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The Next Chapter of Book Publishing

The Next Chapter of Book Publishing

Unless you've been sleeping as soundly as a princess for the past six months, it'd be impossible not to notice that summer 2000 was the season the electronic book finally barged into public consciousness like a battering ram. Publishing's dream boy Stephen King, himself newly packaged following a near-fatal car accident that shattered his right leg, started the assault this spring. Simon & Schuster Inc. released King's Riding the Bullet as an e-book, making it available in a digital form online (an e-book is the encrypted, digitised contents of a book, from jacket image to index). More than 500,000 copies of the novella were snapped up in a day by the author's notoriously rabid fans, e-book enthusiasts and just plain bargain hunters (reportedly, as many as 300,000 free copies were distributed). Simon & Schuster, apparently pleased enough with those numbers, announced it would make all of suspense novelist Mary Higgins Clark's 22 mysteries available electronically just a week after striking a US$64 million deal to publish four of her new works. Then in July King upped the ante, self-publishing on his website Chapter 1 of a new novel, The Plant, saying future chapters would be available if readers paid US$1 per instalment.

King isn't the only print veteran showing enthusiasm for digital publishing. Floor-to-ceiling banners in suburban Barnes & Noble bookstores urged would-be authors to send their brilliant-yet-somehow-undiscovered works to iUniverse.com, an online vanity publisher of sorts in which the bookstore giant bought a 49 percent share. Time Warner took time out from its summer nuptials with America Online to announce it was forming iPublish.com, an effort to solicit, distribute and nurture new works online. Microsoft staked out turf and promoted its Reader software by teaming up with Random House, Simon & Schuster and Barnesandnoble.com to offer free e-book versions of Michael Crichton's novel Timeline and a handful of Star Wars titles for Pocket PC handhelds.

Truth be told, the publishing industry is in the throes of enormous technology-driven change, and the large trade publishers are responding with varying degrees of agility, savvy and defensiveness. But the revolution has been underway for a while now, and the electronic book is only the most consumer-friendly aspect of a much deeper, enterprisewide move to automate, archive and streamline what has been an archaic and inefficient production chain.

This is a business that has centuries behind it, after all, and information technology has been a backroom concern--until now. "I wouldn't call them dusty, but most publishers haven't before seen IT as a necessity to their business," says Anne Mander, CIO and senior vice president at Simon & Schuster in New York City, and former CIO for HarperCollins in North America. "Now they're realising that they've got to start including technology as part of their business plan. A lot of IT people have always had some good ideas, but we weren't on the artistic side. Finally we're recognised as somebody who needs to have a voice."

And with this validation comes pressure for IT managers: Use this technology-driven churn to bring corporate systems and mind-sets into the digital age in record time.

Most publishers have created new-media type departments that ink the deals with the dotcoms, sit on the standards bodies and try to guess which technologies will dominate in a crowded and confusing market, but that doesn't mean publishing-house CIOs are standing idle as the revolution passes by--well, most aren't, at least.

The CIOs are busy managing the seemingly constant mergers that have reorganised corporate publishing in the last decade; reshaping aging, piecemeal telecommunications systems into a single, companywide information architecture; building the digital-asset archives that will eventually store a single electronic copy of each of a publisher's current and backlist books; launching enterprise-management systems to streamline workflow; pumping point-of-sale data into existing warehouses to get better forecasts and fewer print overruns; working with those new-media groups to add e-commerce to what have been product-showcase-only websites; and, oh, yes, overseeing the payroll, human resources, production, sales/marketing and other bread-and-butter systems that actually help publishers turn a profit while the e-volution rages around them.

With the possible exception of Dick Brass, nobody is (yet) saying the book is dead, but it's clear digitisation will morph it in ways that make it nearly unrecognisable. Brass, Microsoft's voluble vice president of technology development, waxes poetic on the fate of Gutenberg's 550-year-old invention even as he drives an eloquent nail in its heart. Typical quotes: "Books are a thing of beauty, but so are horse-drawn carriages"; "We Boomers are paper-trained by nature, so books will be around until we're dead."

The "p-book"--a locution reverse-engineered, of course, from e-book--"is a form of intellectual merit badge" that people love to collect and display, Brass says, but why cling to such sentimentality when you can easily download and bring with you on your next European holiday 10 of the most popular guidebooks of the region? One search across all 10 titles leads you effortlessly to the best restaurant in town. Vacation reading takes on a whole new meaning when you can carry five or six (or 10 or 20) novels you've been meaning to read all year.

E-books can be enhanced with audio or video (how about a clip of J.K. Rowling discussing the finer points of her Harry Potter plots, or a demo of new application development tools for your website?) and updated when new data becomes available, as encyclopedias on CD-ROM are now.

