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GILBANE GROUP

A DIVISION OF OUTSELL, IN C .

G
G

October1 st 2010

A Blueprint for Book Publishing Transformation:

Seven Essential Processes to Re-Invent Publishing

by David R. Guenette, Bill Trippe, and Karen Golden

Outsell’sGilbaneGroup: ResearchReport

Table of Contents Page # Acknowledgements . . . . . . . . .

Table of Contents

Page #

Acknowledgements . . . . . . . . . . . . . .
Acknowledgements
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6
A
Blueprint User’s Guide
7
Executive Summary
Digital Comes to Book Publishing
The State of Book PublishingToday
E-book Market Sizing
Trade Book Publishing: How the Kindle Drove E-book Publishing
Educational Publishing: Solutions Have to Address Both Market and Cost Problems
Agility, Flexibility, and XML Help STM Publishers Meet Demands
Many Challenges, Many Opportunities
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Book Publishing’s Seven Essential Publishing Processes
Mapping Processes to Specific Systems
Planning Processes and Systems
Editorial and Production Processes and Systems
Rights and Royalties Processes and Systems
Manufacturing Processes and Systems
Marketing and Promotion Processes and Systems
Sales and Licensing Processes and Systems
Distribution and Fulfillment Processes and Systems
Publishing Processes: Steps toward Better Efficiencies
What is a Digital Book?
Digital Reading Experience
The Many Forms and Faces of Digital Publishing
The Quest for “Searchability”
Utility, and Other Benefits of Digital Content
When is a Digital Book a Print Book?
Digital Book Publishing Industry Outlook
E-Books Have Arrived
XML Becoming Core PublishingTechnology
Digital Publishing is Digital Printing
E-Reader Devices in Flux, But So What?
Significant Barriers Remain
Integration and Interoperability
Rich Media and Enhanced E-Books
A Brief Glimpse into the Future
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  Table of Contents (continued)   Page # Blueprint Case Studies . . . .
 
 
 

Table of Contents (continued)

 

Page #

Table of Contents (continued)   Page #

Blueprint Case Studies

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. Wolters Kluwer Health: Digital – and the Right Partner – First

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McGraw-Hill Higher Education: Going All Out Digital Starts with XML-Early Education

 

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John Wiley & Sons: When Digital Means Print

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Hachette Book Group: Sticking to Standardization and Best Practices

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Appendix A: Blueprint Study Methodology

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Appendix B: Survey Results

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Introductory Section of Survey

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Publishing Processes Sections Trans-Publishing Processes: Goals and Barriers to Digital Publishing

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Appendix C: Blueprint Sponsors andVision Statements

 

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Aptara: Driving Digital Innovation in Publishing

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BISG: Informing and Empowering the Book Industry

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Hewlett-Packard Company: Imaging and Printing Business

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MarkLogic: Revolutionizing theWayToday’s Enterprises Consolidate, Discover, and Distribute Information

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North Plains Systems Corporation

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Océ North America, Production Printing Systems: Delivering Productivity across the Enterprise

 

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Océ North America, Production Printing Systems: Delivering Productivity across the Enterprise   198

Really Strategies, Inc.: Eliminating Barriers for Publishers to Create and Deliver Content to the World Market

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Really Strategies, Inc.: Eliminating Barriers for Publishers to Create and Deliver Content to the World Market

Appendix D: Digital Book Publishing Industry Directory

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Appendix D: Digital Book Publishing Industry Directory 202

Appendix E: The “Blueprint” Team

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Table & FigureTitles Page # Table 1. NewTitle Production Numbers, 2008 and 2009 . .

Table & FigureTitles

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Table 1. NewTitle Production Numbers, 2008 and 2009

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Table 2. Non-Traditional Book Production Numbers

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Figure 1. PublisherType Figure 2. Worldwide E-Books Market by Segment, Content Sales Only, 2009

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Figure 3. Worldwide E-Books Market as a Proportion ofTotal Books, 2009

 

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Table 3. Regional E-Books Market Size and Growth, 2009

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Figure 4. Percentage of Gross Revenue from E-book PublishingToday

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Figure 5. Expected Gross Revenue from E-book Publishing in FiveYears

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Table 4. Kindle E-Book Availability by BookType, Spring 2010

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Table 5. Sample E-Book Cost and Revenue Analysis

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Table 6. Differences Across E-Book Devices, Smartphones, andTablets

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Figure 6. Book Publishing Segments Represented in Blueprint Survey

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Figure 7. Software System Used in Planning

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Table 7. Klopotek Modules

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Table 8. Focus on Publishing Software Modules

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Table 9. FirebrandTechnologiesTitle Management Solutions Modules

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Figure 8. Digital Editions Considered During NewTitle Planning

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Figure 9. RelativeTiming of Digital and PrintTitle Development

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Figure 10. Digital-OnlyTitle Consideration

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Figure 11. DAM UsageVersus Other Solutions

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Figure 12. End Format for Print Books Figure 13. Usage of Outsource Services for Print Publishing

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Figure 14. Usage of Outsource Services for E-Book Publishing

 

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Figure 15. Lulu.com’s Recent Charge Schedule for POD Books

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Figure 16. Promotion and Marketing Activities Figure 17. CoreSource as Distribution Channel

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Figure 18. CoreSource Fulfillment Platform

 

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Figure 19. FirebrandTechnologies ONIX Platform

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Figure 20. E-Book or Print Book? Figure 21. Untethered Device Adoption Rates

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Figure 22.TheVoyager Company’s 1991 “Expanded” Book

 

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Figure 23. Disney Reader, with Callouts of Interactivity

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Figure 24. InteractivityTakes Many Forms

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Figure 25. Online Access to DigitalTexts

 

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Figure 26. MixableTextbooks

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Table & FigureTitles (continued) Page # Figure 27. Digital Printing and Digital Workflows Figure 28.

Table & FigureTitles (continued)

Page #

Figure 27. Digital Printing and Digital Workflows Figure 28. BISG “Point of No Return” Findings
Figure 27. Digital Printing and Digital Workflows
Figure 28. BISG “Point of No Return” Findings
Figure 29. Kinds of Digital Publications Produced by Book Publishers
Figure 30. Length ofTime of XML Used by Book Publishers
Figure 31. Percentage ofTitles in XML at Book Publishers
Figure 32. Reasons for Using XML
Figure 33. Use of XML Repositories for Content and Metadata
Figure 34. Reasons for Using XML Repositories
Figure 35. Reasons for Not Using XML Repositories
Figure 36. Perception of E-Books’ Support of Digital Printing
Figure 37. Reasons for Using Digital Printing
Figure 38. Book Publishing Companies’ E-Book Production Numbers
Figure 39. Digital Formats in Use at Book Publishers
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Figure 40. Respondents’ Reasons for Digital Publishing
Figure 41. E-Readers Galore!
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Figure 42. Levels of Interoperability Among Publishing Processes at Book Publishers
Figure 43. A Glimpse of Integration to Come? North Plains TeleScope Publishing Platform
Figure 44. Level of Rich Media Use in Digital Publishing Efforts Today
Figure 45. Level of Rich Media Use in Digital Publishing in FiveYears
Figure 46. “Columbus: Discovery” MultimediaTitle, 1991
Figure 47. “The Elements,” a Contemporary Enhanced E-Book
Figure 48. A Sampling ofVideo Formats
Figure 49. A Copia E-Reader, Showing a Reading Community Review Page
Figure 50. DisruptiveTechnologies on the Horizon
Table 10. Major CloudVendors and Services
Figure 51. Respondents’ Self-Identification with Specific Publishing Process
Figure 52. Respondents’ Identification of Size of E-Book List
Figure 53. PositionTitle Breakout for Planning
Figure 54. PositionTitle Breakout for Editorial and Production
Figure 55. Digital Publishing Gross Revenue PercentagesToday
Figure 56. Digital Publishing Gross Revenue Percentage Projections in FiveYears
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Acknowledgements

Thanks to Frank Gilbane, President of The Gilbane Group, for his support and understanding. We also thank our new parent company, Outsell, of which The Gilbane Group became a division during the time we worked on Blueprint; Outsell has been very helpful, and we’ve enjoyed the fruits of their own research and analysis on e-books and digital publishing, referencing and quoting liberally from their related reports, to the great improvement of our own efforts. In particular, we thankAnthea Stratigos, Marc Strohlein, Ned May, and Sheila King, and that hardly exhausts the list.

We are especially appreciative of all the book publishing professionals who let us bother them so much, both from publishing companies and from the vendor and consultant communities that we found to be both generous and open. Our association with Book Industry Study Group (BISG), and, especially, its executive director Scott Lubeck, has been productive and very pleasant.

Finally, and very much in the last but not least tradition, we thank our sponsors for supporting this study. We hope that thousands download this study, and that every one of them becomes the perfect lead. Megan Prosser, of Aptara, was incredibly helpful, as was Marianne Calilhanna, of Really Strategies. Andrew Gordon of Océ North America deserves special credit for his patient tutorials about digital printing; Anat Herring of HP Indigo Digital Printing Solutions deserves our gratitude for getting us a terrific case study subject in LynnTerhune, of Wiley & Sons. MarkLogic’s Jason “JT”Tidwell, long-time client of The Gilbane Group, showed continued good grace with putting up with our demands, as did Joshua Duhl, of North Plains, another of our favorite repeat clients.

—David R. Guenette

Acknowledgements ©2010 Outsell, Inc.

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of North Plains, another of our favorite repeat clients. —David R. Guenette Acknowledgements ©2010 Outsell, Inc.

A Blueprint User’s Guide

The main audience for the study, A Blueprint for Book Publishing Transformation: Seven Essential Processes to Re-Invent Publishing, is book publishers; however, it was created to be used in a number of different ways, at different times and circumstances, by different audiences. Our over-arching intent is to have approached the subject of e-book and digital publishing from the perspective of the book publisher, emphasizing the publishing processes familiar to all as the starting point for further exploration.

Book publishers – and other interested parties – who don’t have time to read, please let these chapter descriptions guide your reading.

Background on Digital Publishing

The introductory chapter, Digital Comes to Book Publishing, is provided as background; those readers familiar with e-book publishing already may wish to skip on to other parts of the study. For those who are newly coming to the subject of e-books and digital publishing in relation to book publishing, we hope you will find sound perspective and solid basis here before moving on to other elements of this study.

Essential Processes ofTraditional and Digital Publishing

The second chapter, Book Publishing’s Seven Essential Publishing Processes, provides a general background on the processes of book publishing, tied together with e-book specific and digital publishing in general considerations. In this chapter, we begin to apply our analysis, drawn both from extensive interviews and from a significant web-based survey we designed and conducted over two months. We also explore the specific issues at work in book publishers today and how print-centric publishing processes are changing as e-books and digital publishing become more important elements of a book publisher’s business.

Defining the Digital Book

The third chapter, What is a Digital Book?, is an essential part of this study. We found that just as the various book publishing processes had to be clearly defined and presented within the context of digital publishing, the very nature of “digital book” required exploration, too. This chapter does not answer the question definitively; instead, it provides a perspective about digital publishing to help readers be conceptually inclusive and open to what cannot yet possibly be well-defined or yet well-known.

