The art of the possible
Sunday, October 14, 2018
Posted by: Brian O'Leary
[Earlier this year, I was invited to speak at Firebrand's user meeting, which took place last month in Portsmouth, New Hampshire. This post is the content of that talk, which addressed the role of standards in preserving and protecting book publishing in a global marketplace.]
Most of the people gathered here live in the details. Our roles – our jobs – require us to process hundreds or perhaps thousands of data points a day, placing each one in some sort of context – “Help me?” “Hurt me?” “Kill me?” – that determines whether and how we respond.
This is not a talk about those details.
But, it is a talk about what happens when the details overtake us, when our systems become so complex that they start to seem fixed, immutable, and impossible to change. It’s about the moments at which we stop seeing the forest for the trees.
And, it’s about publishing.
As I speak, I know it’s late in the day, and we will soon be hanging out and carrying on in my third favorite state in the country. I want to respect that, so for those in the audience who binged on Title Management or Eloquence on Alert and just want the short version, here’s the TL; DL (too long, didn’t listen) version:
- We can reframe how we think about “the art of the possible” (Focus less on the art; focus more on the possible)
- To compete in publishing, we need to remove constraints
- Standards help us remove constraints, but they have to be truly standard
- If we don’t work together to rebuild the infrastructure of U.S. publishing, we risk throttling innovation and reducing our relevance
- And, I have a path forward (that is not “join BISG”)
Okay, if you want the path forward, you’ll have to stay awake until somewhat close to the end. Or, ask me about it later.
I want to start my talk with a nod to Otto Von Bismarck, who in 1871 unified Germany from a collection of more than two dozen kingdoms, grand duchies, duchies, principalities, and free cities into a single country, Germany. In 1867, he was first quoted saying that “Politics is the art of the possible, the attainable — the art of the next best.”
It’s useful to know that Bismarck was not an upbeat guy. He also said:
- “People never lie so much as before an election, during a war, or after a hunt.”
- “Never believe anything in politics until it has been officially denied.”
- “When you want to fool the world, tell the truth. ”
- “It is the destiny of the weak to be devoured by the strong.”
And my least favorite:
- “Man cannot control the current of events. He can only float with them and steer.”
With that context, you could probably interpret “Politics is the art of the possible” as something short of an endorsement of politics, or for that matter what is possible. What Bismarck said persists to this day: “It’s not about what's right or what's best. It's about what you can actually get done."
I admit that the underlying arguments are seductive. Getting everything you want is impossible. Often, you have to severely compromise in order to get even part of what you want. And in the end, refusing to compromise means you get nothing whatsoever.
But there’s a frame here that doesn’t get questioned very often, something along the lines of “I win, you lose.” We treat most negotiations as a kind of prisoner’s dilemma, believing the best outcome is one in which we maximize our own self-interest. In practice, that means the average outcome is worse for everyone.
Several years ago, I taught management for seven semesters at NYU’s master’s in publishing program. At least at the time, the students had never managed a department or function, so I tried to use exercises that challenged implicit assumptions about what made a good business decision.
For one of those exercises, we formed two teams representing one of two gas stations competing against one another on a busy block. At the start of the exercise, both sold gas for an identical price per gallon. No conversations about price were allowed … just like in real life.
We constructed a simple rubric: for every one-cent difference in gas price, the station with the lower price picked up 10% more of the market. I gave the teams a few minutes to construct a pricing strategy before each team posted a price and calculated their market shares. We repeated this five times and calculated a total revenue for the “week”.
Across seven semesters, 14 pairs of teams, and 70 simulations, the results were strikingly consistent: one team would cut price, sometimes dramatically, to gain market share. The other team would follow, dropping price to regain at least part of the market share lost. Several teams stalemated at the cost of the gas itself, splitting the market and earning no profit in the last two or three rounds.
The teams that had gained market share felt at first that they had won, even though I’d been careful to avoid any discussion of how success would be measured. When I pointed out that even the teams with the highest market share had made less money than they would have if they had done nothing but stay at the same price, the lesson came into focus.
