Tools of Change Conference Notes

I just returned home from the O'Reilly Tools of Change Conference in New York and thought I'd share some of my notes.

TOC had a record turnout this year. The conference was sold out with 1,200+ people packed into the Marriott Marquis in Times Square. They had a waiting list of people who wanted to get in but couldn't.

A good conference challenges you to stretch your thinking, and on this count the O'Reilly conferences I've attended (TOC, Web 2.0 Summit, Web 2.0 Expo) have never disappointed.

Killing DRM Softly

O'Reilly has been criticized in the past for using the TOC conference to browbeat complacent publishers on topics near and dear to O'Reilly's heart, such as the evils of DRM (Digital Rights Management). The DRM-will-kill-you theme was less prevalent this year, although Angela James of Carina Press (the all-digital imprint of Harlequin launching this June) struck a more constructive middle ground tone by urging publishers to tip their toes into the DRM-free waters by experimenting with a few titles.

Publishers to Get Closer to Customers?

One theme this year was how ebooks give publishers the opportunity to get closer to their customers. In the past, big print publishers kept their customers at arms-length. They relegated the dirty work of customer relationship management to the retailers. While this offered publishers the benefit of not dealing with pesky customers and the hassles of ebook customer support, it also caused publishers to lose touch with their customer.

This, by the way, was one of my big takeaways from the also-excellent Digital Book World conference a few weeks ago. The always-insightful Richard Nash of Cursor captured my sentiment when in a Q&A at DBW he challenged publishers on an ebook pricing panel to price books based on what customers want to pay, not on a cost-plus basis (where, for example, a publisher might add the cost of their Manhattan high rise office into the calculation of what an ebook should cost).

Whereas TOC generally focuses on helping publishers prepare for the future, Digital Book World was squarely focused on the practical here-and-now. Both perspectives are critical and equally important.

But back to the theme of publishers getting closer to customers. "Getting closer to customers," can mean many things, though it primarily means selling direct. One advantage of selling direct is that the publisher has an opportunity to own the customer relationship, capture the customer's contact information for later communication/email marketing, build its own community around the books and authors, and cut out middlemen like distributors and retailers.

Publisher-Direct Sales to Customers will Accelerate Demise of DRM
(A.K.A.: EEK, a Customer!)

I predict publisher-direct sales, if the practice catches on among publishers, will accelerate the demise of DRM'd ebooks. Why? If publishers become retailers and are forced to communicate with their customers, publishers will quickly realize what a hassle DRM is for their customers. Every time a customer emails the newly minted publisher/retailer with a support question like "the code I'm entering to activate my book isn't working), the publisher loses money just opening the email.

When publishers become retailers, they will suddenly further appreciate the valuable audience aggregation and customer service role played by retailers.

Stats Stats Stats

I love data. The Book Industry Study Group (BISG) presented new data on ebook adoption trends based on a survey of 44,000 consumers (of which, only about 3% were ebook customers), and the results were interesting.

Key takeaways:

• Despite all the hype about rich media interactive ebooks, consumers appear to prefer, at least for now, just words on screens, like words on paper. Ebook affordability (lower prices) is much more important to consumers.
• Ebook customers would be willing to pay more for ebooks if they come with social-media-enabled tools that help them discuss and share the books with others.
  
• Men are bigger consumers of ebooks than woman by a narrow 51%/49% margin. Not a huge difference, but a reverse of print books, where women dominate.
• BISG answered a BIG question haunting large publishers. Will ebooks cannibalize print books? Publishers care, because consumers, on average, pay $6.25 less for an ebook edition they they pay for a hardcover, according to BISG. BISG's conclusion: YES, the 3 percent of people who have moved to ebooks buy fewer print books than before. Publishers aren't yet feeling the impact of this since ebooks represent such a small percentage of the overall book market.
  
• Most popular devices for reading ebooks: This is interesting. You might guess, as I did, the Amazon Kindle. Wrong. The most popular device for 47% of customers is their computer screen. Kindle comes in at a close and impressive second place at 32%, followed by 11% for the iPhone, 10% for iPod Touch (note this adds up to 22%, pre-iPad), 9% each for the Blackberry and netbooks, and 8% each for the Barnes & Noble nook and the Sony Reader. The nook percentage is actually quite impressive because the survey data was taken in November before the nook was even shipping. I'm not sure how they arrived at that number.
  
