Publishing in the digital market

April 20, 2017

Senior associate Mary Elliott was interviewed by Lexis®PSL on ‘Publishing in the Digital Market’. Amongst other topics, Mary discusses how the growth of digital technologies has affected the relationship between authors and publishers and whether rights and licensing are simpler or more challenging in the digital environment.

TMT analysis: As paper becomes screens, books are often represented as an industry under threat from the technological and legal changes of the modern era. Mary Elliott, senior associate at Fox Williams, suggests that the picture may not in reality be so gloomy, with responsive publishers innovating across platforms to rescue publishing, and quality content, from a race to the bottom on price.

How has the traditional publishing model been affected by the growth of digital technologies?

There is a tendency for traditional publishing to be seen as backward-looking and lacking the agility to respond to the current business environment. In fact much of what I see is publishers embracing the digital revolution. For over a century publishers have had to adapt to new formats and rights management has always evolved accordingly—whether that was radio or film. This provided relevant experience in accommodating changes in the industry far quicker than public perception may otherwise lead us to believe. All publishers have long embraced trans-media releases—whether it’s a digital-first approach, launching content across multiple platforms simultaneously or building an online community forum for author-reader interaction.

The digital revolution has opened publishing to newcomers and new platforms. While this is often seen as a sign that the traditional industry is struggling, the digital change might more rightly (and more positively) be regarded as bringing new life to the industry. We’ve certainly seen a shift in the focus of mergers and acquisitions. Increasingly publishers are not only acquired for their lists, but for their digital expertise as well.

How has the growth of digital technologies affected the relationship between authors and publishers?

I’d approach this question from a different angle and argue that the biggest impact of digital publishing has been on the relationship between authors and their audiences (and these are not necessarily ‘readers’ any longer, but might more accurately be regarded as consumers). The advent of digital content, and the changing nature of social interaction (ie social media) has enabled authors to interact directly with readers in a way and on a scale never seen before.

While the relationship between publishers and authors has certainly been made more efficient through digital technologies including the use of editing software and the digital rights management programmes, the greater impact has been on the need for publishers to expand their role to assist authors in engaging their audiences through the new mediums. Authors are well-aware that they can self-resource this interaction in the digital world, at the basic level, starting a Twitter account, but publishers bring the expertise and manpower to help further this trend.

In helping their authors succeed, publishers are utilising digital technologies in three major areas:

  • streamlining and managing the traditional processes of production
  • enhancing the reader experience by expanding author-reader interaction, and
  • securing and protecting the author’s content through digital rights management

Are rights and licensing becoming simpler or more challenging in the digital environment?

Every time a new medium comes along—and digital consists of many mediums—it means that new complexities have to be appreciated on a legal and commercial level. Now that many of the first changes that digital has made to publishing have been understood and properly internalised, publishers have developed a variety of digital tools to help them to navigate the digital environment—these include locating and monitoring licensors, utilising virtual platforms for managing the publishing process (eg contract systems and peer-to-peer editing), creating online community forums, etc.

Publishers are well equipped to deal with this growth, but perhaps the bigger challenge will be the growth of artificial intelligence, which could have a significant impact on the creation of content and who owns the rights to it. If content 2 becomes self-evolving and/or readers can influence such evolution themselves, the question of ownership becomes far more complex. As valuable content is created in such forms, challenges will arise.

To what extent has awareness of digital revenue streams become a part of the commissioning and acquisition process?

Digital has always been seen as a strong value-adding option for any content. There has long been a drive to evolve models that capitalise further on digital revenues, with editors and commissioners always working hard to ensure authors produce content fit for the digital market. However, digital is more than a book-by-book, project-by-project play. Instead, it is now at the heart of most publishing businesses’ strategies, rather than just driving the commissioning process. This is something that we can expect to see more of as digital models continue to evolve (eg, digital-only models, print on demand capabilities). Indeed the importance publishers put on digital revenues is seen in the current trend of publishing mergers and acquisitions. Recent acquisitions have seen big publishers acquiring publishers and agencies with established digital strategies/focus—Hachette have been very active in this area with their acquisitions of Neon Play, Brainbow and Bookouture.

What would you say to critics of the Amazon model of pricing control, have things improved for publishers since their dispute with Hachette?