In fact, the best outcomes in markets where you can’t really control the cost of good sold is revenue maximization. Both gas stations would have been better off raising prices in tandem. But only one team I taught tried that, while the team they faced dropped price repeatedly to pick up as much market share as they could, at lower and lower profits.
You may be thinking, “As an industry, we can’t collaborate on price,” and that is exactly true. But we can collaborate when doing so improves the value we deliver to consumers. And, we can collaborate when we are in situations that threaten to undermine that value.
To illustrate that, I’d like to talk about three inter-related subjects central to the work we do these days: workflow; digital books; and discovery.
Let’s start with workflow.
How many people here work in companies that use Adobe products to create, manage, or distribute content? You don’t have to use it yourself; just raise your hand if it’s something that’s part of your content workflows.
By the look of it, that’s pretty much everyone. It’s likely not a surprise. Products like InDesign are on a lot of desktops, laptops, and mobile devices. Adobe is central to most publishing workflows.
Now, how many people here saw the news announcing Adobe’s acquisition of Marketo? The acquisition had been rumored for some time, and it was announced last week.
Not too many people here saw that, but it’s a potentially important sign of what’s to come with Adobe. Marketo sells marketing automation tools that help business-to-business marketers sell more effectively. Adobe itself has been in the marketing automation business for a while, with a product called Adobe Campaign, but it hasn’t made as much headway in the space as it would like.
With the acquisition of Marketo, it moves within striking distance of Salesforce, the leader in CRM software. It’s a battle of giants: Salesforce projects revenues of about $12.6 billion this year – that’s one company with sales half the size of book publishing in the United States. This week, it’s hosting an event in San Francisco, California that is said to attract more than 175,000 attendees.
Adobe is no slouch, either. Last year it recorded over $8 billion in sales, making it more than twice the size of the biggest publisher. The price it paid for Marketo - $4.5 billion – represents a sixth of publishing revenues in a given year.
If you look at any of its recent analyst presentations, Adobe has grown well beyond its publishing base. Creative Cloud remains a core product, but even there, its growth comes from industries with different profiles and different business requirements from publishing. It’s a world where PDF thrives, at least for now, while EPUB lags.
These days, Adobe talks more about businesses like Adobe Document Cloud, Digital Media, and Adobe Experience Cloud. With the acquisition of Marketo, which will be part of Adobe’s Marketing Cloud business, the company continues to expand well beyond its graphic-arts and publishing base.
What does this have to do with book publishing? With a few exceptions, the answer is “absolutely nothing”, and that’s my point.
Adobe is moving away from its publishing roots, much as Quark did in the 1990s and early 2000s. Publishers who customized their own workflows to fit Adobe’s tool kit are at risk now. As big as our annual spending with Adobe may feel, the reality is that it’s now a drop in the bucket for the company, and it’s probably not high on the product roadmap, either.
There are alternatives, particularly as publishing moves toward the web. Last March, Carolyn Pittis of Welman Digital led a two-hour, highly interactive program on workflow. The panelists included representatives from Pearson, Wiley, and Macmillan. While all have made smart investments, the panelists and those attending are still struggling with tools made to serve an audience that is much broader than book publishing.
Why is this the reality? Why does everyone hate their workflow solutions? Why do we continue to cobble together a set of proprietary, sometimes Rube Goldberg-inspired solutions rather than create a more open-source solutions designed for publishing?
These questions resonated in March, and for me they resonate today. Relying on proprietary tools puts us, a small industry, at risk. We need to think about doing better, openly.
Second up: Digital books.
Standards in ebooks are largely a function of a B2B relationship: what publishers provide, and what aggregators and retailers accept. While a consumer can access an EPUB file, more often than not it is customized to a particular retailer’s platform, with some sort of digital rights management (DRM) scheme applied. Similar restrictions apply to books lent in library settings.
