Tag: toc2007

TOC: Tim O’Reilly/Publishing 2.0

What do killer Internet applications have in common?

• Information businesses (publishers??)
• Software as a service
• Internet as platform
• Harnessing collective intelligence

Web 2.0: harness network effects to get better the more people use them.

• Google: every time someone makes a web link, they contribute
• eBay: critical mass of buyers and sellers hard for others to enter
• amazon: 10M user reviews
• craigslist: self-service classified ads, users do all the work
• YouTube: viral distribution, user creation, user curation

Each of these companies is building a database whose values grows in proportion to the number of participants — a network-effective-driven data lock-in. (gulp)

Law of conversation of attractive profits

• When attractive profits disappear at one stage the opportunity will usually emerge at an adjacent stage.
• PCs used to be expensive. Software became expensive. Free precursor to rediscovery of value in some other form.

And thus, if digital content is becoming cheap, what’s next? What’s adjacent?

For publishers, the question is: where is value migrating to?

Asymmetric competition

• craigslist has 18 employees, #7 site on the web (2005 numbers)
• All others in top 10 have thousands of employees.

Curating user-generated content

• The skill of writing is to create a context in which other people can think. — Edwin Schlossberg
• The skill of programming is to create a context in which other people can share.

Collaborative authoring

• Collaboration works best for modular structure
• instructables.com

What job does a book do? What is a book’s competition?

• Harry Potter’s competitor is World of Warcraft
• Encyclopedia Britannica — Wikipedia — Google
• Books compete with information available online
• Teaching/reference/edutainment

Search is most important benefit of content being online

“Piracy is progressive taxation”

• Benefits the books at the bottom that would be lost
• How to balance/manage a progressive taxation system
• Gain more sales on the bottom end

DRM: “Like taking cat to a vet” (hold them very carefully and loosely!)

More options = happier users

TOC: Chris Anderson/Free: The economics of giving stuff away

Chris Anderson, editor-in-chief, Wired Magazine

The cost of things tend to fall to zero over time.

You can build business around giving things away:

• Free samples
• Skype, YouTube, free unlimited storage on Yahoo
• Ad-supported media..product is free, make it back on ads
• Free ice cream samples
• Give away razor, sell blades
• Gift economy/wikipedia, craigslist: people donate expertise/time for nonmonetary — attention, reputation, expression…never before “dignified” as an economy. There is an economy, just money is not the currency.

If marginal cost of reaching the N+1 customer is approaching zero, then treat the product as free and figure out how to sell something else.

The price of a magazine like Wired is arbirary; it bears no relationship to the actual cost of the magazine. The subscription price is intended to qualify your interest. Setting the price too low “devalues the product.”

Most music is free. “Free as in speech” — DRM is going away. “Free as in beer” — bands are experimenting with giving away music to market the live performances.

Games and movies would be free if not protected. They are locked down to enforce prices. Artificial barriers tend to fall over time. Already seeing ad-supported videogames. (neopets)

The shining exception: Books! They are not asymptotically approaching free. Books make sense. They provide the optimal way to read. The physical product is better than digital product…excellent battery life, screen resolution, portable, and it even looks good on your shelf. Easy to flip through.

If “free” is “the business model of the 21st century,” how could a book be free?

(This was preceded with a disclaimer that many of these options would be “offensive” to people in the audience.)

For his next book, Anderson wants to do the following:

• Audiobook will be free with book (mp3) (free coupon in real book)
• Will participate in book search, include Google
• Considering an e-book locked to a specific reader for free
• Unlocked e-book with advertising inserted
• Book online with ads in the margins
• As many sample chapters as publisher will accept

How could a physical book be free?

• Sponsored book
• Consultants give away books
• Book with ads
• Free rebate
• Free to influentials/reviewers
• Libraries have always had free books

Why do it?

• Free book is marketing for the non-free thing
• Book is marketing vehicle for celebrity
• Can’t give away time
• If free version is inferior, you give it away to market the better product
• Use “free” to maximize reach to new influentials

Why aren’t more people doing free content?

• Most people are not represented by a speaker’s bureau and can’t monetize fame
• Online sample is not a compelling example of book (maybe for cookbook, probably not for novel)
• No natural advertiser
• Publisher opposition — publishers not in business of selling celebrity
• Annoys the retailers
• Fear and timidity/fear of cannibalization

The most critical point: The interests of the author and the publisher are critically misaligned. Publishers doesn’t benefit from speaking fees of consulting fees, only from book sales.

Sounds like an argument for self-publishing to me.

Tools of Change for Publishing/Norwegian Monks!

As part of a brief history of publishing in the opening keynote, I’ve already seen a few friends:

• The Norwegian Monks video — Technical support for books
• A reference to Vannevar Bush’s “As We Might Think” article from 1945

According to Tim O’Reilly, Microsoft Encarta “fatally wounded” the Encyclopedia Britannia because of “asymmetric competition.”

A series of short, related keynotes to kick off the conference. I like this approach; in a nontechnical, high-level keynote, it can be difficult to fill a 60- or 90-minute slot.

Brian Murray, HarperCollins, Retooling HarperCollins for the Future
Consumer publishing *was* straightforward. All promotion wasdesigned to drive traffic to a retailer.

In 2005, “the earth moved.” There were search wars, community sites, user-generated content, Web 2.0. Newspapers and magazines responded with premium, branded sites online based on advertising or subscription models.

Book publishers are confused. Search engines treat digitized book content like “free” content. Rights and permissions are unclear. Books are not online — except illegally! Book archives are not digitized.

Before 2004, “book search” took place in a book store.

What is the role of the publisher in a digital world?
What is the right digital strategy?
What are the right capabilities?
“Search” provides new opportunities for publishers.
Publishers must transition from paper to digital.
How can publishers create value and not destroy it?

Some statistics:

• 65M in the U.S. read more than 6 books a year.
• 10M read more than 50 books a year. [ed.: waves]
• Younger consumers read less; they spend more time online

Search is used more often than email.

HarperCollins decided to focus on connecting with customers, rather than e-commerce. Amazon and others already do e-commerce. They focused on the idea of a “digital warehouse” that is analogous to the existing physical warehouse. They want to:

• promote and market to the digital consumer.
• use digitized books to create a new publishing/distribution chain
• protect author’s copyright
• “replicate in digital world what we do in physical world”
• got publicity, strong public response
• no single vendor who could deliver turnkey

Improvements from digital production and workflow could fund some or all of the digital warehouse investment. Projects that were low priority “IT and production” projects become high priority. Savings were realized in typesetting/design costs, digital workflow, and digital asset management.

The digital warehouse now has 12,000 titles. (Looks as though they were scanned, which doesn’t meet *my* definition of “digital content.”)

At this point in the presentation, we began to hear a lot about “control.” Control of content, controlling distribution, and so on.

HarperCollins does not want others to replicate their 9-billion page archive in multiple locations. They want others to link into their digital warehouse. But if storage is cheap and getting cheaper, what’s in it for, say, Google?

Strategic issues for book publishers

• Should publishers digitize, organize, and own the exclusive digital copy of their book content?
• Should publisher control the consumer experience on the web?
• If the cost of 1 and 2 is zero, should every publisher do them both? would they?
• How to make money

The focus on controlling content was interesting and perhaps not unexpected. The business case based on savings in digital production was also interesting.