Peter Hildick-Smith is Founder and President of the Codex Group.
2009 will be remembered as the beginning of the digital tipping point for book publishing, the year our industry took its turn as the last of the major media to enter the digital transition, following in the highly challenged footsteps of the music, newspaper, magazine, and network TV industries.
The question is whether we’ve learned the lessons from those media that have gone before us, and are entering a profitable new age of digital growth, or are heading for the perfect storm of a soft market, product devaluation through 60% off e-book discounting, and ineffective digital marketing that combined may put book publishing on the fast track to long tail obscurity. The choice remains ours to make, but not for long.
Digital Marketing’s Limitations
- Break-Out Novels, June 2009: Barnes & Noble selected debut novelist Katherine Howe’s The Physick Book of Deliverance Dane (Hyperion) as a “B&N Recommends Main Selection.” In August, Amazon selected 14-year-old debut novelist Cayla Kluver’s Legacy (Forsooth) for the premiere of its new AmazonEncore book break-out program. The bookstore-promoted Physick Book hit #2 on the New York Times bestseller list, not uncommon for a B&N Recommends title, while the digitally promoted Legacy sold only 1,000 units after nearly three months in market.
- Social Network Marketing, November 2009: In an internet survey of fiction book buyers, Facebook was the single largest media outlet of any kind for book shoppers, with 54% having viewed it in the past week (only 14% read the NYT that week). But when these buyers were asked where they first learned about the new novel they had purchased last, only 21 out of 5,173 surveyed (0.4%) said they’d first learned about it from “social networks like Facebook or MySpace.”
- Amazon launched the single largest all-digital marketing campaign in book publishing history with the debut of Kindle in 2007. But after a year of massive on-site advertising and promotion, an online survey of Amazon book shoppers showed that barely half (52%) were aware that Kindle existed. Amazon turned to Oprah’s TV support shortly thereafter, and now, two years later, to the single most expensive network TV advertising campaign in book publishing history to get Kindle on track.
New Fiction Needs Physical Merchandising
- Theatrical Movie Releases: In spite of a wide choice of alternate movie formats and distribution channels (including digital download, online, DVD, cable, and pay-per-view), major movies still release first in theaters where viewers can get the full experience in person at full price. Box office sales are on track to exceed $10 billion for the first time in history in 2009.
- Fiction Releases: New works of fiction, particularly from less known and debut novelists, lack the news value to get media publicity. Fortunately, they can be discovered in the local bookstore, where over 30% of fiction buyers first learned about the novel they just purchased, compared to only 5% at internet booksellers. If publishers don’t protect the bookstore, the industry loses its “theater” where new work is discovered, leaving new novels and novelists nowhere else to break out from the anonymity of the long tail.
Windowing Adds Sales
Trade publishing has benefited from windowing for over 70 years, giving book devotees the chance to get their favorite authors early in hardcover, then allowing them a full year to build word of mouth interest among a far wider audience of paperback buyers. The book’s second release and second marketing campaign then benefit through much bigger audiences and higher unit sales. The movie industry has as many as ten or more format and channel windows offered on sequential release dates, each one another opportunity to re-market and remind the audience to pick the format and timing that’s best for them.
Eliminate windowing and we not only take away the time fans need to build a book’s word of mouth, but jeopardize that second wave of potentially interested buyers attracted by news of the second release. Take it one step further with simultaneous 60% off or greater discounting, and the consumer acceptable price for a newly released book is radically reset in the mind of the book shopper to below its sustainable cost. Just as the consumer acceptable price for new music is now $0.99, and for breaking news near $0, the consumer acceptable price for a newly released book will become $9.99 or lower. Musicians can always go on tour, but what’s left for new authors?
Amazon’s Triple Play
The magic of Kindle is that it is simply the most effective marketing tool ever seen in book retailing. It instantly triples Amazon’s book sales with any book shopper who buys the device, simultaneously taking that market share directly away from all other competitive booksellers.
With such amazing sales growth potential, Amazon’s massive investment in their further triple play of 1) network TV advertising; 2) no window 60% off discounts; and 3) what consumer electronics experts agree is well below cost pricing on the Kindle itself (35% below Sony’s most comparable device) seems like a great long-term investment, with publisher support.
By closing windows, undercutting prices, and preempting vital retail distribution channels, book publishers are placing all bets on a much contracted, digital-only future by default. The result is the very real risk of a fate similar to that of the music industry, or worse.
In 2010, book publishing still has the chance to fight for and protect all channels of book distribution, both digital and physical; add more windows with even more premium formats and pricing options; and support every possible tool to create more new book awareness. Only by actively pushing to expand a healthy mass medium can we ensure a market where bestselling fiction remains viable, and where gifted debut authors still have a chance to break out at #2 on the bestseller list!
