Do Publishers Need Start-ups? No, Shatzkin Says

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

Recently, I sat down with Mike Shatzkin, book publishing consultant and Digital Book World 2014 conference chair, to talk about a wide range of topics, including many that will be covered at DBW 2014. Over the next few months, I will be bringing you some of his insights, many of which will be expounded upon and made into practical, applicable takeaways at the conference itself. Learn more on how you can attend


Related: Why Competing With Amazon Is So Hard | The Challenge of Managing Change at Large and Mid-Size Publishers

The environment in book publishing today is ripe for start-ups: New technologies have emerged that have changed the way money flows in the industry and what traditional players need to do to succeed. Yet, very few book publishing start-ups seem to make any headway. Why? And how can this be fixed?

I sat down with Mike Shatzkin to discuss.

 

Jeremy Greenfield: Publishers and start-ups seem to not get along. Why?

Mike Shatzkin: Publishers sometimes say, “these start-ups come in, they don’t know what they’re talking about and they don’t know about our business,” and start-ups say, “these publishers are hopeless. They don’t want to change; they don’t want to experiment. We came and we offered them an opportunity to experiment for free and they claim they don’t have the time and that they are doing experiments already.”

You have these two constituencies — established publishers who know they need to change but are frustrated by start-ups and the start-ups who can help with change but don’t have the know-how and the relationships. We’re doing a survey of the start-ups and the business development people at publishers to understand what they expect out of each other and what their beliefs are themselves.

 

JG: When it comes to start-ups in book publishing, there’s also a third leg to the stool. 

MS: The third piece is investment. What’s making all these “Netflix for ebooks” arise is that the investment community thinks it’s a good idea even if authors and agents and publishers don’t.

 

JG: Do publishers need start-ups? 

MS: I don’t know if publishers need start-ups. What I do know is that if you’re a “big five” publisher, you can always wait.

For example, HarperCollins has thrown itself in with Scribd and none of the other major publishers have. If Scribd makes this work, they’re not going to tell Simon & Schuster, “you’re not going to get to come in now because you didn’t at the beginning.” So, big publishers know that they don’t need to move now.

The only thing that Scribd can do later [to reward or punish publishers that did or did not play ball early] is put their thumb on the scales [give more exposure on its platform to certain publishers]. Not all exposure is created equal. The risk for a smaller publisher is that you give up the opportunity to be special to a start-up and the benefits to having been special.

In most cases, publishers don’t need the start-ups and when they meet with them really all they’re doing is due diligence to keep themselves informed on potential disruptions in the marketplace. Occasionally start-ups come up with things that publishers want to use.

Inkling is developing tools that people are using. In that case, the start-up has immediate value.

 

JG: Is there too much start-up investment in publishing? 

MS: There’s significant over-investing in ebook subscription services.

The other thing as far as I’m concerned, and I test this all the time, we have established for sure that books that you read from page one to the end work as ebooks. We do not know that about any other kind of book. There is no evidence that illustrated books or reference books or how-to books of any kind have a digital instance that predictably will sell like a book will predictably sell. My advice when I talk to publishers is don’t bother with that stuff. For the ebook world, just do the narrative reading because that works and you can worry about the other stuff when the day comes those things are proven to work. So every start-up that is built around making complex ebooks is over-invested in too.

 

Related: Why Competing With Amazon Is So Hard | The Challenge of Managing Change at Large and Mid-Size Publishers

12 thoughts on “Do Publishers Need Start-ups? No, Shatzkin Says

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  4. Jeff Bach

    s/b no great surprise here. imo one need only look at the tech world to see the big companies sitting on the sideline waiting for the next best thing to break through and maybe even get version one out the door and then Intel, MSFT, etc. come off the sidelines and do business with the startup. No R&D costs, no overhead, no ongoing iterative failures during development. The sideline dwellers let others handle all that and then swoop in and pounce on the survivors. Pretty slick setup. Even better, everyone on both sides knows the model. A recent interesting example that mostly fits the concept is famo.us and their not-so-anonymous big company sideliner. It seems to me that publishing is just further back on the very same business model that tech has been using for the past many years.
    my .02
    P.S. I confess to skimming and scanning during my first cuppa’ joe hope I didn’t miss a major plot twist…..

    Reply
  5. Michael W. Perry

    A few comments:

    1. Although Amazon isn’t mentioned in this article, one of its advantages is that in publishing it’s innovating new things like a startup and so well-established in the retail sales that it draw from its sheer size. It’s benefiting from being both nimble and huge.

    For instance, it can play the same game Microsoft used to play in the operating systems arena. It can benefit from innovating proprietary standards for ebooks as if they were industry standards while denying the use of those standards to competitors. The others are left competing in an ePub arena. Amazon has KF9, trapping its customers in a world of its own but a world that seems so large that it doesn’t seem proprietary.

    2. Mike Shatzkin is right that the major publishers won’t be denied a place at the table these start-ups are creating. But it’s also true that, if you arrive late for dinner, you don’t get to determine the menu. Those who sign up first get to set the overall direction in ways that benefit them. Those who joined at the start-up of the start-up get to dictate even more. Waiting still has its costs.

    3. Publishing executives would do well to take up sailing as a hobby. Sailing taught me that you’re only in control of a boat when you’re moving and interacting with your environment. Trying to sit still means getting blown about by the wind and the waves. If you want to be a successful player in digital media, you’ve got to be in digital learning what works and what doesn’t. You can’t wait until everything settles out. The fact that you’re so big you still survive is beside the point. Your late to the game and suffer from a belated learning curve.

    I can give an example although it’s not in books but it is in retailing. When I lived in Seattle, Amazon was testing a scheme that would use their Amazon Fresh trucks to deliver regular Amazon orders to about a dozen of the city’s zip codes, including mine. The plus was that it made the shipping free. The negative was that deliveries were made on only one day a week, probably the day where food deliveries were the least.

    Part of the deal played on a fetish in Seattle for being a fashionably environmental by trotting about with a reusable shopping bag. Those who ordered delivery by Amazon Fresh could also elect to have the delivery made in a sturdy and well-made shopping bag. Amazon made clear that they would like it if people put out their previous bag out for pickup when a later delivery was made, but they didn’t insist on that. If they wanted, customers could make a $10 order that’d be delivered for free in a bag worth about $5 and keep the bag as a bonus.

    Amazon was testing the idea of reusable shipping bags. If the idea worked, they’d save money and encourage customers to reorder to keep those bags circulating. They dropped the idea and I suspect I know why. Too many of their customers were behaving like me. They were telling themselves, \Hey, this is a great bag. I’ll keep it for storing things.\

    Did Amazon lose money on that idea? Almost certainly. But it also learned that on a small scale. It won’t be tempted to try the idea on a large scale.

    There’s a lot that publishers, large and small, ought to be testing on a small scale to see what works. Pick a few dozen titles with a stable readership and test them on Netflix-like Oyster. If the idea fails, little is lost. If the idea is headed for success, they’ll be in early and knowing all the tricks of the trade.

    If you want to sail someplace, you’ve got to be in the water and moving.

    –Michael W. Perry, Inkling Books (not the startup Inkling that does elaborate graphical books)

    Reply
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  7. Mark Coker

    Hi Jeremy. Thanks for the interview with Mike. Illuminating as always. Here are two more useful questions (maybe Mike could address in comments?):

    1: Do startups need publishers?
    2: Will startups need publishers more or less in the future?

    Reply
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