• BISG looked at whether or not ebook customers know about or care about DRM. The general conclusion, if I interpreted it correctly, is that most consumers don't know what it is, if you look at the trending data between their November and January surveys, it looks like it's becoming a more important issue for consumers as they learn about it.
• 28% of consumers say DRM will affect their purchase decision, 34% say doesn't matter, 38% say maybe.
  
• Men are more anti-DRM than women (interesting, I'm not sure why this is so).
• Most popular ebook genres: 31% general fiction, 28% mystery/detective, 25% how-to guides, 21% sci fi, romance 14%.
• BISG cautioned publishers that their data is dynamic, and suggested they not rush to automatically adjust their strategies to cater to views and opinions of the early adopters, because as ebooks go mainstream the mainstream might have different needs and wants. In my mind, the dynamic nature of the data was fascinating, because consumer expectations are evolving rapidly. You can count on much of this data to be out of date in two months, if it's not already. Fun stuff.
  

Arianna Huffington: We are in the Golden Age of Books

Another major theme of the conference was the importance of books and community. Although reading is primarily a solitary experience, readers have always enjoyed talking about books.

In at TOC keynote, Arianna Huffington, the co-founder and CEO of The Huffington Post, told publishers we are in the midst of the Golden Age of Publishing. Books don't end with the printed page, she said. "We need to leave behind this idea that old ideas are not worth talking about," she said. "Books are conversation starters and that’s what publishers have the opportunity to facilitate on line better than anyone."


The Best Presentation at TOC

My favorite presentation of the conference was from Bob Pritchett of Logos Bible Software, in a session titled, Network Effects Support Premium Pricing. I remember attending his presentation four years ago at the first TOC in San Jose, so I knew I didn't want to miss his presentation this time. They're doing amazing stuff at Logos.

Logos faces an interesting challenge, one that every author and publisher faces: How do you compete against free? In their case, they sell about 10,000 bible study ebooks. How much has the bible changed over the last two hundred years? Not much. But what Logos excels at is making this information more accessible than ever before. They take a database-centric view of their vast and ever-growing library of content.

When you purchase a book from them, you're not just getting a static ebook, you're buying into a dynamic, integrated online application environment that becomes richer with each new publication, and with each new member to their community. Even if Bible study isn't your thing, check them out for future-of-publishing inspiration. I can't do them justice here.

The Future of Digital Textbooks

John Warren of the Rand Corporation moderated an interesting panel on the future of digital textbooks. As a preview to the panel, Andrew Savikas and John published an excellent Q&A interview with John's panelists over at the TOC Blog. Access it here.

My praise for John's panel, I admit, is not completely impartial. John's a great friend to those of us lucky enough to know him, and the panel included Eric Frank, the co-founder of Flat World Knowledge. Flat World is near and dear to my heart and wallet - I'm connected to them as an investor and advisor.

The challenges educational publishers face when transitioning to digital represent a hyper-exaggerated version of the same challenges trade publishers (those who sell through bookstores to consumers) face.

Why hyper-exaggerated? Because textbook publishers sell very expensive content, often $100 to $200 per book. The content is expensive for the publisher to develop. The high cost of college textbooks has caused a crisis in higher education because textbook costs now render college education unaffordable to many deserving students, especially at the community college level.

Whenever publishers create content for which there is great demand (such as textbooks), yet they make that content prohibitively expensive and inaccessible (textbooks), it causes customers to seek out alternative content options (piracy, used textbooks, etc.), all of which provide the publisher and their authors no economic benefit. Sound familiar to what trade publishers face?

Digital textbooks offer potential relief to students and their parents. The challenge for college textbook publishers is to make the transition to lower cost digital products without putting themselves out of business. I think Flat World is well-positioned for the future of textbook publishing, and I last blogged about them here in August if you're interested to learn more.

