The eBook Space


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What I learned exploring a potential ebook startup idea.

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The eBook Space

  1. 1. eBooksWhat I learned from exploring a startup idea in the space Alicia Morga
  2. 2. The Big Trends Technology Meets Book Publishing Big trends: • Growing ranks of self-publishers • Authors posting book content before publishing • Increased online marketing of books*I don’t include conversion into .epub and .mobi files because that’s already becoming a commodity by Alicia Morga
  3. 3. Current eBook TrendsDiscovery of ebooks – players include Wattpad, GoodreadsSubscription services – ebook clubs; players include FarfariaInteractive ebooks – line blurring with apps; players include mainly children’s bookdevelopers like Duck, Duck, MoosePersonalized story-telling – choose your own ending; content based on readerengagement; players include ColiloquyContent meets commerce – starting to see with magazines (Lifestyle Mirror); hasn’tbeen done yet in ebooks but example would be Stipple meets Tapestry by Alicia Morga
  4. 4. Old vs. New Publishing Old Publishing Model New Publishing ModelTitle Acquisition Agents CrowdsourcedPayment Advance, limited royalties Limited adv, more royaltiesEditing Editors EditorsPublishing Print/retailer distribution Digital/online retailersSales Sales teams court bookstores NoneMarketing Pay for placement, PR Email, online promotion But in many ways the new ebook business models I’ve seen are just replicating the old model in the digital space. by Alicia Morga
  5. 5. New New PublishingA Digital Publishing Company has to look different:• Has to do user research (e.g., technology to uncover emergingcontent)• Publish in more digestible formats• Provide immersive experiences• Establish direct consumer relationships and servicesNatural extension of all this will be a new definition of “ebook.” by Alicia Morga
  6. 6. U.S. MarketBook Market Size: $27.94 billion Target eBook audience: Female (women accounteBook Market Size: $2.07 billion (2011) for 64% of all sales)eBook sales account for 15.5% of publishers’ revenues 35 to 65 (average age of the American book buyer is 42)764,448 self-published titles in 2009 Household income of $40K6 major publishers plus (in 2009, 32% of books purchased were from8-11,000 new publishing companies created each year households earning less than $35K)3-400 medium-sized publishers86,000 small publishing companies by Alicia Morga
  7. 7. The LandscapeEbook authoring tools eBook discovery eBook PaymentseBookBurn GoodReads GanxyVook Findings GumroadPressBooks Wattpad ValoboxSmashwords Social Reading AppsBookit Copia CopiaLulu Social Samba ReadSocialInkling Kno BookShoutAdobe Indesign Libboo ReadmillCalibre Zola Books AspindleBookBaby BookPsychiceBookCake AnobiiReadlist Shelfari ReadOyster by Alicia Morga
  8. 8. The Landscape (cont.)eBook Analytics Author EventsHiptype TogathereBook Subscription eBook publishersFarfaria ColiloquyBardowl Aspindle Sourcebooks Paper Lantern Lit HyperInk PresseBook Marketing PlymptonPubMark AtavistBookDailyAuthro by Alicia Morga
  9. 9. Industry FeedbackI talked with a number of publishers and no surprise, they say rumors of theirdemise are greatly exaggerated. Why? Because they understand the secret-saucethat is not dependent on the format of books; they know how to edit, package andmarket stories.What are they concerned about?Publishers say physical bookstores are disappearing and the two big consequences forthe publishing industry are(1) Content discovery is more difficult(2) Amazon becomes the only channel by Alicia Morga
  10. 10. Industry Feedback (cont.)Other comments from publishers and experts in the space:• Most book marketing is through public relations; the best way to sell a book?Get it on The View.• Most books not viral – books require a different time investment; but viralitydoes exist• The first 4-5 weeks after release accounts for the majority of a book’s sales• Publishers have very little money for marketing, are fickle and lack patience• 24 months ago, 31% of books bought were found in physical stores; today it’s17%• Title, graphics, description matter – it’s what you react to when you’rebrowsing. If it doesn’t engage you within one second it’s not going to work. by Alicia Morga
