eReaders & the future of textbook publishing

Reprinting an article that appeared in The Assignment Report September 2009 edition with kind permission. The publisher, Ed Tranham, asked me to do a thought-piece on the impact that eReaders are going to have on the world of education, and textbook publishing in particular:

Amazon’s Kindle eReader device has generated plenty of headlines this year predicting the imminent demise of printed books. With an estimated 1.2m Kindles sold, and $1bn annualised Kindle eBook sales, Amazon certainly does seem to have found something that consumers want.

So when the magazine-sized Kindle DX device launched in May, much was made of a partnership with Cengage, Pearson and Wiley (joined in August by McGraw Hill) offering certain HE titles in Kindle format for a trial starting this Autumn with six US colleges including Princeton. The aim is to cut the financial and environmental cost of paper textbooks. However, this experiment seems doomed to failure.

Nobody doubts that the days of paper textbooks are numbered (although they will equally certainly enjoy many twilight years). However, the idea that simply recreating paper texts as electronic versions is going to revolutionise learning is an absurdity. The major textbook publishers realise that the future lies in harnessing the multi-media and interactivity of the internet to evolve textbooks into integrated teaching and learning solutions. Pearson’s MyLabs, Wiley Plus and McGraw Hill’s Connect point the way as examples of VLE’s (virtual learning environments), combining eBook text access with multimedia enrichment, online exercises with real-time assessment, tracking for both students and instructors, annotation tools for note-taking and revision, customisation tools for instructors, and some level of integration with college-wide LMS’s. This is a powerful combination of benefits, with significant development costs. However, these exciting web-enhanced textbooks are also proving slow to take off. While there could be several reasons for this, I would assert that the idea of paper textbooks being replaced by students reading on a laptop (or netbook) screen is itself as flawed as the Kindle DX pilot. Why? Because traditional computer screens are simply inferior to paper in terms of legibility, portability, durability and annotation – four critical requirements for learners. Why would students, even young hip Facebook’ers, adopt a new technology with so many drawbacks to what went before?

Which brings us back to eReaders. The current generation of eReaders offer eInk screens which mimic the quality of ink on paper, reducing eye-strain and extending battery life. They are also wireless (Kindle) and touch-screen (Sony’s PRS). But to create the book industry’s equivalent of an “iPod” moment, they will also need to be colour, web-enabled, global (Kindle is still US only) and cheaper (the DX is $489). I also believe that they will need to be eWriters – enabling saveable freeform note-taking and scribbling. Once armed with this combination of features, eReaders will truly overturn first the mainstream book publishing industry, followed by textbook publishing (as well as newspapers, journals and magazines for good measure). I suspect that eReaders will also usurp laptops as a digital device we don’t leave home without.

I have predicted elsewhere (http://bit.ly/Fvopm) that such devices will appear in the second half of 2011, with widespread adoption occurring in 2012. So we have less than three years to prepare for the start of this new world. Having said that, the full impact on the world of education will be felt over a good 15 years. Here’s a potential scenario for where we are heading:

Jane is 16 and doing a history homework assignment (“The depression of 2007-2012”) flopped on the sofa. Her teacher mentioned it and then sent the full brief wirelessly at the end of class to all students’ eReaders. Having read the recommended e- text (Brown & Darling’s “caught between a northern rock and a hard place”) and watched the accompanying video, Jane gets past the warm-up exercise second time round (after some personalised feedback on where she went wrong first time). She has just searched for and reviewed some of her own relevant notes (all written during class with her ePen and saved on her eReader’s curriculum tracker) and is now scribbling some ideas down, aided by a mind-mapping app. When she has a theme and logical structure developed, she’ll hit the OCR button to render her notes into essay format. She’ll then move to her desk and finish off the formal write-up, before submitting the completed assignment. Her school’s network records this and will flow all assignments to teachers for assessment and tracking (again, on their eReaders), with her grade history fully searchable via her eReader.

No doubt eReaders will have their initial impact in HE in the US, before spreading to HE in the UK and elsewhere. Once they have proven their value and costs have fallen, funding models will be developed to roll them out in schools, assisted by a new generation of teachers familiar with how to use them effectively.

