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How To Capture The Internet
Publishing Market
One form of electronic commerce (the one that
is the focus of this book) is the creation, marketing,
selling and distribution of digital goods and services. As
the content of electronic publishing is "digital" these
products are suitable for on-line sale and delivery.
Electronic publishing is a particular type of
electronic commerce of digital goods and services and
therefore having similar problems and issues. There are also
issues and opportunities which are common solely to the
electronic and on-line publishing industry which require to
be tackled if electronic commerce is to develop in this
environment.
There is an existing market for
electronic content and a growing potential market. A recent
study showed that fifty-four percent of SME's (Small and
Medium-sized Enterprises) in the US and the UK are now
online. Of that fifty-four percent, thirty-six percent hope
to be using electronic commerce within the next six months.
SME's are a growth area requiring information to compete on
a global and more competitive level. Electronic publishing
entrepreneurs, developers should consider these implications
carefully when designing their business models.
In
addition, instantaneous delivery of information,
entertainment and digital goods of all kinds is the force
propelling the sale of digital goods online. Online users
are already accustomed to receiving instant delivery of
digital goods -if they wait more than 10 minutes before
receiving an email or delivery it will be followed up will
concerned emails to customer service. It has been the
consumer driving faster delivery times.
Although the
number of businesses on the Internet has grown, many
organizations simply have a web presence and do not make
strategic use of the opportunities the web offers.
The Organization for Economic Cooperation and
Development (OECD) predicts a four hundred percent growth in
electronic commerce transactions by 2005 (OECD: 1999).
Presently only eighty-five percent of businesses are using
the web for any purpose. And utilization of electronic
commerce is small.
This lack of progress is probably
due to concerns over issues such as security, payment
mechanisms, user authorization and misuse of personal data.
Technologies concerned with authorization include firewalls,
password access, smart cards and biometric fingerprinting.
However in order to provide secure electronic
transactions (SET), encryption technologies are used.
Encryption technologies which are supported by the
appropriate legal mechanisms have the potential to develop
electronic commerce globally and exponentially.
These
issues have to be addressed not just for the development of
e-commerce within the publishing industry, but for the
development of global electronic commerce.
A recent
study and recommendations by Forrester Research stated:
"Digital security won't stop theft of content on the
Internet, nor will lawsuits. Content owners in threatened
industries -- music and books, but not movies -- must focus
on selling better services, not locking up
assets."
Here are some additional results of the
report:
v Content companies foresee 20% of revenues
online by 2003. v They fear Napster and hope digital
security will stop it. v But only 50% have made
digital-rights partnerships.
v Record labels will
lose $3.1 billion, publishers $1.4 billion, as consumers
embrace piracy and artists go independent. v Companies
facing collapse must seek service opportunities.
v
Record labels should rework their new-artist pipeline. v
Book publishers should start selling e-books now. v Movie
studios should move toward Video On Demand (VOD).
(
Content Out
Of Control,
By Forrester Research. Released September
2000)
Intellectual property is another major issue
for publishers and authors and in particular copyright.
Copyright is initially retained by the author of the work,
however it may be sold or a license granted to enable
reproduction of the work.
Any electronic transaction
in the publishing industry should include a mechanism for
copyright payment- but 99% of the time, it doesn't. Just
like the sale of physical books, after it has been sold
'new' the copyright holder loses rights to royalty payments
with subsequent sales by used and out-of-print book dealers.
Digital copies of copyright works never become
'used' --or do they? Does the sale of a previously sold,
copyrighted digital work lose it's ability to generate
royalty payments for its creator? The recommendation made by
Forrester that content owners "must focus on selling better
services, not locking up assets" may be seen by traditional
publishers as a threat to their current business model. It
is.
If traditional publishers and content owners
don't understand, now, that their content is really a
service and not a tangible product, they will not be able to
profit from the coming revolution. The identical situation
has happened in the computer industry. Computers were a
novelty, now they are a commodity. The computer company who
is focusing on service and creative programs for their
customers is going to be the winner.
New digital
rights management (DRM) technologies may help prevent theft
and copyright infringement- but not eliminate it. In the
very early stages of development, DRM strategies and
technologies are hoping to prevent unauthorized copying of
digital content without payment or registration to the
appropriate source. Software technologies exist now to
prevent un-authorized copying of computer files in EC. A few
proprietary technologies exist such as Adobe's Content
Server2, Pay2See (http://www.pay2see.com) from Perimele, Microsoft's
OverDrive DRM solution (http://www.overdrive.com/) and FileOpen
PersonalPublisher (http://www.fileopen.com). There are few standards.
This has been a stumbling block to industry
growth.
Electronic commerce allows authors the
opportunity to self-publish. It's technologically easy
enough to create content. Content and creation tools are
accessible to almost everyone. But as MightyWords (one of
the first online content marketplaces and publishers)
discovered, ''It was just too easy to publish work that
wasn't that good".
Only a small portion of authors
who write for the traditional publisher (physical books)
ever make enough sales to generate substantial revenue. That
may change with electronic publishing, but probably not.
Self-published authors have the opportunity to eliminate
traditional publishers and go directly to their audience to
sell their work- so net profits will be larger. Stephen King
did just that in got over 500,000 people to download digital
copies of his e-book, The Plant. He reportedly netted
$450,000 in profits.
