Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
As founder and CEO of Inkling, I’ve spent nearly six years working across the publishing industry at every level. In this three-part series, I’ll share my tech-centric perspective on the industry. This first post addresses the changes I’ve seen in the book market and the key trends driving them. Second, I’ll discuss the challenges I’ve observed while working within publishers at every level. And finally, I’ll recount the strategies I’ve seen some companies employ that seem to be working.
Founders don’t start companies to fight their future competitors. They start companies to fix something that they recognize—to an extent untrue of most others—as frustratingly broken. Indeed, an entrepreneur’s obsession is so myopic that most early-stage investors struggle to get founders to name their competitors. “We don’t have any,” says everyone ever.
Cute. But virtually every need is served today in some way. Horses provided transportation before the car, encyclopedias worked well before Wikipedia, and I’m confident root canals will seem perfectly sensible until there’s a pill for that. In similar (but less painful) ways, the book was a very sensible solution to a lot of problems for a long time, until it wasn’t. Today it increasingly isn’t. And many entrepreneurs are finding niches ‘without competitors.’
Getting a degree? Use a textbook. Looking up a word? Grab a dictionary. Traveling? Buy a travel guide. Want to be whisked away to another universe for a few hours? A novel, printed in a book. What an amazingly versatile device! Yet in spite of this homogeneity of format, publishing’s problem isn’t a single competitive technology. Rather, it’s the hundreds of small software companies that rise from the cracks to nibble on the feast of available problems to which the book is no longer the best possible solution. It is (ahem) death by a thousand paper cuts.
Examples abound. Tripadvisor reset customer expectations by providing comprehensive coverage of the world’s hotels and attractions with up-to-the-minute information in an easily searchable database. A book simply cannot compete. On a less grand but nonetheless impressive scale, Lynda.com displaced swaths of learning books. This year, the company was acquired for $1.5 billion by one of the world’s great upstart publishers, LinkedIn.
It looks like the software industry is eating publishing for breakfast. To survive, every publisher must find its path to reinvention as a software company or else decline into irrelevance. If you once sold books to customers to help them solve problems like getting a degree, to entertain them or to help them do their job better, you now had better find a way to do it ten times more effectively with software. Otherwise someone else will. The flaccid argument that software companies don’t understand content is mere hubris.
Of course, this isn’t new news. But the software landscape, and what’s possible within it, is in a perpetual state of ‘new.’ It expands every year, which makes ‘becoming a software company’ a notoriously difficult thing. New technologies haven’t changed the publishers, they’ve changed the customers. And those fast-changing customer expectations set the rules, not the start-ups themselves. After all, the start-ups don’t have any competitors, remember?
So what’s new? Over the last five years, software products have become increasingly integrated and narrower in scope. They’ve moved entirely to a subscription model, and they’re mobile-first from the start.
Integrated and Narrow
Customers increasingly expect single-purpose, end-to-end solutions instead of general purpose, jack-of-all-trades software. Microsoft Excel is a powerful tool, but dozens of companies have sprung up to do a better job of enterprise planning, customer relationship management and data visualization (Anaplan, Salesforce.com and Tableau spring to mind.)
Put another way, successful software products increasingly obsess over very narrow customer problems and solve those problems comprehensively. It’s much harder to develop tools to solve entire classes of ‘similar’ problems. From any given customer’s perspective, your halfway solution will pale in comparison to the narrowly focused solution by the ten-person start-up down the street. (Astrophysics solutions will sell to astrophysics professors far more quickly than ‘science’ platforms will.)
Subscribed to, Not Bought
For a time, we perpetuated the physical-world model of ‘buying’ a book into the digital world. It happened in music for a while, too: iTunes was once the de facto standard for music, back when people bought tracks. Today, it has been rendered far less relevant by the likes of Spotify, which provides a superior experience through an unlimited subscription.
This is a well-understood phenomenon. Time and again, from cell phone minutes to cable TV, markets have shown that products with zero marginal cost (like digital copies of content) ultimately become subscription markets. This will be true of virtually all markets with digital services as products. People no longer want to buy digital goods, but they’ll subscribe to your service in order to get them.
Mobile Is the First Screen
Talk about things that change fast: In just five years, we’ve gone from mobile phones as disruptive ‘second screens’ to being the first, and sometimes only, screen in users’ lives. It goes without saying that software products must work well on smartphones. For novels, that challenge is quite simple. But if you seek to entertain with media, to educate with interactivity or to empower with reference and search, the mobile screen is a tougher beast to satisfy. Alas, customer expectations do not yield to technical complexity.
Accelerator or Albatross
Publishers have solved a thousand problems for a thousand kinds of customers by building products on the same powerful device—the book. But that convenient grouping is coming undone as software products of different kinds solve those same problems in powerful new ways.
To survive, publishers must identify the customer problem they’re uniquely suited to solve and build software to solve it better than anyone else in the world. If they’re lucky, publishers’ existing skills in content curation, along with their content assets, will serve as accelerators to new product development, rather than become their albatross.
What stands in the way of this inside-out reinvention? In my next post, I’ll explore the structural and cultural obstacles publishers must overcome in order to succeed. In my third and final post, I’ll turn to the strategies I’ve seen work as some publishers have turned a corner in their internal reinvention.