Electronic Publishing and Marketing L 10 Ing. Jiří Šnajdar 2014

E-books, which used to be the step-child of the publishing industry, are now being adopted and accepted in a major way. For e-books, at least, the future has arrived— propelled by Amazon.com’s release of Kindle 1 and 2, the continued success of the Sony e-book reader, and the growth of delivering e-books onto mobile phones, as Harlequin and others are successfully doing.

Overall sales of electronic books and “chunks” of books are now firmly embedded into the fabric of most publishers’ product lines, especially those in the professional, college, and STM (scientific – technical - medical) segments of the industry. In many of these houses, electronic editions now prevail over the print versions. And analysts are forecasting that global e-book sales at Amazon alone could reach $2.5 billion by the year 2012!

E-books What is it about e-books that appeals to publishers? There are basically five primary benefits: 1. New products, new markets, new sales 2. Portability 3. Minimally incremental cost of goods 4. Elimination of returns 5. Elimination of warehousing and fulfillment costs

New Products, New Markets, New Sales E-books may best be viewed in the context of a new format, or product, that creates new, incremental sales by building on an investment you are already making in the core market format, the print edition. The results of this new format are new opportunities for sales through new markets.

The true benefits to publishers of this new format are twofold: 1. You can create it at little extra development expense 2. The new format can be sold through current and new distribution channels and can therefore expand sales. Given a new format, it is relatively easy to create an internal structure in which all revenues, cost of goods, and expenses of the e-book are held against the appropriate division or profit center and judged according to whether or not they result in profits.

What’s important for publishers is to market their e-books just as they do their print books. Marketing methods may differ somewhat, specifically being more reliant on links and e-marketing techniques, but the overall goal of the marketing is the same: to generate sales within budget. It is important, therefore, to view e-books from a standard profit perspective.

We can see the relatively small difference between p- books and e-books easily: Core Product (P-book) Incremental Product (E-book) Revenues Developmentcosts Conversion expense Paper,printing, binding Manufacturing Royalty = Gross margin

Note that allocating all of the development costs to the core p-book, and leaving few for the e-book, is similar to the way many publishers, when printing simultaneous hardcover and paperback editions, allocate all of the development costs to the hardcover edition, leaving few development costs allocated to the paperback edition.

Converting p-books to e-books basically means reformatting the digital file. This can be expensive or relatively inexpensive depending upon the original formatting and when the reformatting is done. In addition, the “manufacturing” costs of e-books are basically zero, since they are delivered online, which is what makes this format so appealing. Any new electronic product must still be viewed in a business context and must still earn profits if it is to successfully contribute to the health of the company.

The expenses for e-books must be directly proportional to the sales revenue generated in order to have a positive contribution to profit. E-books, therefore, should be treated no differently than any other product line, category, or division of the company.

Portability The primary benefit of e-books that most people think of is portability. The digitization of a book allows the reader to take not just one book, but multiple books, anywhere and read them at any time assuming the screen, the lighting, and the format of the e-readers are conducive to that task. Reduction in size and weight are paramount if the technology is to gain widespread acceptance.

This evolution towards portability continues, it will make reading e-books and other information in e- formats more appealing and popular. If the prices on the devices can come down further, there will be increased demand for them. When this happens, e-book sales will pick up dramatically.

We can expect this to happen within the next five years. These devices and e-books won’t replace p-books, but they will provide a viable alternative for those who prefer electronic formats. The size of that market remains to be seen, but one fact is certain: younger generations are more attuned to receiving information electronically. They will certainly be more willing than the current generations to read books in this electronic format.

Reduced Cost of Goods The more publishers can sell e-books, the more their cost of goods will be reduced. Why? Because publishers can consolidate their formatting, which in essence is the “make ready” or electronic component of the development costs, for all product variations including p-books, e-books, CD-ROMs, and the world wide web when they edit the book in the first place. By coding the work with metatags up front, time and significant money can be saved later—which means on each “reprint” of the work.

Electronic products, however, require different formats, typically HTML (HyperText Mark-up Language), PDF (Portable Document Files), or XML (Xtensible Mark-up Language). Currently, most publishers go through a two-step process: first creating the p-book files as above, then going backward and creating the e-book files.If the publishers combine the production procedure and consolidate two steps into one by coding or metatagging the word processing file prior to its final design and formatting, then significant savings can result.

If the the document is metatagged once and is then available for all end products, whether printed books, electronic books, CD-ROMs, or another. This saves time, effort, and additional cost in the long run. The e-books have virtually no manufacturing cost associated with them (unless they are put on CD- ROMs). Thus, the more e-books that can be sold, the more the publisher saves.

Finally, the royalty component of cost of goods is always negotiable. If you can pay less than 50% of net dollars ( or other currency ) received, you can increase your gross margin significantly. Elimination of Warehousing and Fulfillment Costs A key benefit of creating and selling e-books and other digital editions is that there is no physical storage cost. From an efficiency standpoint, and from that of cash- flow and cash-savings, e-books should theoretically save publishers significant amounts of money.

Over the next five to ten years, however, as e-books begin to take a larger and larger proportionate share of a publisher’s sales, warehouses should begin to shrink substantially, and the associated costs should decline as well. Ultimately, this will benefit publishers in a significant way. Print on Demand While e-books are gradually catching on, one facet of e-publishing has arrived already. Print on demand (POD) is being used successfully by many publishers to: create bound galleys keep out-of-print books in print maintain backlist produce academic books and course materials that sell in limited quantities save cash

What is print on demand? It is, in essence, what its name says it is: a printing technology that allows publishers and printers to print and bind books and other materials in one operation in very short runs—from one copy upward. What differentiates print on demand technology from other short-run printing presses is that the POD machines are more closely related to copy machines than they are to large presses.

