Disrupition of Business Model

Last night I was watching a movie about The Temptations and  I was struck once again by how much the business model of the music industry has changed. And how much the business models of the publishing industry are being changed. 

Before the digital disruption that was initiated by Napster, the business model centered around the record company and its agents.  The record companies determined what artists were successful and what music we would hear.  The record companies controlled distribution and music was available for purchase in retail stores.  Now we look at the plethora of business models in the music industry in the redistribution of power and profitability they brought to the industry participants.  Music can be purchased by individual song (e.g. iTunes) or albums, through subscriptions to services which provide all songs as long as your paid subscription is maintained current, through selective paid services which offer choice of music genre or type, but not individual songs (e.g. satellite radio), and through free services which are either customized (e.g. Pandora) or generic (e.g. FM radio) and supported by advertising.

It's interesting to apply these models by analogy to the publishing industry and in particular to the textbook publishing industry.  Looking back only a few years, we can see, the textbook publishing industry using models are analogous to those that we saw years ago in the music industry.  The major publishers control the selection of authors, content, production and distribution of textbooks.  But things have changed rapidly.  We see some of these same business models as we saw in the music industry, already established in the textbook publishing industry and competition building in several of the arenas.  For the purposes of this discussion, I will be considering only digital textbooks, not paper textbooks. In the arena of individual purchase we see bookstores such as Amazon (i.e. Kindle), Barnes & Noble (i.e. Nook) and Apple (iTunes) competing to sell individual books.  They are employing different proprietary technologies to try to lock users into purchasing only from their stores or to read books that have been distributed only by them.  Publishers are also selling directly through websites. 

Subscription business models for textbooks also exist already in the marketplace.  These include CourseSmart, and eChapters, for example.  Both of these services provide students with access to the digital textbooks online and through multiple devices whenever and wherever they want to access them.  These services are currently more narrow than the music subscription services, in that the student subscribes only a single textbook for a set duration of time, typically a semester.  That time period can be extended.  We can expect to see these subscription models expanded to include access to multiple textbooks for a duration of the course study.  It is likely that this expanded model will be done in conjunction with either universities or departments within universities.

Other business models are also emerging, which are similar to the custom music services business models.  However, because of differences in the industries, the selection of content is being driven more by intermediaries, namely professors or instructors, then by the ultimate consumers (the students).  Custom textbooks and remixes (to borrow a term from the music industry) can be created by faculty through Flat World Publishing.  This ability enables the creation of unique textbooks with quality content tailored to the individual professor's class and teaching style.

The controversy over providing advertising to students within the body of the textbooks has delayed the emergence of the advertising supported free textbooks for students.  However, I would not be surprised to see this model available within the next year.  This model may make its first emergence through the bundling of textbooks with textbook eReader devices.

What do you think?  


Mitchell Weisberg

How will an author succeed in the New Textbook World

September 20, 2010

So I was reading this article in the NY Times and started thinking about the future world when authors, like musicians in the current music industry, will face a different paradigm to break into the market.  This situation would be analogous to the situation the freelance journalist (Amy) faced in the article: 

Can Digg Find Its Way in the Crowd?

http://www.nytimes.com/2010/09/19/technology/19digg.html

By Todd Wasserman  Published: September 18, 2010   NY Times

In order to get her material to the front page of Digg, this journalist actively sought out and built a social network in the Digg community.  She nurtured them by recommending their material to befriend them and to, in turn, have them eventually recommend her writings.  Once her material was visible, it got “voted” by the masses to the front page of Digg.  Yet we believe that the articles are selected by the masses of Digg readers, not by a few judges, managers or editors.  As the article states, “there is no handful of editors [at Digg] … deciding which articles will get to the front page… the masses are deciding.”  But a closer examination reveals that there is an elite group of writers who have emerged or established themselves as the “gatekeepers” and who have the power to place material in front of these masses for them to vote.  They have usurped the power of editors and have the power to initiate the potential viral effect of the marketing by placing material in front of the masses with their endorsement.  

This appears to be much the same as marketing to the leading faculty or established publishers to get content (chapter, case study, book, etc.) into the future classroom.  Does someone have to do the marketing or to engage the social forces for the first look at new material so it can at least be considered by the masses?   We talk about crowd approving or voting for most popular articles or items on social media. 

Will we see the same result in the future for textbook content and authors?   Will communities emerge of authors who are known for various subject areas, who are succinct, knowledgeable, or otherwise desirable?  Who will determine which new authors emerge to have their material more widely disseminated than their own classroom?  

The overwhelming amount of new material being produced implies that there must be some mechanism or process for the initial visibility of the material, i.e. to get into the media for the masses to vote.  Will new authors be like free agents, working without a publisher?  Will there be an elite group of authors who dominate the landscape of textbooks, each with a major publisher behind them?  Who will fill this role in the future textbook publishing environment? 

Mitch

Pirates... or Are They Buccaneers - It Depends on Your Perspective

As I watch the digital reader device market exploding is fascinating to look at the role that's being played by the Pirates.I find it interesting to reflect on the history of piracy and how it plays into the transformation of this market. In the early days the Pirates were simply thieves with boats out to make money for themselves. However powers that be soon saw an opportunity in clandestinely hiring the Pirates to do their bidding. Oft times, these pirates who are working for a cause (merchants, royalty, or sovereign states) were called buccaneers. Carrying out their acts of piracy actually furthered the cause of the sponsor. 

