Saturday, March 30, 2013

eBook Publishing Part 2: Data, Discoverability, and Diversification

When you look at ebook publishing long enough you realize something curious; Amazon is consistently swimming against the current. When publishers and all other retailers zig, Amazon zags. It is reminiscent of Warren Buffet’s investment moves. In my opinion, Amazon is consistently making the correct moves while publishers and other retailers are making the wrong moves.

Amazon keeps their focus on three core points: data, discoverability, and diversification. All other competitors are routinely missing these points or are simply unable to execute on them. Amazon has done a number of things very well in the ebook space, and I believe that drives not only their market dominance but also sustains it. Publishers in particular need to steal from Amazon’s playbook and not continue their current course of propping up old distribution models, e.g. Pearson’s investment in Barnes and Nobles, or focus on top down editorial curation, e.g. Bookish.

The single most valuable asset publishers possess is their catalog. While I am sure many would argue that their editorial staff is their best asset, it is neither scalable nor unique. What is unique is the publishers huge trove of publishing rights and data found in their catalog. Publishers need to leverage this-- turn it into a platform as Amazon has done with their Kindle platform--and make it an open platform rather than a closed one. In doing so, I think publishers can address, if not solve, the problems of data, discoverability, and diversification.

How would an open platform with a solid API aid the publishers? First, it lets you attack the issue of diversification. At present, ebooks are consolidated down to less than handful of retailers. Amazon is 50-70% of the market with Barnes and Nobles, Apple, Kobo, and Google Play Books divvying up the rest. This shifts all of the power to the retailer. Much ink has been spilled in bemoaning the loss of independent bookstores. An open platform providing access to the treasure trove of catalog data would allow every app developer, social network, etc turn into an independent bookstore on an agency model via in-app purchasing. Much as Amazon provides their Amazon Associates platform to allow everyone to become a reseller, so too can publishers.

By doing so, you provide the entire book ecosystem a solid alternative to Amazon. Publishers can also dictate the terms. The crown jewel would be data sharing. Amazon and others are notoriously picking about sharing data back to publishers. By providing a platform to developers, publishers can also demand access to more data. Better yet, they would have access to highly-specialized data. By allowing open access to a platform API, publishers encourage the organic growth of niche applications and communities and from them highly-detailed data sets. Amazon is currently destroying all competition when it comes to data collection. Amazon Associate links turn every blog into a data collection source. Amazon’s website and purchase history is a massive source of data. Finally, Amazon’s purchase of multiple social networks, including Goodreads, is another source of high-quality data. No one else is even close to Amazon when it comes to data collection. By providing an open platform API, publishers will nurture new sources of high quality data.

What good does all this data do? Data is the key to driving discoverability. Retail is still king when it comes to discoverability. Online retailers have not yet cracked the code to replicating the success of shelves filled with high quality cover art and potent back cover sales copy. Amazon is getting close and is much further ahead than their competition. But, by providing an open platform, publishers can harness the power of the book community. This gives access to data that helps to better market books, but it also harnesses the creativity of countless entrepreneurs as they seek to make money from selling books. So even if publishers don’t crack the code, someone utilizing their platform will. It also fosters a bottom-up editorial system by encouraging niche communities around apps, blogs, etc. These niche communities are the front lines of genre development and critical to understanding where consumers’ tastes are heading.

In my previous article in this series, I highlighted how publishers could embrace ebooks as a new medium not limited by the rules of traditional publishing. In this article, I am attempting to highlight how publishers and retailers need to adapt their business models in the face of the tidal wave of distribution disruption that is the internet. This is the more pressing issue of the two. Amazon has shown that they are the only competitor at present with both the means, desire, and skill to be the market leader. Amazon’s competitors lack the desire (Apple and Google), skill (Barnes and Nobles) and/or means (Kobo) to be a serious competitor. Publishers’ can fight back by taking control of their catalog, fostering a new wave of online independent bookstores, and capitalizing on the flow of data. I think having a strong, diverse marketplace will ultimately be more beneficial to readers than a benevolent dominance from Amazon.

Image Source: AllThingsD

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