David Renard, mediaIDEAS analyst, pointed out the critical design flaws in the product, including poor readability, limited size, and short battery life, but nevertheless called the iPad launch a “call to action” that requires corporate strategizing and investment from the highest levels of management to address the potential of iPad-compatible brand extensions, which are what he called “the key to the future of publishing.”

For book publishers, the problems of luring customers to long-term reading experiences on an iPad screen might be offset by making books into full-color multimedia experiences, revolutionizing the content. Renard also predicted the rebirth of micropayments, the once-hyped payment method of the 90s that flopped in broader Internet applications but has been the financial engine behind iTunes. With micropayments, magazine companies may finally make more from circulation than from ads, Renard said. And with minimal setup costs for iPad media, he foresaw immediate ROIs.

Though the magazine publishing industry has aggressively pursued iPad adaptations of their content, the book publishing industry has not embraced the new e-reader entrant as enthusiastically. It remains to be seen if Renard’s “call to action” will indeed reinvigorate a troubled publishing environment.

On-demand publishing has enjoyed jaw-dropping year-to-year growth in market share. The number of on-demand titles published in the US in 2008 increased more than 200% from 2007 to 285,394, overtaking the publication of traditional titles (which dropped 3% to 275,232) for the first time, reports industry resource Bowker. According to Interquest, a digital publishing market resource, the books-on-demand market has increased from 20 billion pages in 2006 to 38 billion in 2009.

Barbara Pellow of market research firm InfoTrends predicted in the webinar, broadcast this month, that print-on-demand would continue to rise as on-demand book production costs continue to fall. Richard Adey, managing director at children’s UK book publisher Penwizard (www.penwizard.co.uk), explained the logistics behind his company’s personalized, print-on-demand children’s titles. The customer designs certain elements of the book, such as book characters, through an interface on the Penwizard website. Penwizard produces books using a web-to-print digital press that transmits data on customer-designed book elements, stored in a SQL server, to a remote printer. An individual customer’s order fulfillment takes up to three days due to the need to accumulate multiple orders for batch printing. Adey noted that, in customized book publishing, publishers form direct relationships with their customers, allowing publishers access to their demographic data but exposing them to the problems of customer service.

Rick Bellamy, CEO of on-demand manufacturing company RPI, described how a similar digital printing method was used by Against All Odds Productions (www.theobamatimecapsule.com) to produce their personalized Obama Time Capsule books. In those books, personalization was available through customer-uploaded photos and text and appears in several different places, including the front and back covers.

Penwizard’s Noddy books sold a respectable 10,000 in the UK within two and a half months. But RPI’s Bellamy admitted that his Obama Time Capsule books did not sell as well as expected and did not turn a profit. Though the exponential increase in the output of on-demand books is clearly encouraging, it’s not clear if consumer demand has risen to match.

Mace, former VP Product Planning at Palm and VP Marketing for Softbook Press, warned against falling in love with the way you’re doing business today—inevitably, it will change. Sure, important barriers to e-book adoption—availability, pricing, usage patterns, and marketing—mean they’re not going to take off as fast as some people think. Printed books may be the last thing to go. And since the economic structure of traditional publishing is unstable, it’s tough to figure out when the real change will take place—but when it does happen, it will go very quickly. So how to predict what’s coming? We can look at the year 2000.

In 2000, hopes were high for the many e-readers on the market (including Softbook, Rocket eBook, Go Reader, Hiebook, Franklin eBookMan, and others, “more than there are now”). That year, the Industry Standard optimistically forecast e-book device sales between 3 and 7 million for 2001. (Point of reference: Kindle has sold an estimated 2 million units.) And Dick Brass, then Head of E-books at Microsoft, predicted that by 2020 90% of publishing would be electronic. “He’s got ten years to go, but I don’t think we’re likely to hit 90% in the next ten years,” Mace said. So what went wrong at the turn of the century?

First, too few books were available. In 2000, as now, the core customers for e-books were reading enthusiasts, and they couldn’t find everything they wanted to read in digital form. Nervous publishers and agents didn’t want to make the commitment of converting too many titles.

Second, prices were too high. Consumer perception that an e-book is disposable (like a paperback) and shouldn’t be priced like a hardcover was at odds with publishers, who kept e-book prices high in an attempt to protect bookstore channels and hardcover pricing. “Publishers were viewing this as something just short of Napster,” Mace said. High e-book prices and limited availability of titles led to consumers’ strong reluctance to invest in e-readers.

Since people didn’t want to buy e-readers, publishers decided to put e-books on the things they did own—PCs and mobile devices. But PCs aren’t comfortable for long-content reading and mobile devices are too small and have a “unique usage pattern,” said Mace, “where you look up something or take a call and then put it away. It’s not like eating a meal. It’s more like snacking.”

Fourth, few digital periodicals were available in 2000. Magazines and newspapers are actually a better fit for e-readers than books are, says Mace, because they’re already viewed as disposable (so people don’t mind paying the same price for the e-version as the paper version), they’re consumed in small chunks, and the fact that there’s immediate delivery is a big benefit. However, the electronic version’s quality must be comparable to the print version’s, and so far this hasn’t been the case. And digital periodicals are competing with free websites. (Mace thinks the most successful free publisher online is Yahoo!, which takes ads from big national advertisers, mixes them with digital content, and makes a lot of advertising revenue, whereas Google’s ads are like classifieds.)