Some of the free digital books that are available on the web are pirated, illegal copies which steal the profits from their rightful owners.But what about the Buccaneers, those entities putting free digital books on the Web with the intent of furthering the market, and driving our civilization into the future? What about the Buccaneers were writing open-source code to break DRM and giving it away for free (with no intent of profiting themselves)?

Can we consider them positive forces in the marketplace, lubricating the gears of change in driving us more quickly into the transformed publishing environment?

What do you think?

Piracy and Its Potential Impact - What do you think - Where do you stand?

 We watched the battle over piracy and industry digital rights management (DRM) in the music industry just a few years ago. In fact, one could say that the widespread piracy and free availability of music over the Internet by downloads was the catalyst to the transformation of the music industry. Piracy and the widespread access to free digital music spurred the growth of new digital music players and laid the foundation for the emergence of legitimate digital music stores (e.g. iTunes).

One thought that the publishing industry would be able to cull lessons from the experience of the music industry and preempt some of the mistakes that were made. One example of a mistake would be the pursuit and suing of end-user consumers. Other questionable solutions that were tried in the music industry include proprietary DRM solutions and multiple licensing arrangements with different music vendors.

As we now approach critical mass of e-book readers we are witnessing the emergence of broad instances of digital text or e-book piracy. Initially this piracy was limited to a few relatively unknown and highly technical sites. Most of these sites offered primarily technical literature or limited numbers of textbooks and novels. However, with the recent emergence of larger numbers of e-book readers there has been significant growth and spread of digital book piracy. Industry sources suggest that the growth of piracy is now exponential and out of control. According to PCWorld there are "virtual bookshelves stuffed with pirated e-book titles ranging from copyrighted popular fiction and nonfiction to college textbooks and how to e-books" which are downloadable and readable on any of the current e-book readers (e.g. Amazon Kindle, Sony Reader, Barnes & Noble Nook, or the computer).

The various players in the publishing industry each have a different stake vested in piracy of digital texts. Setting ethics aside (if one legitimately can do that) the increase in piracy creates a large opportunity and rapid growth of the eReader device market. This growth spurs innovation, increases profitability, and drives down the cost of the eReaders via the learning curve effect (lower cost per volume). Publishers and authors, on the other hand are being harmed economically by the piracy. They're responding with attempts at DRM protocols.  They have not engaged in widescale prosecution efforts, although they have targeted specific piracy sites and operations. They are also exploring opportunities to combat piracy or creative pricing schemes that will provide quality legitimate e-books at prices that will be attractive to the market. E-books may also prove to be more popular with a segment of the population that cares more about ethics and economics, leaving piracy to serve only a small segment of the market.

The battle lines are still forming in the revolution in transformation of the publishing industry. The structure of the outcome is uncertain, yet we know for sure that e-books and eReaders will become more popular rapidly.

What is your opinion on the evolution of this aspect of the industry and the roles, actions, and reactions of the various industry participants? Would you buy a pirated e-book? We look forward to seeing your comments.

Mitch

Source of PCWorld quote: http://www.pcworld.idg.com.au/article/330902/e-book_piracy_publishing_industry_next_epic_saga_/

ereaders / 23 - Inside Higher Ed

ereaders / 23 - Inside Higher Ed

Looks like the heat is on. Look for comments on this later.

New iPad - is it Fish or Fowl?

A recent article in the Fox News asked if the direction being taken by many of the newer eReader devices and the iPad in particular, is really a better eReader or a "lite" laptop or netbook. I am interested to see how my students (and the market) respond to this choice. Do we want - or need - a light workstation that's portable or just an eReader for student textbooks. Will the market for eTextbooks be closer to textbooks or will students want a multi-purpose device?   Comments?

Technology Innovation in the Classroom Presented at Recent iConference on Informatics

I presented some of the results of my class at a recent conference. Here is a copy of the press release:

Mitchell Weisberg, a lecturer at the Sawyer Business School, Suffolk University was selected as a Session Chair at the 2010 iConference in Urbana-Champaign, Illinois. He also presented a peer-refereed paper at the conference on “Innovative Technology in the Classroom: A Live, Real-Time Case Study of eReaders Disruption of the Publishing Industry”.

The research and paper are based on his teaching of Strategic Management 429 with a focus on industry-disruptive technologies. His presentation covered how he taught the class and the class’ conclusions regarding the impact of digital technology on the textbook publishing industry. It provided detail on the innovative component of using digital readers to enrich the students’ experience with the subject. Student teams used the digital textbooks (eTextbooks) including Sony eReaders, Amazon Kindles, and CourseSmart online textbooks in the class. He sought funding from Pearson Education, the publisher the class textbook, to make these devices available to the students. Students analyzed the companies and developed strategies to compete in the transforming publishing market. By using the devices that they are studying the students became engaged in a “real-time case study” in the course. This has the impact of providing a longer term learning effect. As an example of this impact, a student from the previous semester caught professor Weisberg in the hallway for an extended discussion of how the market is continuing to evolve and how the course has engaged him in continuing to examine these businesses.

Background on the iConference:
The 5th Annual iConference, at the University of Illinois at Urbana-Champaign brought together scholars, professionals and students to examine impacts of the iSchool movement, and how impact can be defined, identified, measured and communicated to key audiences. The iSchools are interested in the relationship between information, people and technology. This is characterized by a commitment to learning and understanding the role of information in human endeavors. The iConference was held on February 3-6, 2010 at the Conference Center at the University of Illinois at Urbana-Champaign. Papers presented at the conference are published in a peer-refereed publication.

For more information:

iConference Program http://www.ischools.org/iConference10/program/
iConference Overview http://www.ischools.org/iConference10/2010index/
iSchools http://www.ischools.org/,