A Changing Industry - PEST

The politics of the publishing industry are shifting, from the powerful to the everyman. While the rich aristocracy, who owned the publishing companies, formally dictated what was considered ‘good writing’ the ability to self-publish online is providing an open platform for the public. Although this opportunity is not without its problems, the legalities of ownership rights being one, this semi–amateur nature of digital publishing changes the traditional narrative of the industry.

Economically speaking, this is a positive change. For aspiring authors, or those so far relatively unknown, online publishing may be more profitable as they eliminate the middleman. Online publishing can also increase the distribution, which would increase circulation, whether it be books or magazines, this could only be beneficial to profits. The nature of digital publishing and the popularity of the e-reader has even widened the industry, with an opportunity for profit for outside companies. As our increasingly green society steps away from the paper trail of traditional publishing, and towards the economically friendly e-reader, hardware creators such as Apple and Amazon stand to gain in the digitization. It is not just the author and publisher who will make money.

With the advancements of technology in the industry, publishing is becoming increasingly social. Online publishing is impacting on the authorship of books by making it a social rather than solitary occupation; blogs that post chapter-by-chapter can allow the feedback from readers’ commentary to effect the direction of the narrative. Social media allows you to be an engaging community rather than just an isolated reader. The popularity and convenience of e-readers is no surprise considering the shift in attitude towards technology in recent generations, compared with our older relatives.

The technological advancements have without a doubt massively affected the publishing industry as it tries to adapt, and with their potential for constant improvement they seem able to change it further in the future. This effect can threaten traditional publishers and force them to compete in order to survive; such as Barnes and Noble and the ‘Nook’ (Erin Carreiro: Electronic Books: How Digital Devices and Supplementary New Technologies are Changing the Face of the Publishing Industry). For the consumer, the technology can be both positive and negative. While the technology does allow you to connect with the text and use social media to input your opinions, having a digital version with constantly changing commentary on it means you never get a complete, single version of the text. Either way, technology is by no means destroying the publishing industry, instead it is providing extra platforms through which we can interact and consume. 

Digital Media in the Publishing Industry

Reading alone has become as old-fashioned as print itself. Thanks to the growth of technology, readers are now seeking to form online communities around their favourite authors and books. The politics of piracy that have plagued the music industry with the growth of digital has been suggested as a similar threat to the print industry. However, by embracing  this change, we have created a whole new way of enjoying books, not threatening them. Ranging from the ‘sticky websites’ Hollander uses to describe online forums and websites, to everyday social media, the e-book allows its readers to post information, thoughts or even share books themselves online, transforming the art of reading into a new, sociable experience

The current economical climate goes hand in hand with technological aspects of today’s society. Reduced print circulation and general income alongside price rises has forced the publishing industry into seeking innovative ways to get their materials read, and still make a profit. Online publishing reduces the costs incurred when producing material in print. Digital media is not only cheaper than print, it is more accessible and user friendly. (World Newsmedia Innovation) The convenience at reading materials on the go can result in clawing in an unexpected  reader, in addition to saving on expenditure.

Furthermore, the social habits of consumers has changed considerably in this new digital age. Hollander also discusses the constant need for innovative concepts and ideas, leaving customers craving the next big thing. This fast-paced, instant culture has developed a need for us to have the newest craze as soon as possible, and this is what digital was created for. E-books mean that customers no longer have to wait, or leave the house to buy the next best seller: it’s already there. 

Technology is the driving force behind the key changes in the publishing industry. The need to create new technologies, or to use existing ones in an innovative way has become the focal point of our society, the publishing industry no less. In a world where nothing exists if not on a screen, books have had to reinvent themselves to reach a wider audience. The invention of e-books, in addition to online publications has not only kept the industry up to speed with the rest of the world, but it has also created a new way to access our most valued materials.

Looking At The Bigger Picture - A PEST Analysis on the Media Industry

Businesses in the media industry have straight forward value chains.  However, the digital revolution is allowing them to reconstruct.  This process is allowing businesses to become more innovative.  But how do they do this? 

Publishing digitally is growing.  Different platforms and devices are being introduced constantly, providing consumers with a new way of reading.  Communities are being created online, allowing people to engage through books, magazines, blogs and long-form journalism. 

The digital distribution of books creates engagement with readers.  Books can reach a much larger audience, which brings in more revenue. 

Inevitably, the continuing growth of the e-book (for example, Amazon's kindle) in this industry will mean the death of the printed book.  The threat lies in innovation – how do publishers think of new ways to attract readers?  Publishing houses are consolidating to reduce operation costs, but if the money still isn’t growing, more rationalising has to take place.