Where Book Publishing is Going… and What May Block the Way

The Digital Publishing Industry Outlook, the last chapter, takes on the charge of analysis of current e-book and digital publishing practices and challenges while seeking to define what is important for the book publisher to keep in mind moving forward.We’ve brought quotes from your fellow practitioners, reports from the survey concerning key barriers and likely technology developments, and our own best efforts to share our understanding about what is ahead for digital publishing.

A Blueprint User’s Guide

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©2010 Outsell, Inc.

to share our understanding about what is ahead for digital publishing. A Blueprint User’s Guide 7

Concrete Case Studies in Digital Publishing

As an essential part of our research, we’ve undertaken in-depth interviews with book publishers and have produced case studies that emphasize real-world experiences.The case studies presented in the appendix reflect most of the key issues facing real book publishers seeking to make a real business out of e-books and digital publishing. We hope that these case studies will be seen as resources for readers, and will help our readers present effective and compelling arguments to colleagues and management as they advance their digital publishing efforts.Taken together, the case studies provide a different way of telling the same story as the rest of the study, but as grounded in practical reality as possible.

Digital Book Publishing Industry Directory

This list is a useful tool providing an alternate snapshot of where the book publishing industry is, especially in terms of tools and services. These types of vendors sometimes spring up and disappear quickly; an online, self-maintaining, yet editorially shaped resource would be ideal but our static version is a very good start.

A Note About Our Methodology

We worked in partnership with the sponsors of our multi-client study to develop and validate answers to key questions about the transition to digital publishing now taking place in the book publishing industry. We investigated these questions using a combination of quantitative and qualitative methods, and relied on our sponsors to arrange introductions to their key reference accounts – customers who have deployed innovative solutions using their systems, tools, services, and applications.

We investigated, in a systematic manner, how our sponsors’ content systems, tools, services, and applications are being deployed. We interviewed both the technical and business leads for projects within the reference accounts. We used the questionnaire that we’ve developed to enable us to characterize the size, scope of deployments, and outcomes, together with open-ended questions through which we gathered an experiential assessment of the projects. We gather sufficient qualitative information from the reference accounts to develop comparative case studies.

Finally, we compared and contrasted the business and technology drivers among the multiple deployments across a range of organizations. We then mapped the technology landscape for content- centric solutions and documented our analysis. In addition, we identified the key business drivers and critical success factors demonstrated by the vendor-nominated customers and by other publishers we interviewed.

A Blueprint User’s Guide

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©2010 Outsell, Inc.

the vendor-nominated customers and by other publishers we interviewed. A Blueprint User’s Guide 8 ©2010 Outsell,

Executive Summary

It truly is a whole new world for book publishing. Publishers know this of course, as do their partners, vendors, and, of course, their booksellers.There are the obvious signs – the Kindles you see in friends’ hands and on the subway and the lines at the Apple store when the iPad was introduced. For industry observers, there are also the daily headlines about Google, Sony, Apple, and Amazon. PW Daily, the Monday-Friday e-mail blast from PublishersWeekly has e-book-related articles in almost every edition; we have counted more than one edition in the past year where every article was about e-books.

After the devastating economy of late 2008 and early 2009, book publishers are seeing more numbers that are positive. The revenues for digital publishing – and e-books specifically – are very strong and promise to continue to grow. Some segments of book publishing, including STM (scientific, technical, and medical) and professional, reached the digital revenue tipping point long ago. Some research from our Outsell colleagues, summarized later in this report, suggest other segments will start to tip in the next year or two.

These larger forces are creating significant pressure inside of book publishing. The goal of this study was to look at how publishers are adapting their traditional processes – many decades old and older – to adapt to digital publishing. Since these processes are usually aided by technology, the study took aim at the tools and systems publishers have been using and are starting to use.

The excitement of the marketplace is tempered by some of our analysis. While there are many bright spots – production and digital printing jump to mind – other process areas lag, are too nascent, or are waiting for industry standards and best practices to coalesce. What makes the landscape particularly challenging for book publishers is the rapid-fire addition of new channels and business models and the need to codify these models in their internal processes and systems even before they can fully evaluate how valuable some of these channels and models are.

Still the big picture for book publishers is very positive. The revenues are there, and growing. Readers are excited by the new devices and are demonstrating their excitement in fast-growing device and e-book sales. Publishers are moving ahead quickly across a broad front of process improvement and technology investment. Our case studies point to some of the smartest bets publishers can make in the near- and medium-term. We expect that a look at these process areas in another year would show steady improvement in most areas and marked improvement in those areas tied most directly to revenue growth and e-book promotion.

For publishers and their technology and service partners, the challenge of the next few years will be to invest wisely in technology and process improvement while simultaneously being aggressive about pursuing new business models. We hope this study helps book publishers with such a balancing act.

Executive Summary ©2010 Outsell, Inc.

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models. We hope this study helps book publishers with such a balancing act. Executive Summary ©2010

Digital Comes to Book Publishing

These headlines, all of which occurred within a one-day period in May 2010, were designed to spark panic in the heart of every book publisher:

‘Google Editions’ CouldTransform Publishing

Google Editions: Let the e-book war begin

Open vs. Closed: GoogleTakes on Amazon and Apple in e-Books

With or WithoutYou,Your Google Editions Will Have Unique ISBNs

What will be the best iPad app for reading Google e-books?

Google Editions still due in ‘late June or July’

Our best advice to book publishers:Take steady, even breaths, and stick to your knitting.

Of course, this advice – apart from the breathing aspect – can easily cause plenty of panic itself, especially when wrestling with the definition of “knitting.”

What is a book publisher’s “knitting” these days? In one sense, the book publisher should be what it has always best been about – discovering, improving, and making public good (and even great) books. But what has changed for book publishers is the radically different world in which they interact today, and that is the world of bits and bytes: digital content, digital communication, and digital commerce.

Today’s knitting must include, right along with the traditional goals of discovering, improving, and making public great books, the always-ongoing effort to improve the processes for meeting these goals. And today that invariably means mastering the digital tools and techniques within publishing processes. If done right, today’s efforts toward digital publishing processes will “future proof” the publisher, because today’s efforts done right are aimed at adding value to the content in media neutral, forwardly compatible forms.

Digital Comes to Book Publishing

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©2010 Outsell, Inc.

to the content in media neutral, forwardly compatible forms. Digital Comes to Book Publishing 10 ©2010

We need to emphasize that the present day for book publishers should involve XML formats as early in the publishing process as possible. We are convinced that e-book formats will evolve and change and that new ones will emerge. XML stands today as the one standard format that will enable publishers to best create, manage, and curate content over time. Moreover, the future will expand how XML and metadata can support strong integration among the various publishing processes within the publisher’s own work. Even more valuable, as the industry moves forward, will be the interoperability of metadata and its subject content across the multiplying value chains from authors to publishers, to distributors and sellers, to readers, and all the known or still not yet discovered participants along the way.

This study, A Blueprint for Book Publishing Transformation: Seven Essential Processes to Re-Invent Publishing, provides a guide for book publishers to discover where they are this moment regarding digital transformation. It also offers specific case studies and analysis of how book publishers should approach getting to where they need to be to take advantage next year and in the years ahead.

Remember the Chinese proverb that every problem is also an opportunity… as long as one keeps breathing.

The State of Book PublishingToday

What is going on in book publishing today? Even for those of us who may be able to take a calming breath or two, there’s no denying that business is stressed. A number of major trade publishers – starting with Houghton Mifflin Harcourt – stopped acquiring titles for a while.While there are a number of reasons given for this, the main message drawn by the industry as a whole was about as dark as could be: trade book publishing is in big trouble. Now, is trade publishing really in “big trouble?” Despite journalists’ and analysts’ comments, it may not yet be time to abandon all hope.According to Bowker’s estimates, new title production dropped a noticeable (but small) 1.25% from 2008 to 2009, as shown in Table 1. More striking than the small overall drop is the steep decline (almost 15%) in fiction titles while all other types of trade titles showed healthy growth, especially in a difficult market.

Table 1. NewTitle Production Numbers, 2008 and 2009

Rank

Category

2009

Production

2008

Production

Growth

1

Fiction

45,181

53,058

-14.85%

3

Sociology/Economics

25,992

24,737

5.07%

5

Science

15,428

14,100

9.42%

5.07% 5 Science 15,428 14,100 9.42% Source: Bowker ReportsTraditional U.S. Book Production Flat

Source: Bowker ReportsTraditional U.S. Book Production Flat in 2009, April 14, 2010 Press Release ©2010 Outsell, Inc. Reproduction strictly prohibited.

Digital Comes to Book Publishing

11

©2010 Outsell, Inc.

Release ©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 11 ©2010 Outsell, Inc.

As Rachel Deahl reported in the November 24, 2008 issue of PublishersWeekly:

It’s been clear for months that it will be a not-so-merry holiday season for publishers, but at least one house has gone so far as to halt acquisitions. PW has learned that Houghton Mifflin Harcourt has asked its editors to stop buying books.

Josef Blumenfeld, Vice President of Communications for HMH, was reported by Deahl as saying, “In this case, it’s a symbol of doing things smarter; it’s not an indicator of the end of literature. We have turned off the spigot, but we have a very robust pipeline.” But the article also referenced “the highly leveraged HMH” that could be suffering from “the company’s need to cut costs in a tight credit market as about the current economic slowdown.”

A week or so later, National Public Radio ran a story that built upon the HMH news, citing that “several publishing houses [Simon & Schuster,Thomas Nelson] announced layoffs or salary freezes, and a major reorganization at Random House left two major players in the business without jobs.”The story, Book Industry Enters Shaky Chapter, by Lynn Neary, ran on December 5.

InTable 2, a look at the top publishers by title output in 2009 shows who is providing content to the long- tail marketplace through the web, according to Bowker statistics. The point here is the large number of titles emanating from what Bowker calls “non-traditional” publishing, which includes e-books and print on demand.

Table 2. Non-Traditional Book Production Numbers

Publisher

Number of

Titles

BiblioBazaar

272,930

Kessinger Publishing, LLC

190,175

General Books LLC

11,887

Xlibris Corporation

10,161

International Business Publications, USA

8,271

10,161 International Business Publications, USA 8,271 Source: Bowker ReportsTraditional U.S. Book Production Flat

Source: Bowker ReportsTraditional U.S. Book Production Flat in 2009, April 14, 2010 Press Release ©2010 Outsell, Inc. Reproduction strictly prohibited.

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Release ©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 12 ©2010 Outsell, Inc.

Neary quotes Jonathan Burnham, the CEO, vice president, and publisher of Harper, an imprint of HarperCollins, saying, “We were already facing certain big challenges before the recession came along, and those challenges were connected to the traditional mechanisms of the book business.” Burnham’s major concerns are two-fold.The first is the need for trade publishers to find an alternative to the system of returns that allow stores to return unsold books to warehouses, resulting in books being shipped back and forth across the country at great cost.The other concern? Burnham says, “The industry must now truly grapple with digital advances, like electronic readers, that are already leading to dramatic changes.”