Educational materials is a content category I want to bolster at Smashwords. At Smashwords, any college instructor anywhere in the world can publish sellable class content. A professor of English literature in India, for example, can publish their book at Smashwords and sell it to students in the U.K. or Australia the next day. How cool is that?

There's a Big Market for Books outside the U.S.

Speaking of the world, in my extensive one-third decade experience in the book publishing industry (yes, I still consider myself a newbie), it's apparent to me that most American publishers and authors take a U.S.-centric view of the world. Among print publishers and their agents, their focus is to carve up and sell the rights to overseas partners and let them worry about the rest of the world.

Yes, the U.S. represents the largest single market for books, but this will change, especially for ebooks. Authors and publishers would be smart to retain global language rights to their books because the Internet moves the world closer to becoming one single market.

Billions of knowledge-and-entertainment-hungry consumers are coming online in fast-growing countries like India, China and Brazil. Hundreds of millions of readers outside the U.S. speak and read English. What's my point, and what does it have to do with TOC?

Ramy Habeeb, of Arabic publisher Kotobarabia, gave a great keynote explaining both the challenges and the opportunities for publishers looking to tap into the huge market for Arabic-speaking and reading consumers. He spoke about the impact of censorship in large Arabic-speaking countries such as Egypt and Saudi Arabia. Self-censorship among authors, he said, is also a problem, because few authors wake up in the morning thinking, "I wonder how I can get arrested today." Habeeb, himself based in London, sees censorship declining once free market mechanisms enable each country to realize the economic benefits of a thriving book publishing community. Kudos to O'Reilly for providing attendees this other-world view of publishing.

Prepare for Exponential Growth in Ebooks

A final highlight was Tim O'Reilly's interview with uber-inventor and master futurist, Raymond Kurzweil, the man behind the new Blio ebook platform. He spoke about how most forward-thinking people consider technology progression as linear (steady predictable progress), when in fact some of the most important technical progressions are exponential (progress accelerates over time, catching everyone by surprise). Ebooks are likely an exponential phenomena. They're not a fad, and they may reshape the book market faster than any of us believe.

Striking the Right Balance with Sponsors

Overall, the conference content was excellent. The biggest gripe I heard was that the conference content had too many paid commercial keynotes. Two publishers from outside the US mentioned this to me as a big disappointment. They paid $1,000+ for admission plus the travel and other expenses, they told me, to access knowledge, not to be forced to endure a commercial announcement. When a stuffed suit gets on stage with a PowerPoint written by some junior PR person, it doesn't go over well. Several attendees vented their frustration on Twitter.

O'Reilly isn't the only offender out there. This was also the biggest complaint I heard about the otherwise solid Digital Book World conference I attended last month. One especially egregious vendor keynote was a sales pitch for a company that ships print books on container ships from China (what that has to do with digital books, I don't know). At least O'Reilly's paid advertisements contained better content.

You can access the entire Twitterstream from the conference here, while it lasts: http://twitter.com/#search?q=%23toccon

Feb 27 update: I cross-posted an updated version of this over at the Huffington Post.

Click here for my conference notes for last year's 2009 Tools of Change.

Tools of Change Conference Notes

I just returned late last night from the O'Reilly Media Tools of Change conference in New York City. This was my third year at the conference. The first year I attended as a reporter for VentureBeat, and then these past two times as a speaker.

For the benefit of those of you who didn't attend, I'll share some of my personal highlights, in no particular order:

Twitter Forever Changes the Conference Experience - Thanks to Twitter, conferences will never be the same. For every session of the three day conference, hundreds of TOC attendees were Twittering real time quotes, analysis and conversation. I found myself monitoring the Twitterstream (check it out here) as I listened to the speakers, and it added another interesting (though distracting!) perspective on the conference. Twitterers held nothing back. If the speaker started giving a sales pitch, or made questionable statements, the Twitterers were merciless. If the speaker said something interesting (or not), Twitterers would tweet it and then that would cause a cascade of retweets. For three days straight, TOC was in the top five most discussed subjects on Twitter. Thousands, if not millions, of people who weren't at the conference were getting a taste of the not only what was happening but what people thought about what was happening. Many of the Twitterstream participants weren't even at the conference. One of the most profuse and entertaining Twitterers on the TOC Twitterstream - and he wasn't at the conference - was Mike Cane (@mikecane for you Twitterers), a self-described "ebook militant" and writer who lives near Staten Island. Twitterers from around the world tweeted their friends at the conference and had them convey questions to the presenters.

