Presentation # 3

By

Tom Woll

President, Cross River Publishing Consultants, Inc.

www.pubconsultants.com

Google, Amazon, Apple and Intellectual Property:

How to Survive The Technical Turmoil

The Epic of Gilgamesh, 1700 BC

From the time of the first book, Intellectual Property (IP) has been the backbone of creative invention and the publishing

process

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• Lest we forget, A publisher’s primary purpose is content:

• Acquisition• Production• Sales & Marketing• Fulfillment• Profitability

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Acquisition/Creation of IP, Production, Sales &

Marketing, Fulfillment of product

$ for author and publisher

Additional IP CreationGreater Brand/ Name Recognition

More $ for author and publisher through increased

sales & rights sales

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• Key Technology Companies moving from

IP content distribution

IP acquisition, distribution and creation

on their own platforms.

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“The biggest tech companies…want to erase the boundaries …and own every waking moment….

The new strategy is to build a device, sell it to consumers and then sell them the content to

play on it…..”

David Streitfeld, NY Times, Feb. 12, 2012

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• The primary digital “Partners” have shown themselves to be Jekyll and Hydes: – Supporting traditional publishers’ business models – Undermining them at the same time

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• The Jekyll State – Supportive of publishers:– Google, Amazon, Apple as Distributors of IP – Supports

publishers in all areas• Amazon

• Kick-started sales of Ebooks via Kindle, now about 2/3 of industry Ebook revenue of approximately $700+ million

• Wholesale pricing was originally favorable to publishers (Amazon sold at a loss)

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• Apple• Provides competition to Amazon as a primary sales outlet

• Agency model of E-book distribution better for publishers

• Allows publishers to set their price and, theoretically, gain better margins per title sold

• iBook and iTunes provide added markets and delivery systems,furthering reach and competition

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• Google • Google Books = Somewhat competitive to Amazon & Apple

• Facilitates expanded information about products, authors and content

• Google Index

• enables information about titles, etc.

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• All have ability and desire to disseminate and distribute IP in multiple formats (hc; ppr; ebook) and multiple slices (whole; chapters; segments):

• Increases the chances of publishers and authors to derive greater revenues from each part sold

• Enables a form of net pricing by setting a set price for the truncated content.

• Allows publisher to track use of content and enable asset management if desired.

• Competition has grown – for the benefit of publishers

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Illustration by Cam Kennedy, from graphic novel e-book

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The Hyde State – Competitors of Publishers• Amazon:

• Movement to undercut publisher’s pricing using wholesale formula to control pricing

• Agency arrangement only with top pubs

• Appropriating IP from Publishers as traditional publisher competitor.

• Yet to be seen how well this will work

• Bar-code scanning plan in Indies with ordering from Amazon

• Arbitrarily cuts off publishers’ titles from the Amazon database (including my own book a few weeks ago) if they don’t like terms, etc.

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• Apple:• Primary competitor to Amazon through iBook app and iTunes

• IBooks authoring tools allow anyone to create a textbook

– undermining traditional textbook publishers.

• Lower pricing on books and textbooks, even with agency arrangement, reduces margins.

– iBook for Textbooks will keep most textbook pricing around “$14.99 or less” according to Apple’s press release.

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• Google

• Google Book Registry positioned Google as arbiter of IP and copyright.

• Opposed by AAP; AAR; many others.

• All• None of the primary distributors share with publisher customer name, address and other demographics. Cuts the publisher off from the life-blood of his market.

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Where should publishers turn?

How can we work with these companies

and survive?

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• Publishers need to be self-reliant1. Understand our primary role still is – more than ever –

content creation and provision.

2. Retain IP and monetize it whatever technology's evolution

3. Develop our own distribution and sales capability

4. Be format agnostic

5. Develop internal distribution and sales channels through moreaggressive use of, and focus on, website

• Not an easy transition since many publishers don’t want to alienate their retail and wholesale customers.

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6. Capture customer name, address, demographic and sell directly to these customers

7. Know the lifetime value of each and every customer

8. Use the Giants for what they do well, but don’t rely on them.

10. Create new IP in various formats; in various content groups/ niches/verticals

– Repurpose as much as possible

– Create content libraries by niche; ie. shorter fiction; anthologies; non-fiction by subject and sub-subject

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12. Price content for margin– use net pricing to ensure profitability

– wean reliance on discount from retail price.

13. Use subscription models at various levels for longer term relationship with customer

14. Eliminate fixed overheads–HC a good example

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The Software Connection

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Software Plays a Primary Role by Enabling our Ability to be Independent:• Through integration of publishing process

• Through better coordination of creative, sales & marketing & financial systems

• Through the control and protection of IP via DAM and rights and permissions modules which becomes increasingly important

• Tracking rights sold; advances; royalty rates; territory sold; language; payments due

• Tracking primary ISBN and subsets of ISBN

• Tracking rights offerings: Who, when, results

• Tracking negotiations and current bids

• Tracking an calculating royalties

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– Through use of integrated software that allows:• publishing efficiencies throughout the organization• enhanced content creation• expanded customer acquisition & retention• customer support• better business practices & control• enhanced corporate value

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“It’s not about brands or devices or platforms anymore. It’s about the ecosystem. The idea is to get consumers tied into that ecosystem as

tightly as possible so they and their content are locked into one system.”

•Michael Gartenberg, Gartner Co.

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• Thank You