Fast forward to 2010 and a thought-provoking article about changes in the book industry. Writing in the April 26 issue of The NewYorker in an article called Publish or Perish: Can the iPad topple the Kindle, and save the book business?, Ken Aulleta notes:

In the weeks before [the iPad product launch], the book industry had been full of unaccustomed optimism; in some publishing circles, the device had been referred to as “the Jesus tablet.”The industry was desperate for a savior. Between 2002 and 2008, annual sales had grown just 1.6 per cent, and profit margins were shrinking. Like other struggling businesses, publishers had slashed expenditures, laying off editors and publicists and taking fewer chances on unknown writers…The industry’s great hope was that the iPad would bring electronic books to the masses – and help make them profitable.

The diversity of the publishing industry is illustrated well in Figure 1, which delivers the results of a question in an Aptara survey: “What industry segment(s) best describe your publications?”

Figure 1. PublisherType

5% 15% 32% 16% 31%
5%
15%
32%
16%
31%

Professional: Science / Technical / Medical (STM)Figure 1. PublisherType 5% 15% 32% 16% 31% Trade / Consumer Education / College Other Education

Trade / Consumer16% 31% Professional: Science / Technical / Medical (STM) Education / College Other Education / K-12

Education / CollegeScience / Technical / Medical (STM) Trade / Consumer Other Education / K-12 Source: Aptara Survey

Other/ Medical (STM) Trade / Consumer Education / College Education / K-12 Source: Aptara Survey Question:

Education / K-12/ Medical (STM) Trade / Consumer Education / College Other Source: Aptara Survey Question: What industry

Source: Aptara Survey Question: What industry segment(s) best describe your publications ©2010 Outsell, Inc. Reproduction strictly prohibited.

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©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 13 ©2010 Outsell, Inc.

E-book Market Sizing

The Gilbane Group’s parent company, Outsell, Inc., published the report Worldwide E-Books Market Size & Forecast Report, 2009-2012 (June 21, 2010), in which Ned May explores how the landscape for e-books is unfolding across all content types. The report also focused on the potential revenue opportunities for all publishers targeting e-books. Here’s an interesting data point:

Outsell forecasts the worldwide e-book market to grow at a compound annual rate of 42% from 2009 to 2012. While this is robust growth and worthy of note, it obfuscates a set of divergent dynamics underlying the segments and regions comprising the market.The e-book market today is not one market but several distinct markets and it is unfolding at different rates across the world’s regions.

Like this Blueprint report, theOutsell report segments the market into narrow slices that closely mirror the print book market, althoughOutsell’s three primary fields – education, professional, and consumer

– is somewhat simpler than our breakout. “As a starting point in this divergence,” May writes, “the

definition of e-book (or e-textbook) is subtly different depending on the core market it is designed to serve.”

Figure 2. Worldwide E-Books Market by Segment, Content Sales Only, 2009

$1.8

$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5

$1.3

$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5

$1.5

$1.3 $ 1 . 5
$1.3 $ 1 . 5
$1.3 $ 1 . 5

Total Education E-book Market

Total Professional E-book Market

Total Consumer E-book Market

Professional E-book Market Total Consumer E-book Market Worldwide E-Books Market Segment Size ($ Billions) Source:

Worldwide E-Books Market Segment Size ($ Billions)

Source: Outsell estimates ©2010 Outsell, Inc. Reproduction strictly prohibited.

Our definition of e-books fits nicely with Outsell’s, which defines e-books as downloadable units of digital book content that can be read on a variety of devices (e.g., laptops, e-book readers, and smartphones). The Blueprint defines digital publishing more broadly as including websites based on content from existing books, for example, but Outsell also is mindful of the difficulty in differentiating the two categories. “However, the standard form of this content is changing for some types of ‘books’ as publishers increasingly look to explore the inclusion of video and audio to support the text where appropriate,” writes May. “In practical terms, this means the category of educational e-books includes

a wider variety of formats than trade books, which keep a closer alignment to their print counterparts.” He provides another useful caveat about defining the e-book market:

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provides another useful caveat about defining the e-book market: Digital Comes to Book Publishing 14 ©2010

One of the challenges in discussing the e-book market is that e-readers can range from a proprietary software platform accessible via the web to a dedicated standalone device. In between is a range of other options that include proprietary software downloaded to a computer, laptop, or handheld device as well as relatively ubiquitous software programs such as Adobe Reader and even Microsoft Word… Complicating this further is that the lines between these different “readers” are increasingly blurred. For example, the Amazon Kindle is a standalone device that utilizes a proprietary format, but it also accepts other formats such as Adobe PDFs. Additionally, the Kindle reader platform is also available for download to a computer, smartphone, and even computing tablet like the iPad.

Outsell sizes the education e-book market at $1.8 billion or 11.5% of the global education book market. The professional e-book market is estimated at 10.5% of the worldwide professional book total, or $1.3 billion, and the consumer e-book market is forecast at just 4.2% of the consumer book market, or $1.5 billion.

Figure 3. Worldwide E-Books Market as a Proportion ofTotal Books, 2009

11.5%

10.5%

4.2%
4.2%
4.2%
4.2%
4.2%
4.2%
4.2%
4.2%
4.2%
4.2%

4.2%

4.2%
4.2%
4.2%

Total Education E-book Market

Total Professional E-book Market

Total Consumer E-book Market

Professional E-book Market Total Consumer E-book Market E-Books' Proportion of Each Worldwide Books Segment

E-Books' Proportion of Each Worldwide Books Segment

Source: Outsell estimates ©2010 Outsell, Inc. Reproduction strictly prohibited.

Outsell estimates the market expanded by 48% in 2009, and for now, the US is seeing the greatest rate of growth across all segments. However, Europe, the Middle East, and Africa (EMEA) will soon overtake the Americas in terms of growth and is forecast to reach a three-year compound annual growth (CAGR) of 51% through 2012. This growth is off of a much smaller base than the US market, however, as consumers across much of EMEA have generally been slower to adopt e-books.

Although results from the Blueprint web-based survey we conducted as part of the research of this study don’t directly reflect market size for e-books, the results do reflect the current state of e-book revenue contribution and revenue expectations in five years. The growth from today’s gross revenue contributions among responding book-publishing professionals compared to their assessments of percentages of gross revenues at book publishing companies from e-books in five years mirrors the anticipated CAGR growth trend.

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e-books in five years mirrors the anticipated CAGR growth trend. Digital Comes to Book Publishing 15

Table 3. Regional E-Books Market Size and Growth, 2009

2009 E-Books Market Size ($ Millions)

3-Year CAGR

US

3,023

41%

Americas

3,167

41%

AP

485

31%

41% Americas 3,167 41% AP 485 31% Source: Outsell estimates ©2010 Outsell, Inc. Reproduction

Source: Outsell estimates ©2010 Outsell, Inc. Reproduction strictly prohibited.

When asked about the percentage of gross revenue that e-book-specific activities generated at their company, survey respondents indicated that the majority of book publishers see less than 5% of gross revenues from e-book efforts, as shown in Figure 4.

Figure 4. Percentage of Gross Revenue from E-book PublishingToday

Less than 5% of gross revenues are from e-book activities

There is no revenue from e-book activities

Less than 15% of gross revenues are from e-book activities

More than 25% of gross revenues are from e-book activities

Less than 25% of gross revenues are from e-book activities

I don’t know

27.5% 19.3% 7.3% 3.7% 7.3%
27.5%
19.3%
7.3%
3.7%
7.3%

34.9%

Source: Gilbane Group Publishing Survey, July 2010 Question 68, "What is the current level of activity, measured as a percentage of overall gross revenue, of the ebook-specific activities at your book publisher?" Base = 109 ©2010 Outsell, Inc. Reproduction strictly prohibited.

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Base = 109 ©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 16 ©2010

In contrast, expected revenue from e-book efforts in five years’ time runs high, with the majority of book publishers expecting 15% or higher of gross revenues to come from e-books, as shown in Figure 5.

Figure 5. Expected Gross Revenue from E-book Publishing in FiveYears

More than 25% but less than 50% of gross revenues are from e-book activities

More than 15% but less than 25% of gross revenues are from e-book activities

Less than 15% of gross revenues are from e-book activities

More than 50% of gross revenues are from e-book activities

Less than 5% of gross revenues are from e-book activities

There is no revenue from e-book activities

I don’t know

21.7% 13.2% 5.7% 4.7% 5.7%
21.7%
13.2%
5.7%
4.7%
5.7%

22.6%

26.4%

Source: Gilbane Group Publishing Survey, July 2010 Question 70, "At what level of activity, measured as a percentage of overall gross revenue, do you see for the e-book-specific activities at your book publisher in five years time?" Base = 106 ©2010 Outsell, Inc. Reproduction strictly prohibited.

There is much more to book publishing than trade books, though the public generally may not know this. College and K-12 publishers have been doing very interesting things in the digital realm, and STM and legal publishers were among the first online publishers (and CD-ROM before that). The list of historical digital efforts and brand new digital publishing undertakings is long and growing. But for panic generation – right alongside hope and hype making – nothing outstrips trade publishing.

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hope and hype making – nothing outstrips trade publishing. Digital Comes to Book Publishing 17 ©2010

Trade Book Publishing: How the Kindle Drove E-book Publishing

In early spring 2010, a quick check on Amazon.com reported 461,899 results for “All Kindle Books.” Table 4 provides the breakdown, as shown on Amazon.

Table 4. Kindle E-Book Availability by BookType, Spring 2010

 

Category

Number ofTitles

Fiction

158,277

Nonfiction

282,904

Advice & How-to

33,797

Arts & Entertainment

35,169

Business & Investing

36,399

Comics & Graphic Novels

753

Cooking, Food & Wine

5,044

History

41,655

Kindle Default Dictionaries

15

Literary Fiction

13,316

Parenting & Families

9,944

Reference

15,688

Romance

26,056

Science Fiction

9,332

Travel

6,447

Source: Amazon.com, early spring 2010 ©2010 Outsell, Inc. Reproduction strictly prohibited.

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2010 ©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 18 ©2010 Outsell, Inc.

There are bound to be plenty of titles showing up in multiple categories in this list, but even assuming

a three-to-one ratio for repetition, there are a lot of titles available for the Amazon Kindle e-reader

platform, especially keeping in mind that the Kindle is only about three years old. Keep in mind too that many of these titles – and probably some altogether different ones – are available in other e-reader formats, as well as PC-oriented titles for Adobe Digital Editions, PDF, ePub, .txt, and etc. And then there are titles available through aggregator sites – especially in the education and professional areas

– and those (usually high-value) titles from professional and STM publishers that aren’t likely to want to show up on a trade book retailer’s virtual shelves.

But let’s get back to the Kindle title explosion. How has this happened?

Step One: Begin Selling Books Online (or, Create Amazon.com)

The first step was the emergence of Amazon and some other online booksellers that became leading places for the selling of books, virtually and otherwise.

