This past week, publishers across the board essentially told their accounts that current contracts would not be honored. Publishers leveraged Apple’s contract for the new iBookstore to strong arm other accounts to fall in line with a new model. Thus begins the Agency Model experiment. Accounts, after panicking, played along, and now everyone is (seemingly) happy. But, what exactly did publishers gain by rewriting the rules of engagement in two days?
Many have voiced the opinion that the consequences of such hasty settlement are going to be felt sharply and for a long time. I tend to agree. In fact, I think the biggest mistake made by publishers quick to push new contracts through was the mistake of near-sightedness. Rapidity beat out thoughtfulness, a little foresight, and strategic planning.
Here’s why: The terms of these contracts were adapted from terms written for print products, with adjusted syntax to accommodate the realities of digital products.
Control over pricing is not the only issue to consider.
This makes no sense whatsoever. If publishers want to move beyond putting out sub-par digital products only for the sake of being represented in the marketplace, we are going to have to start running our digital business like a business. We need to build business models that make sense for digital products. This includes new contracts and terms, not offshoots of print contracts and print terms; rather, we need a digital starting point when making the rules that will govern digital products.
Let’s take a step back for a minute. Let’s say print didn’t exist. Let’s say we only had digital publishing as a reference. Then, what would the contracts look like? What would we think of the royalty system versus revenue shares? What would we demand of our accounts? How would we deal with pricing? How would we build a dynamic business?
So much of what our print business is predicated upon simply does not apply to digital products: returns, reprints, sell-in, shelving, warehousing, reorders, section buyers. So, what if we just threw all the rules out the window and started anew?
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A year ago, publishers finally got the message that XML was the way of the future in terms of content. Right now, most publishing houses have reorganized their workflow to reflect this change; although publishers are in various stages of implementation, there has been an industry-wide acceptance to incorporate XML into the language of publishing as a primary factor in how we relate to content we acquire.
Now is the time to start the conversation for a change in digital business model. In a year from now, our digital businesses will look nothing like they do today. The things about XML that make it appropriate for content are also the things that make its principles appropriate for a digital business model: XML is modular, nimble, strategic, and data-rich.
Modular: Sometimes called ‘chunkable’ content, the modularity of XML content is one of its most important features. The ability to move content pieces around effortlessly is one of cornerstones of the argument to adopt XML conversion. The same should be true of a digital business plan. We need to come up with different modules that work together and separately, that let us define the most appropriate set of terms and circumstances under which to operate reflective of the product offering. For example, we could create an ‘eBook’ module, an ‘app’ module, a ‘print book’ module, and a ‘chapter excerpt’ module. Then, when we acquire content, we could say: this will become and eBook, a print book and an app, but we will not be selling a chapter excerpt. Done: three modules are combined and we have a plan to work with. Rev shares, royalties, terms, partners and more would be defined in the separate modules thus providing a roadmap for each iteration conceivable for content.
Nimble: The digital game is inherently nimble. Embracing the quick-paced shifts that take place across the internet can only be done by adopting a business model that has provisions for these changes. This is the exact opposite of what we have now with our physical book products sitting in bricks and mortar retail stores. Yesterday, eBooks didn’t exist, so they were ignored in business models. Today, they are being hastily written in. But, what about tomorrow? What will exist tomorrow that we didn’t write in today?
Again, a modular business model as described above would be, by nature, nimble. Instead of having to rewrite entire contracts and revise entire businesses, we could simply add a module that defines the rules bearing on a new product of which we previously had no conception. New products could be integrated into the larger mix with little or no disruption for publishers or accounts.
Strategic: Right now, business models in this industry are reflective only of that which we are able to see today. This is the earlier mentioned problem of near-sightedness. If we want to be able to adapt to future innovations in our industry, strategy needs to be considered now! Take a look at the cell phone industry. The first cell phone was a clunky grey box that was bigger than a person’s head. Less than 20 years later, we all carry around mini computers with integrated cameras which we call phones because they make calls, too. The grey box phone is where we are at with eBook technology; we’ve only just begun. If you cannot foresee the future, and how quickly it is going to move, you’re already dead.
Data-rich: One of the best aspects about XML is its ability to store useful data along with content that has absolutely nothing to do with face value usage. This metadata is secreted away in tags which, essentially, aggregate themselves through use of content management systems (a pivotal milestone in any successful XML workflow). As each file gets used by those who touch it along its path to publication, tags gather and help make the content searchable and more exploitable in the future. This is equally possible with our business models. We need to start storing data in the modules themselves as to how each one can be applied, when it is appropriate to use, the types of products to which it applies. Terms for each module that not only defines it, but defines how it interacts with the other modules can be carried in each module separately. Pricing matrices, for example, could be stored in each module.
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One thing upon which we can, perhaps, agree: A year from today, the digital landscape will be unrecognizable. We need to address this today, not in a year as we just did with our digital contracts. Scrambling for impossible deadlines, not taking the time to think things through, and making significant changes in our business within less than a week are not ways to move forward in a smart way.