Below is part four of our seven part series on Big Data & Books. Continue reading to see Brian O’Leary’s take on how digital is affecting the full spectrum of the content publishing lifecycle.
In case you missed it, here are the previous posts from this interview series to check out for some light reading:
- Big Data & Books: Part 1 with Kas Thomas
- Big Data & Books: Part 2 with Tom Chalmers
- Big Data & Books: Part 3 with Christina Taranto
Let’s dive in!
1. Name: Brian F. O’Leary
2. Occupation: Principal, Magellan Media Consulting
3. Location: South Orange, NJ, USA
4. LinkedIn Profile: Click Here
5. Personal Bio & Background: Brian O’Leary is founder and principal of Magellan Media Consulting, which works with content marketers and publishing startups as well as magazine, book and association publishers on issues related to content creation, management and dissemination. O’Leary is the author of research reports on: the use of metadata in the book industry supply chain, territorial rights in the digital age; and best practices in digital exports. Additionally, O’Leary has had a 12-year career overseeing production and distribution operations at several of Time Inc.’s weekly magazines, including Time, Entertainment Weekly and People. O’Leary joined Time Inc. after earning an M.B.A. from Harvard Business School. He also holds an A.B. in chemistry from Harvard College.
How would you describe the average reader’s relationship with technology?
O’Leary: A couple of years ago, Mitch Joel wrote that “technology is removing the technology from the technology”. The average reader sees technology as a means to an end. Of consequence to publishers: if technology is a means to an end, the content consumed on these platforms is increasingly seen that way, as well.
How do you think smart phones have affected the U.S. publishing industry the most since 2007?
O’Leary: Until the iPhone debuted in 2007, I think smart phones – devices like the Treo and RIM’s Blackberry – served as portable storage: all my contacts, e-mail on the go and the like. The iPhone and its competitors have reshaped our use of information, reducing demand for things like directories, guides and maps.
Someone asked me a few years back, “What did we do before we had smart phones?” My answer: “We made plans.” Now, we expect all the information we want or need to be available in whatever device we are holding. Publishers have had to play catch-up, as their information is not organized around readers, but around formats and structures, like magazines, books and pages.
I think the U.S. publishing industry is static (books) to declining (magazines) because publishers have had difficulty adjusting to providing information the way readers choose. It’s not what we have done for the last 150 years, and for legacy businesses the transformation is in most cases pretty painful.
What changes, if any, do you see the U.S. publishing industry going through in the next 3 – 5 years?
O’Leary: No one has a crystal ball, certainly not me. But I think you’ll see many print magazines continue to shrink rate bases. They’ll raise consumer prices and become less dependent on advertising. Book publishers will experiment more with price, particularly in digital formats. Everyone will be looking for ways to deliver and get paid for more granular, less container-driven content.
I’m hoping that the answer looks less like Buzzfeed and more like Vox Media, but there is value in both approaches. The reality is that we don’t know what the future of publishing will look like, as the answer is consumer-driven, and until we put options in front of readers, they can’t decide.
What is the next major issue U.S. publishers will have to face and adapt to in regards to digital content consumption?
O’Leary: I call it the “disaggregating supply”. We build and sell packages of information: books, magazines, journals and collections. A finite number of people will continue to buy these packages, but that’s not where growth will occur. Publishers need to figure out how to organize their information so that it can be delivered how readers want it, when and where they want it, in formats that serve a purpose.
What companies do you think have most successfully adapted digital into their core business?
O’Leary: Bloomberg Media has done a smart job of making digital their core business. I think they always understood the value of information, and they committed to making content available across as many platforms as their audience was willing to support. People sometimes dismiss Bloomberg as a data company, but it has more reporters on staff than anyone else in the U.S.
Among startups, I appreciate what Medium has done to introduce an elegant, engaging platform for both writing and commenting. I am also interested in Wattpad, which has found a way to tap into an audience of both writers and readers, forming a community that serves both.
How has big data transformed the role of a publisher?
O’Leary: Not much. Publishers sell through intermediaries. They don’t really know who buys their magazines or books or what they do with them, how much they liked them, whether they would recommend them, and so forth.
Magazine publishers will tell you that they have huge databases of their customers, but in practice these are used to qualify audiences in ways that advertisers value: wealth, age, gender and the like. Those aren’t the basis for a relationship with the reader. Some special-interest publications offer readers ways to engage with the magazine, but that’s rare.
Book publishers are even more removed from their audiences. They have relatively little experience mapping promotions to actual sales. Companies like Bookseer tried to sell publishers data on what works in selling books, to little avail. The industry walked away from funding a startup like Goodreads (eventually bought by Amazon), even though it offered access to rich interactions every day.
This isn’t to say that big data shouldn’t change how publishers think and act; it just hasn’t yet. In the meantime, retailers like Amazon are mining data every day. It gives them a competitive edge against publishers.
How do you think U.S. publishers should best deal with or incorporate Amazon going forward?
O’Leary: People are buying online; the trend there is pretty clear. Bookstats data showed that around half of all purchases in 2013 took place online (this includes both physical and digital formats). It’s not the only way to buy books, but for a lot of titles, particularly books that sell fewer copies, online sales represent a better option for readers and authors.