In the music industry, CD sales are decreasing.  People are looking for ways to share music, which allows businesses to be innovative and create new ways for this to happen.  However, they also need to find a way to attract people and make money.  If there is no new talent, there is no money.

Newspapers have also realised how beneficial an online presence is.  This provides them with an opportunity to carry a range of content to appeal to a range of readers.  The key, again, is innovation.  Simply, if there are fewer advertisements, there are fewer pages in the newspaper; therefore making it less value for money and less attractive to readers. 

Then we have magazines.  People spend an equal amount of time reading print as they do online.  They have endless opportunities to expand.  However, there is still one major downfall.  If the internet is ever growing, what does this mean for magazine sales? 

For international businesses, their problem is the decline in print advertisement revenue.  In order to compete, they would need to build on their online advertisement revenue and their content revenue. 

Digital is taking over.  There’s no stopping it.  Businesses need to be innovative and aware in order to build, grow and succeed.

Holly Sutton 

Media Industry - PEST Analysis

Political, Economic, Socio-Cultural, Technological Factors – These will help make sense of the bigger picture.

Political – The Digital revolution is expanding yet has many issues to combat. One of which is the number of lawsuits it has faced due to copyrighted content. This has led publishers to take an extra precaution as they need to avoid future lawsuits. They demand that freelancers sign away electronic rights or risk not being published electronically. (Cunningham B. Who owns that story now? Columbia J Rev. 2000; 38(5):11). The threat here is piracy, where people will copy content free of charge.

Economic – The pressure is rising to sell more books. Profits on e-books are not as high and this means that authors are not able to make enough revenue. Technology has undermined the economics of book publishers and authors. On a positive note, e-readers help the economy because e-books as a supply inventory chain control saves trees in the long run. Digital editions of magazines are also creating an attractive environment for advertisers.

Socio-Cultural – New publishing strategies create engaged community forums, for example Goodreads.com is a digital and social networking library which allows people to chat about books and creates awareness about niche books. This builds an opportunity for promotion of products which would not only help authors but also help publishers. A threat that social networking may impose is bad reviews and therefore have the opposite effect. The audience now have just as much access to media distribution as publishers do. E-marketer has reported that CEO's within the media and entertainment industry are leaning on social media to encourage growth and build future customer connections. (www.Fipp.com)

Technological – The media market place is not simply about technology. But technology does in fact play a huge role. Convergence of media is making boundaries harder to decipher. Where do books end is one main question and another medium begin.  The rise of e-books meant numerous platforms were created as a marketplace for books. One example is when Steve Jobs announced the launch of the iPad iBooks, which created a huge opportunity for publishers. A problem with technology is that it is forever changing and media companies must always look at innovative ways to lure back those lapsed readers, with the added pressure of other competing technologies. The good thing about the discovery of new media devices is that it is transforming magazine media audiences, whilst print remains just as important.

 Fipp has researched into how

 “The remarkable strengths of tablets, websites, smartphones and social media in presenting magazine content, and consumers enthusiastic acceptance of these new means of 

delivery, means that for publishers there is a dramatic and continuing shift in profile towards digital audiences without necessarily reducing print audiences. All in all, this indicates a very healthy future for magazine media is one of the conclusions drawn in the book.”

By Saima Omar

Technology proving to be the PEST driving the publishing industry!

"...a huge opportunity for newcomers to rewrite the rules of the game."

The POLITICS of the industry are becoming harder to control. The current view of the industry sees established companies having to make drastic business model changes. Newcomers, driven by the power of changing technologies, are entering the publishing industry and they are altering the structure of industry processes. Internally there is a change in company politics, with staff reluctance to adapt to the changing working environment. With the market structure changing government and other external stakeholders in the industry are losing control of what is published and how. The shared experience of online publishing raises copyright issues. Legalities are becoming harder to control. Most frustrating for authors is the question of their rights of ownership and the value of their words.

‘We own it, but yet, don’t’

The ECONOMIC structure of the industry is changing. Profit margins are smaller and this is putting greater pressure on performance. In the current economic climate many companies are struggling to finance the necessary changes. Innovation requires a certain amount of investment. The economic concerns of the end-user are also changing. Whereas published content has become widely available at a lower price with the development of digital, the new format of books and magazines are increasingly demanding that readers have a digital device to read them on. 

"Information hungry audiences." 

SOCIALLY people’s needs are changing. With the rise of the digital generation consumers are becoming increasingly critical of the content available to them as well as how it is available to them. Audiences now have diverse needs, they find value in different areas than they used to. There is increasing value attached to customer relationships. Innovations focus needs to now consider the ESP as well as the USP. These industry demands are coming from the consumer, the market is becoming increasingly user-driven.