Print-on-Demand Models At the moment, there are basically two business models that POD printers offer to publishers: 1.Short run digital 2. Print and distribute

Short run digital printers function much the way regular commercial presses function. Short run digital printers basically print for the inventory needs you, the publisher, have. They quote you a price on printing a number of copies, and that price to some extent declines as the number of copies printed increases. Unit costs, therefore, vary with quantity.

The print and distribute model is a bit different. In this case, the printer truly prints on demand. When an order for a book comes in from either the publisher or a third-party customer, the printer will print the book to order and ship it directly to the customer. The POD publisher will then send the original publisher a check for the agreed upon percentage of the transaction, less the cost of goods incurred by the POD printer.

Digital Business Models When looking at the digital models for selling content, we can see some methods that are becoming standard: 1. Selling e-books one at a time through downloads either directly from the publisher’s site or through third- parties such as Amazon and bn.com. 2. Selling the print and e-book together as a bundle 3. Selling chapters of books—or even pages—directly or through third parties.

Digital Business Models When looking at the digital models for selling content, we can see some methods that are becoming standard: 4. Selling subscriptions to a collection of content, including: a. The total site content b. Libraries of content (such as Books24x7; O’Reilly’s Safari site, etc.) 5. Selling different chapters or books combined into a new book (these can be called coursepacks or “built books” but the method of combining chapters into a new whole is the defining characteristic.)

Selling from Your Own Website A good website is your sales tool—and image—to the world. A website, like a book, has to be attractive but highly functional. You don’t want your customer trying to figure out how to buy your products. The sequence has to be easy to use and navigate, customer friendly, and visually easy to look at. It needs to be seamless.

The first key to selling, then, is to make your website attractive, highly functional, and reflect the professional image you wish to convay to your buyers. You also need to have e-commerce capability in place. With your website up and running you can focus on the key question that impact your sales: How can you get customers to your site? How can you get your products known to your customers? How can you get the customers to buy from your site? How can you capture information about your customers?

Once you know your target market, you need to sell to that market. Add fresh content to your website and continually update it. Generate publicity. Your publicity efforts overall should support your website sales. Every press release, every radio or television effort, every postcard that goes out from your publicity department needs to note the company’s website URL and needs to alert those receiving the publicity that your website is available 24/7 to accept orders from them. A constant stream of publicity to a targeted group of interested people has a cumulative effect.

Among the ways you can get publicity and drive people to your site, are: news releases Online news rooms Discussion group postings Newsletters and direct marketing Chat tours Online seminars and workshops Contests and other fancy promotions Syndicating your promotions Blogs

Fully use your authors. Closely related to publicity is the need to use your authors fully. Your authors are your best promotional tools. Use social networks to expand your reach. Social networks are great places to get the word out about your new titles and backlist (don’t forget that backlist!) because in almost all cases the social networks have interest groups or communities that are perfect targets for your information. They are also great places to build your brand and your expertise as an information provider—and a perfect place to get your authors fully involved as well.

Optimize your website. Using keywords that relate to your company, books, authors, and customers and both enabling and facilitating the various search engines to find this data can instantly and exponentially expand the reach of your marketing and draw customers to your site. Use carefully targeted marketing. One of the wonders of the internet is that you can get targeted mailing lists of those who fit the demographic profile of your optimal buyers. One world of caution: don’t send spam—don’t send people continuous s that they don’t want.

Getting Customers to Buy from Your Site Once customers learn about your products and get to your site, then how can you get them to buy from your site? To make your site sticky you need to make it interesting. Thus, creating “look inside the book” sections with the table of contents, interior illustrations and chapters, index, and more help to sell the customer.

One sometimes overlooked page is a “contact us” page with specific address, phone number, and personal information for those who want more traditional customer service help. Customer service is critical in an electronic age and sometimes the old fashioned way of talking to a real human being is the best approach. This is one reason you need to have a professional website designer working on your site. One of the benefits of the internet is that it levels the playing field of large and small publishers.

Create appealing offers and be price competitive. There are two approaches. First, create offers with added value. Offer the book at full price, but offer another product at a significantly reduced price or free with every purchase. This effectively gives the customer something extra while maintaining your retail price.

The second approach is to take a more aggressive position. This strategy posits that as a vendor, you need to meet the competition just like any other vendor does. Using this approach, you’ll price your products either at the low end of the competitive pricing scale, or somewhere in the middle.

Accept credit cards or use PayPal. If you want to get customers to buy from your website, you need to provide them with a mechanism to do so. This means you need to accept credit cards or use a payment service such as PayPal to facilitate the transactions. Estimate website sales very conservatively.

Selling on Other E-tailing Websites The second method of extending your reach and your sales takes advantage of the fact that there are literally hundreds, of websites that sell books. Each of these sites is a potential sales venue for your books.

Look at your customer demographics carefully. Keep in mind at all times that you need to convert visitors into buyers. Understanding the internet, creating an attractive and highly functional website, instilling excellent customer service and fulfillment mechanisms, creating excellent marketing and sales plans, and analyzing the results will help you increase your sales in a consistent way.