Fifth problem, now and then: Marketing. Mace says the right way to market a tech product is to determine very clearly who the consumer is and ask what “compelling problem” you can solve for them. But consumers don’t think books are broken. Mace recently examined the pitches of e-readers on the market now. He found that Kindle advertises by listing product features rather than advantages to consumers, and while Sony announces that the Sony Reader lets the consumer carry hundreds of books in his pocket, “how many people actually want to do that?” Companies make the mistake, Mace says, of “trying to convince themselves that the features they have are benefits to customers whether the features they have actually matter to customers or not.” (Whose marketing is best? Barnes & Noble, by a little bit, because of the limited sharing the Nook allows.)

Publishers have to ask themselves some hard questions… and they won’t like ’em. First up: How much reader-visible value does our editing add? “Is [editing] like CD-quality audio? Do readers notice?” Mace wondered. He’s not sure yet: It might depend on the author, or the marketplace might end up deciding what’s well-edited.

Next, How much demand generation do we really do?

Third, Could an author get the same value through contract services (freelance editing or marketing, for instance?)

And the fourth question: Do readers value our brand (versus the author’s)? This varies from publisher to publisher, “but the more that value is coming from the author’s name rather than the publisher’s, the more vulnerable you are to book buyer behavior when they are out in the marketplace.”

When does it pay an author to self-publish electronically instead of working through a publisher? Mace estimates that when between 20% and 30% of the public owns an e-reader, “financial incentives flip around” and authors make more money selling their titles digitally and directly to readers than they do with traditional publishers and a 15% royalty.

We’re not close to this tipping point yet, Mace says, because today only 2–3% of book buyers own e-readers. But he believes the iPad, as well as competition between Amazon and Apple, will accelerate change. And Mace thinks that when publishers raise e-book prices, they bring the tipping point closer by creating higher incentives for authors to switch away from traditional publication. If e-books are cheap, authors might as well stick with their traditional publishers because they aren’t losing out on much money, but when e-books are expensive, it’s in authors’ advantage to switch over early and get a bigger cut.

“Some authors will publish stuff completely on their own, and some will need a ton of help and turn to a publisher,” says Mace. “However, it’s much more fluid than it was in the past, and people providing services have to be clear about the value they are creating for people buying them.”

Create More Apps

In “Running Two Companies,” Sourcebooks CEO and Publisher Dominique Raccah spoke about the challenges for publishers managing both traditional and digital businesses, and what she said agreed with Mace’s idea about the continuum of transformation. Though change appear rapid and pervasive to those of us “on the front lines,” Raccah says the mass market takes longer to respond. CDs still comprised 65% of all music sold in the first half of 2009, despite the fact that the iPod launched in 2001 and iTunes in 2003. It takes a long time for old media forms to disappear and for a company to transfer from B2B to B2C.

“Think through the content you already own,” suggested Raccah. “Is there an opportunity to do something different with it?” She recommends trying lots of low-cost experiments, such as iPhone apps, which are easy to fix on the fly. (Sourcebooks designed all its iPhone apps in-house, with the exception of the coding.)

File Sharing, DRM, and Music Industry Lessons

In “The Impact of P2P File Distribution on Paid Content Sales,” Brian O’Leary of Magellan Media discussed the company’s research on another new challenge for publishers: Piracy. Magellan is currently tracking sales and piracy at O’Reilly and Thomas Nelson to try to determine the niches and titles for which “piracy is a direct loss and enforcement makes sense” and those for which “piracy may help build awareness…to spur sales.” When Magellan monitored peer-to-peer file-sharing sites for O’Reilly’s fall 2009 front list titles, The Pirate Bay was the only site with more than a handful. (Magellan has not yet found any of Thomas Nelson’s fall 2009 front list titles on P2P sites.) There was also an unexplained bump in paid sales of O’Reilly content after seeding (uploading) was first noted. And an average of 19 weeks from a title’s pub date passed before it began to appear on pirate sites.

O’Leary said it’s important to understand the reader’s point of view. First of all, publishers should release digital versions of their titles (might as well not frustrate demand before you even start out) and make them available in a high-quality consumer experience. Digital editions should be high-quality, not sub-standard, and publishers should manage piracy rather than trying to solve it. O’Leary also pointed out that getting pirated books isn’t that easy. The relative difficulty of obtaining pirated content is evidence that restrictions like DRM or business decisions to withhold content can frustrate readers enough that they pursue pirated content instead. O’Leary recommends that publishers visit pirate sites to see what the experience is like and to find out which of their titles are actually being shared illegally. (If they don’t know where to look, they might want to ask their interns.)