"Being able to replace products frequently with better versions is increasingly important."

TECHNOLOGY is currently the main influence on all areas of the publishing industry. The types of digital technology now available to the market is encouraging a multi-path model of business. The publishing industry can no longer survive on a linear model of business. Availability of interaction is now of huge value in the sector. Product life cycles and the diffusion curve are becoming shorter, suggesting that there is an increased need for innovation at a quicker rate than before. A problem for the industry is that digital products are hard to define in a static form. It is harder to market to the consumer without a tangible product that allows them to differentiate between competitors. Innovation in the industry has been disruptive. As well as product innovation we are also seeing process innovation with the way books and magazines are created and then distributed. The service of the publishing industry has in turn had to innovate, with the role of the book shop moving online. As a whole, the publishing industry has experienced a platform innovation; it is no longer the same industry it used to be and this is because of the technological developments it has had little choice to adopt.

Pottermore: Innovative Distribution Process

'Pottermore' is the unique collaboration between the Harry Potter creator and Sony to develop an innovative website that aims to enhance and expand the readers’ experience, and, more importantly for the publishing sphere, act as a distribution forum for the eBook versions. This new website aims to complement the novels and provide backgrounds to minor characters, act as a community for fans to discuss and explore the literary phenomenon, including the opportunity to 'role play' as a 'Hogwarts' student, and exclusively purchase the sought after eBook versions of the seven stories. The opportunity to purchase the eBooks exclusively from the site has caused uproar in the publishing sphere, with bookstores being removed from the equation and resenting the missed opportunity to profit from a series of books they worked hard to promote.  In addition to this, the eBooks, although supported by e-readers, cannot be bought on websites that support the hardware (eg. Kindle users cannot purchase the eBooks from Amazon, which is a first for eBook purchasing!) ‘Pottermore’ acts as an example of a business model that may find itself being increasingly implemented by publishers globally as a way of removing the costly distribution process from the equation. 

Marketing: Planning and Delivering

In the webinar on Monday we discussed marketing and marketing strategy. The marketing perspective is producing and promoting a product that reflects the customer and the customer’s needs. Without identifying a customer and a need, the value proposition cannot be delivered well. However, importance must be placed on marketing planning.

Marketing planning ensures that sub-divisions of a company (ie. A Publishing company) tie together their strengths with the market needs and takes into consideration the existing and expected competitors. It also involves analysing their own organisation (eg. Size, diversity of company operations, finances, resources) and skill sets to ensure all bases of the process are covered.

However, an issue with the publishing industry today is that publishers are too focused on selling products to an already established market (ie. readers) rather than establishing a value proposition for non-readers and cracking this market. With this, they miss opportunities and risk innovating and expanding the market, which is, in my opinion, what they should be doing. However, the logic is understandable; book lovers are guaranteed to buy what publishers produce, however publishers could risk their reputation and finances on developing innovative content and products targeted at a non-reading market to increase their interest (and expand the company’s market), which could fail and hit the company hard.  

Innovation

Innovation is becoming the fundamental requirement for businesses, including the media, to stay in the game and expand nationally and globally, especially in an ever-changing digital revolution. Its importance is recognised by the Media Innovation Awards (http://www.mediainnovationawards.com/home.aspx). Innovation can be in the forms of the product, the process new products are delivered, the context of the product, and the company’s paradigm.

If a company fails to be innovative, it dies. A most recent example would be the fall of Kodak; a company that, in it’s heyday, was hugely successful and profitable. However, as the focus becomes innovative hardware and a digital focus, the company simply did not keep up in terms of innovation of product or their business model.

Product innovation is the most essential of the four Ps, mostly because it is the change that is focused completely at the customer. Product innovation in the media industry can be either hardware innovation, or content innovation, as highlighted in the Jeff Bezos Podcast (Podcast). Bezos claims the iPad is an example of innovative hardware, and this is the focus of Apple. Whereas Amazon focus on being innovative content providers, and their hardware (including the innovative touchscreen device, the Kindle Fire) is simply a ‘passport’ to the vast Amazon media library. The only innovative feature on the Kindle, in comparison to the iPad, is faster streaming to allow for easier access to the content they provide.

1.     Raghavan, B. “Lessons for companies from Kodak’s demise.” Business Line. 29 Jan 2012. Web. Accessed: 29 Jan 2012.

< http://www.thehindubusinessline.com/opinion/columns/b-s-raghavan/article2842779.ece?homepage=true>

E-book Issues

The key to a successful business of any kind is innovation, and at the moment the book industry as whole is undergoing a huge change regarding the new digital landscape.

