By Baldur Bjarnason

What follows is a talk I made at the Publishers’ Forum 2014 on the 6th of May. It has been lightly edited for clarity and context, with a few parenthetical interjections that add relevant detail.

Your back catalogue and publishing pipeline are packed end to end with books. Turning them into ebooks is getting easier and easier. But what if your customers want something that doesn’t look like or work like an ebook?

What if you can’t make what the consumer wants?

Two Industries

It’s a bit of a cliché to compare publishers to the buggy whip manufacturers of old.

As the story goes, buggy whip manufacturers, when the car first arrived, didn’t realize they were in the transportation business and so when cars took over and horses became a niche, they all went bust. The idea behind the analogy is that nobody needs a buggy whip when everybody is driving a car—that companies should focus on the problems their products solve and not obsess about the products themselves.

The analogy is supposed to tell us that publishers should realize they are in the content business, not in the book business, and should focus on digital content in general and not just ebooks and print.

The problem with the analogy is twofold.

First off, the recreational horse business in the US is a 40 billion dollar industry. That is not a bad industry to have a share of. Lots of things that are ‘obsolete’ remain good businesses.

Second, publishers aren’t in the content business. The core function of a publisher is to help people help themselves. Content—giving people information, lessons, documentation, and stories for them to entertain themselves—just happens to be a good way of doing that. Calling it a content business is just another way of focusing on the product instead of the problems they help solve.

The rise of digital content—websites and apps—is the first time we the consumer have an alternative to the book model to help us help ourselves. It’s not just new kinds of content (blogs, wikis, databases) but also self-documenting tools, better software, online classes and workshops, webinars, and online communities where people help each other.

Digital gives your customers alternatives and ebooks aren’t it. Your ebooks aren’t the new thing. They are the old thing photocopied onto a facsimile of the new thing. Ebooks are nothing more than a print artifact delivered digitally.

The web and apps are the new thing. Although I hesitate to call them new because they have over fifty years of history. That might not sound much compared to books, but in modern technology terms that’s ancient.

Crossroads of the Damned

If the stories tech pundits like to spin were true, horse-riding as an activity would have disappeared sometime in 1908. In this worldview, buggy whip manufacturers were fossilized dinosaurs who didn’t realize that they had just been hit by a comet.

If you believed that, those who continued to make horse-related products were quite obviously deranged.

If you believe the same applies to post-digital publishing then all of you publishing types in here are also quite obviously deranged.

Reality, however, is more complicated and interesting than that.

Consumer-owned horses in the US: *

• 1900: 4 million
• 2000: 5 million

Does not include racing or professional use.

Horses didn’t disappear.

The choice buggy whip manufacturers faced during the rise of the automobile wasn’t between extinction or the glories of car accessory manufacture.

Imagine you are the manager of a buggy whip factory. Your sales are going down as people switch to cars. Those who stick to horses do so because they love horses, the activities around them and the animals themselves. Those who used horses because they were the only solution to the problem they had—those people are, or will soon be, gone forever as customers.

If you stay with buggy whips, you stick with your core competencies. You know how to make them well and economically. But, you’d have to figure out new ways of selling them because the clientele has changed—those who remain, possibly fewer, have new reasons for buying your product. You would also be facing intense competition from all of the other buggy whip manufacturers who are sticking with a declining market because it’s the only thing they how to do.

If you follow the customers and start manufacturing car accessories, you move away from your core competencies. You’d be starting almost from scratch, and you’d be competing with new entrants who are also starting from scratch but don’t have your overheads and costs. As Richard Nash of Soft Skull Press and Byliner is fond of saying, a modern publisher would be hard-pressed to sell a book filled with nothing but auto-generated Lorem Ipsum text for less than $9.99. A book, ebook or print, made by a publisher will always be more expensive than a website simply due to the way the publisher is structured.

On the one hand you have your old business you need to relearn, facing intense competition with a product you know how to make well. On the other hand you have a business you know nothing about, facing intense competition with a product you don’t know how to make at all (yet).

Damned if you do. Damned if you don’t. Damned either way you go.

To put it in modern terms:

Path one, staying with books and ebooks, requires retooling your sales and marketing. You need to reflect the fact that your customers have alternatives that may well be cheaper and more convenient. It requires retooling your production workflow to spit out ebooks alongside your print books.

