The Countdown Is On: 4 Days 'Til PBC

The Publishing Business Conference & Expo is now just four days away and, thanks to the guidance of a trusted advisory board and four fantastic co-chairs, this year's conference program is the most-anticipated in years. From Steve Forbes and David Granger to Cathie Black and Jane Friedman, this year's 60-plus conference sessions feature dozens upon dozens of heavy-hitters and heavy-lifters who are propelling the publishing industry through a time of unparalleled changes. Evan Schnittman, vice president of global business development at Oxford University Press and a co-chair of PBC this year, offered a preview of a couple of the sessions in which he'll be participating and tackled the timely question of what the agency model could mean to the future of publishing.

INSIDER: You'll be interviewing two of publishing's most recognizable executives in Cathie Black and Jane Friedman at Tuesday morning's "Special Event: Reinventing Today's Publishing Company." What are you looking to accomplish with the conversation, and what can attendees
expect from the session?

EVAN SCHNITTMAN: It's easy to imagine how publishers that cover or are immersed in technology are moving the bar and transforming their business models to meet the needs and demands of their constituency. I think of Bob Carrigan at IDG and Tim O'Reilly as perfect examples of executives in the publishing technology space who have mastered the transition and can teach us plenty. However, the challenges that general consumer publishers face—be they magazine or book publishers—are quite different and, in many ways, far more daunting than what we can all learn from the tech side. Cathie and Jane have achieved the highest levels of success in the analog world and, as they both move their current businesses forward into the digital realm, we can learn from their trials, tribulations and successes. For example, Hearst has made some very daring investments in hardware, and Jane's new venture is all digital! These guys not only have the general consumer in mind, but they are also out there with the techies in moving the digital ball down the field.

INSIDER: You're also moderating a session called "The Sales Spectrum: From Discoverability to Pricing." What do you intend to cover with this session?

SCHNITTMAN: There is so much focus on digital this and digital that—but at the end of the day, we need to be hyper-conscious that digital is not an island set apart from the rest of our products and services. I asked Michael Tamblyn to give us some real data regarding how Kobo's customers behave at different price points, and the lessons learned there have implications across all the formats we sell content. I asked John Ingram to show us how Ingram's distribution services cut across all formats and content types and enable symbiotic selling. Finally, I asked Tom Turvey to show us how Google Editions has simplified the world of discoverability into a three-word sentence: Search, find, buy.

INSIDER: What's your take on the emerging agency model, and how do you see it
changing the economics of publishing?

SCHNITTMAN: I will answer at a theoretical level as Oxford has announced no plans yet to offer an agency model. From my own perspective, I see this model as doing two positive things: redressing the flaws inherent in the physical product sales and distribution model and having a balancing effect on the reselling industry.

I have maintained for some time now that the current sales model governing e-books (see my blog article, Why Ebooks Must Fail) has gigantic flaws—primarily that the discount incentives and cash flow are misaligned. E-books are sold on a consignment basis yet most reseller terms are at or higher than standard trade book discounts. Consignment changes the cash flow as publishers are paid after actual sales are made, as opposed to when the books are shipped from the warehouse. So rather than shipping 100,000 books and counting the net price times 100,000 as booked income, a file is sent to a reseller who, in turns, pays the net fee due after each individual sale is made. Worse yet, the discount given for the printed book is high in order to incent risk—we want as many copies of our book to be available as possible, so we offer high discounts to incent risk-taking by the retailer. E-books are selling at the same high discount with zero comparative risk. The agency model moves from a roughly 50-percent discount to a 30-percent commission, which, to me, better aligns the incentives.

The agency model can also create a balance in the reseller community as the manufacturer (us as publishers) controls the actual selling price of the e-books in the program. This means that no reseller can use a loss-leader strategy to gain traction in the market. And with behemoths like Apple and Google joining Amazon in the e-book space, publishers need to ensure that even the smallest players out there have an equal chance of success selling our content. A diverse ecosphere in e-book retailing will guarantee industrywide success much more than any single hegemonic device or platform.