I think few would argue that the Amazon model has been good for traditional publishers. It may be possible to say that since the Amazon-Hachette dispute, things stopped getting worse for those businesses—or at least Hachette—since the terms (albeit confidential) suggest that Hachette retained some control over the pricing of their eBooks. However, a return to the status quo is perhaps not as positive as one would like. While there has been some resolution, the situation from which the problem evolved is still with us and largely represents a mismatch between the traditional pricing model and consumer expectation as to price.

Love or loathe them, Amazon and other disruptive models are here to stay and will continue to make it easier for customers to make purchases, switch loyalties and hunt around for bargain-basement prices. As a result of online prices and the transaction process, consumer expectations have been permanently changed. As cheap and free content floods digital platforms, a clearer understanding is needed as to price in relation to the content rather than in relation to format. In this respect both publishers and Amazon need to better engage with customers on the pricing level in order to manage their expectations.

How is the industry reacting to the growth of self-published authors and does this growth present any opportunities?

The growth of self-publishing, particularly in the last few years, is symbolic of the author-reader relationship moving closer still and, as a result, both authors and readers expect far more from their publishers. To be a successful self-publisher, an author needs to be proficient in all aspects of the industry and traditional publishers, with their vast resources and expertise, are expertly placed to help self-publishers with their new ventures.

A growth of hybrid publishers that offer a little of both and allow fluidity between the two publishing models is already taking shape. The larger publishers have dabbled in this already, with varying success, but it is the independents who are increasingly taking the lead. It has been reported that the self publishing platform, Unbound, which works together with distributors, had a book fully-funded within just seven hours. This illustrates the increased impact of readers on the commissioning process and the success self-publishers can achieve by utilising the promotional and financial power of their readers.

If there was one thing you could change about the industry what would that be?

Across the publishing spectrum (whether digital or print), I’ve always wanted to see more value attributed to content. In a bookshop an appallingly written printed book more often than not goes on sale at the same price as an established masterpiece. Digital publishing and the Amazon-led race to the bottom pricing model has further uncoupled content and price. Consumers/readers have become conditioned into believing that content should be free or, at most, available at a token price for platform access. In an ideal world, consumers would buy a right (or licence) to content and then be able to 3 enjoy that content in whatever medium serves them best. Some independent publishers have experimented with this by bundling books and ebooks and there is no reason why, at the right price, this could not be expanded to audiobooks with a long-term goal of enabling the format-free purchase of content which is then accessible across a flexible system of platforms.

The music industry has been ahead of the game on this, for example selling vinyl records with download codes included. This is partly because the large and early problem of digital piracy ensured it was in the interests of the music industry to allow downloads across many systems. Costs were not increased but pricing models were changed along with the internally decided attribution of value to content. There is no reason why similar approaches cannot be adopted in the publishing industry.

Where do you view the role of lawyers in the publishing sector and how can they best assist in the burgeoning digital world?

The digitalisation and opening of the publishing sector to non-traditional participants has exposed companies to a degree of competition not previously seen. This has in turn created a greater imperative for good business sense. Lawyers servicing the publishing industry have always had to understand the nuances of publishing (eg rights systems and distribution), but such expertise will decrease in value unless lawyers can help their clients navigate the wider issues facing such businesses.

For example, digital has helped enable remote and flexible working patterns as well as leading the growth of the gigeconomy. Similarly, digital and online technologies mean that crowdfunding, online platforms and peer-to-peer technologies are increasingly commonplace for growing businesses. Lawyers who service the publishing industry need to have an understanding of the broader issues at stake and to help their clients navigate new legal issues as they arise in this developing digital environment.

As the processes and interactions by which a book is created and reaches its audience evolve, lawyers will need to understand and advise on the legal consequences of such digitalisation—this might range from cookie policies on a website, to data protection issues arising from reader interaction and potential financial regulation concerns when crowdfunding a book. Undoubtedly intellectual property expertise will remain at the forefront of a publishing lawyer’s services but this will need to be offered alongside practical and common sense business law approaches since the current changes are most likely just the beginning.


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Mary Elliott
Senior Associate
Direct dial: +44 (0)20 7614 2628
melliott@foxwilliams.com

Accreditations

  • Top Ranked Chambers UK 2014 - Leading Firm
  • Ranked in Chambers Europe 2013 - Leading Individual
  • Ranked in Chambers Global 2014 - Leading Firm
  • Legal 500 - Leading Firm
  • The Lawyer UK 200 - Listed Firm
  • The Law Society Excellence Awards 2012 - Shortlisted
  • Investors in People - Bronze