Year: 2007

Eliminating the risks in digital publishing.

Most publishers are so busy marketing print books that they can’t put their mind around selling multiple versions of the same books. So, they partner with companies who specifically market digital copies of their titles. Unfortunately, many publishers relate to their digital licensees and vendors in the same way they relate to the traditional book-selling channel. They are most concerned with how many units will be sold or how much royalty revenue will be generated. This isn’t a bad thing by the way. But, there can be so much more value gained by working together with your licensee than by standing an arms length apart.

At my company, we’ve put together a program that allows us to take out all of the risk in digital book publishing. Our Pre-Publication Program allows us to offer digital books before we produce them. Users place pre-orders that are only processed if and when the proposed project is completed, ensuring that there is enough interest to justify the significant investment required to produce a title. We have offered a variety of titles as pre-pubs, ranging from small public domain titles to recent multi-volume sets. In some cases the titles offered were withdrawn when it was clear there wasn’t enough interest to support the project. While we’d like to be able to produce every title, we consider even the withdrawn offerings a success: we identified projects where the return on investment would be weak and were able to re-allocate our resources to projects users wanted more.

This program has been great for our publisher partners too. We don’t sign a contract with them until we know we have enough buyers to pay for our development costs. When we know there are enough, we feel good about signing a deal and the publisher knows exactly how many units we will sell the day we ship the digital product. In many cases, this eliminates the need to pay royalty advances. We simply pay royalties on each pre-order we receive and send that lump sum to the publisher the same day we ship the product to the customer. Each book we license from a publisher is a success for us and for them. We never waste time on books that our customers don’t want.

If you haven’t started yet, it’s important to take your first step to begin publishing digitally. And if you’re a rights manager, you need to work today to ensure you have grasp on the wide variety of issues relating to digital book licensing. Don’t be afraid. Take risks. Partner with experts. In no time at all, you’ll be an expert yourself.

Form communities – there’s power in numbers.

You may have heard that forming “communities” is an important thing in the digital age. It’s true, people like to gather with others and share about things they have in common. As a book publisher, you can get to know more about your customers by forming communities around the authors they follow. One way to do this is to host author “chat” sessions online. Another way is to segment your customer base by product and send them targeted emails according to the genre of the books they buy.

But what if you don’t have a sophisticated website? What if your site is really just an online version of your print catalog? You can still gain access to unique customer information through partnerships with your vendors and licensees.

Find out what the customer wants.

One of the best ways to know a customer is to meet them yourself. If you can’t do this in person, you can do this “virtually” without leaving your desk. Use your website to survey the tastes of your readers. Find out what products they like the most and what they would like you to produce in the future. Offer multiple formats – print, audio, and eBook versions. If a title isn’t available in anything other than the print edition, ask your customers if they would enjoy purchasing a digital version of the paper book you’re offering. You’ll be amazed by what they’ll tell you.

Develop your digital publishing channel.

Do you know your customer? I’m sure you have all sorts of demographic data describing who your typical book buyer is – female, aged 35 to 54, middle income with children, two dogs and a cat. But do you really know your customer? Do you know what their name is? Do you know where they live? Do you know how much they have spent on products purchased from your company? In most cases, your answer would be, “No, I don’t know any of that, but boy do I wish I did!”.

Before the Internet age, the most information you could expect to gather about your customers would be the number of books they buy and where they buy ‘em. You could know that Betty Jo’s bookstore on the corner of 4th and Main sold 25 copies of the latest business title, but you’d never really know who bought those books. Nowadays, it’s becoming easier to actually know who your customer is.

For example, your website can open the door and let your customer right into your virtual lobby. Statistic gathering software can show how many customers are visiting your site and can reveal their general location. You can see which pages they read the most and how much time they stay on your site. Customers can submit their email address and receive a special email newsletter from you in return. Of course, this is great news for your marketing department, but remember this – every customer you meet through your website is a future digital book buyer. They’ve got everything they need to obtain and use digital products from you. They’ve got the computer, they’ve got an internet connection, they’ve got an email address. With a little effort, you’ll find that the customer is willing to share their product preferences with you.

Archive the most profitable front and backlist books.

