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Session: 3.3 – The Evolution of the Book Industry
So cats only make 15% of BuzzFeed but how much is devoted Ryan Gosling [chuckle] or Ryan Gosling or cats. All right so up next weÕre going to move from advertising into books. WeÕre going to be talking about the evolution of the book industry and IÕm excited for this because Laura Owen my colleague who is going to be moderating it is like super, like the smartest person on eBooks in the world. So youÕre going to have a good time. She is going to speaking with Rachel Chou; she is the CMO of Open Road Integrated Media and Dominique Raccah, Publisher and CEO, Sourcebooks and Evan Ratliff, Co-Founder and CEO, Atavist. Please welcome the Evolution Of The Book Industry panel.
Laura Owen 00:52
Thanks so much for coming. So, IÕm going to ask the panelist to begin by just giving a really brief description of their companyÕs business model in case youÕre not familiar with them. So IÕll start with Rachel on my right.
Rachel Chou 01:09
Sure. But I first would have to say women rock, means weÕre all the women are for the day. WeÕre a publisher, weÕre an eBook publisher we focus on the eBook format but the business model for our publishing company is at 50-50 share with our authors as well as full marketing services and so weÕre really, weÕre going to talk about today pushing the marketing side of publishing.
Hi, weÕre a book publisher. We publish about 300 books a year, we publish in all channels and in all style. So physical books as well as digital books and we have just had four New York Times and USA Today best seller. So we do a fair job of getting things out there and helping our authors to connect.
Evan Ratliff 01:53
We are publisher and software company so we publish what are commonly known as these days as eSingles. So books that are in between magazine and book length fuller book length sold as eBooks, we also sell them by subscription. They are all non-fiction for the moment and then on the software side we have a platform that allows multi-media publishing of books, magazines, individual stories and we license that platform to other publishers to use.
Laura Owen 02:22
So one of the complaints that people sometimes have about book publishing houses is that digital is not integrated enough into the workflow. IÕm wondering if you guys can share how youÕre company is structured? Where does digital fit in? Where does marketing fit in and things like that.
Rachel Chou 02:43
Well since weÕre focused on the digital format everything is digital for us. And the wonderful thing for us– the company was founded by Jane Friedman, the Global CEO of HarperCollins for 11 years and before that 30 years at Random House and I had worked with Jane at HarperCollins. I have been in this class before that and the great thing about starting a new company in the publishing and is the platform. So when youÕre starting out you donÕt involve legacy systems so you can kind of think about in the end for us the long term relationship with the author and the product sits with marketing. So in a typical publishing house a tutorial really holds and the manages the author even after the book goes on sale thatÕs totally different for us and so because of that of the 42 people on staff over half are marketing and thatÕs a combination of what I call traditional which is now digital marketing, very large video site to do all the videos that we do that integrate into the marketing but thatÕs really the focus of the company which is quite different than in a typical publishing company.
So in many publishing companies, book publishing companies and digital is a segregated group at Sourcebooks it’s integrated throughout our organization. Digital is a part of everything, it changes everything. So we need to have it be integrated into everything, so whether youÕre an editor or youÕre a marketer digital is part of your job. It’s made interesting things occur for us because it means that weÕre training people on a constant basis, we really had to build that muscle and we have done some incredible things in companywide training as well as individual group training and weÕre really very focused on making sure that we understand how to serve our authors from a digital platform across the organizations, so integrate it.
Evan Ratliff 04:35
Well I guess for us software development is part of everything that we do including the publishing side. So we produce multi-media versions of all of our books and in order to do that and in order to bring down the cost thatÕs why we sort of design software in the first place and as a result now our editorial and technology is completely integrated. I mean basically everything touches each other. It’s a small company, so everyone is in the same room but if we want to deploy something in a book of ours a certain feature, interactive feature, certain map or what have, you we build that as a tool inside our software so then weÕve it forever and it’s actually free to replicate that over and over again. Other people use the software; have the ability to do that too. So we really view it as editorial pushing forward the software and at the same time the software is being developed and it opens up new possibility of what we might do in terms of telling stories.
Laura Owen 05:35
And speaking of telling stories Evan and Dominique you guys are both making content available via apps and also on the web and then you guys are making decisions about whether something should be in eBook versus an app versus online. Can you talk about how you make those decisions and what platforms you decide to be on?
