The New Holy Grail of Traditional Publishers: Direct-to-Reader Relationships

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Today’s post is excerpted from Book Wars: The Digital Revolution in Publishing by John B. Thompson, with permission granted by Polity Books.

Amazon, with over 70 percent of the ebook market and over 40 percent of all new book unit sales, print and digital, in the US, has exclusive proprietary information on the browsing and purchasing practices of a large proportion of book buyers, far more than any retail organization ever had before. It’s hard to overestimate the historical significance of this. Even in its heyday, Barnes & Noble probably had no more than 25 percent of retail book sales in the US.

Moreover, since many books bought in physical stores are bought at the till [cash register] rather than on a customer account and the browsing practices of individuals in a physical store are not tracked and recorded, the amount of information that Barnes & Noble would have been able to capture and store on its customers was much less than Amazon, for whom every online customer is by definition a registered user whose browsing behaviour, as well as purchasing history, is tracked, recorded and stored. The quantity and detail of the customer information now held by one retailer is historically unprecedented and this produces a structural asymmetry between publishers and Amazon that is far greater than anything that existed previously in the retail space for books.

So is there anything that publishers can do to try to counter-balance this structural asymmetry? Why, in this new digital age, should publishers stick with old practices that effectively cut them off from any access to, and contact with, the individuals who are the ultimate consumers and readers of their books? Why should they allow one retailer to monopolize information about book buyers, turn this information into a proprietary asset and then use this asset as a means to strengthen their own position in the field, sometimes at the expense of the very publishers who supply them with books?

These are questions that have preoccupied many publishers as they have watched the power of Amazon grow. The irony of a situation in which the popularity of their own books becomes an asset that can be used against them is not lost on the managers of publishing houses. But what, in practice, can they do?

This is the question that lies behind some of the new initiatives being undertaken by senior managers at publishing houses in recent years, including Melissa. Melissa heads up a unit concerned with developing new kinds of consumer outreach at ‘Titan’, a large US trade house with a full range of general-interest books. ‘My job is to figure out how to build a relationship with readers’, she explained. ‘So understanding who readers are, how to reach them, how to influence them, how to get them to take some action.’

This has become a key concern for Titan and for many other publishers – large, medium-sized and small: trying to build direct relationships with readers is the new holy grail of trade publishers. It used to be a lot easier for Titan to influence the kind of placement and marketing it was getting on Amazon—they could secure spots on the home page, purchase spots in certain merchandising areas, influence which emails were going out and so on: ‘We had a lot of leverage on the platform to be able to drive sales to our titles there.’ They would pay for it, of course—it might be co-op, it might be pay-per-click advertising, it might be something else. It wasn’t cheap, but at least they got exposure on Amazon’s platform. But now things are different, explained Melissa. Amazon is bigger, they have other priorities and, in the area of books, self-publishing is a much more important part of their business, so Titan could no longer rely on Amazon to drive sales:

They’re stronger, they’re driving people to their self-published authors, they’re driving people to things that they want to build. So it behooves us to figure out ways to drive sales on their platform because they’re still a great fulfilment account. And when they get behind a book it still works. But we have a broad list and they’re creating a retail universe that is bigger and more diverse, and so in order to get the signal through the noise we want to be able to drive that ourselves. So rather than depending on their email list, we should be building our own.

Melissa had to persuade her colleagues that it would be a good use of resources to divert some away from marketing specific titles in order to build a proprietary database of email addresses. This is easier said than done because marketers, editors and others in a publishing organization are understandably concerned about the books that are being published next week and next month – they need to get attention for these books and move the units because that’s how they’re going to be assessed at the end of the year. The fiscal demands and incentives of publishing organizations favour short-termism. You have to persuade colleagues to set aside the short-termism and see that there could be immense long-term value in building a database that would be a renewable asset, one that could be used again and again to reach out directly to consumers. ‘So instead of spending x thousand on new online ad spend for every single book, what if we just had a million people on file that we could reach out to directly. Yes, we have to pay the costs of the email service provider and the deployment on top of that but it’s still much cheaper on a cost-per-thousand basis—and, by the way, much more engaged, because they’ve given us permission to reach out to them, than just doing search marketing through Google and Facebook.’

People are more likely to open emails that are linked to specific author brands and specific genres. ‘The benchmark is 20 percent’, said Melissa, ‘but if you look at the open rates for real brands, like a Danielle Steele, they’re like 60 percent, which is unbelievable. So the engagement you get through email is staggering.’ This is not really surprising when you think about it. Many people have an emotional connection with authors whose books they love and they want to know more about them and about any new book they’ve just finished or published. ‘People want to connect with these incredibly creative people. And so we have this advantage and we need to make the most of it, and actually email is a really solid way to do it.’

