http://futurebook.net/content/managing-risk

Managing risk

Peter Collingridge, Co-founder of Enhanced Editions, gives FutureBook his view from 3 international digital publishing conferences: In the last two weeks I have spoken at three digital publishing conferences around the world: Digital Book World in New York; NLPVF in Amsterdam and If Book Then in Milan.  

Whilst the principle area of growth in publishing is in what these conferences call "vanilla" ebooks, there was much talk of enhanced editions, and I enjoyed a variety of conversations both on how publishers are making apps, and how to make them successful.

With agencies quoting entry points for apps at $50k, apps can represent a high risk. It is managing this risk that I spent a lot of time talking about.

First of all - our approach. Coming from a tech background, we knew when we founded Enhanced Editions that a scalable platform (ie the ability to make 1000s of apps from the same code) would dramatically mitigate the risks and costs involved in the setup, so long as we got the user experience right. By comparison, the entry point to our platform is just £5k. However, whilst companies such as Vook in the USA take a similar approach, this is surprisingly rare, with many people I talked to choosing to build apps without a view to reusing the code in future projects.

Henry Volans of Faber Digital included in his talk in Amsterdam a quote from a discussion we had, where I likened this approach to "betting everything on red"; Richard Nash (formerly of Soft Skull and now founder of publishing community startup Cursor) likened this further to "betting everything on 7" and being "like buying a racehorse". Nash's focus at Cursor is to instead "own a racetrack."

Faber has had a well-deserved success with The Solar System app. Volans cited 25,000 sales internationally in the first month, and with 50% of the $13.99 being split between Faber, Touch Press and author Marcus Chown, it seems likely that their significant (but undisclosed) development costs have been met. The other ±50% will go to the VAT man and Apple.

Faber created The Solar System with a model familiar to film companies - the funding of a pot of cash for development, with a share of the spoils allocated in proportion to the investment. Whilst Faber can't reuse the code, the success of The Solar System sees it now being translated into Japanese and other languages, with foreign rights deals being handled by Faber: an old-school kind of scalability. Clever people.

At the time of the conference in Amsterdam, The Solar System was being promoted as "App of the Week" in every country around the world, according to Volans. This support from Apple, without doubt, is the single most significant factor in an app's success, like loading the roulette wheel. However, it is my opinion that publishers are putting too much emphasis on this gamble in their promotional strategies, rather than planning a more nuanced campaign themselves that looks to independent methods of promotion. For example, how can awareness be created without relying on Apple's involvement?

I spoke at DBW with Dominique Raccah, CEO of SourceBooks, and one of the leading lights of USA enhanced ebooks. Raccah has had hits with titles such as Baby Names (80,000 downoads) and several other titles developed from the ground-up from their print list, and says that their average sales are "a few thousand" of each app.

Soon to launch is their Fiske guide to university admissions processes, an interactive version aimed at students. When I asked Raccah what her marketing strategy for the title was, she said, simply, "promotion from Apple", with whom they clearly have a great relationship. Whilst we discussed other strategies - from Facebook advertising (based on keywords shown on user profiles) to working with the colleges direct, it was clear that these approaches were far subordinate to promotion from Apple.

One thing I find very exciting about Sourcebooks is their structure. All of the app planning - the information architecture, user interface, user experience - is done inhouse and outputs blueprints for the apps. The subsequent development (coding) work is outsourced to an increasingly commoditised market. This is a different, and very smart, way of minimising costs and risk, so long as you know what you are doing.

Dominique's relationship with Apple leads to other benefits: the launch of Fiske had actually been delayed because Apple had seen a beta version, and made some UI (user interface) suggestions. Raccah took the advice that it should "show off the features of the device" better. Similarly Liz Kessler of Hachette presented an app they had recently made for photographer Ansel Adams. The feedback from Apple was that the app was "too bookish", and the subsequent re-engineering delayed launch and extended deadlines and budgets.  Such delays were clearly lesser risks than failing to impress Apple.

The digital marketing approach of many publishers reminds me of the reliance set on retailers to do the promotion of print books. As well as being risky, I fear that this omits one huge upside of digital: the ability to market direct to your readers, and to capture rich data about their usage. These are two areas in which Amazon, Apple and Google excel, and which should be seen as an invaluable by-product of any digital project.

Apple loomed large at DBW, was but conspicuously absent from the podium, unlike Amazon (who by and large impressed the crowd) and Google (who dramatically underwhelmed the audience). As James Bridle tweeted in Milan, "The big 3 always used to refer to publishers and were different from country to country. Now it's the same globally: Apple, Amazon, Google."

The power of Apple to change fortunes on a whim was shown by the emerging storm around in-app purchasing; Michael Tamblyn of Kobo described being on the App Store to me as "like farming on the sides of a volcano: incredibly fertile lands, but you never know when you're going to get wiped out".

It is clear that a significant new ecosystem of enhanced books is emerging on the Apple platform, but Apple risks confusing users by putting apps in the App Store rather than iBooks, their eBook store. Book apps are a genuine example of user experience differentiation that Apple currently holds over Amazon and Google, whose platforms do not support many of the features available in an app. As Apple struggles to compete against Amazon, and as books compete with Facebook and Angry Birds for people's attention, I wonder whether integrating enhanced books into iBooks would help celebrate the benefits of reading on the iPad over Kindle?

I had further fascinating conversations with other members of the international publishing net set: Peter Meyers, formerly of O'Reilly and author of the recent "Best iPad apps" book, described the incredibly fertile ecosystem springing up in enhanced books from outside publishing such as Strange Rain and The Pedlar Lady but bemoaned the lack of attention to narrative and typography. Mike Shatzkin suggested that "publishers are in serious danger of losing control of the juvenile market to developers", although I disagree not least because of the powerful pull of brands such as Miffy, Maisy or Disney (who recently announced over 1m downloads of a Toy Story book app).

Ed Nawotka, from Publishing Perspectives, noted that UK publishers are more advanced with enhancements than their US counterparts. He put this down to two factors: (1) that USA publishers got burned a lot more badly by CDROMs, although he thinks the comparison between enhanced editions and CDROM is fatuous; and (2) that the cultures of the media and creative industries in the UK are simply much more innovative and adventurous than in the USA.

Publishing is a creative industry, entering a moment of great innovation. And innovation is all about managing risk. Fortunately, the rewards can be bountiful and long-lasting, and there are many ways for well-executed digital projects to mitigate the risks of their print counterparts.  My advice to publishers who are interested in digital innovation is two-fold. Firstly to learn as much as possible, as quickly and as cheaply as possible, from everything they do; and secondly to channel their considerable creativity into making sure that their marketing is as polished, considered, and contemplative of their users as the products they have made.

More on Enhanced Editions, here [www.enhanced-editions.com]  and on Twitter @gunzalis @enhancededition