Evan Ratliff 05:56
So for us we kind of view, I mean the fundamental unit of what weÕre producing on the editorial side is a story. So weÕre interested in stories and the way those stories get told on different platforms we donÕt mind that they morph between them and thatÕs sort of like, thatÕs how we use technology. We use technology to make it easy for us to tell the story in different ways and different platform. So we sell through Kindle, a text version and we do pretty well there because thatÕs what Kindle readers want and thatÕs a very, very large audience and people who love reading. Now we also sell a much higher end in some ways version for apps in the web but to us it’s the same story. It might be told in a slightly different way and our goal as an editorial operation is just how can we get this in front of the most amount of people who might buy it, so whether thatÕs an audio book which we also sell, whether thatÕs an eBook, we really donÕt care. It’s only a question of how hard it is to make that version I guess.
So I think weÕre interested in experience and we think about it a little bit different way because story telling is the goal of our authors and weÕre really the platform to create that and so when you look at the work we have been doing apps are one way that we can tell stories very interestingly. We have been developing methodologies to really integrate stories into peopleÕs life in different ways and weÕre trying what weÕre really trying to do is to solve problems for readers in ways that are really useful to authors. So let me give you an example of that because it sounds very, it’s probably easier if I just give you an example. Gifting, all right, giving people books as gifts. So we know that before digital ever arose books were 50% gift. So 50% of the purchases that occurred in book store were actually given to somebody else. Books were an expression; books were a way that people communicated to one another about something. So how do we translate that into digital? How do we make that work for digital? So we created on the picture book side for example something called put me in the story and what that does is it actually allows for parents and kids not just parents and kids but adults and kids to connect in interesting ways by putting the child into the story and then talking about that experience. So it’s a very experientially based app but it also has what is probably more important in some ways a printed component which you can share with that child and we see apps and print and digital and eBooks actually as being just all parts of the circle, a continuous circle that you touch readers with and that we help authors express through.
Laura Owen 08:56
So discoverability is a phrase that IÕm sure you guys have heard before because it’s thrown around a lot in the publishing these days. Wondering if you can talk about how you worked to get your content discovered on the web. How are you marketing it? And especially how youÕre working with the retailers on this, how they are either partners or hindrances in some way.
Rachel Chou 09:20
I mean we try everything, I think the number one goal is at the top of the list is to be experimental and try lots of different things. So I know Dominique, youÕre the same way. WeÕre always in the same experiments [chuckle]. So weÕre really open to working with startups and try new things. That being said we look at the analytics a lot and thatÕs a huge shift in marketing, we actually have analytics as part of the skillset that we look for when weÕre hiring. Our marketing team is really different and the marketers actually handle marketing, publicity, integration with sales and the technology aspect, the analytics aspect. So it’s a very broad skillset that weÕre looking for. So to StumbleUpon which is mentioned by John at BuzzFeed, we work with them a lot. If weÕre not working with them they have one of our highest referrals. They work incredibly well when youÕre referring to content. So, weÕre constantly kind of trying different ways to work with them and partner with them. As Facebook, if youÕre not using sponsored stories then youÕre stuff is not been seen so we will continue to work with that.
Rachel Chou 10:25
We were the first publisher to work with Twitter, we were in the Beta of their ad platform. So we have been a partner with Twitter for about 2. 5 years and with every launch we get an early– and thatÕs another thing for us. I mean Twitter for us drives to– we have a ton of video content, content thatÕs not about the buying book but that leads you want to make the purchase. Twitter has been far in a way better than driving the content than Facebook for us. So it’s about experimenting going back and trying things more than once. I like it when youÕre teaching your child try different foods. Somebody mentioned awareness in the impressions, it’s roughly about 10 times until you probably get used to it. So weÕre not all about immediate, the CPC and the click through rates were about trying things in a couple of different angles and ways and then after a while understanding what the best partners are.
So book publishers tend to be the old evolution traditional book publishing used to be very allergic to data and what you just heard was a very different approach to that. We also are a different approach to that, I would say to you discovery for us is about meta data and surfacing and then rinse and repeat basically [laughter]. So great meta data, so you really– and that actually is relatively new term in our industry meta data but it really is the key. So making sure that youÕre really providing great information about what your content actually delivers and then surfacing whether it be through StumbleUpon or through Twitter. However youÕre going to do it and then do that over again but in ways that actually touch reader, right? So if youÕre just trying to make a sale that actually doesnÕt for us hasnÕt worked it actually is about that connection and about that experience and we really– its really important to know that book publishers know a lot about what touches readers. So weÕre very useful from that point of view and can help craft those messages in interesting ways.