The business model accompanying the introduction of eReaders is hard to predict. In HE, hardware costs will probably be expected to be stumped up by students, in return for lower textbook prices, and possibly embedded in tuition fees (in the US at least). Amazon is currently riling publishers by taking 70% of ebook revenues and retaining total control of pricing. However, workflow-embedded textbooks are a very different proposition to selling a basic eBook. It is likely that two or three competing VLE applications will emerge (quite possibly spun out of major publishing houses), with publishers developing new “titles” that are compatible with one or all of them – as functionality will be broadly similar. Revenue-sharing deals will be cut between content- and VLE-owners. VLE’s will either be browser-based or applications which can run on eReader operating systems. This should foster an era of innovation in teaching and learning materials, as new features are added to eReaders and VLE’s and authors in turn push the boundaries of how to exploit them. Where this leaves device-makers to make their profits is unclear; Apple makes a lot more from iPod hardware sales than from iTunes, but Amazon is ultimately more interested in ensuring that it takes its cut on every Kindle eBook sale. Other eReader makers are hedging their bets so far, but none (with the exception of Apple itself, which is poised to enter the fray within the next few months) has sufficient market power to avoid open formats. Which is good news for publishers, who need to nurture a competitive landscape which isn’t dominated by Amazon’s and Apple’s closed eco-systems. And a key part of doing this is ensuring that traditional-format textbooks are licensed as eBooks for a range of devices, to avoid Amazon’s 70% cut becoming the benchmark for the sector, and a punishment for inaction…

eReaders limited by device fatigue?

Good article on minonline highlighting the challenge for eReaders of creating a need for a new device.  It asks “how many people really want to add an eReader alongside a mobile and a laptop when they leave their home?” Not for the first time, my riposte could be attacked as too old-school. But I would ask – what proportion of the population actually leave their house with a laptop in their satchel or briefcase? Yes, probably a fair % of the sort of people who the author of this article hangs around with. But if I counted the people I see on the train and on the streets each day, I’d say it’s closer to 5%. Just as importantly, I haven’t seen this % climb significantly over the last couple of years – nor do I see any driver of growth over the next few years. Compare that to pretty much 100% who already carry a mobile phone, and a rapidly increasing % whose mobile is a smartphone. On the other hand, 75% of people I see are carrying some form of paper – either a newspaper, magazine, book, or notepad. So my reasoning is that the next-generation of eReaders (ie wireless, touch-screen, colour, document-sized, light-weight, web-enabled, and cheaper) – particularly when they are fully featured eWriters too (see my earlier blog post) – will definitely earn their place in Joe Public’s bag; lighter and more versatile than hauling around a stash of “ink on dead trees”.  Meanwhile, the laptop can battle it out with the desktop as the main computing device for home use, offering the added benefit of portability… Anybody care to challenge this perhaps unfashionable assertion?

Murdoch aint mad, he’s preparing for eReaders

Today’s announcement that News Corp will start to charge for full online access to all its titles is being generally derided. Taken as a standalone move, I agree that it won’t work. I don’t see more than a trickle of subscription revenue no matter how hard they promote. And I doubt it will even be enough to compensate for lost web-advertising. So he is consciously taking a decision that will (peripherally) hurt his bottom line. However, Murdoch isn’t stupid. His thinking is strategic and is about changing customer attitudes. I don’ t believe he’s thinking about the web here – frankly, I think he has probably written off the web as a profitable channel for serving News Corp content. And if he hasn’t, then I am guilty of over-rating his intelligence, as this is truly a lost cause. Murdoch’s move is about preparing the ground to hit the reset button in time for the eReader  revolution. In other words, to use the opportunity presented by a new platform in order to get people to pay for news content again. Which means pulling back free content in order to re-educate people about its value. I’ve written elsewhere why I think this is sensible to some degree for almost all publishers. However, I also think that News Corp’s stable of general news titles is least well-positioned to take advantage. So overall – it’s strategic and sensible, but it’s a defensive move and a gambit. I have no doubt that Murdoch can do no more than slow down the decline of News Corp. Its glory days belong entirely to the past.

