“It’s all about the data”, says John Conley, an executive with a long and successful career in the book publishing business. These observations were shared by John in a recent interview that knk held with Mr. Conley, the first in a series of discussions on the topics of the day with the thought leaders in our industry. John has seen it all, starting with Donnelly (as they were then called), where he flourished at the peak of the print industry, and where in the early 90’s he saw the beginnings of the digital print era. In 2004 he moved on to Xerox, who allowed him to do what he wanted to do – to explore new publishing and manufacturing models for the Book industry, using technology to usher in new publishing models that abandoned the old (and in some cases, not so old) fixation with unit manufacturing costs, and moved towards a Total Cost of Ownership model for managing inventory. “It was only possible when we analyzed the data and used the learnings to change outcomes and behavior’s”. Today, John runs his own consulting company, (Borderland Advisors, see below), helping printers, publishers and distributors to manage the seismic changes in our industry through data analytics. “Change only comes out of chaos”, according to Conley, “and we have had plenty of that in our industry”.
We asked John where he saw the threats and opportunities in today’s publishing supply chain. Many of the risks, John believes, are because the industry completely underestimated the impact that Millennials would have on product choice, and in particular, on container choice (hard cover, soft cover, audio, etc.) . Previous generations, especially boomers, were enamored with the physical book. Their books sat nicely on the acres of bookshelves this generation had in their homes. Well, Millennials don’t have bookshelves – they have small apartments and don’t have the room. So, the hard cover book that was the container of choice for boomers is now only part of the balance of delivery formats that publishers must manage.
And the BIG issue is that the margin on hard cover books is significantly higher than on other deliverables. What containers will Millennials prefer, and when they do, are we ready to retain and control the rights and to make the mix profitable?
The second risk is that John believes that big box book retailers may well disappear. We are already seeing publishers struggling with how to market and sell books because of this. And lastly, what happens when publishers can’t sell case-bound books? What will the alternative model be and how will publishers maintain profitability ?
The business of publishing will always be about identifying and creating great content, curating and marketing it, and there is an increased focus now on those core competencies. Peripheral services such as inventory and warehouse management are being rapidly jettisoned by the publishers themselves and outsourced to specialist firms where these services are a core competence.
Each sector is responding in varying degrees. We already see the results of chaos in higher-education, where there are significant challenges to finding a profitable model, and new competition from the universities themselves. We are witnessing a move towards consolidation and digital delivery models, but will it work ? Trade is adapting well, especially in the audio format, and although bricks and mortar may suffer, specialty book stores will survive, he believes. The Professional sector is slowly shrinking, despite being the first to commit to an almost-exclusive digital model. And the K-12 vertical is holding its head above water, possibly because they do have test standards and long runs that result in good margins for high–volume offset printing. So, although the industry is gradually coming to grips with new formats and business models to combat the slow demise of the profitable case-bound book, the balance and the mix of containers in order to make a sustainable profit is still mostly unresolved.
So where is the new focus – Should it be on technology or organization, content or container ? We clearly cannot remain tied to the physical book. In technology, the bottom line is that the big online retailers are extremely competent at data collection, retention and analysis, and own much of the container and customer data, so that publishers mostly still don’t know where, what and why their customers buy. They don’t have the data and there is little infrastructure there for collecting it. Royalty tracking business systems, in particular, must be developed to track this elusive data (especially difficult in higher ed for example) or litigation is swift and often painful. If publishers are to be successful in developing and sustaining a profitable mix of content and delivery containers that meets the market needs, they must add data analytics to their list of core competencies.
The organizations that excel at collecting, controlling, and analyzing the data will be the winners!
John Conley is the Principal Advisor and CEO at Borderland Advisors, who are focused on helping publishers and printers develop strategies and solutions that will create new revenue opportunities, product models and busy models driven by changes in digital technologies. For more information, please contact John Conley at firstname.lastname@example.org or via LinkedIn.