One by one, at Futurebook 2011, publishers declared what their true focus was going to be from now on, what their strengths would have to be for them to flourish after the digital transition.
A picture of a possible future emerges, allowing us to make a few educated guesses, based on how similar transitions have affected other sectors.
Ingram and Hachette UK did a long infomercial song and dance about their collaboration, which essentially boiled down to this: Hachette UK is letting go of doing some of the infrastructure work in its business, outsourcing it to Ingram, and concentrating its resources on the company’s core value proposition, i.e. making stuff they can sell.
Stephen Page from Faber & Faber talked about their shift to offering publishing services, but emphasised that they were heavily invested in developing each ‘book’ (apparently a banned word at his house) as a family of products, instead of just as series of book formats.
It doesn’t take much to see a picture developing here. Penguin offers self-publishing services with Book Country (apparently self-publishers are more important than libraries). Other publishers like Macmillan are taking a similar angle to Faber & Faber and shifted to a more holistic view of product development, even including starting a production company of their own. Publishers are shifting away from vertically integrated monoliths to being horizontally integrated specialists that communicate and partner with other specialists through web services.
The future might look something like this: A product innovation and commercialisation company develops a property into various products. They partner with a infrastructure management company like Ingram to provide the backbone that keeps everything together and moves everything from the right spot to the next right spot. Sometimes they partner with another former publishing company, that now emphasises publishing services instead of products, to fill in the gaps in their own capabilities. And they partner with a customer relationship company like Amazon and Kobo (for ebooks), or Apple and Google (for apps), for the ever so important end point of selling something to a consumer. The issue of one customer relationship company effectively owning all customers in a single sector is mitigated by the fact that the product company isn’t tied to doing a single kind of product.
These terms are, by the way, cribbed directly from John Hagel III and John Seely Brown who’ve written a lot about these kinds of corporate structures, for example in the book The Only Sustainable Edge.2
This kind of transformation isn’t new or unique. It’s one of the most researched trends in business over the last decade.
Since this has happened before, there are a few lessons to be learned from history, which lead me to make the following guesses:
The transition will be hard. Re-skilling often won’t cut it, which will lead to layoffs and bad morale. The new corporate structures will be much more IT-heavy than most expect.
Publishers are probably going to unbundle. Infrastructure management, product development, customer management (i.e. direct sales) will in many cases be spun out as separate companies because they will compete better independently.
Some of the product-oriented new publishers will look a lot like a bog-standard software company, with an army of programmers, and web and ebook developers.
Some of the product-oriented new publishers will specialise in boutique solutions, high quality physical objects.
New publishers with contrasting specialisations will collaborate.
Many publishers will collapse because their current revenue isn’t enough to fund their transformation (or falls too fast) and they fail to develop new revenue streams in time.
So, my impression after the Futurebook 2011 conference is that publishers today are in the process of transformation. Above is one theory of how they will change. Some of them will fail spectacularly. Some will succeed. But they are all changing.
This isn’t an open source anything. This is a classic software business approach of extracting the value of your data through a paid API. Only in publishing would charging for and controlling access to your data via an API be called open source. ↩