ABA at BEA Talk (Thursday): Going Digital–An Industry Discussion on Selling e-Content

And now commences the servicey portion of this blog, friends. Spin the dial if you do not wish to read a recap of “Going Digital: An Industry Discussion on Selling e-Content,” from Thursday’s ABA Day of Education at BookExpo America. (Have a look at “Opportunities in the Digital Arena for Independent Bookstores,” which gives a great overview of the main themes of the talk.)

The panel featured Len Vlahos, ABA Director of BookSense.com (now IndieBound?) and Director of Education; Andrew Savikas, VP of digital initiatives, O’Reilly Media, and program chair of O’Reilly’s Tools of Change for Publishing Conference; Dr. Mark Nelson, digital content strategist, National Association of College Stores, and VP of strategy and development for NACS Media Solutions; and Jenn Northington, the events and marketing manager of The King’s English bookstore, Salt Lake City.

Vlahos kicked off the talk with a quick and quirky stick-figure animation of a curly-haired customer “with a desire to read a book–a digital book.” (The author of the book appeared with rumpled hair, frowning and gripping a mug of coffee.) The implication of the reader-author drama, and the book that perpetually seemed to float out of the poor girl’s reach? This is the consumer behavior the industry faces. (Or, perhaps, industry behavior that the consumer faces!) How do we figure out how to serve her?, Vlahos asked. And how has this changed?

The traditional model’s changed because of

• easy, accessible, free content
• ubiquitous broadband access
• adoption of IDPF digital standards (ePub), allowing for reflowable content
• mobile communications and computing
• Kindle and Sony e-Reader mania
• digital natives (under-20s who have grown up reading and writing online)

E-book sales for Q1 of 2009 reached $26 million and have risen every month since. To underscore the strength of the market, Vlahos put this into historical perspective and showed an adoption curve chart illustrating the penetration of various media into U.S. households from 1910-2000: as black and white tv, color tv, and the Internet gained mass adoption, the curve leveled out. (You can see this chart in the “Opportunities in the Digital Arena” paper I’ve linked to, above.) So it is with e-books. “The reality is beginning to outpace the hype,” noted Vlahos.

Andrew Savikas took the floor and discussed the state of the industry from the perspective of Safari Books Online, an independent digital library and O’Reilly-Pearson joint venture. PDFs are being replaced by e-books, Savikas said, but with few detriments, it seems. Safari bundles some texts–offering print and e-book formats in one purchase–for 140% of the print price. Multiple formats without DRM (digital rights management, or copy-protected coding*) are 80% of the print price.

One hurdle the industry faces is the perception of online content as entirely free. Safari offered a title (originally retailing in print for $24.99) at an introductory online (Safari) price of $4.99, and then raised the price after the introductory period to $9.99. Sales dropped off immediately.

Contrary to popular belief, Savikas emphasized, a correlation does exist between the sales of the digital and print versions of a title. (This is huge news, but not surprising, as a similar correlation seems to exist in the online music world.) According to Savikas, not having DRM doesn’t harm Safari sales.

Another thing to keep in mind, according to Savikas: customers value packaging and convenience as much as content. O’Reilly and Pearson put one title online while it was in draft form and solicited comments from readers, who left 7,500 comments during the title’s online development. A survey illustrated that only 10% of the comments were anonymous; 21 people left at least 75 comments. This kind of high-level, dedicated (not to mention smart) input is akin to having a team of technical reviewers. (The title already had a paid team…who must be both grateful for the feedback and deeply uneasy.)

At the end of his segment, Savikas listed two sites for further reading:
his links on Delicio.us and the O’Reilly Tools of Change conference link.

Mark Nelson spoke next, and some of it seemed to terrify his audience of indie booksellers. His main points:

1. Small startups and big players alike are innovating. Nelson’s urgent tone suggested that if booksellers and publishers hadn’t yet invested much time or money in the digital side of things, they’d have to start scrambling. Or, as Nelson pointed out in a Wayne Gretzky-ism: “Skate to where the puck is going to be, not where it is.” Innovation goes through three stages: product innovation, adoption of common features, business model. We’re not at the business-model stage yet, cautioned Nelson. We’re still innovating, and we’ve got to be “product agnostic” in order to find the best solutions. But the point is that e-books are beginning to go mainstream.

2. Publishers are losing faith in the traditional channels.

3. Consumers are changing, so booksellers have got to change. Nelson’s informal poll of kids in his family revealed that the age of digital natives–or people who will eventually find nothing strange about doing nearly everything online–is lower than imagined, and mirrors broader findings that college students on the whole might prefer to have only a few digital textbooks, but 97% of eighth-graders have been using computers since second grade.

4. Many bookstores don’t yet see the urgency, and now it’s getting to be too late. Everyone has been clamoring about digital for so long that some stores are completely wary. (Yikes.)

5. Booksellers (and, it seems, publishers) should start thinking about market share, not margins. Incumbents in the market often don’t survive: they act as though they have a superior product and as though the margins wouldn’t be good enough on digital products. So new entrants swoop in and take the market share.

Jenn Northington followed Nelson’s stark portrayal with a more optimistic look, speaking about how the local and indie movements can help independent booksellers. Consumers who embrace local and independent shops and products also have the wherewithal to buy e-books; if their local bookseller can step in and act as an intermediary, directing the sale of an ebook through the store, then they can prevent the loss of those customers to a big-box store. Ideally, Northington added, an indie bookstore would have a kiosk in the store for customers to buy e-books and thus still feel connected to the store’s community. The King’s English has been working on using social media to keep online customers (both local and international) connected to events at the store.

Vlahos stepped in to talk briefly about the ABA’s new IndieCommerce program, which will offer multiple platforms and device formats for booksellers and customers by late June.

Northington stressed the importance of marrying a store’s e-book efforts to its social-media efforts in order to capitalize on viral potential. The IndieBound iPhone app has had 50,000 downloads in the last 5-7 weeks–without a cent of PR money. That’s pretty amazing, but it reflects the main themes of the talk: you have to be online, moving quickly toward digital, and reaching out to your audience. Otherwise, you’ll be trampled by the e-book Vikings.

(I left this talk, before the Q&A session started, to go to another talk I’d starred on my program, titled “XML for Editors.”)

*My wacky term, not the industry’s.

–Edited to incorporate clarifications on Safari as an independent company and O’Reilly-Pearson joint venture, from Brandon Watts, 6/5/09.