When publishers from all over the world met in Frankfurt in early October for the annual Bookfair, the hot topic of conversation was not print books but digital content. We are offering an overview of the activity as a follow-up to the BAPLA Book Publishing Survey August 2010 available to members here.
The Bookfair’s headline attraction was its “Sparks” program, a wide range of seminars around digital content and delivery. These seminars explored the many ways that publishers are adapting to derive revenue from digital versions of books and digital offshoots from their print publishing.
There is a rapid and marked change in the way that UK publishers and packagers approach digital projects. At last year’s Frankfurt the general attitude seemed to be “we should do something about digital”. This year, many publishers had already published digitally and planned to do more. In particular, there are now digital revenue streams for illustrated books.
Publishers showed the offerings they had produced over recent months. These included “augmented reality” books (where a book held up to a webcam produces onscreen animations based on the still image in the book), apps for the ipad and iphone sold through Apple, marketing websites and apps to promote books, and pages for online library systems that are very similar to pages that might have previously appeared in print books. There was much discussion about the need for extra content to be made available in digital form, content that adds value for the reader – and that content includes more images and more video.
One of the most interesting Sparks seminars shared the experience of American trade publishers. Speakers included Evan Schnittmann, Bloomsbury’s worldwide sales director and Brian Murray CEO of Harper Collins USA, who were questioned by Tom Turvey, the Google Director responsible for Google’s books programs. With Amazon’s Kindle well-established alongside Barnes and Noble’s Nook and Apple’s ipad, ebooks are producing substantial revenue for publishers in the US. Bloomsbury and Harper Collins agree that 9% of their US revenue is produced by e-books and they expect this to double in the next year. Publishers expect European uptake of e-readers to be slower, but this Christmas may be a major turning point with high anticipated sales of the ipad and kindle expected to kick start the e-book market.
What are the implications for the photo industry in terms of rights?
Firstly, Harper Collins, Bloomsbury and other publishers emphasise that many of the new e-books sold are not replacement sales for print books – they say about 40% of their e-book sales are incremental, ie books they would not have sold if the title was only available in print. That is significantly different from the information given by those on the frontline negotiating picture costs for digital rights and is a good argument for those licensing images to expect an additional payment to cover digital editions.
Secondly, clearing e-book rights is a major undertaking: Harper Collins has a team of 12 people dedicated to this alone. And authors are paid a higher percentage royalty on e-book sales than they are on print. Traditionally authors royalties on print books are 15-20%; whereas publishers offer 25% for ebooks. That is equivalent to a 40-70% rise in royalties – and publishers are under strong pressure from authors and agents to increase this percentage. As publishers accept they should pay higher rates to authors for text, this is an argument that those licensing pictures should also expect higher fees to cover digital rights.
Thirdly, because digital products may be sold worldwide regardless of where the book is published, it makes sense to publishers to clear world language rights in a book. This may have a significant impact on the UK publishing industry which has often published books in the UK and Commonwealth or for the world excluding the USA. We may see considerable disruption in the UK publishing industry as companies here compete more directly with US publishers, and may find broader territory rights being requested by publishers.
Some publishers were keen to point out that the vast majority of their business still comes from print books and that will be true for some time to come. But the industry has arrived at a tipping point. Publishers are pushing ahead in trialling digital models and are bullish about the potential. It does not appear that the book publishing industry will be as severely disrupted as the music industry was by file-sharing. BAPLA is supportive of our industry’s clients’ as they develop digital revenue streams. Equally we want to make sure that the rights settlement is equitable and that payment for digital rights reflects the value that our publishing clients derive from these rights.
Other key talking points were comparisons of e-readers, which currently show the iPad and Kindle as dominant, but providing different experiences (Kindle ideal for ebooks only, iPad better for those wanting to jump from one area of content to another). The US offers choices such as the B&N Nook, which are not available in Europe yet.
The Book Industry Survey Group survey “Consumer Attitudes towards E-Book Reading” (conducted Nov 09 – May 10) showed purchase of ebooks growing steadily but with rate of increase slowing slightly. 38% of respondents cited Kindle as preferred device, while Amazon was the dominant retail outlet, with 61% of respondents having used it. Outside the English speaking world, ebooks are less advanced and in territories such as Germany with retail price maintenance, print sales remain high.
Bloomsbury’s Public Library Online launched in mid 2009 and now has 7.5 million UK readers, with apparently 100% renewal rate.
Google Editions is set to launch in US by end of 2010 and in Europe in first half of 2011. This will be “device agnostic” and will also be available through small book stores.
It also apparently includes image-scrambling technology, to deter piracy, and image-blocking technology when publishers wish to block images or when rights are not cleared.
The Livres Hebdo/Publishers Weekly annual ranking of the world’s biggest publishers showed Pearson in first place for 2009 with 7,756 US$ million revenues compared to US$ 7419 million in 2008. In second place is Reed Elsevier (US$7367 in 2009), followed by Thomson Reuters (Canada), Wolters Kluwer (Holland), and Bertelsmann (Germany).
UK publishers OUP stands in 21st place, while 5 Japanese publishers are currently in the Top 40. Many major US publishers, including Harper Collins, Hought Mifflin Harcourt, Scholastic, Simon and Schuster and Reader’s Digest, showed significantly reduced revenues in 2009 compared to 2008.
Toby Hopkins (BAPLA Rights Group), Corbis
Tim Harris (BAPLA Rights Group Chair), Nature Picture Library