If you don’t have access to a digital workflow software system, and you haven’t yet partnered with a company that can provide a complete turn-key service, you still need to get started on the path to digitization. It can be even more simple than you think. The best and most inexpensive thing rights managers can do is become good friends with people in their own production department. Get in touch with these folks and be sure that a copy of the files for every book published are sent to you. Burn ‘em to CDs and stick ‘em in your desk. Just make sure you’re a part of their workflow. This is the easiest first step you can take to ensure you have files when you need them.

If getting files to every book published isn’t practical, do everything possible to single out titles that have been good sellers (and therefore still in print) and work with your marketing department to find out which new books have the largest order commitments. Just try to keep ahold of as many files as you can.

Picking the right archive file format for your digital product.

Overall, I wouldn’t worry too much about the differences between this file format and that one. But, you should have some knowledge about which files are best for the long term. It’s really rather easy. If the only thing you’ll ever want to do with a book is print it, PDF is probably the best file format for your archive. PDF accurately represents page presentation, and for products that just require facsimile reproduction, it’s well suited. Unfortunately, many publishers think PDF is the only format they’ll ever need. This is understandable. After all, they’re in the business of printing books, right? Most every desktop publishing application exports to PDF, making it very easy to quickly obtain a snapshot of the finished product. It also makes it easy to transport, since PDF’s can be opened on computers running different operating systems. But what happens when the publisher works with a vendor or a licensee who needs to break apart pieces of the book and tag the text for search-ability with other books on a CD-ROM or an online database? PDF’s can be difficult when it comes to data extraction. To remedy this situation, many publishers are standardizing their file archive in XML.

XML stands for Extensible Markup Language. It is a general-purpose markup language that allows its users to define their own description tags. Its primary purpose is to facilitate the sharing of structured data across different information systems, particularly the web. It’s very flexible, and from XML, many additional file formats can be created. In fact, using the right software, you can create PDF files from XML.

Again, don’t be too concerned with file formats. In most cases, your partner will be the one to worry about this, and will let you know what’s best for their use of your data. If you don’t have the format they need, let them create the data for you. Just be sure to get a copy for your archive!

Develop a good digital workflow.

Your digitization partner can help you create digital editions of your backlist, but you’ll want to be sure the processes you use to publish new books include the creation and archiving of useful electronic files.

There are large scale software solutions available today to help a publishing house manage their digital workflow. These cover every point in the process – from the moment you receive the manuscript to contracting, editing, and on through to blue lines and the actual print run. More than just highlighting milestones in a process, these systems help a publishing house archive important files created during the production stream.

But what about the publishing house that can’t afford to implement an in-house digital workflow software solution? In the same way that most publishers don’t own a printing press anymore and instead, outsource their print jobs, you can do the same when it comes to digitizing and archiving your books. Companies exist today that will do everything for you.

Pick a Climbing Buddy – partner with experts.

If your publishing house hasn’t committed to a digitization process yet, you might wonder who’s out there doing this kind of work and how you can find them. Digitization services is a commodity business these days. Most of the heavy lifters in digitization are located off-shore. You’ll find large scale companies with locations in India, the Philippines, China, and most other countries in Southeast-Asia. But don’t worry, you won’t have to learn another language or bank lots of air miles to pick your partner. Nearly all the major digitization companies have local U.S. based offices. Working together with them will be just like working with the company you use to print your books.

Not just icing anymore – digital rights income can taste a lot like cake.

How many of you have booked a million dollars in digital rights revenue? $500,000? $100,000? How about $50,000?

Admittedly, digital rights licensing has not yet become a primary profit center for many publishers. Why? The obvious reason is because print still drives the vast majority of revenue for most publishers (therefore, print-centric work-flows continue to be a practical reality). Other reasons; most publishers don’t clearly understand how digital products are sold. And if they happen to know how the product is being sold, they misunderstand who the customer is. They believe e-books are priced dramatically less than their print counterpart and therefore two things happen – less revenue is generated and print sales are cannibalized. They look at royalty calculation methods and see nothing but pennies. And since the expectation of getting rich is so low, many publishers sign contracts that virtually guarantee it. Worse yet, some publishers become so confused that they take the easy way out; they avoid the category completely.