(Remember what I said earlier, ebooks are just print adapted for digital distribution.)

In other words: make books (and ebooks) for people who have deliberately chosen them over other ways of solving their problem. Your overall market is likely to shrink but you’d be well equipped to compete in it.

Path two, leaving, requires learning how to create apps, websites, databases, subscription sites; it requires building a developer team and a support team; it requires figuring out new models and solutions for a completely new context; it requires competing with scrappy, nimble upstarts with nothing to lose; it requires being fearless and open-minded; it requires just the right amount of self-destruction and wildness; it requires so many things that are difficult and frightening to any sane person out there.

It’s hard to blame anybody for choosing path one instead of path two.

The fun thing about path two is that people tend to forget that it’s often a lot quicker than path one, which was books and ebooks. Making a website or an app when done well is done iteratively and piecemeal over time. The production style publishers use for books is called the “Waterfall” style in the software industry and, despite the poetic name, has been heavily criticized for over fifty years and is so badly regarded that the term is practically a swear word.

Another problem with path one is that the best way to do books and ebooks may well not include publishers at all.

Bridging the Gap

There are two ways to tackle this crossroads—these choices. The first is just to choose a path and do it with gusto. Don’t look back, just give what you’ve chosen to do everything you’ve got. This has the advantage of clarity.

Trying to go down both paths is a surefire way to ruin yourself. It means compromises everywhere in your production chain, it mean confused sales and marketing, it means even higher costs and overheads while competing with new entrants with low overheads. It isn’t an option.

The only true alternative is to choose a path but to partner with somebody going down the other road. If you decide to go digital, do so wholesale and shed your book production systems. But do partner with somebody who is sticking with books and ebooks. That way both of you maximize your potential return and you smooth over the transition. If you decide to stay with books and ebooks, partner with somebody who has gone digital wholesale; don’t try to do it yourself. That way you still manage to capture some value from growth in other media. You have to share some value with your partner, but they’re also sharing the risk so that is generally likely to work out well for you.

The best thing about this path is the partnering companies can be your existing book business and your new digital business, provided it they have been set up as a separate, siloed entities.

(For more information on how this can be done well, look at Clark Gilbert’s work at Deseret News. With thanks to [Suw Charman-Anderson](http://suw.charman-anderson.com/) for the pointer to Gilbert’s work.

The absolute worst thing to do is to stand still and pretend the world isn’t changing.

Almost as bad is assuming that events will unfold along the same paths they did for other media, like advertising in the 90s, record labels fifteen years ago, or film and TV over the past couple of years. Books aren’t ads and they sure as hell aren’t music, no matter how “enhanced” your ebook is.

If you pretend that your customers don’t have new alternatives, they will leave you.

If you pretend that new product types don’t need new structures, new kind of teams, and different methods management, your experiments in digital media will fail.

If you don’t change, you will fail.

Most of you won’t change. Most of you will stick to the tried and true for as long as possible. Most of you will think of digital as a sideline until you become the sideline.

Most of you will fail and I’m personally convinced that in ten years’ time most major publishers will be gone.

All because you didn’t choose.

What I can do, is tell you exactly how to choose. It’s quite simple.

How to Choose

If your business model hinges on taking money from people who don’t want to give you money, you will fail. It’s just a matter of time.

Remember this?

Consumer-owned horses in the US: *

• 1900: 4 million
• 2000: 5 million

I left an important statistic out of it:

Domesticated horses in the US: *

• 1900: 21 million
• 2000: 6.9 million

At least fourteen million horses disappeared from the US economy. That’s despite the stupendous growth that economy has seen over the twentieth century. The only real and substantial horse industry that is left in the US is an industry of people who love horses, who have chosen horses over other activities, and don’t care how they compare to other modes of transportation in terms of efficiency or cost. If that was the business you were in before the car appeared, the great depression probably represented a bigger threat to your company than any car that was made over the entire twentieth century.

It comes down to the difference between horses for recreation versus horses as industrial machines. It’s the difference between people who use a tool because they have no other alternative and those who use it because they love it. Ask yourself, are you in the business of selling books to people who love books and choose books? Or, are you in the business of selling books to people who have to buy books because digital alternatives aren’t good enough yet or, even worse, their institutions won’t let them consider those alternatives? Judging by some of the other talks here at this conference, a lot of you are hoping that governments or institutions will step in and throttle your competition in its crib. But, if your customers are only sticking with you just because they have to, then you have no future as a business, only as a state-supported pyramid scheme.