Finally, O’Leary warned publishers not to draw broad conclusions from the limited data available. Attributor grabbed lots of headlines with its recent study claiming that piracy is a “$3 billion problem,” leading publishers like Macmillan to announce detailed “piracy plans.” But more data is needed to find out what’s really happening, and a rush to DRM isn’t necessarily the answer. DRM-restricted content just isn’t wortRh as much as unrestricted content, and true pirates don’t worry about DRM since they can easily disable and strip it (or just scan the book). “We’re restricting the rights of readers just in case they turn into pirates,” said O’Leary. Publishing can learn lessons from other industries—but it’s not as simple as saying that “piracy killed the music business.”

So what can we learn from the music business? In his panel “DRM, Digital Content and the Consumer Experience,” Kirk Biglione, Principal of Oxford Media Works and contributor to Medialoper, set out to answer that question. And like Mace, he gave publishers another chance to learn from history. The future of all media, he said, is digital. And all media companies, not just publishing, are challenged by the transition. Consumers burned by DRM during the music-buying experience carry that baggage with them as they move to digital books. “Even though you haven’t done anything to consumers yet, they’re prepared for the worst already,” Biglione said.

But though everyone agrees that the music industry made mistakes, there’s been no consensus on what those mistakes were. The music industry was hugely successful in the 1990s. Consumers loved the improved sound quality and durability of CDs, and they had to buy their record collections all over again, which led to huge profits that the music industry expected to keep going up. Digital content distribution wasn’t on the agenda, and music companies weren’t worried about MP3s because they assumed consumers cared deeply about CDs’ superior sound quality. At the turn of the century, the recording industry didn’t realize that the internet had allowed consumers (who’d historically bought whichever format they were told to buy) to gain control.

One of the industry’s mistakes, Biglione said, was to mistake consumer demand for piracy. Industry execs reacted to digital media piracy in the same way they’d reacted to bootlegs and counterfeit products—they tried to stamp it out. But this was a new breed of piracy with “no profit motive involved.” The new pirates didn’t make money from sharing MP3 files, and they didn’t have legal digital options to turn to—MP3s weren’t for sale (notwithstanding some short-lived trial runs like Sony’s Connect Sony format). So there were no credible alternatives to piracy: “Consumers were showing a preference for digital music and labels did not have anything in place.”

Biglione drew a parallel to consumer demand for e-books. “Ever try to buy a Thomas Pynchon e-book?” he asked. The author is not available in a legitimate digital format. But Google “Thomas Pynchon e-book” and the second result on the list is “The Burgomeister’s Books,” whose owner describes it as “My personal backups. But since you’ve dropped by, I’m happy to lend them to you. Naturally you’ll delete these books when you’ve finished—your way of returning them. Download and enjoy five truly free e-books on loan from my library!” The Burgomeister has scanned hundreds of titles—by authors like Saul Bellow, Agatha Christie, and, indeed, Pynchon—and promises, “More late-20th century classics are being added every week.” The site also runs a “Wanted” list of titles and authors (Evelyn Waugh, Patricia Highsmith, Graham Greene) and promises, “I offer unlimited download access to anyone who can supply me with a decent digital copy of one or more of these titles. I even pay money. I am certainly willing to buy you the book if you are willing to scan it.” The new pirate: Someone who really loves the backlist and can’t get it legally. (Flashback to Michael Mace’s panel: Mace says digitizing the backlist is a major untapped opportunity for publishers to make money.)

Other music industry mistakes included declaring war on digital and using litigation as a business model, but the biggest lesson publishers should learn, Biglione says, is not necessarily to assume that DRM is the answer. Echoing O’Leary, he listed a few myths about DRM: DRM prevents piracy (the reality is that all you need is one physical copy of a book to scan and upload it); customers won’t pay for DRM-free content (they buy Amazon’s DRM-free MP3s and O’Reilly and Microsoft’s DRM-free books); DRM enables a marketplace for digital content. In fact, DRM shapes the marketplace for digital content in ways that have unintended consequences. When Microsoft launched its PlaysForSure DRM standard in 2004, they hoped to license it to every manufacturer who made devices and anyone who wanted to market digital music. In fact, many companies and content providers did license PlaysForSure—but not Apple, and Apple’s iPod and iTunes were what people wanted. Microsoft sealed the nail in the PlaysForSure coffin when it launched its own MP3 player, the Zune, in 2006 and made both the device and the content on Zune Marketplace incompatible with PlaysForSure. As publishers struggle with DRM and various e-publishing formats, Adobe’s Content Server DRM seems to have emerged as the standard. It’s been widely licensed—last fall, Sony’s e-reader store pulled its proprietary format and switched to Adobe’s. But Amazon uses its own proprietary DRM, as will Apple in its iBookstore. Biglione predicts the Adobe Content Server standard will “end like the music industry’s PlaysForSure standard ended.”

In the meantime, the top search phrases on Medialoper relate to cracking DRM, and these searches spike on Christmas Day, when people want to break the DRM on their new presents. “So sell consumers what they want, since they are going to get it anyway,” Biglione said. “You might as well get paid for it. In the 21st century, you are not going to beat the consumers.”