Read my feature article in InPublishing magazine on eReaders

InPublishing magazine’s August issue is being mailed out, and my lead feature article has now been uploaded to their website. I hope you enjoy it – to give you a flavour of what it’s about, here’s the stand first:

“Where do you stand on the great eReader debate? Not sure? Happy to wait and see? Well then, you need to WAKE UP! According to Dominic Jacquesson, they are all set to revolutionise our industry and you need to start planning right now.”

I argue in this article that the iPod moment for ethe magazine and newspaper industries will come in the second half of 2011, by which point I believe that full-size, wireless, colour, touch screen, multi-media eReaders will be available, with prices falling rapidly thereafter as sales volumes grow and multiple hardware suppliers get in on the act. And if you’re a publisher who doesn’t start preparing for this reality now, you’re going to go the way of the dinosaurs…

The eReader killer app = eWriting

Life at work for all but the most hardened geeks still involves a fair amount of writing in a paper pad – either for capturing meeting notes, scribbling to-do lists, or sketching out conceptual ideas. Trying to hold a meeting whilst tapping away on a keyboard just doesn’t work if you want to (and I hope you do want to) maintain any non-verbal communication. We then waste time manually transcribing these analog notes into digital formats – or we can’t find  the time and those valuable notes cannot be referred to or shared. The doodled breakthrough diagram often gets lost for ever, because it would take too long to re-create in Powerpoint, or look bizarrely egotistical if we went to the trouble of scanning it. We then either throw away our old paper pads, or they collect, unloved and virtually unusable. This is all ripe for digitisation! The first tentative steps are being taken already – see this video demo of the forthcoming Plastic Logic reader with basic touch-screen annotation.  Fast forward to 2012 and I envisage eReaders with sophisticated stylus input devices and clever OCR software (as well as all the other good stuff – full form factor, colour, wireless) so that we’ll finally be able to digitise notes and sketches in real-time, making them easy to categorise, search, share, synch, etc. And that, my friends, will be a device truly worth keeping with on your person alongside your smartphone – and quite possibly replacing your laptop…

Opening up is good but it costs eReaders

Amazon takes a 70% revenue cut on Kindle purchases. Apple takes a 30% cut on App Store purchases. Both are closed-system business models. Amazon and Apple get away with it only because they can. But it also means they have a mixed-revenue business model, and can afford to discount on hardware. Other eReader device makers are going to have to be more open about download formats. Which means they’ll miss out on those revenue shares. Which means their hardware will stay pricey, allowing Amazon to reinforce its dominance. Right? Maybe not - subscriptions to magazines, newspapers etc still offer device makers the chance to intermediate delivery – if they choose to take it. Kindle’s the only wireless show in town so far, so will be interesting to see which way Plastic Logic and other eReader device makers go with this decision. The other question is whether publishers dig their heels in and are able to force Amazon to loosen its grip. I’m not convinced they will, because Amazon is the proof that content is no longer king…

Digital Strategies for Publishers – A Roadmap

As a first “supersized” post for this blog, I had been thinking for some time about a topology of optimal digital strategies geared to different forms of content. Then a couple of weeks ago I read a great post on Rory Brown’s excellent blog which pre-empted some of my thinking. I agree with his thesis as far as it goes, but want to push it further in two ways; first, to include magazine publishing as well as newspaper and specialist publishers. And second, to consider the impact that eReaders will have on different categories of the print publishing industry. This post recognises six categories:-

1. National (general) newspapers
2. Local newspapers
3. Specialist information providers
4. Consumer magazines (general)
5. Consumer magazines (specialist)
6. Trade magazines

Ideally I’d like to broaden the thinking to include broadcast media – TV and radio – but that will need some more time to clarify some emerging themes.

1. National (general) newspapers

Prognosis: This is a commoditised space and there is only one way the sector is going as a whole. Plenty of renowned brands with distinguished histories, but an out-dated consumer proposition in this age of instant and multi-media news coverage, and an out-dated business model given the free availability of online news and the migration of classified advertising to specialist online directories.