Even looking at book publishing in a generic way, ignoring the wide range of book types and markets, there have been several big developments over the last decade or so.One such development has been the growth on online bookstores, of which Amazon remains the 800-pound gorilla. Amazon got to be so big because it made book buying easy through wide title selection, good prices, and a simple, attractive, and trustworthy buying experience. Other bookstores – Barnes & Noble is perhaps the best next example – followed suit, even as the brick and mortar bookstores have been falling away.

StepTwo: Learn theValue of the Book Online

This second step wasAmazon (and to some extent, other online booksellers) learning which titles were selling how much.

One nice outcome of the high-volume booksellers handling book transactions online – from publisher orders and distribution to letting visitors browse and buy online, title by title – is that all this activity is easy to track, especially with tools like enterprise resource planning platforms, web metrics, and audience tracking and personalization (e.g., “Customers who bought this item also bought”). And so enters a new thing in book publishing: knowing not just how many copies of a given book are sold but how customers are seeking, evaluating, and buying them. Book publishers in many markets have never been close to the customer in this way, but new technologies are giving book publishers visibility into the customers’ wants, needs, and habits that they have never had before.

Not that book publishing was without such tools, notably ones from Bowker and Nielsen. Nonetheless, Amazon’s relationship with the book publisher is a direct and highly motivated one for each party, as a relationship of producer and seller.

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one for each party, as a relationship of producer and seller. Digital Comes to Book Publishing

StepThree: Make Book Buying Easy

The third step was that Amazon created an infrastructure that supports and expands upon the book publisher’s traditional promotional efforts.

Amazon’s ongoing efforts expand its role as a promotion and marketing asset for the book publisher, through book marketing material presentation, by improving discoverability, adding personalization, and buildingAmazonAssociate linking. Discoverability, a term wrapped by so many in so much magical language like “SEO,” “taxonomy,” and “social communities,” is the means of making books known to the prospective buyer via search. Personalization is the association of similar reading choices to promote similar buying patterns. Associate site linking is a way to accomplish contextual promotion and advertising of titles across a much larger number of sites than simply Amazon, while driving sales only through Amazon.

Amazon’s numerous options for customer interaction for a title, such as the Look Inside! function, reviews, recommendations, and rankings, make Amazon a far more effective co-marketer for book publishers than any actual storefront. In short, Amazon makes it easy for the book publisher to benefit from the advantages of online marketing and promoting.

And Along Came E-Books… and Revenue

Amazon’s e-book play has to be admired. The company has become an important part – often the majority – of book publishers’ print sales. To capture a good share of the e-book market Amazon turns to its publishers and reports to them several important facts, including an in-depth knowledge of the publisher’s titles, because Amazon carries them; the audience interest in the specific titles, because Amazon sells the titles and tracks these numbers; and the search metrics for the particular title and titles from other publishers that meet the same book-type and subject category.

From these reports, it is but a short step – and getting shorter all the time – to provide reasonable sales projections for print titles as e-book titles. Put your print titles into Kindle, goes the tempting argument, and reap the bottom line, done on a title-by-title basis.

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and reap the bottom line, done on a title-by-title basis. Digital Comes to Book Publishing 20

For a book publisher, it is not hard math to discern if an e-book edition will make financial sense, based on such revenue expectations. Table 5 is a simple example we created to illustrate “e-book math.”

Table 5. Sample E-Book Cost and Revenue Analysis

Unit Sales Forecast

Title X has sold 1,000 print copies for the previous three years. First year sales were 2,200. Estimate is for annual units of e-book sales.

600

Title X’s rights and royalties situation seems clear, but a contract check and agent correspondence will confirm this and update the royalty system to include the new e-edition.

$200

Title X’s conversion to e-book format

$100

Total one-time costs

$600

E-book edition sales price

$9.95

Total gross revenue, year one

$2,985.00

Net revenue after payment of one-time costs of $600

$1,638.75

Source: Outsell analysis ©2010 Outsell, Inc. Reproduction strictly prohibited.

The assumptions are here for example purposes only, and the success of the scenario inTable 5 depends on many factors, including:

Are the rights and royalties well-tracked, simple, and easily discernable by the editorial worker?

Are back office systems (accounting, inventory, and royalties) easily accessible and updatable by the editorial worker?

Are the print book production files well managed, retrievable, and in a format appropriate for efficient e-book conversion?

Is the e-book file easily packaged and transmitted to the e-book retailer?

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file easily packaged and transmitted to the e-book retailer? Digital Comes to Book Publishing 21 ©2010

In this simple scenario, with positive answers to the questions above, the revenue expectations are reasonable, and, indeed, the associated costs per title would likely be lower when applied across many titles. For a mid-size publisher of 200 titles per year, for example, one might assume that a front-, mid-, and backlist of titles going back three years (600 titles) may represent 300 titles that can be considered by dint of sales history to present reasonable sales expectations as e-books. Furthermore, these are recent titles that may have a better chance of the author/agent contracts cleanly anticipating e-book editions, and production files that are more likely to be appropriate for e-book conversion, all of which would work to further constrain the costs associated with moving forward with an e-book publishing program. If the price and revenue assumptions listed above are extended as an average for a list of 300 titles, the first year’s net revenue for the publisher would be $491,625, on a direct cost of $180,000.

So, basically, Amazon comes to our example book publisher and says, “Would you like an extra half- million in income next year?” Not to mention other benefits, including:

Expanded promotion for title;

Strengthened competitiveness for publisher;

Potentially lower cost moves into other e-book formats;

Expanded sales of title through other e-book formats;

Expanded sales through print-on-demand (POD) and short run, with little or no additional file costs;

“Just-in-time” inventory of backlist titles through POD.

What Is in It for Amazon with E-Books?

So why is Amazon, with its Kindle device and its proved-out ability to encourage book publishers to publish in the Kindle format, doing it? The obvious answer is that Amazon wants to expand its book selling business to e-books, and not only that, but in its own proprietary format, Kindle.

But this expansion is not without its challenges, especially the challenge of entrenched profit models for publishers (and royalty models for authors), which are commonly based on the list price of the book. Aulleta notes that “Amazon had been buying many e-books from publishers for about thirteen dollars and selling them for $9.99, taking a loss on each book in order to gain market share and encourage sales of its electronic reading device, the Kindle.” This approach has been effective, with, according to The NewYorker article, the close of 2009 seeing Amazon accounting “…for an estimated 80% of all electronic-book sales, and $9.99 seemed to be established as the price of an e-book.” The price causes concerns among book publishers, even while currently they are losing nothing relative to the typical wholesale revenue.Aulleta quotes DavidYoung, the chairman andCEO of Hachette BookGroup USA, saying, “The big concern – and it’s a massive concern – is the $9.99 pricing point. If it’s allowed to take hold in the consumer’s mind that a book is worth ten bucks, to my mind it’s game over for this business.”

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ten bucks, to my mind it’s game over for this business.” Digital Comes to Book Publishing

So publishers are pushing back on Amazon’s demands for the uniform $9.99 price point for e-books. This seemed to come to a head at the start of 2010, when Macmillan, the behemoth trade publisher, refused to follow Amazon’s pricing scheme for Kindle titles, all up to then available through Amazon at $9.95.

It remains to be seen whether Amazon will succeed in its efforts to establish the e-reader (Kindle) as the expected e-book format and the Amazon channel as the expected source for most e-book sales, But clearly, not all have been happy: many trade publishers, fearful of print book price erosion, were sympathetic to the Macmillan et al agency pricing revolt, where the retailer is, in effect, selling on commission and, typically, for a smaller percentage of the revenue than the 50% wholesale discount of traditional practice. The current flurry of interest in the agency model may prove to have legs for publishers wanting more control over pricing, and they have at least temporarily been given a boost. Part of the boost may come from the hope and hoopla about iPad, and from the many other existing and coming e-book reader and general portable devices (e.g., netbooks) yet to come.

The real question for publishers of all stripes is not whether Kindle will rule the market or if the iPad will be the Kindle “killer” and save the book business, but instead whether book publishers can create and produce their products in ways that allow, cost-efficiently, the flexibility to serve whatever forms, factors, and fancies their customers may want.

Table 6 notes the various strengths and weaknesses for different types of digital publishing across e-reader-capable devices.

Table 6. Differences Across E-Book Devices, Smartphones, andTablets

 

Primary

Best

Type

Primary User

Interaction

Display

Size

Display

Format

Display

Speed

Connectivity

Content

Revenue

Model

Battery

Life

Content

Match

E-Readers

Consume

Medium

Grayscale

Slow

Limited

Subscription

Long

Books

 

Data

Transaction

Linear

Tablets

Engage

Medium

Color

Fast

Full

Subscription

Medium

Magazines

 

Data

Transaction

Multimedia

 

Advertising

Source: Outsell analysis ©2010 Outsell, Inc. Reproduction strictly prohibited.

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analysis ©2010 Outsell, Inc. Reproduction strictly prohibited. Digital Comes to Book Publishing 23 ©2010 Outsell, Inc.

Educational Publishing: Solutions Have to Address Both Market and Cost Problems

A big part of book publishing is textbooks, along with the instructor and student ancillary publications that support learning, notesOutsell, in the November 9, 2009 report, TheOutsell Education 100.Outsell describes the overall market this way:

We’ve established that the education industry is diverse, global, and comprised of a variety of players and products. It is highly fragmented, even in some of the areas that have been in play for decades such as content available in textbooks or training materials. What is happening is that the type of content is changing, the financial models of selling content are changing, and the market composition and global markets are changing. At the same time, the market size is almost static with an estimated US 2010 growth rate of about 3%.

Copyright law has a major impact on how printed books are sold. While buyers of a book are precluded from copying and distributing information found in the book that they purchased, they do acquire a perpetual assignable license to use the book and then sell it to another reader if they so desire. Although many readers prefer to collect and retain books that they have purchased, other readers lack the space or inclination to keep their books and eventually sell them.The internet has played a very important role in enhancing the market for used books.

Used books have a minimal impact on the trade, STM, school and children’s markets. However, the higher education market has been severely affected by used books. While many people believe that used books save students money, quite the opposite is true. The preponderance of used books significantly reduces the number of new units that are sold by publishers. In that publishers are responsible for providing significant amounts of costly pedagogical support elements for instructors and students, the price of new books must be increased to compensate for the lower number of units that are sold. As the price of textbooks increases, the number of copies diminishes further and the cycle repeats itself.

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number of copies diminishes further and the cycle repeats itself. Digital Comes to Book Publishing 24

This above example illustrates the importance of publishers choosing a business model that reflects the behavior of their customers and that offers pricing that is commensurate with the value that customers derive from each content product. Digital publishing affords publishers much more creativity and flexibility in pricing their products. Free from the costs of manufacturing and distributing printed books, publishers have quite a different cost structure to work with. And channel costs and discount structures can be less because retailers do not need to pay to ship the books and to dedicate space in their store to display the books for sale. Other costs such as royalties and permissions need to be rationalized in light of the potential growth of digital content products.

What is going on in education digital publishing would make for a multi-volume report in its own right, but there are a number of very interesting efforts underway that speak quite eloquently about digital publishing’s role in the healthy future of this book publishing segment. Perhaps most impressive is CourseSmart, for its assembling of major Higher Education publishers into an effective production process and delivery platform.

