How Digitization Can Destroy Your Business
A cautionary tale from book publishing.
It used to be that publishers created huge production runs of printed books because of the available printing technology. That meant that printing books required a big investment. But one of the impacts of digitization is that many books today are available as e-books or audio books, which drastically changes the production capabilities and costs needed to create the book. It's now incredibly cheap to produce books compared with the old model. Plus, most of the paperbacks you might order online are now printed on demand, meaning that they hit the printer only after you've hit the "buy" button, reducing inventory and capital costs. I have even seen the case where a bookstore has invested in a big printer of its own, lets customers order any book they want, and prints it for them right then and there--quite literally giving it to them "hot off the press."
Another element of the traditional book production process was that the team needed to bring a book to life--through, for example, copyeditors, layout designers, and cover illustrators. But you don't need to work with a publisher to access that talent these days. There are countless people with these talents you can now hire on a freelance basis, all of whom are just as good as the people you would work with at a publisher. I was able to assemble a team of national-class talent who worked together virtually on the book.
It used to be that traditional publishers would help publicize their authors' books. Then, more recently, they shifted their thinking to prefer working with authors who have a good social media and publicity platform already--because they can sell more books. The thinking became that it's less risky for them to publish books for which the authors could help sell more of the books themselves. That dynamic now works in favor of someone like me creating and publicizing my own book as well. I could also hire great freelance marketing talent to help me promote and sell the book--no publisher help required.
Another element of control that traditional publishers used to have was accessing the distribution channel where books were sold. They were the ones who shipped the books to bookstores and airports. But, today, Amazon dominates the industry as some 60 percent of all books are sold through the site. Plus, any author can work with companies like Ingram Spark and others that can help you print and distribute your physical book anywhere books are sold.
The fifth element of publishing that's been disrupted by digitization is the capital needed to create books. It used to be that publishers invested thousands and thousands of dollars in creating, marketing, printing, warehousing, and distributing books. Plus, they also paid authors what was called an "advance" on the future sales of the book. Now, because of digitization, any author can create, market, and distribute their book for a fraction of what it used to cost. The added element here is that when you self-publish a book, you also retain ownership of all your content--and a much bigger proportion your sales.
The result is that more and more people are choosing to self-publish their books instead of working through the traditional publishers. This used to be a mode used only for vanity books, but it has become a mainstream approach for many popular books. That all adds up to a disturbing trend for traditional publishers, which, just like magazines, face an extremely uncertain future all because digitization and democratization are completely disrupting their business model.
The moral of the story is that digitization is here and it's coming to destroy your business unless you lean in and begin the process of creative destruction yourself. Yes, your business won't look the same as it did a few years ago, but you'll still be around!