  11. 11. Industry Feedback (cont.)• Ask people if they want curation for books and they will throw up all over you – they findit offensive; seems to say we’re smarter than you• People do buy off of lists or rankings – not seen as the same thing as curation• 5% of past book buyers visited GoodReads and just under 1% of books bought werethrough that site – it’s proven more effective than social media but you wouldn’t touchthat site unless you were a really avid book buyer• Books are going the way of the music industry and CDs• Pure play bookstores are morphing into boutiques with emphasis on high-end stationeryand toys• Publishers see self-publishers as part of a service business – some are entering thatmarket because they see it as another revenue stream; example Penguin’s acquisition ofAuthor Solutions for $116 million by Alicia Morga
  12. 12. Industry Feedback (cont.)• Publisher advantage used to be “come to me and I’ll put you in stores” but withoutstores don’t have this unique advantage anymore• Of note: JK Rowling’s PotterMore site – she’s taken control of her digitaldistribution• DRM not an issue; see Tor• Non-fiction requires a level of credibility – so a publisher brand is important here;but for fiction it is not• Piracy is a red herring – Amazon is a much bigger threat• Books in browser – it’s a question of connectivity – it won’t work on a NYC subway• People don’t read on laptops for pleasure by Alicia Morga
  13. 13. Industry Feedback (cont.)• Interactive ebooks don’t sell well because it’s not as simple as sticking video in the file• Enhanced ebooks are like a film – it’s not about the technology, it’s about the story• On a tablet all media are equal in terms of access ; they are no longer single purposewhich is a problem for ebooks• There is no programmatic discovery taking place; it’s mainly word of mouth and WOMdoesn’t support new books – only older books• People who read a lot will find ways to get books – 40% of U.S. adults are regularbook buyers• Occasional book buyers don’t really look for books by Alicia Morga
  14. 14. DiscoveryHow do people discover new books/eBooks?From Consumer Survey:Learned of books through friends, NYTimes, blogs, Amazon, iBooks, 14% ofrespondents mentioned GoodReadsFrom Industry Conversations:Recommendations come first from a friend (75% of recommendations happen in aconversation) and second from a retailer.The main problem for a startup thinking it will tackle the discovery problem?Most consumers don’t believe they have a discovery problem. by Alicia Morga
  15. 15. What About Amazon?Their retail front is a great beachhead, but the publishing they are now doing isthe real concern. In this space, content is king. You own the content peoplewant, you win. So the first way to beat Amazon is to simply be a better story-teller. Other potential ways: Amazon’s Weaknesses 1. Browsing is bad 2. Amazon doesn’t share data 3. Amazon doesn’t connect pubs/authors with readers 4. Reviews can be gamed, no marketing help 5. Pareto effect by Alicia Morga
  16. 16. What are the Opportunities?I modeled out a few different potential business models and in every case, in order tomake any real money you have to own the content and to make even more, you haveto own the distribution.At an average price of $2.99 for a fiction ebook you have to be able to take as muchof that $2.99 as possible and you can’t do that if you’re giving away 30% to retailers.Publishers could create their own sites (and some have) that allow for direct purchaseand make them mobile accessible, but difficulty still exists: driving traffic to the site,direct purchase is problematic (book delivery not simple), and discovery is limited.The only way I believe you can get big then is to own the content, build a character orstory brand and if you can’t own distribution, derive ancillary income from othercommerce extensions – ala the Pixar/Disney model but for ebooks. by Alicia Morga
  17. 17. Other Ways to GoIf you’re core competency is not story-telling, here are some other potentialopportunities:1. Build a technology feature you believe one of the big six publishers will want and hope for an acquisition;2. Create ROI marketing tools for self-publishers (this is one of the most over-looked problems with few real solutions)3. Become the O’Reilly Media for self-help books or a category of non-fiction books and supplement your revenues with conference fees What do you think? by Alicia Morga
  18. 18. Comments? Questions?You can reach me@AliciaMorgaor through my website by Alicia Morga