CourseSmart: An Early Implementation of Integrated Digital Publishing Focused on Audience

CourseSmart was founded and is supported by five higher-education textbook publishers: Pearson,John Wiley,Cengage Learning, McGraw-Hill Education, and Bedford, Freeman andWorth PublishingGroup, but today has 14 publishers participating. This effort brings together thousands of textbooks across hundreds of courses in an e-book format on a common platform, with the following objectives:

To provide an environment where faculty can access digital texts for evaluation purposes;

To create a marketplace where students could buy e-textbooks;

To support business partners.

CourseSmart hopes to reduce what has always been a high cost for publishers, even while helping teachers find the most relevant and applicable textbooks in the correct editions. From the students’

perspective, such a resource helps resolve access barriers, since the mass of e-textbook content is in

a common format. While it is early days as yet, part of the hope behind CourseSmart is to become the single – or, at least, main – distribution channel into college stores and institutions.

Currently, CourseSmart uses two content formats, including a proprietary format that delivers an online version of the textbook, and a downloadable format called VitalBook, powered by software developer VitalSource (now part of Ingram Content), which allows users to download the textbook to

one laptop or PC.This format was designed specifically for the teaching and learning environment, and

is also used by other publishers in this marketplace with large and complex texts, such as JohnWiley.At

least at this moment, CourseSmart does not support formats that would enable its e-textbooks to be delivered to e-book reader devices such as the Amazon Kindle.

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be delivered to e-book reader devices such as the Amazon Kindle. Digital Comes to Book Publishing

Although device developments such as the iPad may enable textbooks that rely heavily on color or that would benefit from other rich media, the experience of having an e-textbook on a laptop or PC is becoming well-established, and laptop penetration among higher education students is as high as 80% of incoming freshmen in the US.

Not surprisingly, the business model CourseSmart uses with students is quite different from the traditional textbook purchase model. Instead, students take out a subscription to the textbook for a specified period, although an alternative model that would allow limited use for four more years of access is reportedly being considered. VitalSource’s VitalBook e-book format uses proprietary DRM technology.

This approach to textbooks may remind some readers ofSafari BooksOnline, which pioneered technical e-books through an online environment. Sean Devine, CourseSmart’s CEO, had spent six years as the CEO of Safari Books Online, a leading provider of electronic access to computer and business books founded in 2001 by O’Reilly Media, Inc. andThe PearsonTechnology Group, with the goal of gathering technology books into an online database serving IT, programming, and design professionals. A well- known aspect of Safari Books Online is the Rough Cuts service, where authors publish their working manuscripts to give customers early access to pre-published information, and where readers post feedback to the editors and authors. Collaborative authoring is a small step further, and it remains to be seen if CourseSmart and similar efforts taking form in digital textbook publishing might succeed as significant custom publishing environments.

For many publishers, figuring out how to benefit from the digital transformation in book publishing can seem as painful as a root canal. But while educational publishers have always had some connection with the process of learning, digital publishing clearly expands the utility of texts to support learning – whether through interactivity, improved search, or rich media.

Agility, Flexibility, and XML Help STM Publishers Meet Demands

Most publishing professionals understand that journal publishing has for the most part run ahead of book publishing in the adoption of digital production and distribution. There may be any number of reasons for this, but one, certainly, is that the high-value content of scientific, technical, and medical information tends to appear first through peer-reviewed journals, not books. In addition, the need for access is often very time sensitive: for most scientists, for instance, there’s not much enthusiasm for using out-of-date research when trying to cure cancer.

In its history, STM’s digital inception is similar to the history of digital legal publishing, where LEXIS launched publicly in 1973, offering full-text searching of all Ohio and NewYork cases, and by 1980, had completed its hand-keyed electronic archive of all US federal and state cases.The NEXIS service, added that same year, gave journalists a searchable database of news articles. Medline, one of the oldest bibliographic archives, came out of the National Library of Medicine, with the first online interface developed in 1984 by Ovid Technologies, Inc., now a significant part of the publisher Wolters Kluwer Health.

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now a significant part of the publisher Wolters Kluwer Health. Digital Comes to Book Publishing 26

And much like the requirements of legal publishing, STM content often carries high-level search and retrieval requirements, including complex taxonomies, composition-challenging tables, math, and chemical formulae, which made working in SGML (the Standard Generalized Markup Language and XML’s predecessor) common, despite the pain of it.

Clearly, STM – as well as a number of legal and professional publishers with highly structured references and directories – have their own demands on top of those shared by other book publishing segments. Much of the progress inXML use in editorial and production processes owes a debt to these segments of book publishing. One specific aspect of XML application in book publishing is what is commonly called an XML repository, a server platform that provides capabilities to store, search, enrich, analyze, and dynamically deliver content.Typically, on top of such platforms, technology partners build information access, editorial and production tools and interfaces, and delivery solutions used by publishers to accelerate the creation and distribution of titles.

One of the major benefits of XML repositories is that when they are properly implemented, a book publisher can more easily repurpose content, creating new information products faster and delivering them through multiple channels, in what is often called “content agility.” Flexibility comes from a number of capabilities including the integration of immense stores of data from distributed sources, enhancement of the content, and structured search and navigation. What these capabilities can mean for e-book and digital publishing generally is easy enough to see: book publishers can create content once, but publish many ways, such as the various e-book formats, or to aggregators, or within distinct portals, making content available in as many formats and as many contexts as possible, and as efficiently and economically as possible.

As Outsell’s report, <title>XML:The Necessary Ingredient for Information Publishing</title>, from June 22, 2009, noted:

The tenth anniversary of XML recently passed without so much as a candle being blown out, but as this report will show, perhaps that is the biggest testimony to its acceptance and success. Many standards and technologies seem to get (and require) an extraordinary amount of press, often in stark contrast to their actual impact and importance. XML, on the other hand, has had a sort of quiet revolution where, for many publishers, it has quietly become pervasive in all aspects of content markup, manipulation, and reuse. But, that doesn’t mean “we’re done.” XML may be pervasive, but much value remains to be exploited by most publishers and information providers.

As well, we will use their very solid definition of XML, found in the same report:

One of the challenges in understanding XML is its chameleon-like nature – it is described in as many ways as it can be used. Most basically, XML is a specification sponsored by the World Wide Web Consortium (W3C) for creation of custom markup languages. In other words, users can define the markup elements. XML is a sort of lingua franca, enabling sharing of content across disparate computers, devices, and applications by defining the content of a document separate from its format. XML also enables serialization of data – which in layman’s terms is the ability to deconstruct, send, and faithfully reconstruct a document or other form of content.

Many Challenges, Many Opportunities

Book publishing is hardly monolithic; it contains many market segments, of which the common breakout is as follows:

Trade and Consumer

STM, Professional, Legal

Higher Education

B2B and Directories

K-12 Education

Government and Regulatory

These are gross categorizations, and there are many subcategories. One example is that trade publishing contains religious publishing, which in theUS market, especially, takes the form of “Christian Publishing,” but even within this sub-category there are bibles and references (concordances, for example), fiction, non-fiction, and, no doubt some education and professional publishing, too.

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and, no doubt some education and professional publishing, too. Digital Comes to Book Publishing 28 ©2010

The response (in Figure 6) to the Blueprint survey, which shows the distribution of survey respondents among publishing segments, was somewhat more heavily reflective of trade publishing than the Aptara survey noted earlier, but since Aptara has many STM publishers as customers, the discrepancy is understandable.The “Other” category largely reflects trade variants, especially religious publishing, when individual text entries were reviewed.

Figure 6. Book Publishing Segments Represented in Blueprint Survey

Trade and Consumer 30.9% STM, Professional, Legal 22.3% Education, Higher 20.5% Education, K-12 15.1% B2B
Trade and Consumer
30.9%
STM, Professional, Legal
22.3%
Education, Higher
20.5%
Education, K-12
15.1%
B2B and Directories
4.2%
Government, Regulatory
4.2%
Other
3.0%

Source: Gilbane Group Publishing Survey, July 2010 Question 1, "In what segments of the book publishing market are your books sold? (Check all that apply)" Base = 337 ©2010 Outsell, Inc. Reproduction strictly prohibited.

The universe of book publishing is varied in other ways as well. These days, the phenomenon of self- publishing has moved a great distance from the vanity press services of old; self-publishing is fast becoming the basis for the new publishing business model, as well as for new forms of books (think of blog-originated print books).The very nature of “book” is up for grabs, whether from the many efforts to support processes to create customized and one-off titles or because e-reader devices and personal computing platforms are increasingly supporting non-traditional book content such as audio, video, hypermedia, or collaborative virtual services.

Obviously what segment of book publishing one is involved with means a lot; for example, each has different audience needs, different content use cases, different channels and media requirements, and different business needs and models.The questions raised by digital publishing opportunities and change requirements for book publishers are significant, and while some specific issues regarding digital publishing may be more or less applicable to one book publishing segment compared to another, the fundamental challenges face book publishers across the spectrum.

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fundamental challenges face book publishers across the spectrum. Digital Comes to Book Publishing 29 ©2010 Outsell,

Here are some examples of questions every book publisher facing a move to digital publishing must wrestle with:

What are the high-level business objectives (e.g., increased revenues, lower costs, customer satisfaction, quality, and time to market) for producing digital content products? What results are publishers achieving now and what are their expectations?

How do requirements such as royalty obligations and rights assignment and protection deter digital content publication?

Where are the biggest pain points in providing digital content publications to internal and external partners, suppliers, and/or customers? What major obstacles do publishers face with distribution of digital content products or parts thereof, across their own enterprise, in conjunction with partnering service providers, and to distribution channels?

How are publishers making the business case for short- and long-term investments in the digital content publishing efforts?

What role does business intelligence play in publishers’ digital content publishing efforts?

Once a business case is made, how are publishers prioritizing investments according to the business issues they want to address? What kinds of change management issues are occurring? What role is IT playing in technology-driven decision-making?

To what extent are standards such as XML, DOI, ISBN, ONIX, ePub, PDF, and others in use and how are they delivering value?

How much cross-systems (departmental) collaboration takes place within the publisher?What level of interoperability exists among the publisher’s publishing systems? Which cross-systems intersections require more attention?

What e-commerce system implementations or e-commerce partners are publishers pursuing? How is the imperative for “discoverability” affecting business decisions regarding digital content publishing? Are SEO efforts, social media communities, and self- and customer-generated content entering in the publisher’s business model?

Are increasing benefits being seen by publishers in building direct customer relationships and feedback mechanisms?

Getting to answers for these questions, and others, is what this study is about.

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for these questions, and others, is what this study is about. Digital Comes to Book Publishing

Book Publishing’s Seven Essential Publishing Processes

This chapter defines the book publishing process as a sequence of business processes common across most book publishing segments, whether trade, educational, professional, STM, or many others.