The truth is, money can be made. In some cases, the revenue can be significant. In other cases, it can be incremental. As a publisher, it’s important for you to be aware of the potential revenue streams and take a ‘more is better’ approach.

Lots of Flavors to Taste – there are many revenue models

Different types of books will generate different amounts of revenue. Books should be matched to fit their market. Reference, text books, or better yet, books you open to the middle rather than at page 1 make better selling digital products in some channels than the latest John Grisham title or Harry Potter book.

When licensing digital rights, sign non-exclusive deals. If there are two or more suppliers in a market, don’t lock yourself into just one, but be sure one of those is the market leader. Make sure your licensing policies are flexible enough to accommodate a ‘one size doesn’t fit all’ market. Get to know your partner and their product. Gain a clear understanding of who their customer is and how they buy digital products. There is no single business model, so get used to hearing a lot about how “this type of content sells best at this price and in this kind of configuration.”

Avoid the temptation to think that selling digital products is the same as selling individual print copies. Many products sell best when multiple books are bundled together. Digital library products exclusive to certain disciplines can be very lucrative for publishers who commit with multiple titles.

Smorgasbord vs. Ala Carte – selling digital book collections

My company sells a product that includes 330 reference books, costs $630 and includes over $6,100 in equivalent print editions. You might think, “Wow, that’s nearly a 90% discount from list price on each book.” Well, you’re right. And when you look at the individual royalty revenue each book generates when sold this way, your first reaction would be to say, “Who in their right mind would want to license books for this product?” But what you may not know is that we sell tens of thousands of copies of this product each year. Those kind of sales provide a lot of potential royalty revenue for the publishers who have licensed books to us. But of all the publishers represented in the product, some are much happier than others. Why is that? Well, some publishers own and have licensed to us dozens of titles in that box. Others have licensed one or two books in there. The publishers who represent dozens of books are collecting tens of thousands of dollars from us in royalty revenue each year, while the others are collecting under one thousand dollars.

In our model, more is better due to the volume of bundle sales. If your publishing house is taking a conservative stance as to which books you license to us and you limit the way we can sell them, your revenue will reflect that.

When to Open Your Own Place – publishing your own content digitally

Most publishers have fewer than 100 titles available digitally and many of those have come to market through sub-licensing deals with partners. If your publishing house is small or medium sized, there’s good reason to keep licensing digital rights. After all, committing to your own digital publishing means higher costs over the short-term and a stretching of (already stretched) resources. But, for those of you who believe participation is better than spectatorship, there are models you can follow to begin publishing your own digital editions.

At my company, publishers partner with us to bring their own digital products to market by licensing the technology we create. In many cases, we act just like a packager does. We help publishers identify the books that will sell best together. They pay us to digitize the books (if they’re only available in print) and work with desktop publishing formats for books that are already digital. Once everything is formatted for our technology and made searchable, we create a master CD or DVD-ROM and hand that back to the publisher. At that point, they create the product packaging and enlist their own sales and marketing team to bring the product to market.

By partnering with us this way, the publisher avoids the cost of developing a custom e-book technology and the ongoing burden of providing technical support services. They pay us a small royalty on their sales, and in exchange we handle everything for them.

But that’s just one way for a publishing house to bring digital products to market. There are lots of digital book technologies and lots of great companies to partner with.

Remember I mentioned that at my company, the ‘more books are better’ approach yields more royalty revenue for our publisher partners. This ‘a lot of a little’ philosophy is shared by major publishers who do their own digital publishing. In 2001, HarperCollins offered 188 digital titles which were chosen selectively, and as a result, the revenue generated was small. Since then they increased the amount of digital books published and here’s what they found. Today, 75% of the revenue generated from digital books sales by HarperCollins is from titles selling less than 49 units per month. In fact, 95% of HC titles sell fewer than 49 units per month. Yet, their revenue climbed over 800% from 2001 sales. By June 2008 they will offer over 4,000 titles in the market.

The lesson here is, if your publishing house is going to jump head first into the digital publishing pool, don’t forget the water. And don’t be afraid of its temperature either.