Lessons for Book Publishing From the Music Industry's Digital Street Fight

Publishers are well served by looking at the music industry's experience in dealing with similar disruptions to their traditional business environment.

As President for over twenty years of the largest US independent label, TVT Records, (25 gold and platinum releases including Nine Inch Nails, Lil Jon, Pitbull, and Dashboard Confessional) I sat front row to the spectacle of major labels' serial failed attempts to avert change wrought by the digital revolution. I testified before Congress on the issue of digital rights, served on the boards of Napster, MusicMatch (acquired by Yahoo!) and Tune Up, and was founding board member of the American Association of Independent Music (formed, first and foremost, to help indie labels organize themselves in regards to the battle over digital distribution).

Mergers among record labels were decidedly not good for the "ecosystem": not for music discovery, not for artist development, not for sales, not for artists and certainly not for the bottom line of labels. They did not enable the surviving majors to do any better in pushing back against the dominant retailer, in that instance, iTunes. And competition from other online retailers like Amazon, Napster (when legit), Best Buy's Liquid Audio, Walmart, and countless startups, did not help either.

Industry after industry has faced dramatic technological change driven by the consumer preference for convenience and efficiency that the internet provides. In no case I can think of, has "pushing back" or market share leverage of the strongest players proven to be a successful strategy to anything other than being able to cut costs and weather declining margins better than the competition.

What has proven to be successful is winning the consumer. Not pushing back, but competing in the new landscape.

Publishers retain the upper hand if they act NOW, while they still retain the goodwill of their authors. Because it is access to these authors and the harnessing author's ability to generate excitement that holds the key to the next big transformation in book marketing.

While Amazon has revolutionized distribution of books and perhaps optimized the activity of book purchasing they have not, as of yet, brought the power of the internet to bear on revolutionizing book marketing. Commoditization, discounting and efficient shifting of units is different from enhancing the perceived value of a book and broadening its audience by exposing its appeal. There remains a better way of enticing people to explore new works other than "consumers who bought this also bought this". There remain better ways of stimulating word-of-mouth than questionable self-serving reviews. There remains the virtually untapped opportunity in using the internet to create vibrant communities of readers where they can meaningfully share their enthusiasms with one another, meet authors, discuss books and be introduced to new works.

Research confirms that even in the age of Amazon the two biggest factors driving book purchases are by far, word of mouth and personal recommendation. It is also not news to anyone that aside from the experience of reading the book itself, nothing drives word of mouth and personal recommendation more than unique live interactions with the author. New video chat platforms now allow for all the dynamics of such author interactions, the traditional book launch parties, in-store events, readings, panel discussions and Q&A's to be achieved online. Brought online, these events can pull communities of readers together and engage them in ways heretofor unavailable, with far greater convenience to the participant sand at a scale previously unattainable. I should say here that I'm the founder and CEO of Shindig, a platform that can do just that. On our platform, an author can address upwards of a 1,000 fans, can share the stage and answer audience questions face-to-face and audience members themselves can also be social, talk privately, make friends and exchange ideas.

Publishers are uniquely positioned to create and curate such online reader communities. They are the ones with access to the author's schedule and the author's trust in prioritizing such appearances.They are the one's who can combine author events to create dramatic synergies. Whether genre based, or built around particular imprints, driven entirely by author talks or featuring commentators, editors, or panel discussions of audience members, these regular online book talk based communities can serve as a natural venue for readers to become supercharged evangelists for an author's latest work. They also offer publishers enhanced ability to cross-pollinate author audiences, leveraging the appeal of their star author appearance to assist in the exposure needed for the up-and-comer. And unlike physical author events, these can be conducted with great frequency, with no travel, or huge commitment of author time and effort, and with little expense. The question is who will lead the way.

Not only do publishers have the most incentive to grab this opportunity, we should all root for them to do so. The music experience is a helpful guide here as well. While industry consolidation wrought havoc, on company staffs, share values and bottom lines, ultimately, the demise of major labels that many predicted never occurred. YouTube and iTunes did not make it possible or desirable for artists to function without labels. And even my discovery, Nine Inch Nails (Trent Reznor), who famously left his home with the largest global record label, Universal, recently determined that he was better off leaving marketing to experts and focusing himself on his unique musical gifts, returning again to the major label fold.

What did change, however, was that the Majors lost their economic rationale for artist development, which they effectively outsourced to TV, the internet, and artists themselves. Likewise in books, authors themselves simply cannot pick up the slack of the loss of the past business model that supported both publishers and authors. Direct consumer outreach by authors to their self-identified current audience will never provide the same caliber fuel to attract new audiences that reader communities provide and it does not solve the riddle of "breaking" a new author. Book-lovers all depend on the major publishers to innovate and retain their margins to avoid the similar decline in artist development that the music business has seen.

If publishers seize the opportunity in creating such compelling online meeting places where passion for books can be shared, then they will see the market for books delivered through whatever platforms grow and the issue of demand creation will again overtake that of the best way to service it.

This piece was first published on Digital Book World. Reproduced with permission from the author.