Web strategy: Don’t bother with paywalls. Take-up will be confined to a narrow band of loyal older readers so little growth potential either. Put all your content online (but don’t shout about this) and maximise traffic. Monetize via online advertising and lead generation. By now you know if you’re going to be one of the few winners from this approach (eg The Guardian), and if not then continue to slim down your business to stay alive. In BCG terms you’re a cow that’s steadily mutating into a dog.

eReader strategy: Not a big subscription opportunity. You should participate, if only to protect revenues from readers who would rather migrate from print editions. There may also be an advertising-driven eReader future for some titles.

2. Local newspapers

Prognosis: Whilst suffering the same pressures as nationals in terms of consumer proposition and (even more markedly) business model, locals’ content is less commoditised. Those titles which retain deep roots with their communities should survive. But they may also need deep pockets to see them through a difficult few years ahead…

Web strategy:  The web should supplement your print title through participation (both for readers and advertisers), and needs to keep the brand alive for a younger generation. But you don’t want to accelerate a decline of print copy sales, so hold back full content for print only. I don’t see paywalls generating anything more than a trickle of revenue.

eReader strategy: This could be transformative. Locals have failed to develop significant subscription volumes, but by making it really easy to subscribe, with a high-volume low-price model, and with few (if any) direct competitors, eReaders could turn this around. And the interactivity offered by eReaders could win back classified advertisers.

3. Specialist information providers

Prognosis: Niche players in both B2B and B2C areas can flourish if they look after the quality of their content and out-market competitors. And there are plenty of ancillary revenue opportunities to supplement a tiered subscription model. The speed of migration from print to online will vary markedly according to a) data-intensity of service, b) importance of real-time, and c) reader engagement. Many information services of course are already online-only, but there will be a continuing place for special reports, events etc.

Web strategy: Paywall access to your full/premium content. But, depending on how tightly defined your market is, you’ll need to have a lot of free optimised content to draw traffic and to have an effective means of moving customers up the value pyramid. Registration and stickiness will often be more important than SEO, particularly in B2B niches.

eReader strategy: Data services are better-suited to web-access, but where mobility and/or design matters more, readership will migrate from print as eReader ownership widens.

4. Consumer magazines (general titles)

Prognosis: Magazines have been somewhat protected from the web because they are more experiential with design and portability being critical components of success. They also don’t rely on classified advertising, with brand-conscious display advertisers (65-70% of revenues) being wary of embracing the web. However, they take up a diminishing proportion of media-time which tracks age. So they need to become more compelling to the young in order to secure their long-term survival.

Web strategy: You should be using the web to supplement your print product and to drive reader-engagement. Luxury brands will slowly engage with the web, but accept the advertising limitations in proportion to how upmarket you are.

eReader strategy: It will take a while, but ultimately eReaders will revolutionise this space, once devices can sufficiently mimic the “iodt” experience and as uptake reaches different demographic groups. All advertisers will then fully embrace the possibilities that digital offers their brands. As I have argued in a recent article in InPublishing (not yet posted online), I predict this revolution will begin in earnest in H2 2012.

5. Consumer magazines (specialist)

Also largely protected from the web, specialist titles have more compelling reasons to be active online too, as niche communities are keener to interact and engage. There are also specialist lead-generation and e-commerce opportunities in every niche, be it mountain bikers or board gamers. Some content should be restricted to subscribers only, and you also want to force registration as far as possible too, as your survival requires a tightly defined readership. The eReader revolution will be as fundamental as for general magazine titles, and with even more opportunities taking advantage of interactive advertising.

6. Trade magazines

Prognosis:  Trade titles have obviously suffered badly from the recession, and being completely dependent upon advertising makes them doubly vulnerable.  But there will be places for titles in every sector, so those who weather today’s storm will be well-placed. It’s all about owning your community through excellent content both online and offline.

Web strategy: Trade magazines are all about lead-generation, and B2B advertisers have embraced the web. You shouldn’t be differentiating at all between print and web, with content freely available. Usually tight registration-controlled access and stickiness will trump SEO considerations, and be creative in how you can serve up leads for advertisers.

eReader strategy: Mobility is a less important consideration for trade magazines than for B2C, but eReaders will substitute for print magazines which will be a bonus in terms of cost and value-added for advertisers.