Time for audio to go OTT

Nicholas Jones
Opinion - Books Tuesday, 08 May 2018

Nicholas Jones suggests that new technologies may need new business models

In the late 1980s I was working for a technical publisher producing directories and bibliographies. When CD-ROMs came along, we rightly saw them as a great opportunity to digitise our data, although it was not a cheap undertaking: a CD burning device cost more than £3,000 (£7,100 now), and each blank disc was £10. Because the value of the data was such that our customers would pay a price that was economically sensible to us as creators, the result was a win for both parties.

Some general publishers thought that this was a technological bandwagon they should jump on, but failed to see that what worked for business customers would not translate into the home, where people wanted something less structured, more informal, and more user-friendly and casually browsable. Publishers followed their existing business model for books, failing to see that this different technology required a different model. They lost a lot of money.

Then came ebooks. User-friendliness, or indeed accuracy, were not givens. I have titles that have endnotes that you cannot return from, and as recently as last year I purchased an ebook of a Booker Prize-winner with several literals on every screenful: it has clearly been scanned and not subjected to any human rigour.

Arnaud Nourry, ceo of Hachette, recently remarked: "The ebook is a stupid product." This headline-grabber is somewhat misleading: the full interview is a nuanced confirmation of my point, that different business models are required for different technologies.

Fine for programmers...
When the iPad was invented, companies spent huge sums of money creating (presumably forgetting the analogy with CD-ROMs) interactive "journeys" with structures that, while possibly clear in the minds of the programmers, were not at all apparent to the end user. Once the novelty had worn off, users often found it more appealing to get information from printed books or the internet.

Kodak invented the first practical digital camera in 1975, but the Kodak board failed to foresee that the millions of dollars of revenue from film would not continue forever. In 1990 - yes, 15 years later - they were among the first to produce relatively cheap digital cameras that effortlessly transferred the results to computer, correctly identifying a market where people wanted to attach pictures to then burgeoning emails. What they failed to anticipate was the speed with which digital cameras in that low-end market would become low-margin commodities. It was too late for them.

In the audiobook world, Amazon, through its Audible subsidiary, is by far the major distributor of audio downloads to the UK market. It is increasingly becoming a producer as well as retailer, and in so doing is making a significant amount of content exclusive. Agents are sometimes tempted by large advances to split audio from other book rights, but while this might seem financially attractive in the short term, the long-term consequence will be that significant titles will be available from only one outlet - the equivalent of a potential bestseller being available in WH Smith but not Waterstones.

Competition please
There is consensus among the audiobook arms of publishers that competition would be welcome in the market. The audio group of the Publishers Association was recently quoted saying that the UK needed "a diverse and robust market for audio, with as many companies producing and selling audiobooks as possible". Yet Bonnier's BookBeat service, one of the few serious potential competitors to Audible, has announced a pullback of its plans in the UK, since it is unable to obtain enough content to justify promotional expenditure on the service. The problem is that it is a subscription service that provides unlimited streaming. Most UK publishers seem unwilling to embrace this business model, thinking that it will damage the revenue stream, although I have seen figures that show that given the way listeners consume audio, at about 18 hours per month, the earning from a revenue share scheme can actually be very similar to the revenue from outright sale of titles.

Consumers nowadays expect to be able to sample and taste content, and leap around from one title to another; this expectation will only grow as the millennial generation matures into the majority of book or audiobook buyers. Typical use of Netflix or Amazon Prime (or Hulu in the US) is either grazing or binge watching, both of which are models for which the consumer expects to pay a subscription, not a per-item amount.

The television industry refers to services like these as OTT services: over-the-top. It means that a streaming content provider is selling programmes directly to the consumer over the internet, bypassing cable services or broadcasters that have traditionally acted as controllers or distributors of such content. In the UK audiobook market, Audible is moving towards being in the position of a broadcaster, controlling the material that is available to its subscribers. Its domination is being reinforced by its suppliers' unwillingness to see that alternative business models are necessary to encourage competition.

Audiobooks need to be streamed. That is what consumers expect. It's time audio went OTT.

Nicholas Jones founded Strathmore Publishing, an audio and printed book production house, in 1995, and has since produced more than 1,000 titles. He has watched with fascination as the audiobook market moves from niche to mainstream.

This article first appeared in the Publishers Weekly/BookBrunch London Book Fair Show Daily.

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