Textbook and business book publishers, many of which already do a brisk business in custom courseware for teachers, envision a Web-based system that lets professors pick-and-click chapters and other discrete chunks of material from an online database of thousands of books and periodicals to build a volume tailor-made for the class, time and term they're teaching. Since copyrights are assigned to each piece, the book would already be cleared to be printed by the publisher or e-mailed to a university print shop or downloaded to individual students.

There are some problems yet to be worked out with such slice-and-dice scenarios, points out Chris Hogg, director of new Web/publishing technologies at Houghton Mifflin Co. in Boston. For example, once a textbook has been broken up, what happens to its cross-references, its glossary and its index? Still, the powerful customisation, searching and archiving abilities of electronic textbooks stand to aid Houghton's primary audience, teachers. Hogg sees, for example, being able to easily include up-to-the-minute state curriculum standards alongside Houghton's current offerings of books and teaching materials.

E-books also offer a chance to deliver new types of writing in different-size formats that better suit the work and the people interested in reading it. Fatbrain.com, which carved an early niche in the online market by selling books, training materials and print-on-demand documents to the business and academic community, recently launched and spun off MightyWords.com, a site dedicated to works like speeches and short stories that don't turn a profit under the traditional publishing models. And it's no coincidence that Stephen King's e-offering was a novella, a short-fiction form that's traditionally a hard sell in the hardcover or paperback approaches of the large trade publishing houses. In cyberspace, where there are no line lengths, publishers could sell books a chapter at a time, or offer an all-you-can-read subscription service to its entire digital library.

"Publishers are locked in to a mind-set of 'this is how we do books,' but the Web doesn't have any physical limitations," observes Forrester Research analyst Daniel O'Brien. "This is a much more fluid medium, and there is an opportunity here to surface different kinds of creativity. Poets could sell individual poems to an audience that cares about that kind of thing."

E-books may account for as much as 10 percent of the market for adult consumer books by 2005, with sales totaling US$2.3 billion, according to a study prepared by Andersen Consulting for the Association of American Publishers.

Hoping for at least a slice of those sales are Web-based startups like Fatbrain.com; NetLibrary, which helps libraries and corporations make available to their members a wide variety of scholarly, reference and professional e-books; PeanutPress.com, an online store recently purchased by NetLibrary that converts and then sells to consumers books and periodicals for the handheld computer market (PalmPilot and its ilk); Glassbook, an early player that offers both reader software and a content-server program to help companies automate the e-book supply chain; and Versaware, a service company that offers publishers a "digital content exchange network" of programs for conversion, security, enhancement, e-commerce fulfilment and archiving. And that's not even including the many companies trying to dominate the nascent market for digital-rights software or the many "fan sites" that offer public-domain e-books for download free of charge.

Next to such eager beavers, the big trade publishing houses can seem hopelessly conservative, out of the game or both.

Versaware CEO Harry Fox, who like his colleagues at other startups is something of an e-book proselytiser, says, "going to the Frankfurt Book Fair is like walking through Disney's Dinosaur movie." While publishers have taken some small steps toward automation--particularly in the areas of inventory management and laser printing technology, which is far cheaper and more flexible than traditional offset printing--the concept of an electronic publishing business model, from creation to consumer, hasn't become ingrained. "They're scrambling," Fox says of the large trade publishers. "They're going to have to adapt very quickly, be purchased or go out of business. This is all going to happen very fast, in two years," he predicts.

Microsoft's Brass, whose own large company has partnered with a lot of these dinosaurs, is more inclined to take a longer view, but he too agrees the next two years will make or break a lot of publishers in the electronic arena. "These guys didn't jump willy-nilly to convert everything they own. They've been carefully watching and measuring the impact to see if there's going to be a market," says Brass. But the days of conservative watchfulness are over. "If they ignore the market now, they're in great danger."

If publishers are going to stay in the game, analysts, industry and Internet executives agree, they need to get cracking on a to-do list that's not so much long as it is prickly in places. First, publishers must convert both their current list and their backlist books to a digital format compatible with the Open eBook standard-in-progress, with the idea that these relatively generic files can then be easily converted to fit one or all of the competing e-book reader formats until a clear dominant reader emerges in the marketplace (if ever). They must archive this digital library in a way that's both flexible, to achieve maximum process efficiencies, and safe, to ensure from the outset that copyrights are created for and travel with their data. That's assuming, of course, the publishers own the digital rights to the works in question, a point that is rarely clear on older backlist titles.

Then publishers need to decide on a price point for their digital offerings--one that turns a profit but also sits well with a savvy public that knows a digital offering simply doesn't cost as much to manufacture and distribute as a wood pulp, cloth and glue product. Pricing is a particularly touchy point in the industry: Some publishers worry the Stephen King giveaway did more harm than good. If Stephen King costs nothing, why pay even a dollar for some new, unknown novelist? The author shouldn't be left out of this profit-sharing exercise either, lest she bolt, set up an e-tail site and start hawking books directly to the public, a very real scenario under the new world order of the Internet.