You can’t count on the instability of the software industry to protect you from new competitors. You can’t rely on just outlasting them because even when a software firm fails they always leave a residue of open source contributions and tools. Their life and death improves the open source ecosystem that their successors can build on and you lot persist in ignoring. Open source means that spectacular and often misguided software startup failures can still contribute to your downfall. These startups and entrepreneurs are—figuratively speaking—building a pyramid of corpses to reach you.

The difficult thing about assessing the economic impact of the web as a disruptive innovation is that it is replacing monolithic media industries with a plurality of networked interest-oriented communities.

The same thing actually happened to the horse industry. Instead of horses we have cars, tractors, generators, motors, the electricity grid, public transport, trucking, trains, ships and shipping containers, and more. We didn’t replace the horse industry with another identically shaped industry that was just a bit more efficient. The horse industry disintegrated.

Just like publishing will.

Which brings us to the roadblock—the gap publishers have to bridge. And it’s a big one. You are not going to like it.

The gap that Cannot be Bridged

Stories, learning, non-fiction, education, art, and culture, are all becoming emergent products of existing social networks.

This is the disintegration of publishing, analogous to that of the horse industry over a century ago. One thing becoming many things.

This has been an especially strong trend in non-fiction. Websites, ebooks, online courses, and videos help people build skills and achieve goals in a particular field of interest. And those media artifacts are all emerging as a byproduct of the online community networks of a particular field.

Both professionals and hobbyists congregate around websites, blogs, and other online venues. Some of them are better than others at communicating in writing or on video and community demand drives them to do more. Some of them simply have a stronger intrinsic need to tell their stories, communicate their ideas, or convey their knowledge. Whatever the reason, these media artifacts—ebooks, websites, videos, online courses, wikis—emerge from communities as a consequence of the social interactions within those communities. You can see this happening in programming, where community-led publishers and services such as A Book Apart, Smashing Magazine, Stack Exchange, and Leanpub are starting to dominate the discourse.

This has been happening in English-language comics for even longer. In comics, community-led self-publishing has been a vibrant part of the scene since the eighties. You are even starting to see it in fiction as new writers have been emerging from online fiction communities. They’ve been appearing on Wattpad, Livejournal, Dreamwidth and similar fan-oriented venues. Storytelling is becoming a mainstream activity—as it should be.

Writing is flourishing in these online contexts unlike any other creative form because writing is one of the two native forms of expression on the web. The other one is code. So, it shouldn’t come as a surprise to anybody that writing about code is a locus of considerable innovation in community-led publishing.

In this context, ebooks and print books express value that has already been created within a community. In this context, they represent the value that their creators have already established as community members. In this context, neither print books nor ebooks create nor do they have value in and of themselves. They merely represent a convenient way for the community to reward artists and writers for their overall contributions to the whole. A book is just a lever that amplifies appreciation. If you like the contributions that writer has made to the community, if you like the value they have created for you as a member of that community, you pull on that lever to reward them.

Every interest represented online has communities which support a number of core contributors by rewarding the work they produce as a part of community participation. It doesn’t matter whether it’s photography, pets, cooking, wine, programming, or comics, all of these interests have a core group of producers who not only do not think of themselves as a part of publishing, even though their work is replacing it, they do not even think of themselves as a part of the self-publishing movement that is disrupting publishing. Most of them are barely aware that such a movement exists. They are focused on the field they are participating in, nothing else.

Making money from a community-driven creative product isn’t like anything you’re used to. It’s completely different to making money from the output of a top-down hierarchical production system like the one that publishers employ. It requires different approaches.

Both the traditional publisher and its modern halfbreed cyborg clone—the entrepreneurial self-publisher—are designed for the production ideals of the factory floor, the production methods of the salarymen trapped in glass tower prisons.

I don’t think of those two as adversaries but as two feuding brothers, each aspiring to be more like the other.

