I think it’s time to take a reality check on the state of news publishers digital transformation. While digital revenue streams may be delivering, there’s still a strong reliance on print for revenue and research shows readers engage more with print.
Media economist Robert G. Picard. summarises well the key problem with digital transformation. He notes that as news publishers focus on growing digital revenue, they forget their customers and their needs.
He notes that while journalism institutions have embraced the challenge of monetising digital media and increase revenue, this “institutionally focused strategy is designed to serve institutional interests not improve its offerings”.
In fact, newspapers keep offering the wrong things to their audiences. In Picard’s words, they sell readers horses when they actually prefer sports cars.
I think his words also apply accurately to Fairfax Media. Its digital strategy is focused on increasing shareholder revenue, and has very little to do with its journalism or journalistic offerings.
My recent research focused on the digital strategies of Fairfax Media and The New York Times Co. While the two “journalism institutions” pursue different digital strategies, the outcomes for two newsrooms are somewhat different. The New York Times strategy is based on digital-only subscriptions, whereas Fairfax is betting on its digital property listing service (Domain).
The main difference between the two is that while The New York Times continues to invest in its newsrooms and expand internationally (it has journalists filing stories from over 150 countries), Fairfax continues to chop newsroom jobs. It’s currently planning to cut 25% its newsroom staff from its Australian flagship papers to save $A30 million.
However, the report also notes that “these gains did not translate into circulation growth for the industry overall” and the combined digital and print circulation of newspapers fell 8% – “marking the 28th consecutive year of declines”. Digital advertising revenue also declined, but the proportion of digital advertising revenue of total revenue grew to 29%, because print advertising income continued to decline.
Fairfax, currently in the midst of a bidding war among private equity firms, is still driven by digital revenue from Domain. But the management of the company changed its tune in February, in terms of its print strategy.
Fairfax CEO Greg Hywood explained “while we have considered many options, the model we have developed involves continuing to print our publications daily for some years yet”, adding that “this is the best commercial outcome for shareholders based on current advertising and subscription trends”.
In May, media industry commentator Mark Westfield said that Hellman & Friedman, which is bidding for Fairfax’s media assets, “wouldn’t be interested in buying [Fairfax] unless they saw the assets of The Age, Sydney Morning Herald and Australian Financial Review and Domain as good assets to maintain”.
The sale or closure of newspapers wouldn’t make sense as Fairfax is still print reliant in terms of its revenue, and the same applies to The New York Times. My research shows in 2016 Fairfax print still delivered 78.6% of revenue, while digital was only 21.4% of its total revenue. Digital advertising made 18.5% of the total revenue, and digital subscriptions 2.86% of total.
I also found in a six-year period from 2011 to 2016, digital revenue of Fairfax grew 69% and at the same time print & other revenue declined 31.5%.
In comparison, in a five-year period from 2012 to 2016 (when figures were available) The New York Times digital revenue grew 32% – more slowly than Fairfax’s, but its print revenue dropped less than Fairfax’s – 11.5%. In 2016, digital made 27.8% of its total revenue and print 72.2%. The New York Times also continues to be print reliant in terms of its revenue.
Recent studies by media scholars Neil Thurman and Iris Chyi & Ori Tenenboim suggest that print continues to be strong in terms of readership. A study of 11 British newspapers by Thurman shows that the readers spent more time with print newspapers than with the online edition.
In their study, Chyi and Teneboim found that the “(supposedly dying) print product still reaches far more readers than the (supposedly promising) digital product in these newspapers’ home markets”.
In the light of this, it can be argued that digital transformation is continuing, but being fully reliant on digital readers may be a myth – as academic Vincent Mosco puts it: “a captivating fiction, a promise unfulfilled and perhaps unfulfillable.”
Merja Myllylahti, Project manager and author for Journalism, Media and Democracy (JMAD) Research Center
While just a few years ago, headlines predicted eBook supremacy and the demise of the paper book, that’s now reversed. They’re now saying the Kindle is clunky and unhip and paper books are cool and selling well as eBook sales crash. But are today’s claims any more accurate than those of 2012?