Digital asset management--the creation and maintenance of that digital archive--is one of the key pieces that prepares publishers for participation in an e-commerce market as well as allowing them to tap their own backlist of out-of-print books for shorter, print-on-demand runs that can keep quiet sellers before the public eye and making steady, if modest, money. But there's more to the process than simply digitising existing books. "Publishers need to rethink the way that they produce content, the way they manage the creation process," says Andres Sadler, associate partner in media and entertainment strategy practice for Andersen Consulting in New York City. "Some publishers are already reengineering processes to make them more efficient."

The goal is to ingrain digitisation in the publishing process from the outset rather than adding it as an afterthought. "You're asking people to do things in a whole new way," says Kate Tentler, vice president and publisher of Simon & Schuster Online. "The biggest challenge of the Internet society is asking people to completely change their systems. You need to do and build it to be in the market, but it's a huge undertaking. I feel for people who have to go through it."

Even though some third party--a PeanutPress, a Versaware or a Glassbook--will likely be charged with printing and formatting publishers' electronic matter for the short-term at least, decisions regarding the digital archive are still a struggle, says Simon & Schuster CIO Mander. "We still need to hang on to our own copy of our own content, and that's a huge amount of data. Everybody's looking at what's the best model to get that content in a form that's useable and reusable."

At Random House, Vice President of Information Technology and CIO John Buese has been working on a digital asset management system for two-plus years, which counts as a head start in the industry. In searching for ways to leverage digital content, the company was preparing for not just the potential e-book market, but for efficient business operations all the way around, Buese says. "Our thinking was, if we start creating this stuff digitally, if we have a repository, then we can create files for mass printing or for print-on-demand or for e-books."

Though he spends a lot of time meeting with and assessing the various would-be players in the e-book reader and copyright-protection market, Buese, like his colleagues at Simon & Schuster, finds the most difficult job is not navigating the marketplace but changing the corporate mind-set. "The real challenge is how to institutionalise this into the process. You have to work with your art directors, production department, all the processes to embrace digital creation from the outset."

All this frenzied archive-building doesn't seem to have rattled the cage of Maurice Greenfield, CIO at Scholastic. While the children's book publisher has digitised and stored metadata on its books--such as the PDF of the latest Harry Potter book cover sent to Amazon.com--there is no concerted effort afoot to digitise every book Scholastic ever offered, according to Greenfield. "If and when people need it, it wouldn't be a big deal," Greenfield says.

That doesn't mean Scholastic isn't playing in the new economy of the Web.

Scholastic has a three-part Web strategy, headed up by Ruth Otte, executive vice president of the software and Internet group. The strategy calls for first attracting new and existing customers to the site and supporting their online book-club activities, which reach some 1.8 million teachers nationwide and rack up US$350 million in business. Phase 2, now in beta, is designed to commerce-enable the websites so that teachers can order books (and other classroom materials) through the Internet. Next year, the company plans to add a professional-development component, with online seminars, digital curriculum services and so on.

When the book club sites were serving up content only, Otte says, she had limited interaction with Greenfield. This summer they were in contact almost daily. "We're hammering out how and what kind of access we need to legacy information and deciding what portions of the databases in the back will be brought to the front for customer and promotional purposes," says Otte.

For his part, Greenfield says it makes sense for Otte's group to handle the presentation layer of the e-commerce project, and yet he declined to characterise his department's contribution as back-end only. "We will have e-sellers [that market books online] coming directly into my databases. That's not back-end," he points out.

Also, Greenfield simply doesn't have time to worry much about what's been on Otte's plate; his own is full. Greenfield's department is starting to put together an ERP system to deliver more sophisticated demand-forecasting capabilities and tighten Scholastic's supply chain. And Greenfield has just finished building a set of logical data models as a preliminary step toward cleaning up and integrating customer and product databases throughout the company. The goal is to give executives an easier way to view internal operations and interactions with suppliers and customers.

In a way, Scholastic's close relationship with its customers--a loyal group of teachers who have been members of its book clubs for years--makes it easy for the company to set its goals in the electronic age, Otte says.

That kind of specific customer-focused business is rare in the world of trade publishers, which buy, produce and distribute books without any clear indication of how the product will fare in the marketplace. "Publishers risk losing the younger audience to other forms of media," says O'Brien. "They need to condition their audience to look forward to an author's next book and to read reviews. They ought to be training the next generation of consumers, and digital books can help with that."