Major changes at Random House under Madeline McIntosh, President Sales, Operations, and Digital. Joining her team are Nina von Moltke, VP, Digital Publishing Development; Amanda Close, VP, Digital Sales and Business Development; and Pete McCarthy, VP, Online and Digital Marketing. Andrea Sheehan, formerly VP & Director, Digital Strategy and Business Development at RHPG, will now report to von Moltke as VP, Digital Publishing and Product Development. Amanda d’Acierno, VP, Publisher, Random House Audio, Books on Tape and Living Language; Tim Jarrell, VP, Publisher, Fodor’s Travel Publishing; Fabrizio Larocca, VP, Creative Director; and Susan Livingston, now Director, Digital Business Management and Planning will also report to von Moltke. In addition, Sheila O’Shea becomes Director of Publicity, Digital Initiatives.Amanda Close, currently VP, Group Sales Director, Crown Publishing Group, becomes VP, Digital Sales and Business Development. Reporting to Close will be Jeff Weber, now Director, Digital Sales, formerly Associate Sales Director, Amazon; Randi Rosenkranz, Senior Manager, Digital Channel Development; and Lilly Kim, Account Manager, Digital Sales.

Pete McCarthy, VP, Online Marketing, will expand his department in a new mission to maximize the ability “to convert consumer interest to incremental purchases.” Newly reporting to McCarthy is Christine McNamara, currently VP, Director, Adult Sales, Borders Group and Books-A-Million and now taking on the newly created role of VP, Partnership Development. Chelsea Vaughn, Director, Online Marketing Operations, will continue to report to McCarthy. In addition, Camille Collette, Director, Web Production, and Jinny Kwon, Creative Director, are transferring to McCarthy’s department from Crown online marketing.

Andrew Weber, SVP, Director, Operations, and Technology, welcomes John Bohman, VP, Sales and Customer Operations, to his team. Bohman formerly held that role reporting to Jaci Updike, SVP, Director, Adult Sales. Continuing to report to Bohman are Chris Demyanovich, VP, Customer Operations, and Janice Vanghele, Director, Sales Services. Newly reporting to Bohman are Christian Waters, VP, Director, Sales Planning, and Kelly Fischbach, formerly Director, Online and Digital Sales, now Director, Online and Digital Sales.

Nihar Malaviya has been promoted to VP, Strategic Planning and Projects for Sales, Operations, and Digital. He was VP, Director, Business Operations and Strategy. Newly reporting to Malaviya is David Thompson, VP, Sales Analysis.

Newly reporting to Jaci Updike is Julie Black, VP, Director, Sales Strategy.

In the Crown Publishing Group, Jill Flaxman has been promoted to VP, Group Sales Director. She was VP, Imprint Sales Director. Jacqui Lebow, formerly responsible for selling Crown to Barnes & Noble, takes Flaxman’s place.

In the Knopf Doubleday Publishing Group, Janet Cooke continues as VP, Group Sales Director. James Kimball continues as VP, Imprint Sales Director. Newly reporting to Kimball is Carlos Azula, VP, Director, Foreign Language Sales.

Candice Chaplin, formerly Marketing Director for the Information Group, has been promoted to Imprint Sales Director for Random House Audio Group, Fodors, Living Language, Prima, The Princeton Review, and Sylvan. Chaplin reports to Cynthia Lasky, SVP, Group Sales Director. Allyson Pearl continues to report to Lasky as VP, Imprint Sales Director.

In Random House Publishing Services, Skip Dye now reports directly to Updike as VP, Group Sales Director.

In online sales: Al Greco, formerly VP, Director, National Retail Accounts, will now move to become VP, Director, Online Sales. Reporting to him will be Anh Schluep, National Account Manager, Knopf Publishing Group; Kristen Fleming, National Account Manager, Crown Publishing Group; and Elena Legeros, Online Sales Coordinator. Newly joining from the Borders team are Richard Callison, National Account Manager, Random House Publishing Group and Jen Tolan, National Account Manager, Audible, Audio, Princeton Review, Fodors, Sylvan, Living Language, and Prima.

In the Barnes & Noble sales group: Kim Shannon continues in her role as VP, Director of Sales, Barnes & Noble, now reporting directly to Updike. In the Borders sales group, with Christine McNamara moving to Pete McCarthy’s Online and Digital Marketing group, Beth Koehler has been promoted to Director of Sales, Borders Group. Books-a-Million: Glenn Ellis, VP, Director, Field Sales, continuing to report to Jaci Updike, will now oversee Cathy Calvert and Karen Hayes, both National Account Managers. Ruth Liebmann continues in her role of VP, Director, Account Marketing, now reporting to Jaci Updike.

Matt Shatz, VP Digital, is leaving the company to become Head of Strategic Content Relationships at Nokia.

Cyrus Kheradi has been named SVP, International Sales and Marketing, at Random House and has resigned from his position as VP, Group Director, International Sales at Simon & Schuster. The international sales team will report to EVP Sales & Marketing Michael Selleck until further notice. Beth Wareham, Director of Cookbook and Lifestyle Publishing at Scribner, has left the company. In other changes at Simon & Schuster, the company’s new telemarketing sales group will comprise Anna Carlino, who was most recently a national account manager; Karen Fink, currently in the marketing department after twenty years at Random House that included working as a telemarketing rep; Stuart Smith, currently on the Sales & Client Communications team; and Hilary Lowe, currently a customer-driven publishing sales coordinator in the Premium Group.

