An optimal distribution mix is the key to monetizing digital content

– Four in five publishers globally are already producing digital content
– PDF continues to be the most popular digital format, with a majority of publishers indicating that ‘universal’ accessibility was a driving factor for choosing formats
– Third-party bookstores/channels such as those offered by Amazon, Apple, Google and Sony are preferred, but there is a growing need to develop online bookstores

 

April 2011: Amazon released its first generation Kindle in November 2007 – an event that subsequently shaped the digital market. Since then, large corporations such as Sony, Barnes & Noble, Google, and more recently Apple, have given the digital content market significant attention, while adding credibility and validating the digital market as a strong revenue source.

 

In the last few years, the publishing industry has witnessed tremendous change. For publishers, the digital market presents a holistic solution – one that opens a channel of revenue with non-linear growth, and ensures minimal costs of production and sales. To address this, however, requires a paradigm shift that will need publishers to revisit how they produce, distribute and deal with the economics of the digital market.

 

The transition to a digital inclusive model is impacting publishers – and the industry is still nascent. There is an inherent lack of clarity about various aspects of the publishing industry. ValueNotes conducted a research study, sponsored by Qbend, to understand the impact of digitization on the publishing industry. This research, titled The Current State of Digital Content, found that four in five publishers were already producing digital content.

 

Kris Srinath, CEO of Qbend says, “The growth of the e-books market and the push on the publishers to improve digital sales are going to be constant factors in the next few years as publishers strategize to improve their bottom line. E-books not only offer cost benefits for the consumers, but also provide great cost savings and increased benefits in terms of portability of content. It is going to be a driving factor in the next few years and we expect the print and digital versions of books to co-exist in this landscape. This is the focus area for Qbend as we work with publishers to help them realize their digital goals.”

 

Publishers addressing the digital market face various challenges while producing and distributing content, and protecting their intellectual property. Legacy workflows in the publishing industry have mostly been print. For publishers creating digital content, the main challenges were availability of resources and capabilities. This is now being mitigated by re-engineering legacy workflows and leveraging vendors’ resource pools. Publishers are now moving to a model that incorporates workflows and processes to deliver both print and digital output. Nearly 70% of the publishers surveyed stated that this transition was a manageable challenge.

 

The transition to incorporate digital workflows has been partly inhibited by the increasing number of formats, and reading and mobile devices. Initially, publishers were producing content in every possible format – a situation that was created by digital readers, such as Kindle and Sony Reader, supporting only proprietary formats. Digital readers have since moved to supporting ‘universal’ file formats, with PDFs being the most popular.

 

Distribution, on the other hand, is an area where publishers are still evaluating the optimum solution. Figures from ValueNotes’ report suggest an overall preference for third-party bookstores/channels such as the ones provided by Amazon, Sony, Apple, and Google. Each of these bookstores service consumers in the millions. The most notable threat being that of a publisher’s title getting ‘lost in the noise’. For example, Amazon’s Kindle bookstore now offers consumers over 630,000 Kindle titles – in addition to 1.8 million copyright free titles. We also see a growing need for developing in-house bookstores or distribution channels.

 

“Any company that begins operating in a digital economy needs to understand the copious volume of data that is being generated online,” says Jui Narendran, head of the ValueNotes Sourcing Practice. She adds, “The challenge, thus, is creating the right mix – a mix that optimizes in-house channels and leverages third-party ones.” Publishers, too, have recognized the need for multiple channels of distribution. Respondents from the survey indicated a strong preference for in-house digital bookstores / e-commerce solutions along with applications on reading devices.

 

As the digital market matures, publishers are likely to consolidate and optimize their digital distribution channels. The challenge is to identify the right mix of existing and in-house channels. This mix needs to not only ensure the best possible reach, but also the maximum returns.

 

For a complimentary copy of the report – The Current State of Digital Content – click here

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