Evan Ratliff 12:32
I donÕt have too much to add. We also are at a very small level. We experiment a lot with different ways of reaching people and social media and all these things. One thing that we try to do is weÕre putting together books that often have media in them and we try to think about those media almost as shareable, that we can pull out and so we might do an animation of one chapter and thatÕs something that we could take out. We can put on YouTube; we can have people send it around. So weÕre trying to think outside of this sort of traditional things that a book publisher might do. We place excerpts and we try to get reviews whether it’s on blogs or traditional reviewers, all that sort of stuff. But really trying to add more creative content but weÕre very small and we spend almost nothing on marketing.
Laura Owen 13:15
What about retailers, Amazon, Apple, [Printable?] other?
Rachel Chou 13:20
Before I get to that I just want to jump in with one more thing about discoverability. For us the big shift has been about having a team that actually creates marketing content and so having kind of an editorial focus in your marketing staff because discoverability is about kind of teasing and having people be interested not necessarily jumping straight to the product description but really thatÕs why the video has become such an important part but our marketing staff is constantly writing, they are working archival photos, manuscripts so that all becomes a part of our database and our platform that we use every time. In terms of retail partners for us, Frenemies, they are so important to us and we work really well with them. The fact that weÕre digitally focused means that weÕre working directly with the Kindle team, the Nook team, Kobo, all of those different partners and it leads back to the marketing content that I was just talking about. One of the interesting things for us has been not strictly pure merchandising and working with the merchs team to placement on the homepage but how do we leverage the blogs? How do we leverage their Twitter feeds and that goes back to us creating really compelling content that they want their users or in this case the readers to see and so weÕre kind of working with them to think about not the typical merchandising side but together creating content that readers want and using their channels to push that out and not just the store front.
So we think about it a little bit differently. So there is a part of that company that does eBooks, eBooks is where 28% of Sourcebooks sales last year. Two parts of my company tipped last year so over 50% digital both of our fiction list went that way but there is another whole part of the business for us which is the experimentation that you see in, put me in the story where weÕre actually working with Apple on app development or where weÕre working– we also work with Apple– weÕre very geeky trust me. So Shakespeare and poetry, yep thatÕs yes. And so we worked really hard on very detailed and kind of very interesting Shakespeare project. Those things, you want to work really closely with your retailer partners because youÕre going to need everything that they are doing and youÕre going to make changes and youÕre going to have conversations and so we have very great relationships that are platform building for them as well as for us with all three of our partners with Kindle, with Nook and with Apple.
Rachel Chou 15:53
Yeah I think thatÕs extremely important especially with the multimedia content. I mean enhanced eBooks or things like that. Yesterday we launched an iBooks Author created book called Simon’s Cat. So Simon’s Cat is this megabrand, so it’s got over 500 million views on YouTube and we did each of the iterations that weÕre building of the product in the iBook store, we were sending back to the Apple team, getting their feedback on it, getting them to help us with the widgets that we were putting into the book and that went hand in hand so that we can make sure that when the book was launching, it was the only platform that can do everything that we wanted to do then youÕre merchandising team was involved, the social teamÕs involved and so the launch of the product has retail both on the product development side and also on the marketing side and you must be excited as well.
Evan Ratliff 16:41
Yeah I mean we try to work with the retail partners to get whatever we can promotion wise. We have a unique situation, the Kindle single store maybe it’s not a unique situation but there is a kind of intense situation where Amazon is producing their own stories. WeÕre producing stories, other publishers are producing stories and it’s a kind of curated store and of course we want ours to be featured on the front page. We want ours to go out in the daily deal and all these sort of things and thatÕs up to them. So part of it is trying to have a good relationship with them but mostly it’s trying to produce things that they are going to like and that you canÕt really judge what they are going to like so it’s all about producing the highest quality pieces we can and they tend to like to promote those I think and then– but we also sell direct so we also are very into selling directly to readers, not going through those platforms and having our own relationship with our actual brand, not just individual books but people who know Atavist know we produce and want more of that.
Laura Owen 17:45
And just to come back to Kindle SingleÕs for a second, Ken Lerer was talking this morning about how long-form journalism is probably not an area as VC firm is going to invest in anytime soon as IÕm kind of wondering how you would respond to that and if you can talk about or you guys can talk about how youÕre experimenting with length? How the Kindle Single store is working up for you guys? Love to hear your thoughts on it.