They both employ top-down leader-led production decisions. Linear processes. Conveyor belt production. First this. Then that. Then this, but only if that has been done first. The only difference between a traditional publisher and an industry self-publisher is in who cuts the cheques to the freelancers. And it’s often the same freelancers working for both of them. The self-publisher might skip a few of the steps that the traditional publisher thinks is necessary, but they are fundamentally the same beast behaving in the same way, making books using the same processes. Neither are equipped to engage with communities to extract value from them without destroying them. What’s worse, disgusting, manipulative, and exploitative tactics are becoming common practice among both groups. The ethical seem to be the exception, not the norm.

The self-publishers and publishers who are interesting are those who don’t think of themselves as a part of the publishing industry. They are a part of the software industry, or cooking, or wine collecting, or photography, or horses.

The books and products they create are a byproduct of their interest; their zeal; their passion; their professional pride. They can’t help but create and talk and write about something they love and they do so in the most obvious context there is: with other people who share that love. They aren’t just driven by community participation, the very existence of these publishers—self- or not—and their creative products, are both a byproduct of community interaction.

Publishing as an industry cannot beat that, replace that, or supplant that. They can either fundamentally change their own ways and participate equitably with both readers and writers as peers. Or, they can destroy those communities.

The Impossibility of Prediction

Unlike many others who specialise in all things digital, I am not a believer in predictions. The only predictions that can safely be made are those that are facile and simplistic and obvious. Every prediction on matters of consequence has to take into account the behaviour of a large, decentralised, and disaggregated system: human society.

When faced with what is de facto a non-deterministic system you cannot reliably extrapolate from cause to future effect. And even if your prediction does come true, there is no way for you to know if that was because of luck or because of insight.

Predictions don’t work and because they don’t work, they are dangerous. They prompt people to take self-destructive actions and build systems that are fragile when faced with changing circumstances.

I want to make my position on predictions clear because a lot of you will assume that the ideas and observations I have been talking about today are predictions.

That’s my fault, I presented them to you that way—as if this were a new thing. I was being a bit impish. Your problem is that these ideas aren’t predictions. What I have been doing today is describe the past.

These communities I mentioned have been growing for twenty years now. Online communities predate the web. It’s what the internet was made for. Their growth and the growth of their byproducts aren’t recorded as a part of publishing industry statistics, because they aren’t a part of the publishing industry. I could spend the rest of the day if I wanted describing case study after case study, going back twenty years. Each one would be a demonstration of how community-led media production is displacing institutional corporate media production piece by tiny piece. But I won’t do that, I’ve probably gone way over my allotted time already.

(I had.)

This has already happened:

The book publishing industry as a whole, worldwide, has either been stagnant or declining for the past few years.

US sales in 2013 were basically flat. UK sales in 2013 were down 4%. And 2013 wasn’t a one-off. Ireland sales so far in 2014 are down 14% and publishing in the previous few years has, in most countries, been either stagnant or declining. Depending on what country you are in—taking care to take inflation into account, the stagnation either kicked in at the start of the century, around 2002-2003, or it kicked in somewhere around 2006-2007. You may have the occasional minor upswing, but the industry then very quickly regresses to the mean. This is not a new trend. Things are slowly going downhill.

At best we’re talking about a fixed size pie, which means that publishing today is a zero-sum game, limiting the potential upside for any startup that intends to participate in the industry proper.

This is taking place for a very good reason. Consumers don’t need you. Outside of trade publishing, most of them don’t want you. A lot of them buy your textbooks and similar non-fiction titles only because they have to. It isn’t because they are against reading, after all, what’s replacing you is more reading that is just happening in a different context—the web and apps.

And while this has been happening you have been behaving as if you are entitled to their custom. You haven’t been treating customers as human beings with free will and the right to choose the solutions that are the most appropriate to their tastes and needs. Instead you lobby for legal changes and compare the free information and open source movements to totalitarian fascism.

It’s true that publishers have better margins today, which buys them some time, but those margins are largely because they’ve refused to give authors higher royalties on ebook sales, a stance that isn’t sustainable as self-publishing matures as an alternative for authors. Authors are your core labour class and you haven’t been treating them well.

Programmers haven’t stopped programming just because the sales of programming books collapsed and stayed collapsed after the dot-com crash. They haven’t just given up on their field and spent the last fifteen years playing on the X-Box. The role that books played in the software industry has been supplanted by online communities and their byproducts. Sometimes those byproducts are ebooks. Most of the time they aren’t.