In researching the topic and developing the report prospectus, we decided on a breakdown of seven business processes:

1. Planning

2. Editorial and production

3. Rights and royalties

4. Manufacturing

5. Marketing and promotion

6. Sales and licensing

7. Distribution and fulfillment

Any such breakdown is a matter of judgment, and publishing companies vary based on size, market focus, and a variety of other factors:

The breakdown could include anywhere from five to nine processes, and certain processes could be broken into their own category (sales, certainly);

In large publishers, certain processes become highly specialized and segmented and can be supported by multiple, unrelated systems;

Processes grouped together here can be discrete in practice. For example, in a large publisher, separate groups will often handle subsidiary rights while other individuals will handle royalties.

Mapping Processes to Specific Systems

Our research showed that some processes map cleanly to specific dedicated systems (e.g., a dedicated planning system customized to a publisher’s specific process). In other cases, a process is supported by more than one system or by one primary system and specific tools. For example, one educational publisher we consult with has several planning systems for different geographical locations, though it is trying to migrate all groups to one standard system. In another example, a trade publisher uses an enterprise resource planning (ERP) system for planning and tracking major milestones (e.g., manuscript complete, page proofs ready, and files to manufacturing), but then leaves it up to individual acquiring editors and the production editors to track individual manuscripts from inception to completion. On a smaller scale, publishers have long been creating ad hoc databases and spreadsheets to maintain data for royalties, contracts, assets, and schedules.

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contracts, assets, and schedules. Book Publishing’s Seven Essential Publishing Processes 31 ©2010 Outsell, Inc.

Another factor complicating a clear mapping exercise is that mergers, acquisitions, and divestments often require the acquired company to adopt the processes and systems of its new parent, or for the new parent to realize (and live with the fact) that its new acquisition is sufficiently unique that it must keep its own processes and systems intact.

This section summarizes our research of the various publishing processes – and the systems and tools that publishers use to support these processes – including a discussion of the breakdowns and overlaps we often see among them. As such, this breakdown of seven processes is our stake in the ground. It’s also our attempt to make explicit common book publishing processes that are often well understood inside the industry, especially within each specialty. For example, book marketers know very well what they do, especially for their own markets but might only have a high-level understanding of manufacturing.

One key assumption behind this report is that digital publishing will require publishing processes to be more integrated, efficient, and transparent. This call for higher integration and efficiency will require key stakeholders to have a more common understanding of other functional areas in order to help enable process improvement and tighter system integration. We are also interested in both supply chain issues and value chain issues, and attempt to highlight where e-books in particular and digital publishing in general introduce new requirements to both processes and their associated systems.

A fundamental difference between traditional book publishing – print – and e-books and other digital publishing forms is that while print processes are increasingly digital in many of the publishing processes, the medium itself is physical and so, unavoidably, must at some stages participate in the physical world of paper, bookshelves, transport, etc. However, apart from digital-to-print on demand, digital publishing remains digital from start to finish, which means that computational processes and electronic transmission can be brought to bear on every aspect of publishing.The potential for creating highly efficient publishing processes – largely by advancing integration – remains tremendous for publishers, not just in the creation and production processes, but up and down the entire value chain.

Planning Processes and Systems

Planning is where book title acquisition is undertaken, and typically where profit and loss (P&L) estimates for titles are calculated.This process can also include the development of at least preliminary marketing, production, and manufacturing costs and details.

Of the process areas we looked at, planning is one where investments in technology range widely:

Very light investment in desktop tools (e.g., Microsoft Excel and Access, Filemaker Pro) that are used to track key information.These can be informal (an editor keeping track of his or her own titles) to more formal (a complex spreadsheet or Filemaker database kept on a shared drive);

Moderate to significant investment in a publishing-specific ERP or planning system.There are a number of systems marketed specifically for planning, though they have a wide range of functionality to include title information management, inventory management, royalty tracking, and subsidiary rights management;

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and subsidiary rights management; Book Publishing’s Seven Essential Publishing Processes 32 ©2010 Outsell, Inc.

Significant to very significant investment in a major ERP system such as those from SAP or Oracle;

Anywhere from moderate to very significant investment in wholly custom systems built to the specifications of the publisher.

We kept hearing about Microsoft Office being used as planning system, and now we believe it. Figure 7 shows that office software such as MicrosoftOffice is used by half of respondents for title planning; the other half use a variety of custom-developed and general ERP orTIM platforms.

Figure 7. Software System Used in Planning

Office software such as Microsoft Office for book title planning purposes

Custom-developed software from title planning purposes, and have this integrated with various other publishing processes (e.g., manufacturing, sales)

General ERP platforms (e.g., SAP, Oracle, Great Plains, Microsoft Dynamics ERP) for book title planning purposes and have this integrated with various other publishing processes (e.g., manufacturing, sales)

We use custom-developed software from title planning purposes, not integrated with various other publishing processes (e.g., manufacturing, sales)

Off the shelf book title information management platforms with modules for integration with various other publishing processes

17.9% 14.9% 10.4% 7.5%
17.9%
14.9%
10.4%
7.5%

49.3%

Source: Gilbane Group Publishing Survey, July 2010 Question 10-PL3, "What general types of tools and software platforms are used for your company’s planning process? (Check all that apply)" Base = 67 ©2010 Outsell, Inc. Reproduction strictly prohibited.

It’s notable that these latter three categories of technology involve customization, often extensive. This is not surprising considering the range of products that publishers develop, the variety of roles and titles in different publishing houses, and the wide variety of partner and vendor relationships from publisher to publisher. It’s hard to imagine one system that can codify all the variations in business process without extensive customization.

One Consultant’sView

Edwin Fager, a publishing industry expert and consultant (Kensai International Ltd.) who focuses on title information management platforms and royalty and ERP platforms for publishers, sees most vendor companies as small, with tight budgets, and the perception that their overall markets are constrained. For example, according to Fager, “Publishing Technology or Klopotek targets about 300 to 400 publishers [in the USA]… [while] Cyberwolf and MSGL… are targeting about 1,500 publishers [which tend to be smaller publishers].”

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[which tend to be smaller publishers].” Book Publishing’s Seven Essential Publishing Processes 33 ©2010 Outsell, Inc.

Fager describes the world of “traditional” publishing software solutions breaking out as follows:

At the top end of the market the main competitors are IBS, PublishingTechnology, Klopotek, and Virtusales;

At the low end are Cyberwolf and MSGL;

Only IBS and Cyberwolf are focused on selling an integrated ERP solution, while the others focus on selling modular best-of-breed solutions;

Other competitors lack the market share, at least to date:Trilogy has only a few clients in the US; and iPub not many more;

A number of current publishing clients are switching to general financial platforms to handle rights and royalties (among other things), and a number of prospective publishing clients seem happy with SAP, Oracle, or other general business platforms in use.

Even bigger challenges remain, when electronic publishing is added to the potential publishing customer’s requirements. Fager sums it up:

All the vendors are attempting to reposition themselves as digital publishing enablers, with various degrees of success, MSGL is promoting their ability to handle fractional sales [e.g., chapter sales], Cyberwolf has their digital download service, and Publishing Technology has their turnkey digital conversion and marketing service. IBS and Klopotek are promoting their ability to handle digital books.

That said, each vendor, perhaps with the exception of PublishingTechnology, lacks a key element that the others have, such as, for example, MSGL handling fractional sales for royalties but lacking a digital download service, or Acumen (Cyberwolf’s platform) offering the Digital Download Service, but no fractional sales capability.

There are other players in this field, including MetaComet Systems, which manages the royalty payments, rights tracking, and royalty statements, and handles unlimited authors per title, reserve accounts, sub-rights, sliding scales, advances, and expenses applied against royalties, all while integrating with most AP or GL accounting systems. MetaComet Systems offers its platform, Royalty Tracker, as a web-hosted service or as an in-house installation. Like so many of its competitors, MetaComet Systems has a lot of small publishers on its customer list, but also a number of surprisingly large publishers on board, including Harcourt.

Firebrand Technologies has recently added an e-book production capability to its stable of offerings that include title information management, an ONIX server and service considered very highly by many in the industry, and various components that support promotional and marketing efforts of publishers.

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and marketing efforts of publishers. Book Publishing’s Seven Essential Publishing Processes 34 ©2010 Outsell, Inc.

Looking at the Survey Results

We were curious to try to quantify title information management, royalty, and ERP systems with the question “What specific software programs and platforms are used for your company’s planning process?” Here is the list of products and their companies we included as choices:

ACUMEN, Cyberwolf

IPUB, IPRO Business Systems

Advance, PublishingTechnology, Plc.

Klopotek/GlobalTurnkey Systems

Advantage, Advantage Computing Systems

knk Publishing, knk Business Software AG

Biblio3 and Biblio Publishing systems, Virtusales

Schilling, Schilling A/S

BookMaster, International Business Systems

TeleScope Publishing Platform, North Plains

ELAN Book, Media Services Group

TrilogyTitle and Production Management, Trilogy North America

Title Management Enterprise, Firebrand Technologies

I don’t Know

Focus on Publishing, Focus Information Technology Services, Ltd.

Other (Please Specify)

This list is not complete, but does cover most of these categories well, although outfits like AVATAR and Bradbury Phillips – both UK-based companies offering royalty-oriented platforms – could have been included, for example, and the list potential is much greater still (look at the Vendor Directory in the appendix for others).

We found many responses we expected, but “I don’t know” and “Other” were the big winners, with “none” and “custom systems” the main entries filled in when “Other (Please Specify)” was checked. Cyberwolf, Firebrand Technologies, and Klopotek were in close first-through-third placement, with Virtusales a further distant fourth, among those companies that had any noticeable selection.

Fager’s analysis is borne out by our survey results. To begin with, most publishers use general-purpose software for planning purposes instead of dedicated software.Almost 65% of respondents report using one of the following for title planning purposes:

Office software such as Microsoft Office (49.3%)

General ERP platforms (14.9%)

Custom-developed software represents 28.3% of respondents, leaving only 7.5% who report using “Off the shelf book title information management platforms with modules for integration with various other publishing processes.”

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various other publishing processes.” Book Publishing’s Seven Essential Publishing Processes 35 ©2010 Outsell, Inc.

When asked, “What specific software programs and platforms are used for your company’s planning process? (Check all that apply),” respondents’ most common answers were Firebrand, Cyberwolf, Klopotek, ELAN, and Vista (Publishing Technologies). But several publishers also reported using custom systems here as well, along with SAP.

Scratching the Surface: More Research Needed

We encourage readers to understand that a more probing analysis would need to be done to fully understand how book publishers apply automation to the planning process. To begin with, we repeat our earlier point about “considering the range of products that publishers develop, the variety of roles and titles in different publishing houses, and the wide variety of partner and vendor relationships from publisher to publisher.”

Also, we asked for “high- and mid-level book publishing professionals” to take the survey, and the titles of the respondents bear this out. More than 30% of respondents to the planning questions are C-level executives, and 18.4% hold the title of publisher. In other words, one half of the respondents are executives, and it is likely many of these respondents do not perform hands-on work with the planning systems themselves. We can imagine (and know of) scenarios where acquiring editors and editorial assistants do the work inside the planning tools, and more senior personnel are provided with reports and presentations generated by the tools. In other words, a person’s role in the process likely says a lot about how they would report on the system or tool they use in the process.