I acknowledge that there are exceptions, such as some Macmillan imprints. I’m starting at this level not to criticize the current practices or praise the outliers. Rather, I’d like to suggest that the current, tangled mix of standard and proprietary approaches is limiting the market for digital books.
In presentations, published research and a range of consulting projects, I’ve consistently encouraged the use of EPUB as an open format for digital books. I believe in an open standard, so I have supported EPUB even though some high percentage of the eBooks sold in the United States are read on a platform (Kindle) that delivers a proprietary format to readers.
In my writing, I’ve also encouraged publishers to re-think their stance on the use of digital rights management schemes. The current DRM patchwork is used largely to create platform lock-in for Amazon, Apple, Barnes & Noble, and others. As it limits utility, DRM also may have had the perverse effect of depressing price.
To the best of my knowledge, there has never been a comprehensive study of the impact of DRM on competition and price. The results might give the industry better arguments for maintaining an open standard throughout the digital book industry.
In the absence of data, then, a bit of conjecture: we focused too much in the past on getting publishers to create EPUB files, and not enough on getting consumers to value (and buy) open, interoperable formats. The result is the reality we know today: platform lock-in, with one retailer dominating the market in the U.S.
The lock-in has had a two-part corrosive effect on innovation, as well. Proprietary DRM meant that any investments in digital books might be lost to whatever black-box transformations occurred at the retailer. Joshua Tallent led many publishers from darkness to light in those early days, but there were always limitations. Once you start living with them, you stop innovating.
The second corrosive impact looked like innovation, but it was something worse. Companies with proprietary solutions – custom workflows, custom processing tools, unique rendering engines , and the like – pitched publishers on digital products that looked and felt like a book. All of the functionality, none of the paper.
Unfortunately, these were solutions that required separate, parallel, or sequential workflows, at a time when publishers really needed to be developing a single workflow for physical and digital content (we should still be working on that, I think). And when the companies pivoted, only a vestige of the original solutions remained.
So here we are, with platform lock-in and something approaching monoculture in the U.S. market. Wishing it were different will not change our reality. But the current EPUB standard is not forever. The W3C, successor to the IDPF in maintaining and enhancing the standard for digital books, is already working on an update – call it EPUB 4, though it may have a different name – that will more closely align in with web standards.
The update may also improve the functional performance of digital books in offline environments, a challenge that is not unique to books, but it is certainly important to solve. Also important to solve: how our files display on different platforms and reading devices.
As pressing as these problems are, only the W3C is working to solve them. Representatives from PRH, Hachette, Wiley, Macmillan Learning, and VitalSource are part of this effort, but the broader publishing industry is largely absent.
I’ve heard and understand the arguments about the cost of joining the W3C, as well as the implications of having a staff member dedicate time and energy to developing next-generation standards in a working group of peers and competitors. We face similar arguments within BISG.
But this argument is not new to the W3C. In the mid-2000s, the IDPF struggled to gather enough support to respond to the first commercial prospects for ebooks. It ultimately merged with the W3C for not only technical reasons – a desire to avoid having EPUB become a fork in the road for HTML – but also (or equally) operational and financial considerations. It had trouble standing on its own.
I think publishing is deeply ambivalent about its relationship with digital tools, technologies, and formats. In the past decade, we’ve become better at producing ebooks, but we haven’t tackled what is unique and sometimes challenging about digital sales, particularly when it comes to the business side of things.
There’s no guarantee that EPUB 4 opens the door to a new or more favorable business environment for digital books. But a weak effort on the part of publishers to shape the new standard all but guarantees that it won’t.
To my third example: discovery.
My focus for the moment is on trade publishing. Scholarly, educational, and professional have their discovery challenges, but I needed to choose one path for this talk, and I went with trade.
Further, I’m putting aside those publishers that have developed or tried to develop direct-to-consumer relationships. They are still a minority of sales, and there are about as many failures as successes there. It’s a worthwhile topic, but not quite ready for this one.
As book sales have moved online, our primary tool to foster discovery, access, and purchase is our metadata. And, as with workflows, and digital books, publishers use metadata as a tool between trading partners. It’s a B2B exchange.
