marginal cost of distribution. This troubles publishers, who have historically been able to charge for access: the ability to provide the content at the right place in the right time. Now, content is everywhere, anywhere, and always. And most worryingly for content owners, more often than not it is free. Yes, I have finally said it. The dreaded ‘F-word’.

The actual acts of using and sharing physical content degrades it, and entices further purchases. Digital content suffers no such issue with obsolescence. In fact, sharing and copying is very much an inherent part of the digital content experience, whatever the legal system or debatable moral standards dictate.

Monetize the community, not the content

To start to provide a route out of confusion, there is a two-step change of focus that must occur. Firstly, publishers must start to consider their business to be community management, not shipping books. Publishers that have built direct relationships with their most active, vociferous, and passionate customers, have an opportunity to maximise lifetime customer value. Secondly, it’s vital to shift the focus from monetizing content, to monetizing that community. Digital content, in most instances, is trending downwards in price.

The truth is that there will not be as much money in the selling of content as there has been. That’s a result of content ubiquity. The lie is that most publishers have to go bust. There are a myriad of potential revenue streams when communities are the source of monetisation. To help identify them for any publisher, at idio we have devised a simple ABCD framework:

Audience revenue drivers

This category covers the traditional revenue streams that are a function of the audience size: purchase price and advertising or sponsorship revenue.

Brand revenue drivers

Moving beyond the initial audience, this category denotes the brand extensions that can be implemented. Obvious examples include mobile applications, events and new products.

Content revenue drivers

This shifts the focus from the ‘normal’ consumer of any publisher, to explore the opportunities for supplying the asset to other stakeholders. Magazines can use their writers to create branded content commissioned by other companies, and books can be syndicated for other territories.

Data revenue drivers

As direct-to-consumer relationships increase, data becomes an invaluable asset for every publisher. This might be in the form of selling on marketing lists to interested brands, building insightful research from aggregate data, or selling through ancillary products to the current audience.

Co-create

As focus shifts from product to people, this focus on community does far more than provide a marketing channel. It is the publisher’s best source of new ideas, authors and editors. Wikipedia is by far the most edited and up-to-date encyclopaedia. It is also, in most areas, the most accurate. That has been achieved by providing the community with content creation and curation tools, and a viable (but not-financial) reason for experts to contribute. Dilbert, the award-winning comic strip, is now no longer the inspiration of Scott Adams the cartoonist. All the new strips are driven by concepts submitted by his community. Even in music, many mainstream artists now release remixable versions of their tracks, so that the community can co-create parallel versions.

Co-creation sums up the biggest opportunity for publishers. It might sound scary, loose, unpolished, uncontrolled, and amateur. But if your community are already creating, becoming the focus of that community is the only way to extract value. Simple marketing to a community will not work. The new publisher must be the focal point of the community.

The publishing industry will never return to how it once was. The problems with the traditional industry cannot be excused by claiming they are ‘cyclical’. Sure, the recession has exposed many poor businesses; when the tide goes out, you find out who was swimming naked. But the cyclical conditions have only exacerbated structural cracks. There is no one solution, but by reforming based on openness rather than closed systems, and community instead of control, a sustainable future can be built.