One of the biggest issues at the moment, as discussed by Dail below, is the e-book VAT issue.  EU law states that e-books are electronic goods rather than books and must be charged at full VAT – that is, in the UK, 20%.  Publishers may wish to take on this charge themselves, rather than pass it on to the reader and risk losing customers; however, I would say that this affects booksellers more than publishers.  Readers are far more likely to buy an e-book from Amazon with just 3% VAT than from Waterstones and pay 20% VAT.  Yet, this should not be a long-lasting issue as a new EU law in 2015 will mean all consumers have to pay the VAT of the country they live in rather than the country they are buying from.

Another major issue with e-books is their place in libraries.  There have been problems with the refusal of libraries to allow readers to remotely download e-books.  Readers have to physically go into a library in order to borrow and e-book.  This policy is intended to stop piracy or lending by people outside of the county.  However, it would be quite simple to check IP addresses to ensure they are nearby, and would mean 24/7 access to libraries for people who are immobile or living in rural areas.  This issue is not helped by the lack of a standard format and the issue of how to connect, for example, an i-Pad, to a PC in order to download an e-book.  There is not enough software available in libraries to deal with e-books in various formats.

Economically, publishers need to make it clear to the consumer the true cost of producing an e-book and price e-books according to what they would expect on revenue from the print versions.  Editors must be constantly searching for new talent, and publishers may even wish to consider vertical consolidation into distribution or production, as Amazon has done.  Some companies have also looked into the possibility of ad-supported e-books or subscription services similar to Netflix and Spotify.  Publishers will find this much easier than Amazon or Google as they hold the rights to hundreds of rights to new and old works.  Most of all, publishers must take advantage of the new digital landscape

If publishers fail to work with these changes and to innovate, they risk failing.  They must be ready to change and adapt their business models, improve their products and employ new staff or give new training where necessary.

Carreiro, E. 2010. “Electronic Books: How Digital Devices and Supplementary New Technologies are Changing the Face of the Publishing Industry.” Publishing Research Quarterly, 26:219–235

Hollander, S. 2011. “Listen to the Music: Lessons for Publishers from Record Labels.” Publishing Research Quarterly, 27:26–35

Jones, P. 2010. “UK government holds firm on e-book VAT.” Web. http://www.thebookseller.com/news/uk-government-holds-firm-e-book-vat.html Accessed 18/01/12.

“What’s happening to your library?” 2011. Web. http://www.publiclibrariesnews.com/ accessed 18/01/12.

Advertising as revenue stream in E-Books

There seem to be contradicting convictions on the possibility of advertisements being included in e-books in order to reduce their cover price (a move which could ease the reader protestations mentioned in The Maudster's post). While Sam Hollander claims that “None of the sources in digital publishing would agree that in-book advertising is on the horizon” (Hollander 2011), John Wheeler’s research in publishing trends shows a prediction that ads WILL start to appear in eBooks (Wheeler 2011). Could it be that in the six months between the first comment and the second we have seen a change in sentiment towards advertising?

Generally I would argue that the latter makes sense since, socially, we are already so conditioned to be interrupted by adverts, on tv, on the radio, in magazines and in newspapers.

It seems to still be in debate among publishing companies with varying conclusions such as Harper-Collins' plan to include ads in e-textbooks but not fiction e-books, where it deems it would be too distracting (Kobie, 2011)... though one wonders if it would really be so distracting in natural chapter breaks.

But I also think that if publishers have shifted their feelings on advertising it may be due to the resounding success of Spotify as a model for the music industry. We know that publishers have looked to the music industry for indications of what to do and what not to do with their own digitalisation, and perhaps the Spotify model is one of the 'what to do's'. Namely that users are generally happy to be interrupted by adverts if it means they are getting something else (music) for free / cheap. Plus there is the added revenue model in the incentive to pay to go 'premium' so as not to get interrupted by adverts.

As a magazine journalism student (who is nevertheless still very interested in eBook models) I'd be really interested to get thoughts on advertisements from the publishing students.

Hollander, S. (2011) “Listen to the Music: Lessons for Publishers from Record Labels’ Digital Debut Decade,” Publishing Research Quarterly, 27:26–35

Kobie, N. (2011) "Publisher considering ads in ebooks", PCPro.co.uk at: http://www.pcpro.co.uk/news/371191/publisher-considering-ads-in-ebooks [Accessed 22/01/2012]

Wheeler, J. P. (2011) “Publishing Trends 2011 to 2012, and the Changing Landscape (part 2 of 3)”, Spi-global.com at: http://www.spi-global.com/content-solutions-blog/content-solutions/publishing-trends-2011-to-2012-and-the-changing-landscape-part-2-of-3 [Accessed 22/1/2012]