Shatzkin's Speech to the London Book Fair

Regular readers of this blog know that one of my heroes is Mike Shatzkin. Mike is the CEO and founder of Idea Logical, a consulting company. He is a frequently sought speaker, especially on the impact of digitization.

I frequently stop by his company's website here to see what he's been up to.

Last month on April 16th, he delivered a speech at the London Book Fair on the "state of digital change in the U.S."

He spent a good part of the speech talking about horizontal and vertical integration. If you're not familiar with the concepts (or want to brush up on them), go to my post of October 21, 2006 here.

Shatzkin said:

In the 20th century, successful consumer media enterprises almost always shared two characteristics: they were horizontal in their content coverage and format-specific. In the US, that means companies like Random House, CBS, and The New York Times. They all embraced a very wide span of subject interest, but very seldom strayed from books, broadcast, or newspapers, respectively.

But in the 21st century, the net is flipping this on us. The net tends to self-organize us by subject niche, so the eyeballs and human bandwidth are linked to the niches, which are vertical, not horizontal. And because web interaction is about file exchanges, format specificity is meaningless . . . So we’d expect the successful 21st century consumer media entity will be vertical in subject interest and format-agnostic.

He also refers to DADs or Digital Asset Distributors--distributors of digital content in the same way that Ingram is a distributor of physical books. In this speech, Shatzkin says "it looks like Ingram Digital and LibreDigital are the market leaders on our side of the Atlantic" in digital asset distribution.

Shatzkin also says:

There is ebook growth that even the most hardened skeptics and defenders of the primacy of paper books must admit is real. The Kindle was introduced by Amazon and is apparently a great success; the Sony reader is rapidly becoming a ubiquitous professional working tool. The new epub standard is going to make it easier and easier for books to find their way into any conforming ebook format.

You'll recall I mentioned the new epub standard in yesterday's post under the sub-heading "Association of American Publishers Posts Open Letter." In talking about the new epub standard, Shatzkin also says:

Ebook retailers we checked with say that only Harlequin puts all their new releases into all ebook formats as a routine matter. Now that other publishers seem about to join instant adaptor Hachette Book Group USA in embracing the new epub format for ebooks, which should make conversion to different formats just about free, we’d expect to see more titles in more formats in the future.

I bored some of my readers silly in late March and early April nattering on and on about Amazon's new policy intended to force small publishers to use the Amazon proprietary POD press, BookSurge. Shatzkin has something to say about this, too:

About three weeks ago, Amazon declared a new policy that they would no longer ship as Amazon-sold product books printed on demand by another supplier . . . The legality of this approach is not yet clear, but many of the marketplace implications certainly are. Amazon has a commanding position among online book purchasers and they can use that as leverage to compel publishers to conform to their desires . . . This latest policy is a shot across Ingram’s bow -- at the very least; maybe it is a missile into the wheelhouse -- but it is also a sober reminder to publishers that their now second-largest vendor has a whip hand and will use it.

One of the more interesting comments Shatzkin made was this:

I’d add a word here about libraries. They “lend” ebooks and digital audio already. Since ebooks and audiobooks tend to be read once, as opposed to music that might be listened to many times over many years, “borrowing” an ebook or audiobook is about as good as buying one. This has already led some publishers to think about some sort of per-use charging in this marketplace, which would certainly be a challenge to implement. On the other hand, as the download customers become savvier, one would expect more and more of this business to shift from “buy” to “borrow” with a dampening effect on sales..

Read Shatzkin's entire speech here.