Evan Ratliff 18:09
Yeah I mean in terms of VCs investing directly in long-form there was like long-form journalism company is there something? I mean there arenÕt that many of those out there right now but I mean generally I would say thatÕs probably wise on both sides like I donÕt know that long-form journalism benefits from having VCs, necessarily invest directly in the journalism and VCs IÕm not sure it’s the best judge of whether or something should exist in the world whether or not if a VC wants to invest in it. But I think that we have investors, our investors are interested in technology more so than they are interested in the actual stories that weÕre producing I think for the most part and then we also have investors on the book side but I think in terms of links of content weÕre kind of still stuck in this realm of thinking of long-form journalism as sort of like, ÒOh, there is magazine and there is stuff thatÕs just longer than magazines, thatÕs long online but whatÕs really happening is all of the barriers between these different types of media are just completely breaking down. So what weÕre producing books, is it a magazine, we produce one every month like it doesnÕt really matter. It’s thinking of it as some sort of unit that relates to print that I think is kind of going away. So for us we have produced a documentary film thatÕs 45 minutes and we sell that and it has text integrated with it. So, what is that? Is that a story? is that a– but in terms of specifically the Kindle Single store that is really nice because it’s a place where Kindle has tried to define what a form is, what a sort of new form is, is it new length and instruct readers, ÒHey, there is this thing, it’s cheap, it’s quality, you can read it in an hour. Try it.Ó And thatÕs obviously very valuable for someone like us.
Laura Owen 19:53
Do you guys think that readers need length to be sort of explained to them, do you think they needed to be sort of warned like this how long something is going to be before you read it? What are you finding–?
Rachel Chou 20:03
Well I think it’s probably the number one complaint on the eBook reader is that people donÕt know where they are in the book. It drives people nuts, they donÕt know they are paperback. We get that because of the pricing, because you could have a book that can take you. It could be 800 pages in print and be priced at 299 and then you can pick up something in the store thatÕs 299 that you read in 30 minutes. So that has kind of blow away all of peopleÕs notion about the length of time with the product and apps have even done that more so where especially in the childrenÕs world where it’s time on screen versus time reading. So you will have a product thatÕs 299 that you can give to your children and it will be on the screen for an hour and then you have a Caldecott winning picture book thatÕs 20 pages and theyÕre like wait a minute IÕm paying 699 for this. So it’s all kind of tied together and so lot of peopleÕs thoughts about length and about price are kind of coming through and everyone is dealing with that.
Laura Owen 21:00
So what kind of pricing decisions are you guys making? Are you giving away anything for free? I know people always complain that eBooks are too expensive but what are you guys doing about that and how are you looking at different areas?
We are not giving away a lot for free so thatÕs not part of our model. We spent the weekend number one on the Kindle store, it wasnÕt free. I think it’s really about developing a marketing strategy that actually and this probably is a very at least for us it’s an evolution in the concept of publisher. So that used to be the case that you might do your first book with Little Brown and youÕre next book would go to HarperCollins and then your next book would go to Sourcebooks right? These days because of the way that weÕre doing integrated marketing across a list for an author, weÕre really interested in having that authors full works and so what we did to create the momentum for Susanna this weekend, that was part of– I would guess about a six page marketing plan that was implemented for the launch of her next book which is launching in about a week, okay? So, that whole integrated platform is really requires you to have some thoughtfulness. Pricing is going to be part of that but we canÕt give it all away for free because otherwise authors will not be interested in working with us in the future [chuckle].
Evan Ratliff 22:35
We donÕt give away anything in its entirety for free or we haven’t. We will do excerpts of 10% or something like that that weÕll give to high traffic website but I do think that we will– weÕre likely to experiment with things like I donÕt like the word paywall but the best way to describe us is like a porous paywall, a place where if someone shares something it’s cheaper or if they share with someone else and they come in from sharing, ways for people to get inside of our stories from social media without having to buy it so that we can convince them to buy or subscribe. So, not exactly giving away things for free but kind of letting people in through these different avenues as a way to entice them to kind of actually buy something.
Laura Owen 23:27
Is that something youÕre close to rolling out?
Evan Ratliff 23:29
I wouldnÕt say weÕre close to rolling it out. It’s on the roadmap as they say [chuckle].
Rachel Chou 23:33
And I would say we haven’t given away full books for free either but where it gets interesting as a brand and the author as a brand is when you have especially in something like romance, where you have an author who has 32 books in a series and you have been marketing that author for a while and then you realize that there are all these other communities out there that are all about free. And so do you do something in that community and do one of the book of the 32 that are out there into the free communities in order to get the brand awareness out there, in order to get them hooked. It’s a little like being JetBlue, my kids had pop tips for the first time. We had never seen them they were free and then all of a sudden it was like, ÒOh my god, we want these at home.Ó And so we started going through all of their stuff. It’s like that when you have a catalogue of books for an author. You come up with a lot of different ways to think about reaching different audiences but free is tricky because free is free and usually those communities have plenty to choose from to stay inside free.