At one great panel on social media in publishing, moderated by Ron Hogan (@ronhogan for you Twitterers) of MediaBistro/GalleyCat, Ron actually introduced his panelists by their Twitter handles. Is Twitter going to become a secondary form of identity? I think yes. I think it'll also forever change the dynamic between conference presenters, attendees and wannabee attendees.

At some points, the Twitter echo-chamber reached heretofore unknown limits of, well, echo-chamberness. During the Blogging and Social Media Workshop led by social media guru Chris Brogan (@chrisbrogan) who told attendees he considers Twitter the new phone, session attendee Chad Capellman (@chadrem) uploaded a YouTube video of Chris speaking. When Chad told Chris about it, Chris logged on to YouTube and the audience watched Chris watch a big screen projection of the Chris video taken minutes earlier, and then Chad or some other attendee joked they could take and upload a new video of this special moment as Chris watched a video of himself that we could all then watch.

Several times during his three hour workshop, Chris checked the Twitterstream to gauge audience impressions of his live performance. At one point after he walked on stage drinking from what looked like a beer bottle, Susan Danzinger (@susandanziger) of DailyLit tweeted she thought Chris was drinking a beer onstage, then yours truly (@markcoker) retweeted it because I was wondering the same, then Kat Meyer (@katmeyer) set the record straight, as did Chris when he saw the tweetstream on the big stage monitor.

Twittering while watching Twitter while listening to and participating in a conference while the presenter talks about Twitter and is the subject of a Twitterstream while he himself Twitters makes for a very surreal experience.

Peter Brantley on Literature as a Driver for Services - Peter Brantley directs the Digital Library Federation, and he's one of my favorite thinkers about the future of the books, and about the sacred place books occupy in culture. In a keynote address, Peter challenged the audience of publishers to consider how moving books from print to digital can change the nature of reading, and how the move to digital can open up new business opportunities for publishers. "What's published will be less about the book and more about the people who read them," he said. He talked about how books will become networked and empower more participatory methods of reading.

Cory Doctorow Eviscerates DRM - In a keynote, author Cory Doctorow (@coreydoctorow) had the audience in rapt attention as he proceeded to disembowel Amazon and all those who would seek to perpetuate the short-sighted practice of DRM. He challenged publishers to step up to the plate and demand Amazon accept their ebook files DRM-free. If anyone knows where I can find a transcript of his talk, let me know so I can link to it here.

Chris Baty of Nanowrimo Says Authorship has Bright Future - One of my favorite presentations came from Chris Baty, founder of National Novel Writing Month, which just completed its tenth year of operation. Although Steve Jobs says people don't read books anymore, Chris made clear that you can't stop writers from writing, and for this reason alone books face a bright future because the process of writing helps writers appreciate books. "Novels are not written by novelists," he said, "novels are written by everyday people who give themselves permission to write novels." At least one Nanowrimo participant has landed on the New York Times Bestseller lists, and several have earned book deals. The international Nanowrimo challenge has grown from only 21 participants in its first year, 1998, to 119,000 participants in 2008. Chris spoke at length about how the success of Nanowrimo has been driven by the powerful community that develops between writers as they share the deeply emotional experience of "meeting the book inside them."