The latest round of headlines was triggered by UK Publishers’ Association figures noting a fall in consumer eBook sales of 17% in 2016, while physical book sales rose 8%. This statistic seems straightforward enough on the surface, but it pays to go deeper.
Mainstream media have long been in the habit of relying on figures from publishers’ associations, retailers’ groups and Nielsen data, but the industry has changed. While these measures are accurate, they are only accurate in terms of what they measure, and they represent far less of the industry than they once did. They are no longer a proxy for the industry.
A recent history of eBooks
Amazon’s Kindle was launched in November 2007. Barnes & Noble followed with their Nook in October 2009 and Kobo with their eReader in May 2010. Apple’s launch of the iPad in January 2010, meanwhile, introduced a non-specialist device that gave a pleasing eReading experience. US eBook sales rose 1260% between 2008 and 2010. By early 2011, US advisory group Gartner reported that industry researchers were predicting a 70% annual growth rate for eReader sales globally.
In February that year, the REDgroup, the parent company of Angus&Robertson and Borders in Australia – chains responsible for 20% of the country’s book sales – went into receivership. Retailers across the industry in Australia were noticing a downturn. After 5% growth in 2009, Australian book sales contracted slightly in 2010, then dramatically in 2011, with falls of 13% in volume and 18% in value, and significant falls continuing into 2012.
In January 2011, Amazon announced that, for the first time, it was selling more eBooks than paperbacks. According to Nielsen figures, US eBook sales went from US$69m in 2010 to US$165m in 2011, a 139% increase. They increased a further 30% in 2012 and 13% in 2013.
Nielsen figures, though, only record sales of books with ISBNs, something many independently published eBooks do not have. Despite not counting many eBooks, Nielsen still recorded sales as increasing, albeit probably at diminishing growth rates each year.
With increases in both average smartphone screen size and smartphone use, the 2014 to 2015 period marked another shift – the phone was becoming a significant reading tool. According to US Nielsen surveys, while the percentage of the eReading population reading primarily on tablets had increased from 30% in 2012 to 41% in 2015, the number of eBook buyers who used their phones to read at least some of the time increased from 24% to 54% in the same period.
Judith Curr, publisher of Atria Books, stated in 2015 that,
“The future of digital reading is on the phone. It’s going to be on the phone and it’s going to be on paper”.
EBook sales in the US, though, appeared to plateau at 2013 levels, according to Association of American Publishers figures, and then dipped early in 2015. In the UK, the Publishers’ Association reported digital sales for the year 2015 falling slightly and print sales growing minimally. “Readers take a pleasure in a physical book that does not translate well on to digital,” the Publishers’ Association stated, and declarations of “peak eBook” became commonplace. Those figures, though, do not tell the whole story.
As Simon Jenkins admitted in The Guardian last year when declaring that peak digital was at hand, the adult colouring book fad made a contribution to print sales in 2015. Unlike fiction blockbusters, sales of colouring books are almost entirely in print format.
In the case of the UK market, the £20.3 million generated by adult colouring books in 2015 matched the growth in the overall print market. Without it, the pattern of zero or negative growth seen in the preceding seven years would have continued. In the US, Nielsen reported that sales of adult colouring books surged from one million units in 2014 to 12 million in 2015. Australia was also part of the adult-colouring craze. Nielsen BookScan’s November 2015 Australian top 20 featured eight colouring books, each one of them outselling the most successful Australian novel.
Other factors were at work as well. Following the renegotiation of pricing between major American publishers and Amazon, eBook prices rose in the US Kindle Store in late 2014 and 2015. Until then, Amazon had pushed publishers to keep prices no greater than $9.99, and buyers had become conditioned to paying less than $10 for eBooks.
Publishers that increased prices above that mark subsequently recorded a fall in eBook receipts, and some identified higher prices as a factor. According to journalist Jeffery Trachtenberg, publishers viewed this pricing change as involving “some sacrifice, but they felt it was worth it to keep Amazon in check”.