The metadata is prepared by a publisher and sent directly or through a third party to another company, typically an aggregator, distributor, or retailer. Recipients process that information in a way that is said to be standard, and is most certainly not standard.
Retailers, in turn, display the metadata provided by publishers on open, online platforms that may or may not match publisher intent. Publishers complain that the retailers don’t understand the books they are selling, that their metadata has been over-written or misused, and that consumers are not able to find what they want.
Retailers make the inverse arguments.
Now, no one knows the history, trials, tribulations, high points, and low points of metadata in the United States better than the folks at Firebrand. Square that if you are talking with anyone named Toolan. So, I’m not here to say that I know more about metadata. I just want to make one bold claim.
Our frame is wrong.
We’re trying to compete in a B2C world with a legacy B2B model. That’s understandable. ONIX 1.0 and 2.0/2.1 grew out of a response to online sellers, who in the mid-1990s were displaying fields limited by EDI to something like 37 characters. Much of the structure of those standards, and all of the nature of our trading relationships, emulated what came out of those EDI feeds.
In 2003, 2005, maybe even 2009, that still worked. Sales were still market-specific, pricing was not a mix of multiple models, and the sophistication of packaging and bundling was manageable using the prevailing, feed-based model.
With global sales of digital products, simultaneous release of multiple formats for almost all major titles, the rise of audiobooks, the complexity of sets and series, and the expansion of pricing and business models across most channels, the old, feed-based system does not work as well. Add in non-book products, and you start to push the outer boundaries of what we are capable of supporting.
This is not an attempt to revive the argument for ONIX 3.0. That ship left port a week ago. It’s a call to arms, to ask publishers, aggregators, and retailers to work together to reframe the metadata conversation around what buyers need to be able to make an informed choice.
I know… a retailer calling you back? Never going to happen, right?
And I know… a publisher listening to what a retailer has to say about reaching a consumer? How often does that happen?
I don’t know the answers, really. I know what I’m told, and it’s often discouraging. But, I’m here today to say that the existing order will make us irrelevant if we don’t change it.
Whether we build more robust repositories that host publisher data, or we use that data to build more robust relationships through trading partners, we have to migrate away from making metadata something we send. We need to make it something we use, adapt, and enrich, to better serve readers.
That starts by jointly embracing the customer … not the retailer customer, or the library customer. The reader customer. Start there, and work backwards. That takes collaboration.
So where does that leave us? I’ve given some pretty broad hints along the way, but here’s a path forward.
By any measure, book publishing is a small industry. Our suppliers are often larger, and our competitors are elsewhere. We have opportunities to collaborate on things that will make us faster, more flexible, and more responsive. Let’s name those opportunities – things like workflow – and capitalize on them.
Critically, they are created and maintained by those who show up. Relatively few companies in the book industry are actively examining ways to use standards as drivers for changes in business models and competitive advantage. We need to find ways to engage senior staff around core opportunities, and we need to staff standards-setting efforts in ways that lead to positive change. And for the love of all things good in this world, can we agree that implementing them differently across senders and receivers just makes progress harder?
We have to reframe our messaging to truly serve their interests. Even when working through channels – especially when working through channels – we need to operate in a way that consistently delivers value for the reader. Our metadata models have to evolve to make that happen.
Toward the start of my talk, I said that one particular Bismarck quote – “Man cannot control the current of events. He can only float with them and steer” – is my least favorite. I believe in possibility, and I believe in agency. Not everything is achievable, but everything is possible. Not trying, or believing that I can do no better than steer, has not and probably will not work for me.
I’d rather close with a more literary quote, adapted from noted philosopher Christopher Robin: “You’re brave than you believe, stronger than you seem, and smarter than you think.”
I’d like to ask that you join me in reframing “the art of the possible” as a challenge to all of us, an opportunity to embrace those things we want to accomplish.
In that spirit, collaboration is the art of the possible. Standards are the art of the possible. And let’s make publishing, our industry, the art of the possible.