Disney Book Group publisher Jonathan Yaged is leaving the company to become Chief Operating Officer at House Party, a company that organizes brand-sponsored parties.

Marysue Rucci becomes Editorial Director at Putnam on March 15, reporting to President Ivan Held. Rucci was Executive Editor at Simon & Schuster for 13 years.

Ralph Munsen has joined Hachette Book Group as SVP, Chief Information Officer. He was most recently VP, Technology at Clear Channel. He will lead HBG’s technology group and will split his time between the company’s New York and Boston offices.

Bill Preston joins Sourcebooks in the new position of Senior Account Executive, Mass Market and New Business Development. He was most recently VP, North American Business Development for UK distributor Gardners Books and SVP of Retail Sales for Baker & Taylor.

Gail Kump has been named Director of the National Book Network and will work out of the company’s New York office. She was EVP, Director of Marketing at Midpoint Trade Books.

Howard W. Reeves, Publisher of Abrams Books for Young Readers and Amulet Books, will become Editor-at-Large for the company.

Holt Senior Editor David Patterson has left the company and may be reached at davidroystonpatterson [at] gmail dot com.

Nathaniel Marunas is returning to Sterling as Executive Editor.

Jane Fleming is leaving her job as Editor at Penguin Press to begin freelance editing.

Michael Campbell joins becker&mayer! in the new position of VP, Sales, Marketing, and New Business Development. Amy Levenson has been promoted to Group Manager, International Sales.

In the agency world: Mary Ann Naples, co-owner of The Creative Culture, has joined startup OpenSky as VP Development, representing authors and brands….Martha Guzman has joined the Maria Carvainis Agency as Contract/Subsidiary Rights Manager. She was previously Associate Manager, Domestic Rights at Random House….Don Fehr has joined Trident Media Group. He was most recently Editorial Director at Kaplan….Following Brendan Deneen’s move to Thomas Dunne Books as an editor, Pouya Shahbazian has joined FinePrint Literary Management as literary manager/producer, specializing in book-to-film and TV deals. He will also head FinePrint Productions, producing and packaging film and television projects….In the UK, Caroline Hardman has moved to the Christopher Little Literary Agency as an agent. She was at the Marsh Agency for six years….Janklow & Nesbit UK Director Tif Loehnis is leaving after 13 years. Claire Patterson will now oversee the office.

Robin Dennis has joined the UK’s Oneworld Publications as Senior Commissioning Editor for popular science, social science, psychology, and current affairs. Previously, she was a senior editor at Times Books.

Global brand and licensing operative Chorion is expanding its executive team with the appointment of Tamra Knepfer as EVP Brand Management and Marketing and Steve Cipolla as EVP Global Licensing and Sales. Most recently, Knepfer was SVP, Global Licensing and Business Development for Rodale, working on publishing brands including Men’s Health and Prevention, and Cipolla was VP and General Manager, ESPN Consumer Products.

Frankfurt Book Fair VP Marketing & Corporate Communications Thomas Minkus is relocating to New York but will continue to work for the show.

Aly Mostel has joined Rodale Books as Associate Director of Communications. She was Publicity Manager at Time.

Anna Crowe has joined Planned Television Arts as a senior publicist. She was at Houghton Mifflin Harcourt and Random House.

Elizabeth Gold, Managing Editor at Guideposts, has left the company and will be freelancing.

PROMOTIONS AND INTERNAL CHANGES

Chris Rogers has been promoted to Editorial Director at Yale University Press. He was most recently Acting Editorial Director, and previously Editor for History.

Pam Roman, VP, Director, Specialty Sales at Random House, has been promoted to VP, Director of Sales, Special Accounts, reporting to Joan DeMayo and succeeding Andrew Stanley, who has relocated to London.

Congratulations, Peter! Please e-mail me back ASAP.

I’ve e-mailed Peter to let him know he’s the winner and will call later today. If I haven’t heard back by 6 PM on Monday, 2/8/2010, or if he is somehow unable to attend the conference, we will randomly select another winner.

We had 92 responses to the survey. We selected one using Random.Org, a random number generator.

But that is rapidly changing. Three relatively recent entrants into the market are the Codex Group, which surveys Borders customers to discover about genre, author, and jacket preferences (see our coverage here, here, and here); Bowker’s PubTrack, which partners with MarketTools, Inc. to conduct surveys; and the latest entrant, Verso Digital, which relies on its access to numerous “deep vertical” sites and is now rolling out a new service, tentatively called Verso Flight Plan.

Flight Plan makes Verso Digital’s survey technology available to publishers on a subscription or à la carte basis. It lets publishers carry out their own title-specific consumer research and pre-publication testing of book jackets, titles, and copy. They can analyze author awareness and audience size, run online focus groups, and delve into various vertical Reader Channels (such as Thought Leaders, Women’s Romance, and Science Fiction and Fantasy). The service will launch by the end of March; for more information, contact Business Development Director Jack McKeown at jack [at] versoadvertising.com.