The Rise of Ebooks - Ebooks were a big theme of the conference. The first year of the conference in 2007, there were maybe one or two ebook-themed sessions. Last year there were maybe three or four. This year, ebooks reigned supreme with at least ten sessions squarely focused on ebooks and with most of the other sessions touching on related themes. I moderated the "Rise of Ebooks" session. I admit, I'm biased, because I think my panelists (Joe Wikert of O'Reilly Media; indie author advocate and Publetariat founder April Hamilton; David Rothman of Teleread; and Russ Wilcox of E-Ink) did a kick *ss job of surfacing and debating some of the most interesting trends facing ebooks today. We covered a lot of ground in just 45 minutes, including:

1. What's driving the rapid sales growth of ebooks? (Answers: better screen display technology; availability of more titles; Oprah; lower prices; e-reading becoming as, or more, pleasurable than print; DRM starting to slip away)
2. How long until ebooks go mainstream? (Russ predicted 2-3 percent of American households will own a dedicated e-reading device in the next 18 months [this is huge, and even if he's off by half, it's still huge], and most of the panelists agreed the ebook market will be dramatically larger in the next couple years.
3. Screen technologies, present and future (screens will get faster, cheaper, better color, different sizes)
4. Print vs. ebook, complementary or competitive? (most concluded they're complementary, though I don't think we'll know if they're a net positive or net negative for a few years - I suspect the latter)
5. Supply chain implications for ebook intermediaries (new supply chain models forming, may not look exactly like print model; publishers and authors likely to get closer to consumers)
6. Rich media ebooks, integrating video, audio, sensory feedback such as vibrations (lots of interesting stuff happening; a worthwhile opportunity to leverage traditional "book" content to offer readers a more engaging experience)

Artist Nina Paley Argues, "Give Away the Content, Sell the Containers." - Artist Nina Paley closed out the conference with a thought provoking talk in which she argued that artists and writers should give their content away for free but sell the packages that add value to their content. For example, she argued, water is free from the tap or filter, yet people will pay for water in a bottle for the benefit of the packaging, the brand, and the perceived benefits of that bottle or brand. Customers will pay for free content that is packaged in such as way that it adds value to the consumption of the content. She showed a trailer for her new animated feature film, "Sita Sings the Blues," which she plans to make available online for free. She plans to make money (and pay off the debts incurred to make the movie) by selling the film to theaters, and by allowing publishers to publish coffee table books of the movie and its art. She also plans to sell value-added packaged versions of the movie, such as the limited edition DVDs she sold at the conference (Corey Doctorow was the first buyer).

Amazon Announces the Kindle 2 - Amazon tried to steal some of the thunder of the conference by choosing to announce the Kindle 2 a few blocks away on the first day of the conference. Amazon, however, was conspicuously absent from the conference. While attendees generally praised the new device for it's faster screen refreshes (enabled by new E-Ink technology) and improved user interface design, as mentioned above in Cory Doctorow's keynote and repeated by other keynoters, presenters and conference-goers, Amazon was ridiculed throughout the conference for its adherence to DRM on the Kindle.

Download O'Reilly's Free "Best of TOC" Ebook - There was a ton more of interesting opinions and news from the conference, and I couldn't possibly capture it all here. O'Reilly put together a good ebook (it's free) that captures the best of the show (its only big omission is it doesn't mention the Rise of Ebooks panel!) you can download it as long as you don't mind jumping through all the convoluted hoops necessary to register for, and "purchase" the free ebook. Check it out here: https://epoch.oreilly.com/shop/cart.orm?prod=9780596802110.EBOOK

Watch TOC Videos - O'Reilly has created an online archieve of some of the videos from TOC 2009 and prior years you can access here.

"The Rise of Ebooks" at Tools of Change 2009 Conference

Registration is now open for the third annual O'Reilly Tools of Change conference to be held in early February 2009 at the Marriott Marquis Hotel.

I'm moderating a panel discussion entitled, "The Rise of Ebooks," featuring Joe Wikert of O'Reilly Media, indie author advocate (and author) April Hamilton, David Rothman of ebook industry bible Teleread, and Russell Wilcox, co-founder of E-Ink, developer of the digital ink technology driving many next generation e-reading devices.

We'll explore a wide range of ebook industry trends and issues, including DRM, reading devices, consumer awareness of ebooks, ebook self-publishing, how Amazon’s digital publishing strategy might upset the balance of power in traditional print publishing, digital ink technologies, and more.

If you're in the publishing industry and responsible for shaping your organization's digital publishing initiatives, this is a must attend conference. If you have specific suggestions for additional topics you'd like to see us address in the session, drop me at note at first initial second initial at smashwords.com.