The same has been happening across our economies in a variety of industries with people who, before the web, would have sought out books to solve their problems, to learn new skills, and tackle new problems. But now they don’t and the growth that should have been publishing industry growth went elsewhere.

Earlier I said that publishers had to make a choice. Be a producer of books for people who love books. Or, be a producer of digital artefacts that help people attain their goals in new and interesting ways.

Publishers very much have to make that choice. The problem is they had to make it fifteen years ago. They should have made the choice back when it first became clear that the web wouldn’t go away after the burst of the dot-com bubble. That was the time to choose. Go all in on digital solutions to your customer’s problems. Or, go all in on making books for those who prefer books, no matter how much more expensive they are.

(One of the audience made the point afterwards that Thomson Reuters and firms like it had made exactly that choice at exactly that time, fifteen years ago.)

Most publishers chose not to make any sort of commitment to any specific direction. At best they exercised creative inertia.

The choice publishers should have made is about what kind of product it is they intend to focus on but the important change that needed to happen was the same in both cases. Publishers needed and still need to learn how to address and engage with communities as if those communities were their organisational peers. They need to treat the community’s members as if those members were equals, not marks to be sold to, cheated, controlled, or exploited.

Which leads me to, as my final point, the only real prediction I have made today. It’s one I made earlier: I think most existing publishers will disappear over the next decade or two.

I stand by it because I think it is precisely a common sense, facile, simplistic, and obvious observation. Unless traditional publishers make their choice today, digital or books, and commit to it and—more importantly—unless they learn how to work with, collaborate with, and be a part of the communities they are serving, the publishing industry will continue its decline until it it becomes too small to be sustainable and collapses. The only surviving organisations will be the greediest and the most ruthless corporate behemoths who will be subsisting solely on licensing revenue from a static backlist and the occasional blockbuster bestseller. What’s more, those behemoths will own the *entire* backlist, having swallowed every other legacy publisher in existence. The publishing industry itself as a going and growing concern will collapse and disappear into the bowels of multinational business entities.

What’s more, and it breaks my heart to say this, the publishing industry will *deserve* that collapse. It will have earned it. Readers and writers won’t miss it.

References:

* Statistics on the horse economy

[“National Economic Impact of the U.S. Horse Industry.”](http://www.horsecouncil.org/national-economic-impact-us-horse-industry). Fetched on 31 March 2014.

[“Population of Horses 1880-2000”](http://www.horsecouncil.org/national-economic-impact-us-horse-industry). Fetched on 1 May 2014.

[“History of the horse in Britain”](http://en.wikipedia.org/wiki/History_of_the_horse_in_Britain). Fetched on 1 May 2014.

* Publishing industry statistics

[“Global eBook report Update Spring 2014”](http://global-ebook.com/). Apparently a free download for a limited time.

[“Book Sales as a Technology Trend Indicator”](http://radar.oreilly.com/2005/04/book-sales-as-a-technology-tre.html)

[“State of the Computer Book Market, part 1: Overall Market”](http://radar.oreilly.com/2012/03/computer-book-market-2011-part1.html)

[“2010 State of the Computer Book Market, Post 5 – Wrap-Up and Digital”](http://radar.oreilly.com/2011/02/2010-book-market-5.html)

[“A Computer Book Author’s Manifesto”](http://www.oreillynet.com/pub/a/oreilly/news/ksmanifesto.html)

[“UK Book Sales – 2001-2012”](http://www.booksellers.org.uk/getmedia/3a6cead6-e6a1-4145-a5c5-4a9a6a8d21f5/UK-Book-Sales-2001-2012)

[“Amazon, Barnes&Noble and Book Store Sales Numbers Annual Update.”](http://www.fonerbooks.com/booksale.htm)

[“O’Reilly analysis on the uptick in the computer book market”](http://www.fresh-books.com/blog/archives/2006/04/oreilly_analysis_on_the_uptick_in_the_computer_book_market.html)

[“O’Reilly’s Computer Book Analysis, parts 2 and 3”](http://www.fresh-books.com/blog/archives/2006/04/oreillys_computer_book_analysis_parts_2_and_3.html)

[“State of the Computer Book Market”](http://www.oreillynet.com/pub/a/oreilly/tim/articles/usmarket_0404.html)