A version of the following post was published today in the PW/BookBrunch Frankfurt BookFair Daily.
October (again). Chatting with a number of British publishers in advance of the annual pilgrimage to Germany, many were anticipating a tough fair. Economies across the world remain challenged, books face growing competition for attention in peoples’ time-poor lives, and on-line retailers (one in particular) continue to grow market share. Which makes justifying the expenses associated with a week in Frankfurt tougher and tougher as the cost is amortised over a decreasing portion of overall sales. Yes – there are still crucially important relationships to be initiated and nurtured here. Face-to-face brings enormous benefits and often clarity. But this is a business-to-business fair – and while the publishing industry has spent years dithering on the edge of the device/file-type dilemma – the rest of the commercial world has been undergoing a tectonic shift we seem to have been wilfully ignoring. The fundamental change the Internet is bringing about is not a change of format – it’s a change of business model.
Our industry’s engagement with the Internet has been about replicating print products online and creating websites. We’ve got the hang of Twitter because it plays into our natural tendency to network and promote. But we’ve missed the core point: which is that volume sales are shifting from business-to-business to business-to-consumer. And the wider world is shifting from selling products to selling services. You think I’m wrong? As an American tech-company founder & CEO named Tien Tzuo I was listening to last week put it: Who’d have thought of ZipCar ten years ago? Or software hosted in the cloud?
Because the world is shifting from a product economy to a service economy, something else is changing. And that’s the pace. 18 months from commission to customer (or 6 months from initial marketing push to availability) makes us look like dinosaurs to new tech companies. Our marketing cycles are designed around the needs of our industry – not about the needs of consumers. This is only going to become more and more problematical from now on.
In London last week I was fortunate to find myself at a seminar called The Subscription Economy, hosted by Tzuo’s company, Zuora, (a technology company that didn’t exist in 2006 – but has grown exponentially since its launch in 2007), partnering with some of the biggest firms in the Internet economy (like Salesforce). They’re a remarkable company because they’ve innovated in one of the most traditional areas of all (more traditional, even, than print books). Zuora have taken hold of accounting as it is applied to the Internet economy – and most particularly the service economy, (what they call the Subscription Economy). Yes – they’ve taken on the bastion of double entry book-keeping – and made a new accounting system fit-for-purpose in a commercial environment where business models are shifting rapidly from manufacture – product – sale – to ongoing sale/ ongoing service – variable demand/ variable supply – variable income to be amortised to service. We in publishing think we understand subscriptions: we’ve been publishing journals for centuries, after all, and journal subscriptions are one of the most lucrative (if currently challenged) parts of our industry. But Zuora have designed a set of business tools that have taken subscriptions to a whole new level – and their systems make new business models possible and scalable. This kind of thinking (not which ebook format/ conversion tools to use) is smart, game-changing, global innovation.
We talk about data a lot in publishing: Data is the New Oil was the mantra of the BIC New Trends Summer Seminar in London. But when print publishers talk about data, they’re talking about product data: metadata. And God knows metadata is crucial to the supply chain. What we’ve missed is that when the rest of the world talks about data – they’re talking Big Data; personal data; customer data; usage data; transactional data. They’re talking about using data to reach and be relevant to individuals. We need to wake up to this. And when we do we’re going to wake up to an unholy mess in our back offices, where we find it difficult enough to use data well at reseller level, not customer or use level – let alone monetising on a use basis (unless it is via an aggregator saving us the pain of ever getting to grips with new transactional business models). And it is this that makes Zuora (used by Pearson, by the way) so fascinating to me. They’ve understood that the Internet has changed the whole context and therefore the fundamental basis of commercial transactions.
So here we are, the international publishing industry, in Frankfurt once again– making new business friends & partners – sustaining existing relationships – ( & occasionally lamenting friends & partners no longer with us). But unlike 25 years ago, when I first came here, this fair no longer represents a complete closed economic sector. This remains a vital part of our commercial world, but the global business landscape into which we must innovate – or die – is being changed forever by forces beyond our control. It’s being shaped by developers. It’s being shaped by the demands of GenY – a generation raised on self-determination and individual choice. (Read Joeri Van den Bergh’s How Cool Brands Stay Hot: Branding to Generation Y, published by Kogan Page and you’ll see how demographics are making the march towards customer engagement and the Subscription Economy described by Tien Tzuo and Zuora an unstoppable trend.)
Frankfurt is important. We all need to be here. We will all need to be here for years to come – and the Boersenverein is doing a fantastic job of remaking itself as a forum for information and education as well as business. But it’s no longer our whole business ecosystem. We ignore that at our peril.