Recently, Publishing Trends interviewed Bowker Director of Client Development James Howitt about PubTrack Consumer. Howitt, who previously worked at BookScan, said he realized four years ago that Bowker, which at the time was attempting to compete with Nielsen BookScan, should “move away from POS in the trade market and [instead] directly survey the consumer.”

In the past, “it was easier to get a consumer to buy your product,” says Howitt. “All you had to do was get it into Barnes & Noble or Borders. But now, with e-readers, publishers becoming vendors, and search sites becoming publishers, consumers can go anywhere to purchase a book. Traditional tracking of core channels no longer reflects the whole size of the market.” Though Bowker is known primarily for its core product, Books in Print, the company is increasingly becoming known for following the demand chain of the book process—beginning with ISBN registration and ending with PubTrack Consumer, for publishers.

PubTrack Consumer, released in 2007, provides publishers with data regarding consumers’ book purchases, demographic, and behavioral profiles. Some clients include Random House (the charter subscriber), DC Comics, Zondervan, BISG, K-Mart, and Direct Brands. The cost of access to the service varies by client, Howitt says. Some companies, with complete toolset access to the data, can analyze information any way they want. Other companies have to rely on Bowker to come in to present it.

To obtain its data, Bowker works with MarketTools, Inc. (MTI), an online market research firm, using its ZoomPanel tool. MTI has a pool of 10 million active names of people age 13 and up (they receive rewards points for participation). Bowker tracks 3,000 unique individuals each month.

“In the past, companies like this were either doing phone-based or diary-based surveys,” says Howitt. “But if you try to get hold of a 13-year-old, they don’t have a household phone, they have mobile. If you’re doing diary-based surveys, you’re relying on someone with good handwriting, someone who’s able to distinguish Harry Potter #1 from Harry Potter #7.” As for internet access, Howitt says that since nearly nine people out of ten in the U.S. have it, “that bias…doesn’t affect what we’re doing.” (MarketTools weights the sample to eliminate any remaining bias.)

Panel participants answer 65 questions about their book-buying behavior. A participant is first asked to report on all the books she has acquired in the past month, including books bought as gifts. She types in each book’s ISBN (a diagram shows her where to find it; the ISBN ties back to the Books in Print database), which pulls up the book’s format, author, etc. Next, she answers questions about each purchase, such as:

How much did you pay for this book, excluding tax?
How was the book displayed when you first saw it?
What other items did you buy at the same time as this book?

“For the first time, the industry can see a book’s real average selling price,” says Howitt. “One of the things POS is great at telling you is that a book sold 20,000 units last week, but it’s not designed to tell you if that 20,000 is made up of 18 to 29-year-old females.” Kelly Gallagher, VP Publisher Services, notes that Bowker can also go back to previous participants and ask them more in-depth questions. The company also launched a Cover Analysis service last year.

Publishers have always had trouble attracting advertiser interest, and Bowker’s research opens up the opportunity to determine correlations between book buyers and brands. Now publishers just have to sign up for the service and learn how to use it.

Lots of movement at Barnes & Noble: Liz Scheier has joined Barnes & Noble.com as Editorial Director, working with publishers to create “unique, exclusive content digital opportunities throughout our digital distribution platforms, including in store programs” and reporting to Theresa Horner, VP Digital Products. She was most recently Director of Publishing Relations at ScrollMotion and previously an editor at Random House and Penguin. Mike Ferrari has left the company. He had held several positions there, most recently Director, Digital Content at B&N.com.

Margot Schupf has joined Sterling Innovation as VP, Publisher. She was SVP, Editorial Director, Digital Publishing for the Morrow/Avon/Eos group.

With the demise of Air America, website Editor-in-Chief Beau Friedlander may now be reached at simnyc [at] rcn.com.

Ron Marshall, Borders CEO for barely a year, has resigned to join A&P. Michael Edwards, who joined Borders last fall as EVP and Chief Merchandising Officer, has been named interim CEO. He will report to Mick McGuire, Chairman of the Borders board. Also at Borders, Dan Angus has become VP, Customer Loyalty, and will be in charge of loyalty marketing programs and initiatives. Angus was formerly VP, Customer Relationship Marketing, for Guitar Center.

Scott Lubeck, most recently VP of Technology for Wolters Kluwer Health, Professional and Education, has been appointed Executive Director of the Book Industry Study Group (BISG). Lubeck has also held executive positions with Harvard Business School Publishing and Newsstand, Inc., as well as with Perseus and National Academy Press.

Nicholas Brealey announced that John Groton has been named Sales Director for the North American operations based in Boston. He joins Editorial Director Erika Heilman and Finance Director Jill Friedlander. He was most recently at Globe Pequot, following many years at Random House.

Whitney Peeling is leaving PublicAffairs to “volunteer for a few months in India and Bangladesh.” Jaime Leifer returns as Publicity Director. Leifer was at Perseus from 2001–07 and was most recently Public Relations Manager at The New Yorker.