So one of the great things about and this is one of the really great things about publishing today is especially for data geek like me is we have data and Kobo for example has been very clear about Michael talks about freegans, people who only like free and thatÕs all they are going to do and so converting freegans into I guess paygans would be [laughter] pretty other side of that. Making those in that transition seems to be challenging.
Rachel Chou 25:03
It is challenging, you have to really hook them with whatever it is thatÕs free.
Laura Owen 25:10
So one possible way to hook them is to hook readers and journalist to look at book clubs, look at subscription models. Can you guys talk about what youÕre doing in that area? You know it’s still new for all of you and it’s really new for book publishers in general. What are some of the things youÕre thinking about and if you have this in place already? What are some of the early lessons youÕve learned?
Evan Ratliff 25:34
Well we do have subscriptions in place, it’s fairly new for us. And again it’s partly because we think of ourselves as somewhere between magazines and book. So, we think it’s natural for someone if they like the kind of stories weÕre putting out to subscribe, to receive on a month and pay less for that. It’s not discounted the way that magazines have been discounted down to a dollar an issue or whatever but it is cheaper and we do find that people who show up for the first time will often go ahead and subscribe and it’s because of the kind of thing we do, weÕre doing long-form narrative journals and so there is a certain audience for that and the audience for that they tend to not just like the topic they like that type of thing, thatÕs our theory. So for us it’s been good so far but it’s extremely early I would say.
So we built in April of last year, we built a romance eBook club called Discover A New Love and it’s an online platform and I think there are couple of things that we have learnt from it and one of the things we have learned from it and this will not apply to you at all is the challenge of book rights worldwide. So weÕre no longer a United States Community or an Australian Community, weÕre a global community and people who are interested in Carolyn Brown are interested in Carolyn Brown across the world. Books are not setup like that, I mean we just donÕt have that built into our thinking and it is something we got to take on and I would urge us to take it on like now.
Rachel Chou 27:17
I mean weÕre a little bit the opposite because of us getting into the mix later of the 3000 books that we have on-sale right now and growing almost 2300 of them are World English and so weÕre looking and everything is digital advertising and social media et cetera. So weÕre able to actually have our core group here in United States and I just got back last night from the London Book Fair where we have started to team in London and weÕre meeting with all the retailers there because weÕre able to do things and replicate them. YouÕre right, really different.
It’s a solution we need and we donÕt have. I mean weÕre going to do an experiment I guess it’s going to be in the next five or six weeks. We do a lot of experiments, everybody up here weÕre really into experimenting. So weÕre going to do an experiment that is going to have millions of page views because of the partner that weÕre working with and unbelievably–
Laura Owen 28:07
WhatÕs the experiment?
I canÕt tell you [laughter]. But the challenge of finding a book that would work worldwide was actually very really.
Rachel Chou 28:18
I believe that.
And youÕre doing a romance readers club?
Rachel Chou 28:23
Yeah it’s a little different in that. WeÕre just launching a Retro Reads Program. It’s starting with romance but you know our company was setup really to talk about authors backlist which were the books technically it’s a book that was published more than a year ago but it’s a lot of the books that were published in the 70s, 80s and earlier. So we have these iconic authors with all of their books and so Retro Reads is a way for us, it’s curated– you have to apply to get into the program and what we do is two books a month on a theme. So it could be two from one author, or two different authors and we kind of– we work with the people on the program to have a community discussion and get feedback and then they go out and put their reviews out in the world. So it’s not an open program for 100s of 1000s of people. WeÕre really thinking about the group that we want to have the discussion with in order to go further. So thatÕs a marketing program but to get to a really core group of readers.
Laura Owen 29:21
We have like 30 seconds left, I just want to see if there is one or two questions in the audience, if not. Yep go ahead.
IÕm curious, do you think that the big publishers that still exist for few years. Are anyone of them going to be like the Google or the Apple of publishing or they all going to end up being the Yahoo or the AOL? [laughter].
Random Penguin or Penguin Random, yeah, could be I think thatÕs certainly the play they are going for.
Rachel Chou 29:56
Well certainly just because of the size they are going to be a huge player but it’s really hard when youÕre building something the size of the Titanic to move quickly and to be experimental and do all those things which is why all of us are able to do a different path. For us it’s great when all the consolidation happens, it just makes–
You need to know that there has never been more opportunity in book publishing than there is today and thatÕs kind of a remarkable thing to be saying [chuckle] and very unexpected for most of us.
Laura Owen 30:28
Awesome, looks like a place to end. We will see where weÕre next year. Thanks so much.
Rachel Chou 30:31