Nonetheless, it seems clear to us that the way forward with integration will be found in one or several of the choices already being made within the industry. We wonder which of the following may provide an answer:

Title information management platforms, tied into financial, production, marketing, sales, and fulfillment platforms, perhaps through modular components;

General financial platforms, with specialized publishing-centric options;

Publishing-centric platforms, with robust API or middleware connections to general financial platforms.

Understanding the Market for Commercial Planning Systems

It’s worth looking at some of these commercial systems in depth.

First, the capabilities of these systems, inasmuch as they are successful, represent generalized needs and requirements of publishers. In other words, if a vendor has bothered to develop a feature or module, it has been in response to a perceived need or requirement.

Second, and as discussed further in our outlook chapter, some of these platforms represent the most extensive and public attempts to integrate varied publishing functions. The success of the vendors – and more importantly the publishers – to reach high levels of integration with digital products may well be the key technology and process question for book publishers moving forward.

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for book publishers moving forward. Book Publishing’s Seven Essential Publishing Processes 36 ©2010 Outsell, Inc.

Third – and most importantly – most of these platforms are used in other process areas. Publishing Technology’s Advance system (formerly the VISTA platform) is used extensively in rights and royalty operations and many of these systems have order-to-cash modules that are essential in sales management and distribution management. Indeed, it’s reasonable to say that some of these systems ended up in this category because they have title planning modules, not because they are primarily planning systems.

Klopotek North America, Inc.

The KlopotekGroup claims that it is “by far the largest provider of solutions specifically designed for the international publishing community, servicing hundreds of individual customers, including the majority of the largest publishing entities in the world.”With the acquisition ofGlobalTurnkey Solutions in 2006, the Klopotek Group was set to support “more than 11,000 users” around the world.

Klopotek is a supplier of software and consulting services for publishers, from trade and specialist literature, school book and education publishers, to scientific publishing houses. Global Turnkey Systems was a leading supplier of enterprise resource planning (ERP) solutions to the publishing industry, and has been designed specifically for publishers of subscriptions and books in the areas of subscription management and customer service and fulfillment.

Klopotek is clearly tuned into the market needs brought about by the explosion of digital product development. A recent Klopotek press release noted, “As the publishing industry continues to evolve into an increasingly electronic future… [publishers need to] support both their physical and online product development and distribution.”The press release goes on to describe Klopotek being focused on “…the system requirements for supporting the evolving production, editorial and distribution processes.The need for sophisticated production management, global contracts, rights and royalties and online integration capabilities within the context of physical and online distribution of both books and journal products… [requires Klopotek].”

Putting aside the question of whether publishers achieve this with Klopotek’s offerings, Klopotek’s view of the market is in line with our analysis.

In a move that is becoming standard in this area of product and services for publishers, Klopotek also offers software as a service (SaaS), an internet-based, on-demand service allowing publishers of all sizes and types to more rapidly access the Klopotek software.

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rapidly access the Klopotek software. Book Publishing’s Seven Essential Publishing Processes 37 ©2010 Outsell, Inc.

Klopotek is a strong example of the “modular approach” to process integration, which means nothing more than its product offerings come in discrete entities – modules – that address one or another business process element of use to publishers. Table 7 provides the current Klopotek module list (not including several journal-specific ones).

Table 7. Klopotek Modules

Module

Description

Order to Cash

Covers book sales and distribution, journal sales and distribution, online business, and school teacher systems

distribution, online business, and school teacher systems Customer Care Management Integrates customer acquisition,

Customer Care Management

Integrates customer acquisition, customer classification, customer service, complaint management, and call center activities

service, complaint management, and call center activities Editorial Planner Project planning module, with all data

Editorial Planner

Project planning module, with all data created by this module exportable to PPM

iPublishCentral

Self-service infrastructure solution from outsource vendor Impelsys that enables publishers to brand, market, promote, and distribute their products, regardless which format, on the web, but with special focus on e-books

which format, on the web, but with special focus on e-books ST4 Component CMS Module from

ST4 Component CMS

Module from SCHEMA GmbH, which makes the XML-based editing and content management systems, SCHEMA ST4, for which Klopotek is exclusive worldwide implementation partner for the publishing industry

worldwide implementation partner for the publishing industry Source: Klopotek North America, Inc. ©2010 Outsell, Inc.

Source: Klopotek North America, Inc. ©2010 Outsell, Inc. Reproduction strictly prohibited.

What makes Klopotek an interesting case for integration and interoperability is not only the company- developed modules relating to basic publishing processes, but also Klopotek’s willingness to work with other service or product vendors – Publishing Technology, Impelsys, SCHEMA – to offer as complete a solution as possible, even as some of Klopotek’s affiliate companies make claims of their own for wide-ranging integration solutions. While our sense is strong that Klopotek has a very sophisticated offering for integrating book publishers’ processes, our confidence that this level of integration is widely implemented is far weaker. We do look at the Klopotek offerings as a developing model for book publishers’ platforms.

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model for book publishers’ platforms. Book Publishing’s Seven Essential Publishing Processes 38 ©2010 Outsell, Inc.

Publishing Technology

Like Klopotek, PublishingTechnology is a larger, well-established vendor of planning and supply chain software for publishers. It was formed in 2007 following the merger of Ingenta, VISTA, and Publishers Communication Group (PCG).The combined company provides a wide range of software and services and represents perhaps the most comprehensive set of offerings available from one company, spanning acquisition, product development, production, title information management, sales, and distribution.

Like Klopotek, their positioning centers on digital publishing, with their home page noting, “In the fast paced digital world, our services are designed with tomorrow’s market in mind. Supply chain to social networking, scholarly research to semantic web, Publishing Technology provides practical and accessible solutions and does the hard work for you.”

For book publishers, Publishing Technology’s main planning offering is its platform Advance, which is its contemporary version of the VISTA product that has been marketed since the 1970s. The core modules available through Advance:

Product Manager

Contract, Rights, and Royalties

Order to Cash

Relationship Manager

Information Commerce

For societies and associations, Advance also has modules for membership management and meeting and event management.

As Outsell noted in an Insight report at the time of the merger of the three companies, “The new company, Publishing Technology plc, will find itself straddling the central need of the industry – management of declining print sales while uncovering the potential for online growth. The new company will endeavor to help customers minimize the disruption caused by migrating from one to the other.”The two product companies,VISTA and Ingenta, did not have a great deal of overlap in customer and product focus at the time of the merger.VISTA had focused on providing electronic solutions to the problems inherent in print publishing: distribution, stock control and so on. Ingenta, on the other hand, had experience in online subscription management, through its Information Commerce System (ICS) and electronic hosting and publishing services for clients that were not staffed to provide full electronic services directly to the market.

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services directly to the market. Book Publishing’s Seven Essential Publishing Processes 39 ©2010 Outsell, Inc.

Three years later, PublishingTechnology is seeing this expertise combine in interesting ways:

PublishingTechnology offers its pub2web digital publishing platform, a hosted service that provides publishers with a tailored environment to place their content online. Pub2web supports a variety of digital content, from journals and books to data sets and video clips. Support services include data conversion, e-commerce, and content discoverability management (metadata distribution, search configuration, and optimization).

IngentaConnect is an online scholarly publications collection that offers a ready-made audience for publishers’ content. It makes publishers’ content available to registered libraries, organizations, and researchers around the world. IngentaConnect handles usage reporting via standards such as COUNTER, and supports purchasing account features to meet document delivery needs. IngentabyDesign is an upgrade allowing publishers to apply their own branding and web design to their IngentaConnect web pages.

To drive revenue to its digital products and support individual publishers’ sales and marketing strategies, PublishingTechnology’s Publishers Communication Group (PCG) offers full-service marketing and sales consultancy either in conjunction with, or separately from, other Publishing Technology services.

Writing about Publishing Technology a year after the acquisition, Outsell wrote that Publishing Technology “is unique in its capability to provide enterprise-wide software and services that straddle both digital and print production processes.”This unique position stems from PublishingTechnology’s size and focus; it’s ability to tie numerous back office functions to a web interface; its strength and presence in the print publishing supply chain; and its ability to offer “a one-stop-shop solution for STM publishers seeking an online presence: They can simply hand over their online files and let PT handle online hosting, content conversion and enhancement, search, e-commerce, sales, and marketing.”

Virtusales

Virtusales is a relatively new vendor, but one that has managed to gain a reputation as one of the fast growing book publishing software solution vendors. They entered the market with a product focused on bibliographic title and digital asset management, but their software has expanded to include many other aspects of publishing management; editorial management, royalties, rights, and production management.

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rights, and production management. Book Publishing’s Seven Essential Publishing Processes 40 ©2010 Outsell, Inc.

Here’s how their “About Us” puts Virtusales’ positioning, with messaging that highlights process integration for publishers:

The release of our BiblioDAM Digital Asset Management system is revolutionizing the publishing process, enabling publishers to modernize their methods, improve workflow, and further embrace

multimedia and other modern technologies

As a consequence,

Virtusales now specializes in the following four core areas:

Implementing the current functionality of Biblio3 and BiblioLite to book publishers

Broadening Biblio3’s functionality by replacing disparate and legacy systems, keeping the system technologically advanced and programming “gaps” in functionality

Building supplementary systems that integrate with Biblio3 and compliment theVirtusales portfolio of systems

Building robust interfaces between Biblio3 and other core publishing systems within the publisher’s IT landscape and to third parties such as customers and suppliers

Like Klopotek, Virtusales is modular in nature, although, also like Klopotek, its offerings can span a wide range. In addition to the main platform Bilbio3 system, the company offers BiblioLite, a tool for smaller publishers, by way of a web-based hosted system that provides a user-friendly way of managing reusable data that is BIC and ONIX-compliant. In addition, there is BiblioDAM System, a digital asset management system designed especially for book publishers, and which enables publishers to control and distribute all assets. BiblioDAM includes automatic version control; a transfer tool that provides a secure, robust method of transferring large numbers of sensitive and valuable files across the internet; conversion of files between popular file types such as Microsoft Office and open source files; and scalable storage and data replication.

Biblio3 is described by the company as “an enterprise-class system that has been developed extensively, ensuring that your key publishing processes are handled with ease. Developed in the latest Microsoft .Net technology and SQL Server, Biblio3 is browser-based, which means that the system works equally well across both Mac and PC platforms and provides for straightforward remote access. The modules of Biblio3 include:

Bibliographic, Editorial, Sales and Marketing module, which manages title data, images, and documents as collections that can be accessed by real-time reports in formats such as Excel, PDF, Quark, XML and a native “interactive” reporting function. Other characteristics of this module are feeds in and out of other business systems and websites to ensure “in sync” data, the ability to generate “title information sheets” for a single or group of titles “with a single click of a button and then have them e-mailed directly out of the system, thus drastically improving the operational efficiency of staff.”

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the operational efficiency of staff.” Book Publishing’s Seven Essential Publishing Processes 41 ©2010 Outsell, Inc.

Production and Print Control module, which has as its focus on editorial and production scheduling, estimating, and cost management applied to both book production process and reprint management, along with margin analysis and P&L reports.