A lot of Melissa’s time is now involved in developing a new site—let’s call it ‘Although it’s a website, the primary thinking behind is that it’s actually an email program’, said Melissa. ‘It’s an email sign-up primarily for women. It doesn’t look that way on the site just because we don’t want to alienate dads.’ They chose to focus on women for several reasons: women are heavy readers and book buyers, they buy across channels in lots of different categories and they are very active on social media, so they share and chat about recommendations more than any other segment. Melissa set herself an ambitious goal: try to get half a million women signed on with an open rate of over 30 percent in twelve months’ time. They used a variety of methods to drive women to the site and get them to subscribe—paid ads, partnerships with food companies and supermarkets, sweepstakes to win a Nook or an iPad or gift vouchers for books, and so on. The sweepstakes work particularly well, explained Melissa. ‘We basically said, we’re going to give away 25 books of your choice, something like that. And the reason we did it that way, “of your choice”, is because we also wanted to gather preferences. Because you don’t just want names: you also want people to tell you what they like. You do an ad on Facebook and then people click through to and say, yes, sign me up. They give us their address and they put in preferences, which was fantastic and a very cost-effective way to do it.’

Some of these people are only interested in the sweepstakes but a substantial proportion—over half—opt in to receive news and information from GoodFood, and half of those again opt in to receive information from Titan. Then, once someone has signed up, the key is to personalize the communication with them through targeted emails.

Melissa and her team did actually achieve their goal of getting half a million email addresses in the first year. They produce a lot of content for the site—by the end of the first year, over 500 pieces of content had been produced. Most of the content—‘I would say 90, 95 percent’—is ‘inspirational’, explained Melissa, by which she meant short articles about which recipes work best for which purposes, how best to deal with certain practical problems, and so on—‘people are looking for guidance, so that is really the bread and butter of what we do, as opposed to “buy this book now”. This is not the hard sell. This is information, inspiration, almost lifestyle.’ But Melissa is confident, nonetheless, that it does sell books: ‘I know it’s selling books because we track everything we do. It’s a super-light sell. Some of our articles don’t even have a click through. I would say that 30 per cent of our articles actually have buy links and it’s very subtle—there’s a buy-it button and you press on it and it drives you into retail. We’re seeing conversions from retail at a higher rate than some of the other programs that we’re running—even those programs that are much more focused on selling.’

Having created this successful prototype, Melissa’s goal is now to roll out this model across the company and build a limited number of other topic-focused sites. By developing, they’ve created a set of tools, templates and methodologies that can be used by other groups and divisions in the company to build dedicated customer databases that will enable them to reach out directly and effectively to the kinds of readers who might be interested in their books. These initiatives are part and parcel of a broader plan to grow substantially Titan’s database of customer information.

As Melissa sees it, building the customer database has become a critical part of what a publisher is—and what it needs to be—in a world where people are increasingly learning about things, and buying things, online. People are not walking into bookstores as much as they used to, and not seeing physical displays of books: book marketing is becoming more personalized and is increasingly happening online. But publishers can’t assume that the big retailers like Amazon will do this marketing for them.

Titan is not alone in pursuing this strategy. Many publishers are developing their own customer databases, and many have launched sites similar to—there is, a site run by Penguin Random House aimed at mothers with young children; Epic Reads, a site run by HarperCollins aimed at teens and young adults;, a site run by Macmillan aimed at readers of science fiction and fantasy; Work in Progress, a site and newsletter run by FSG aimed at readers of literary fiction; and many more. Most of these work on a similar model: a publisher creates the site, populates it with content that is often linked to authors and books (some of which will be the publisher’s own books, though they may also feature and recommend authors and books published by others), and uses a variety of methods to encourage people to sign up, adding their email addresses and perhaps other information to the publisher’s customer database. While the model is similar, there are many variations and permutations. 

It’s too early to say whether these initiatives will flourish, or even survive; too early also to say whether initiatives of this kind will enable publishers to wrest back some power from Amazon and chip away at the near-monopoly of information capital, in the form of user data, that Amazon now has in the world of the book. Amazon has a huge advantage in the struggle for control of information capital—with more than 300 million active users, they are far ahead of where any publisher, or even consortium of publishers, could ever hope to be. But publishers are not without cards to play in this game. After all, the relationship that most readers have with Amazon is a practical and functional one: Amazon provides an excellent service at a good price. Most readers don’t want to have a relationship with Amazon beyond this practical and functional one. But there are many readers who do want to have some kind of connection or relationship with the authors they like to read, with ideas and stories—a relationship that is more than a purely functional one, that is richer, more engaged and more interactive, and publishers are much better placed than Amazon to facilitate these connections.

Book Wars: The Digital Revolution in Publishing, by John B. Thompson

Publishers who have seen this potential and used the digital resources at their disposal to reach out to readers have begun, in their own small way, to build and facilitate relationships of this kind. Small databases of readers who are actively interested in the kinds of books and authors being published by a particular publisher or group of publishers may be just as valuable—perhaps even more valuable—than large databases of customers with diverse interests, and building databases of this kind may turn out to be one of the ways in which publishers can make some small shift in the balance of power in a game where the giant retailer holds most of the cards.

Note from Jane: If you enjoyed this post, check out John B. Thompson’s Book Wars: The Digital Revolution in Publishing.

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