Indeed, with the advent of better forecasting abilities, Web-based interaction and the customisation possibilities offered by the e-book, the customer may wind up becoming the love interest in the next chapter of publishing. And that's just fine with new-publishing leaders like Time Warner's Greg Voynow, the general manager of iPublish.com. "We're trying to go from being in the book business to being in the reading-experience business."

Are book publishers doing enough to meet the challenges facing them? Write us at letters@cio.com. Tracy Mayor, a freelance writer in South Hamilton, Mass., can be reached at tmayor@mediaone.net.

SOULS OF NEW MACHINES

Players in the publishing industry must keep tabs on these areas in the digital revolution FILE FORMATS While a number of e-book reader software programs vie for supremacy, publishers can format their books to OEB, a nascent standard developed by the industry group Open eBook Forum. These generic files can be further customised to work with a particular e-book reader. Competing file formats include Adobe PDF (which has the largest installed base), Microsoft Reader and Glassbook Reader (an emotional favourite among e-book evangelists), along with formats from NetLibrary, NuvoMedia, SoftBook and Versaware.

DIGITAL RIGHTS MANAGEMENT

DRM comprises electronic copyright protection (from vendors like InterTrust Technologies and Xerox) and an electronic locking "envelope" that determines how and when an e-book file is opened up, and by whom. Reciprocal is the big player in this area, called digital-clearing. The Electronic Book Exchange (EBX) specification--a copyright and distribution standard backed by Glassbook, Adobe and others--is in the works.

TYPE TECHNOLOGY

Subpixel technology allows small type to be displayed much more crisply on LCD screens, thereby making the electronic reading experience (industry players hope) more attractive to consumers. Microsoft's ClearType, now in its Reader software, will be folded into Windows. Adobe's CoolType is slated to make its way into the Adobe Acrobat reader.

HARDWARE

NuvoMedia had RocketBook. SoftBook Press had Reader. Each was roughly the size of an open paperback with a backlit display and other features. Everyone liked them, but nobody (or next to nobody) bought them. Gemstar International Group purchased both companies and has contracted with consumer-electronics giant Thomson Multimedia to build a mass-market device that should debut in time for Christmas 2000. The Microsoft-backed Pocket PC and the Palm handheld can also support e-books. Purists worry the tiny screens will only turn potential readers away from the e-book, but the devices' popularity could drive the market. -T. Mayor MOSTLY QUIET ON THE E-FRONT By Jason Compton Traditional publishers say they are making digital plans, but judging by the industry's big trade show, the lasting effects from an e-book revolution will have to wait.

The year 2000 is no different from 1980 or 1960, according to publishers' booths at Book Expo America held last June in Chicago. Rows of hardcover books were the norm, with scarcely a word breathed about emerging technology. Random House, one of the show's largest exhibitors, went so far as to leave its booth's few computers turned off.

Conspicuously absent from the show floor was Gemstar, owners of the Rocket eBook, although they sent emissaries to technology panels. And Amazon.com limited its presence to a large logo banner outside the hall and a modest booth to promote its affiliate sales program.

Technology presentations emphasised copyright protection and usage limits in the online and e-book environment (delivering interesting and affordable content was a distant second). Convoluted plans to encrypt PDF files with unique code keys, methods for charging users to quote text and implementing library-like notions of check-in/check-out systems to online reference materials were the order of the day from companies like Ebrary, Glassbook, NetLibrary and SoftLock.

Do these kinds of efforts make sense, given the Internet's potential to unleash open access? "No, but the industry is in a transition period right now, and this is what the publishers can accept," replied one technology vendor representative who asked not to be named.

To their credit, traditional publishers do seem to be embracing the movement to store their content in standard digital formats.

New York City-based John Wiley & Sons (despite a very traditional booth) is aggressively converting its catalogue to XML and other common formats to take advantage of the potential to reintroduce titles through on-demand print shops, or as e-books when they see fit. Gwen Jones, director of systems and special projects for John Wiley & Sons, says the company plans to introduce standard electronic templates and storage for its publications, including 200-plus professional journals.

The lasting impression from the show is that the book industry values its traditions. Case in point: One small bookseller at an e-book panel discussion got a titter when he asked, in all seriousness, how the spread of e-books would protect consumers from a flood of unreadable, lousy writing.

Jason Compton is a freelance writer in Evanston, Ill. He can be reached at jcompton@xnet.com.

AFTERWORD

Since CIO reported this story in June, publishing industry players have been keeping the e-publishing pot boiling.

July 24 Stephen King started selling chapters of The Plant directly to readers via his own website, www.stephenking.com.

July 31 Random House set up AtRandom, a new unit that will publish digital books next year.

Aug. 1 Time Warner Books' iPublish.com unit unveiled its first list of e-book titles.

Aug. 8 Barnesandnoble.com opened an "eBookStore" to sell retail electronic books digitised in the Microsoft Reader format.

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