Sydny Miner has been named VP, Executive Editor of the Crown Publishing Group after 26 years with Simon & Schuster.

Kevin Hamric has left Quayside to join The News Group as VP, Book Operations. He will also be working with TNG’s sister companies, Select Media Services and ProLogix.

HarperCollins Digital announced the formation of three teams: Author Services, headed by Carolyn Pittis, SVP, HC Digital; Global Author Services Consumer Products, headed by Joe Park, currently CEO of BibleGateway/Zondervan and a former Amazon executive; and Business Development, where Leslie Hulse continues. In addition, Larry Nevins announced the formation of the Digital Technology Services Group. Mike McGinniss, VP of Emerging Technologies, will move into the newly created role of SVP, Digital Technology Services. Greg Mucci has been named Director of Digital Technology Operations. He had been a consultant at HarperCollins.

Direct Brands has hired David Gitow as CMO and Alan Katz as EVP, Business Development, the first major appointments under new CEO Deborah Fine. Gitow was CMO at both B&N.com and Barnes & Noble, and founded and ran Time, Inc. Home Entertainment.

Elizabeth Evans has joined the Jean V. Naggar Literary Agency. She has worked at Kimberley Cameron & Associates (formerly the Reece Halsey Agency) for the past six years.

Mary Dolan has left Kaplan, where she was Executive Director of Sales, to join Harvard Business Press.

The Library of America has hired Trish Hoard as Production Editor. Hoard was previously Managing Editor at Counterpoint and Associate Publisher at Shoemaker & Hoard. She replaces retiring Managing Editor Sharon Graham.

Rubin Pfeffer, most recently Simon & Schuster SVP of Children’s Publishing, has joined East/West Literary Agency. Pfeffer is focusing on projects with a digital component and will head up the East Coast branch of the agency as a partner and content agent, a new position.

Joe Esposito, one-time President of Encyclopedia Britannica and earlier at Random House, has signed on as CEO of GiantChair, which provides direct marketing services for the publishing industry on the internet. He reports to Cory McCloud, the company’s founder and president for technology. Most of GiantChair’s operations are based in Europe, but Esposito remains in California.

PROMOTIONS AND INTERNAL CHANGES

Nicole Reardon has been promoted to Associate Director of Marketing at HarperCollins, replacing Christine Boyd, who left at the end of 2009. Reardon reports to Angie Lee, who has been promoted to VP Marketing.

Frances Gilbert has been promoted from VP, Editorial Director to VP, Publisher, Sterling Children’s, which includes the imprints Sterling Children’s Books, Sandy Creek Press, Begin Smart, and Flash Kids.

NAL’s Brent Howard has been promoted to Editor. At Random House Publishing Group, Kathleen McAuliffe has been promoted to Marketing Manager, Trade Paperbacks. Camille Dewing-Vallejo has been promoted to Senior Copywriter and Elizabeth Eno to Designer. At Bantam Dell, Randall Klein has been promoted to Associate Editor.

Tom Roberge has been named Associate Editor at Penguin, and remains publishing coordinator there.

Lance Fensterman has been promoted to Group VP at Reed Exhibitions and will now devote his attention exclusively to running and growing the company’s Pop Culture business. Steven Rosato has been promoted to replace him as Event Director of BookExpo America.

HarperOne Associate Publisher Claudia Boutote is being promoted to SVP. Executive Editor Gideon Weil has been promoted to VP.

DULY NOTED

OverDrive released interesting statistics about its library business in 2009: 401 million website pages viewed by library patrons (69% growth over 2008) and 8.7 million digital titles checked out (63% increase over 2008); and 4 billion minutes of spoken-word audio downloaded from library websites, with a 70% increase in audiobook checkouts over 2008. E-book checkouts increased by 53%. And there was a 40% increase in new library users over 2008. 2009’s most downloaded adult fiction audiobook was The Lost Symbol by Dan Brown; the most downloaded nonfiction audiobook was 25 Things to Say to the Interviewer to Get the Job You Want by Dexter Hawk. The most downloaded adult fiction e-book was The Lost Symbol; the most downloaded adult nonfiction e-book was Blink by Malcolm Gladwell. OverDrive also releases monthly “Most Downloaded Books from the Library” lists.

UPCOMING EVENTS

The Books for a Better Life Awards, which honor self-help books and have raised over $1.6 million for the New York City – Southern New York Chapter of the National MS Society since 1996, will take place on February 22 at NYC’s Millennium Broadway Hotel. Robin Roberts, co-anchor of ABC News’ “Good Morning America,” hosts the awards and Carolyn Reidy, President and CEO, of Simon & Schuster, Inc., will be inducted into the Hall of Fame.

The Book Business Publishing Business Conference and Expo takes place March 8–10 at the New York Marriott Marquis. Speakers include Susan Danziger, CEO of DailyLit; Laura Dawson, President of LJNDawson; Bob Miller, President and Publisher of HarperStudio; and Steve Forbes, Chairman and CEO of Forbes Media.