There is also the issue of
quality especially if the information chain is redefined.
The publishing chain, as it's now defined, incorporates a
number of quality filters such as copy editors and proof
readers which may be difficult to apply in the electronic
environment. Self-publishers will learn that they need to be
their own 'quality control' or contract for it. One site
that's used frequently by online self-publishers is
Editor.com (http://editor.com). They provide proofreading,
editing, ghost writing, content consulting services and
more.
On-line publishing will also become
increasingly fragmented and confusing to the end-user unless
it controls or establishes quality control. Evidence of that
occurred recently (11/2000) when MightyWords (http://www.mightwords.com), decided to eliminate 7,500
of the 10,000 self-published electronic titles on their
site.
Managing director of MightyWords, Judy
Kirkpatrick, said the company, which is partially owned by
Barnes & Noble.com, …"couldn't afford to provide the
editing, proofreading, layout, and cover design services
needed to make all 10,000 of its titles marketable".
In other words, their marketplace was fragmented. It
had to decide between charging authors for these services --
"moving toward becoming a vanity publisher," as Kirkpatrick
puts it -- or becoming much more selective about the titles
it sells. "You can't build a Web site with the right kind of
infrastructure, the right kind of customer support, and the
right kind of marketing for free," Kirkpatrick said.
So the company chose to husband its resources,
notifying authors that all but 2,500 of the site's titles
would be removed by the second week of December. It asked
authors of its surviving titles to sign a new contract that
reduces their royalties to 30% of a work's selling price,
down from 50%. And it eliminated authors' ability to upload
titles directly to the site, substituting a new, stricter
selection process.
"There is a value MightyWords
provides that warrants compensation of some kind,"
Kirkpatrick said. "What we have chosen to do, as opposed to
moving toward becoming a vanity publisher, is publish fewer
works upon approval." The new submissions policy limits
works to four categories: business and management; computing
and technology; health; and self-help and requires that
authors provide a competitive analysis and marketing
strategy along with their manuscripts.
I was lucky.
I was one of the authors asked to sign the new contract. I
had 2 self-published titles listed with MightWords when this
policy was implemented. One was continued under the new
policy, one was dropped because it didn't meet their
profile. It is not the only means of marketing my titles, of
course, but for many self-published authors the new policy
was a severe blow.
But Kirkpatrick says marketing is
what the change is all about. "We've been selling content
for a long time now and we've learned a lot about who's
buying it," she says.
Pay close attention to what
Kirkpatrick says next. It cost MightWords several million
dollars to learn who their market is: Kikpatrick says,
"The company has identified 'harried professionals' looking
for medium-length, 'need-to-know' information as its best
customers."
That meant, for starters, banishing most
of the site's fiction.
"We really don't think that
fiction is the category that will catch on electronically
first," Kirkpatrick says. "There is so much great fiction
already available in print."
Kirkpatrick denies,
however, that MightyWords' policy shift means the company is
giving up on Internet self-publishing. "I would only agree
with that if there were no self-published titles remaining
on the site, which is not the case," she says.
She
points to MightyWords author Verne Harnish, author of a
12-page, $2.00 document called "Mastering A One-Page
Strategic Plan," as an example of the kind of go-getting
self-publisher who is most likely to succeed in the new
medium. "He is not an author per se, but a business expert
on this topic who has done things with us and on his own to
market his title," says Kirkpatrick. "It's now a very good
bestseller."
In other words, stay in touch with your
market, understand what they want and give it to them.
MightyWords is mostly described as an e-book site by
its customers and competitors, but CEO Chris MacAskill
disagrees with that view.
What MightyWords is,
according to MacAskill, is a 'digital marketplace' that
specializes in works that are longer than a magazine article
and shorter than a book. Most MightyWords customers print
out the ''e-matter'' they purchase on the site before they
read it.
MightyWords is also a work in progress.
After launching as a kind of literary eBay in March 2000,
and receiving a $20 million investment from Barnes &
Noble in June 2000, MightyWords rapidly filled up with
nearly 10,000 self-published works. Then the site radically
adjusted its business model, as we mentioned, informing
thousands of authors it would no longer host their work.
''It was just too easy to publish work that wasn't that
good,'' MacAskill said.
Within the next two weeks,
customers noticed far fewer selections, closer to 2,500. And
MacAskill promised the quality will improve as the company
adjusts to this emerging market.
''We've learned a
lot of lessons,'' he said. ''One is that our best customers
tend to be technically adept professionals. That shouldn't
have surprised us: They were the first to adopt cell phones
and Palm Pilots. We also had to recognize the power of
brands. Even eBay, our original model, relies on brands.''
eBay?
''The seller might be anonymous, but
think about it: He is selling a BMW motorcycle - a brand you
know. He can also display a picture so you can see if it's
exactly what you want...'', MacAskill states.
Brand
recognition, knowing your market and giving it what it
wants…it's starting to sound more like a traditional
publishing venture than high-tech digital publishing. But in
life and the Internet, "there's nothing new under the sun"
and the Internet will not change what people want to
purchase…only the way people decide what to purchase and
when. The basic motivations of making a purchasing decision
never
change. | |
Entire Contents © Copyright 2001 by
David Vallieres. All rights
reserved. |