Contracts, Rights, Subrights, and Royalties module, which is aimed at managing contracts and royalties along with the sale and acquisition of rights and sub-rights for a title or range of titles. In some implementations, the contracts module “front ends” a royalties payments system and stores the scanned paper contracts for ease of inquiry.

Schilling

Schilling is a European company without a lot of activity in the US, and one that approaches book publishing process integration by providing a web-integrated ERP system to publishers.The company describes its product concept as based on “30% standard finance and 70% publishing solutions.” With Schilling’s fully integrated e-publishing solution, “everything is covered from sales, distribution, storage control of books, e-books, e-books for marketing, subscription, and royalty control, including new self-service functions for customers and authors,” according to marketing material.

One of Schilling’s boasting points is that publishers can use the platform to start integrating processes quickly, and, like most other such platforms, Schilling has a modular approach. “Be quick to make your first success with the functions that you need the most here and now,” this company argues, “Later on it will be possible for you to expand your system with additional modules.”The total integration of the modules makes an automated updating of data possible wherever it may be relevant in the system, in such cases, for example, where a posting automatically triggers an updating in the stock and statistics module, payment in foreign currency in connection with discounts, freight costs etc. and updating of the relevant accounts in the nominal ledger accountancy.The modules offered by Schilling will have by now a familiar ring, although the emphasis on e-books and digital publishing is refreshing:

E-Publishing

Project Life of the Book

Subscription

Sales Orders

Standing Order

Nominal Ledger

Conference Booking

Stock and Distribution

Marketing

Sales Ledger

Royalty

Purchase Ledger

Advertisement Control

Business Intelligence

Book Club

SAP for Media

By no means are all publishing process software platforms coming from specialty companies. Not surprisingly, big business platforms like Oracle and SAP have solid presence in this marketplace.

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have solid presence in this marketplace. Book Publishing’s Seven Essential Publishing Processes 42 ©2010 Outsell, Inc.

SAP for Media supports a comprehensive set of industry business processes for premium content publishers, including:

Author Relations Management, which manages author relations, from first contact to contract entry, from royalty settlement to contract performance analysis;

Editorial Collaboration, which manages tasks, resources, and schedules involved in the development of new titles;

Subscription Sales, which addresses aspects of the subscription-based sales of products such as journals, loose-leaf collections, closed series, book clubs, and online content.

The business process of Author Relations Management, for example, reflects quite well the general needs of book publishers, including such areas as idea management, license acquisition, contract processing, rights clearance, outgoing royalties settlement, contract analysis, and activity analysis.The EditorialCollaboration and subscription Sales platforms are as thorough, and likewise, not surprisingly, are based on or extended from SAP applications such as SAP Intellectual Property Management, SAP ERP, SAP Product Lifecycle Management, and SAP Supply Chain Management.

Based on SAP’s well-developed and powerful business process platforms, SAP for Media no doubt has extensibility and scalability for very large publishing houses, and several of the publishers answering our survey reported using it. Its orientation, however, also suggests a weakness of not keeping current enough with e-book and other digital publishing demands about which the more publishing-focused platforms are likely to be in front.

Focus on Publishing Software

Focus on Publishing Software describes itself as “the first complete accounting and management software solution for publishers,” and while the claim of ascendancy may be in question, Focus on Publishing stands in as a good example of the accounting orientation a number of publishing management platforms pursue. Focus on Publishing is a unified system that integrates various departmental functions, in what sounds very much like the module approach of other platforms, broken out into the two module categories inTable 8.

As the company says, “the Focus on Publishing system is uniquely developed for the publishing industry to meet their accounting, administrative, and electronic data requirements.”

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and electronic data requirements.” Book Publishing’s Seven Essential Publishing Processes 43 ©2010 Outsell, Inc.

Table 8. Focus on Publishing Software Modules

Financial Modules

Publishing Modules

Sales Ledger

Production and Scheduling

Returns Processing

Purchase Ledger

Author Royalties

Standing Orders

Nominal Ledger

Rights Management

EDI/XML Electronic Document transmissions

Cash Book

Marketing

Journal Review Management

Sales Order Processing

Subscriptions

Import Dispatch Information

Stock Control and Product information (ONIX version 2.0 compliant)

Cataloguing

Publishers’ Management Account

Job Costing

Consignment Control

Importation of orders from e-commerce website

Purchase Order Processing

 

Source: Focus on Publishing ©2010 Outsell, Inc. Reproduction strictly prohibited.

knk

knk Business Software AG, with its head-office in Kiel (in the very north of Germany) is a developer of business software for publishing houses that offers Microsoft certified publishing-specific modules that integrate with the Microsoft Dynamics (formerly Navision) software. knk employs about 120 staff at several locations in Germany and France and cooperates with several local partners in about 30 countries worldwide.

The knkPublishing software, this company claims, “has been developed for the business organization of small and medium-sized editors of books, journals, magazines, newspapers, electronic media and other kinds of media (e.g., yellow pages and calendars). It handles a publisher’s editorial requirements and pays attention to the newest and important developments in this industry, i.e. e-books, new media; standardization of information interchange with authors, surveyors, printers; and best business practices in the publishing industry.”

In one sense, knk can be described as trying to bring the power of Microsoft Business Solutions’ ERP to editorial and publishing services. Something of a counter to SAP for Media, one could argue, although how Microsoft ERP compares to SAP is a good question to consider.

Firebrand Technologies

FirebrandTechnologies’Title Management Solutions, a title information management (TIM) platform, now in Version 7, is a substantial newer offering in this space, one that seems to be competing head to head against larger competitors such as Klopotek and Publishing Technology. Title Management Solutions offers publishers software based on a centralized database with the capabilities to manage publishing, the company states, “from acquisition through reprints, with marketing and sales in between.” A core principle in the TIM design is that title information and collateral is collected in one central place “by those that know that information the best, at the time that they know it.”

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best, at the time that they know it.” Book Publishing’s Seven Essential Publishing Processes 44 ©2010

Firebrand offers Title Management Solutions in both a hosted form, for companies that want to minimize up-front capital investment and still provide a predictable operating cost, and as an installed platform, run by a publisher’s IT department, on its own servers and operating systems.Title Management Enterprise uses a Microsoft SQLServer database, coupled with features such as RSS- based “desktop alerts” and e-mail alerts, and with Ajax controls for web browser integration for such UI assistance as “RecentActivities andOverdueTasks,” “Multiple Saved Searches,” and “ Saved Lists of Titles/Projects/Contacts.”The full range of modules includes the list inTable 9.

Table 9. FirebrandTechnologiesTitle Management Solutions Modules

Module

Description

Acquisitions

Handles proposal, through peer review, due diligence, and final decision, and helps acquiring editors to track the status of all submissions or proposals under review

Title Profit & Loss

Integrated with acquisition projects, with project-based P&L based on the publisher’s own pre-defined models; creation of P&L for each stage in lifecycle of the project (i.e., Acquisitions, ManuscriptTransmittal, Print Decision, and Actual from ERP); and with the ability to carry multiple versions for each stage, including sales, royalties, expenses across multiple editions, and multiple years

Editorial

For capturing and managing title information efficiently and accurately in a single integrated database developed specifically for book publishers

Production

Supports the development of publishing project plans using configurable and customizable schedule templates

Manufacturing

Supports tracking manufacturing specifications, cost estimates, and purchase orders by title and printing, including reprints; maintains historical records for each component of a manufacturing process; and manages sourcing opportunities by analyzing data

Marketing

For coordinating the marketing team across a wide range of activities by managing marketing plans, campaigns and projects, as well as creating, gathering, and disseminating marketing content throughout the lifecycle of a title, including sales catalogs and other promotional materials

including sales catalogs and other promotional materials XML Integration with InDesign Includes new catalog export in

XML Integration with InDesign

Includes new catalog export in XML, application support for InDesign templates, and snippets for page layout and import of title information

and snippets for page layout and import of title information Publicity For managing contact records by

Publicity

For managing contact records by media, market, or category; creating review request and call lists by linking contact records to entered book titles; creating pitch letters and mailing labels using mail merge templates; and organizing and managing author tour schedules with event details, budgets, and notes

author tour schedules with event details, budgets, and notes Source: FirebrandTechnologies 2010 Outsell, Inc.

Source: FirebrandTechnologies 2010 Outsell, Inc. Reproduction strictly prohibited.

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Inc. Reproduction strictly prohibited. Book Publishing’s Seven Essential Publishing Processes 45 ©2010 Outsell, Inc.

Planning Processes and Systems: Summing Up

As these snapshots of the dedicated software systems show, this is a category of technology that does not lack for ambition.The full list of systems that could have qualified for inclusion in the survey is quite a bit larger.These vendors aim to capture the broad range of publishing business processes in a single system, a single modular system, or a single modular system integrated with modular offerings from other vendors.

Two-thirds of respondents report that digital publishing titles are being considered right from planning and acquisition, which suggests to us that book publishers are moving away from early reactive stance regarding e-books, as shown in Figure 8.

Figure 8. Digital Editions Considered During NewTitle Planning

Digital editions are always or mostly considered as part of new title planning and acquisition

Digital editions are never or almost never considered as part of new title planning and acquisition

Digital editions are sometimes considered as part of new title planning and acquisition

I don’t know

18.4% 13.2% 0.0%
18.4%
13.2%
0.0%

68.4%

Source: Gilbane Group Publishing Survey, July 2010 Question 13-PL6, "Are digital editions considered at the stage of title planning and acquisition?" Base = 38 ©2010 Outsell, Inc. Reproduction strictly prohibited.

Significantly, this ambition seems to be met by publishers. Of those respondents who answered our questions about planning processes, a sizable majority indicated that the planning tools in use are usually comprehensive, most often helping publishers plan products from assessment through production or from assessment throughout the entire product cycle.The gap between the relatively low numbers of off-the-shelf title planning platforms listed in the survey question selected by respondents and the large percentage of book publishers claiming that their planning tools in use are comprehensive falls to a matter of definition or semantics. In the course of our interviews, we came to see that many book publishers do indeed have title planning systems in place, but the “systems” are not necessarily discreet software products. Rather, they are a system or systems developed over time to accomplish title planning processes. In some cases, such systems may be checklists or spreadsheets, but work well within the culture of the particular book publisher.

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culture of the particular book publisher. Book Publishing’s Seven Essential Publishing Processes 46 ©2010 Outsell, Inc.

Just as significantly, our survey showed that digital publishing is highly important among today’s book publishers. Digital products are a key consideration for publishers and are a key part of the planning process for two-thirds of publishers. Moreover, in addition to being accounted for in the planning process, digital products are very often developed alongside print products.

Figure 9. RelativeTiming of Digital and PrintTitle Development

Digital editions of print titles are always or mostly developed as part of the development of print titles

Digital editions of print titles are sometimes considered as part the development of print titles, but sometimes handled post print title publication through a conversion service or process

Digital editions of print titles are never or almost never considered as part the development of print titles, but instead are handled through a conversion service or process post print title publication

28.9% 26.3%
28.9% 26.3%
28.9% 26.3%