BAM’s Eat, Drink & Be Literary brings authors to Brooklyn’s BAMcafé for dinners, readings, and discussions. Upcoming speakers include Lynn Nottage (February 11), Sam Lipsyte (March 11), Colm Tóibín (April 8), and Joshua Ferris (April 22).

IN MEMORIAM

Karen Hansgen, Associate Publisher of Skira/Rizzoli, died in her sleep on January 10. A memorial service was held on January 15.

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2009 will be remembered as the beginning of the digital tipping point for book publishing, the year our industry took its turn as the last of the major media to enter the digital transition, following in the highly challenged footsteps of the music, newspaper, magazine, and network TV industries.

The question is whether we’ve learned the lessons from those media that have gone before us, and are entering a profitable new age of digital growth, or are heading for the perfect storm of a soft market, product devaluation through 60% off e-book discounting, and ineffective digital marketing that combined may put book publishing on the fast track to long tail obscurity. The choice remains ours to make, but not for long.

Digital Marketing’s Limitations

• Break-Out Novels, June 2009: Barnes & Noble selected debut novelist Katherine Howe’s The Physick Book of Deliverance Dane (Hyperion) as a “B&N Recommends Main Selection.” In August, Amazon selected 14-year-old debut novelist Cayla Kluver’s Legacy (Forsooth) for the premiere of its new AmazonEncore book break-out program. The bookstore-promoted Physick Book hit #2 on the New York Times bestseller list, not uncommon for a B&N Recommends title, while the digitally promoted Legacy sold only 1,000 units after nearly three months in market.
• Social Network Marketing, November 2009: In an internet survey of fiction book buyers, Facebook was the single largest media outlet of any kind for book shoppers, with 54% having viewed it in the past week (only 14% read the NYT that week). But when these buyers were asked where they first learned about the new novel they had purchased last, only 21 out of 5,173 surveyed (0.4%) said they’d first learned about it from “social networks like Facebook or MySpace.”
• Amazon launched the single largest all-digital marketing campaign in book publishing history with the debut of Kindle in 2007. But after a year of massive on-site advertising and promotion, an online survey of Amazon book shoppers showed that barely half (52%) were aware that Kindle existed. Amazon turned to Oprah’s TV support shortly thereafter, and now, two years later, to the single most expensive network TV advertising campaign in book publishing history to get Kindle on track.

New Fiction Needs Physical Merchandising

• Theatrical Movie Releases: In spite of a wide choice of alternate movie formats and distribution channels (including digital download, online, DVD, cable, and pay-per-view), major movies still release first in theaters where viewers can get the full experience in person at full price. Box office sales are on track to exceed $10 billion for the first time in history in 2009.
• Fiction Releases: New works of fiction, particularly from less known and debut novelists, lack the news value to get media publicity. Fortunately, they can be discovered in the local bookstore, where over 30% of fiction buyers first learned about the novel they just purchased, compared to only 5% at internet booksellers. If publishers don’t protect the bookstore, the industry loses its “theater” where new work is discovered, leaving new novels and novelists nowhere else to break out from the anonymity of the long tail.

Windowing Adds Sales

Trade publishing has benefited from windowing for over 70 years, giving book devotees the chance to get their favorite authors early in hardcover, then allowing them a full year to build word of mouth interest among a far wider audience of paperback buyers. The book’s second release and second marketing campaign then benefit through much bigger audiences and higher unit sales. The movie industry has as many as ten or more format and channel windows offered on sequential release dates, each one another opportunity to re-market and remind the audience to pick the format and timing that’s best for them.

Eliminate windowing and we not only take away the time fans need to build a book’s word of mouth, but jeopardize that second wave of potentially interested buyers attracted by news of the second release. Take it one step further with simultaneous 60% off or greater discounting, and the consumer acceptable price for a newly released book is radically reset in the mind of the book shopper to below its sustainable cost. Just as the consumer acceptable price for new music is now $0.99, and for breaking news near $0, the consumer acceptable price for a newly released book will become $9.99 or lower. Musicians can always go on tour, but what’s left for new authors?

Amazon’s Triple Play

The magic of Kindle is that it is simply the most effective marketing tool ever seen in book retailing. It instantly triples Amazon’s book sales with any book shopper who buys the device, simultaneously taking that market share directly away from all other competitive booksellers.

With such amazing sales growth potential, Amazon’s massive investment in their further triple play of 1) network TV advertising; 2) no window 60% off discounts; and 3) what consumer electronics experts agree is well below cost pricing on the Kindle itself (35% below Sony’s most comparable device) seems like a great long-term investment, with publisher support.

By closing windows, undercutting prices, and preempting vital retail distribution channels, book publishers are placing all bets on a much contracted, digital-only future by default. The result is the very real risk of a fate similar to that of the music industry, or worse.

In 2010, book publishing still has the chance to fight for and protect all channels of book distribution, both digital and physical; add more windows with even more premium formats and pricing options; and support every possible tool to create more new book awareness. Only by actively pushing to expand a healthy mass medium can we ensure a market where bestselling fiction remains viable, and where gifted debut authors still have a chance to break out at #2 on the bestseller list!