At the moment, Amazon is the dominant online retailer. More than that, it has bought companies across the publishing value chain. A short list of good examples, compiled by Aaron Miller, includes Shelfari, mobiPocket, Stanza, CreateSpace, Audible and GoodReads. Sometimes, Amazon buys platforms like Stanza, a reader that worked on any device, and abandons them, so that Amazon can maintain a platform that locks readers into the Kindle universe.
In a post that was published on Medium in April 2013, Miller suggested four ways publishers could respond to Amazon:
- Care about community
- Care about what happens to a book after it is sold
- Understand that the context of content and authors is as important as they are
- Understand that a seven-figure advance for BJ Novak’s book might be a good idea, but so might a $2M investment in a tech startup that helps them with #1, #2, and #3 above.
I like this list, and I might add “foster alternatives to Amazon”. Work with companies like B&N and sites like IndieBound to improve their customer experience. Consider developing a multi-publisher consortium.
And if you don’t have an appetite for that, at least stop letting eBook retailers wrap their content in platform-specific DRM. Readers should have options that let them buy books anywhere and read books anywhere. Amazon’s digital dominance starts with its ability to lock readers into the Kindle universe. If it’s not clear to publishers by now that Amazon is a much bigger challenge than piracy, I don’t think anything else I say will make a difference.
Do you think Amazon will expand successfully outside of the U.S.?
O’Leary: It already operates successfully in markets like the United Kingdom. The company competes on three dimensions: breadth of selection; speed of delivery; and price. Although markets in which price competition is allowed (the U.S. and U.K. are examples) have been the ones in which Amazon has grown successfully, it competes on all three dimensions.
Many countries have laws preventing discounts on retail sales of books. These laws were written for a range of reasons: to defend established retailers; protect book culture; and foster smaller, local businesses. Publishers and retailers are currently using these laws to keep Amazon at bay in countries like Spain, France and Germany.
Even if the price of books sold in these countries is fixed, Amazon still has significant experience offering value through breadth of selection and speed of delivery. I think Amazon will find ways to expand successfully in markets where price competition is not an option. Retailers will have find ways to compete against selection and service, if only because those are things that readers value.
How much progress has e-reading made in the U.S.?
O’Leary: The sales part is easy: eBooks represent perhaps 20% to 25% of unit sales in book publishing. Digital replicas might be 5% of total unit sales for magazines. So, on that basis, the answer is “some” progress, maybe even just “moderate” progress.
But the reality if that most people turn first to digital to find something, whether it is news and information, a restaurant location, a book review, a music download or the availability of tickets for a movie tonight. On that basis, e-reading is the dominant way people find and consume content.
I think we feel as if digital is nascent largely because we are measuring it in ways that fit the established model. We haven’t organized content around readers. We aren’t engaged with how they seek, find and consume content. We sell objects, whether physical or digital, to readers, so we think of progress in “digital” as “share of total”. That view misses what readers are actually doing.
Going back to Mitch Joel’s post from two years ago, I liked what he wrote “the new digital minimalism”:
“Consumers are moving through content at a voracious pace and yet we (the marketers) still pretend that everything we’re publishing is some kind of destination in their consumer experience. It’s to adapt to the new reality. This is less about short-attention spans and a consumer’s ability to click away in a millisecond, and much more about creating a clear value chain that is steeped in minimalism.”
The answer to a question about “digital progress” boils down to this: consumers have made lots of progress. Publishers are trying to catch up.
Who are the key players in digital publishing driving change?
O’Leary: There’s a tendency to favor this year’s models in picking the key players. So right now, we look at startups like Buzzfeed and Vox Media, middle-era platforms like the Huffington Post and Forbes.com, as well as data-driven platforms like Bloomberg Media and maybe The Atlantic. In retailing, Amazon certainly gets credit for pioneering online sales and establishing a true market for eBooks.
The problem with these examples is longevity. At 20, Amazon is the grand-daddy among them. The Atlantic was founded in the 1800s, but its digital makeover started less than a decade ago. Where will any of these examples be in another 20 years? I’m really hard-pressed to say.
When I talk about digital publishing, I tend to invoke principles more than players. The four principles I fall back on most often are:
- Our content must become open, accessible and interoperable. Adherence to standards will not be an option;
- Because we compete on context, we’ll need to focus more clearly on using it to promote discovery;
- Because we’re competing with businesses that already use low- and no-cost tools, trying to beat them on the cost of content is a losing proposition. We need to develop opportunities that encourage broader use of our content; and
- We will distinguish ourselves if we can provide readers with tools that draw upon context to help them manage abundance.
I first wrote these down more than four years ago, and I think they still hold up. But, let’s see how they look in 2034.
Brian O’Leary is founder and principal of Magellan Media Consulting as well as author of research reports on: the use of metadata in the book industry supply chain, territorial rights in the digital age; and best practices in digital exports. O’Leary has had a 12-year career overseeing production and distribution operations at several of Time Inc.’s weekly magazines, including Time, Entertainment Weekly and People. O’Leary joined Time Inc. after earning an M.B.A. from Harvard Business School. He also holds an A.B. in chemistry from Harvard College.
Kait Neese has worked in the digital publishing sector of the book industry since 2009, Ms. Neese is one of the foremost experts on Print-on-Demand (POD), eBook and Self-Publishing technologies. Additionally she has attended over 39 International book fairs since 2010 and was recently a featured speaker at the First World Digital Publishing Conference held in Beijing, China this past November 2014.