Joseph is a senior research analyst covering digital media and technology for Enders Analysis. He writes about the internet and technology and their impact on traditional media, advertising and consumer services. He has led research on ad blocking, the evolution of mobile platforms and the rise of voice interfaces and digital assistants, and what they mean for media. Joseph has also consulted for large media companies to help them understand the impact of the digital transition on their legacy businesses. He covers the trade publishing industry from the perspective of new technology, and has bylines in the Bookseller. Prior to Enders, he analysed FMCG markets for Kantar Worldpanel.


Summary of Contribution:

While the trade books market in the UK is resilient in the face of technological change, incumbent publishers are weakening in certain ways. Certain tools that publishers rely on to shape the market and reader preferences are being undermined. Relationships with book retailers are threatened by the rise of generalist retailers, Amazon and (before it) supermarkets, such that books are competing for influence with all other product categories. Publishers’ ability to break new hit books is threatened by a retreat in marketing, to concentrate on sure things and presumptive bestsellers than the middle of the market. And while publisher access to institutions, in particular print media, remains good, the impact such institutions have on the public is declining.

This reduces publishers’ ability to address an underlying fundamental threat, which is the rise of genuine price competition in books. Ebooks, self-published and published by Amazon, can cost a tenth of the price of traditionally published books (if they cost anything at all). This means that traditional ways of picking books, such as loyalty to authors or marketing, are diluted by price differences. Book titles are clearly not freely interchangeable, but there are some areas where this price competition is already beginning to bite.

In particular, genre fiction is at risk. This area is traditionally a locus of profits for publishers, due to low advances combined with high author output and high reader demand. These factors are what make self-publishing a threat. Authors stand to lose little by foregoing advances, and benefit most from higher royalties, while the price advantage means readers of genre fiction, buying multiple books a month, can save significant sums.

The publisher response to this threat must avoid certain pitfalls. The urge to cut costs, as a response to pressure on a profitable segment, will be strong, but in certain areas should be resisted. In marketing, brand advertising in print and out of home is a differentiator for publishers which self-published authors don’t have access to.

Editorial and curatorial functions could also come under scrutiny; both have moved up the supply chain, with agents and authors taking on many editorial functions that might have once sat with the publisher. The risk is that publishers outsource more of this role, relying on printing and access to retail as the differentiator. Experience shows that technologies such as printing and distribution almost never function as a moat in the long term. Product and talent are much more reliable, even if they require investment.

There are strategies publishers can usefully employ to protect their position. First, they need to invest in all their authors, in order to keep the traditional route to market attractive for would-be authors. Most authors may not be profitable, but maintaining the pipeline of profitable ones needs investment in the whole pool.

Second, they need to concentrate on areas of strength and differentiation: curation (taste), and editors. Make sure prospective authors know the best editors work for publishers, and have time to devote to their books.

Third, they should rebuild author loyalty, through an approach of “reader relations management”. Publishers could help their authors maintain touchpoints with readers outside of the book release cycle, and the experience gained through doing this with multiple authors would be invaluable.

Finally, they must protect print books, where publishers have the most advantages. They have already done a good job of differentiating the physical product by making books beautiful objects; now they must differentiate the physical retail experience, and encourage investment in physical ecommerce by dedicated book retailers.