The specific books published from one year to the next had an impact too. Some publishers noted that 2015 saw fewer “hot” titles. With nothing to match Frozen and the Divergent series, children’s and young-adult eBook sales fell 45.5% in 2015 in the US.
eReading growth not counted
While the Association of American Publishers’s figures are based on a survey of 1200 publishers and often seen as authoritative, the Amazon Kindle Store stocks many independently published titles and titles published by small and micro publishers not captured by the survey.
At the same time as the association was reporting a drop in overall eBook sales, Amazon, the retailer with the majority of the US eBook market, reported increases in sales in terms of both units and revenue.
And other avenues were opening up that facilitated continued growth in eReading that was not feeding into the statistics. Public libraries were lending eBooks and subscription eBook libraries were opening for business – Oyster in September 2013, Scribd the following month and Amazon’s Kindle Unlimited in July 2014.
While subscriber downloads earned an author readers and, in the case of subscription libraries, revenue, they did not count towards sales.
David Montgomery, CEO of publishing services company Publishing Technology, drew on these factors to declare last year that publishing had split into two markets, with a widening gap between them.
Self-published and micro-published authors, particularly those writing genre fiction, were pricing their eBooks much lower and claiming an increasing share of the market, particularly through Amazon, while large publishers were increasing eBook prices in a way that reduced eBook sales.
This pattern has continued, and the rhetoric that pits one format against another appears to be continuing too. At the Digital Book World conference in January 2017, Nielsen presented 2016 data from more than 30 traditional US publishers showing a fall in eBook sales from 2015 to 2016 and hardback unit sales overtaking eBooks for the first time since 2012.
Association of American Publishers (AAP) data released in February 2017 appeared to confirm the decline of eBooks, with eBook sales for the first nine months of 2016 down 18.7% on the year before.
However, at the Digital Book World conference in January, other evidence was presented that attracted less media attention.
An analysis by the Author Earnings website (an aggregator and analyser of eBook sales data) identified that, outside the world of traditional publishing, authors who were self-published, independently published or published directly by Amazon imprints, had sold more than 260 million eBooks worth more than US$850 million in the US in 2016.
Total eBook sales by Amazon – which makes up 83% of the US eBook market by volume and 80% by value – rose by 4% from early 2015 to early 2016, at the same time as eBook sales recorded by the AAP were falling.
While no direct comparison exists for the UK market – where the Publishers’ Association reported a 17% fall in consumer eBook sales from 2015 to 2016 – 42% of eBook sales in that market are by self, indie or Amazon-published authors. This added up to 40 million of the 95 million units sold in the UK in 2016 – a percentage that is growing as the eBook market share held by the larger members of the Publishers’ Association falls.
The publishing industry has changed. It is no longer solely the domain of members of publishers’ associations and books with ISBNs that allow easy tracking and accumulation of data that appears robust but tells much less of the story than it once did.
Moving beyond the ‘format wars’
It is too easy to have our attention grabbed, and sometimes our biases or hopes confirmed, by an appealing set of statistics from an authoritative source, and to misunderstand what those statistics are measuring.
While it is possible to speculate about the future trajectories of the eBook and paper book markets, many confident pundits have been wrong before, as new factors have emerged that have significantly impacted reader behaviour and sales patterns.
From the practical perspective of writers wishing to connect their work with readers, it is prudent to see both paper and eBooks as significant for any book-publishing project in the present and near future, and to develop strategies to meet both of them. It is also prudent to look beyond both platforms to another, one that had long been regarded as a peripheral player: audiobooks.
All we can be sure of is that the digital platform is still evolving. What will an eBook be 20 years from now? What will a book be?
In this political climate, academic and public libraries may be in danger. The existence of vast amounts of information – a lot of it free – on the Internet might suggest that the library has outlived its usefulness.
But has it? The numbers tell a very different story.
In spite of the findings of a survey in which Americans say they are using public libraries less, the usage numbers reported by libraries indicate the opposite.
Here’s what data on circulation (books and other items checked out to library users) and annual visits to public libraries reveal.
The number of books and other items borrowed from U.S. public libraries increased from 6.5 items per capita in 1993 to 8.0 items per capita in 2012 (up 23 percent). Over the same time span, the number of visits to U.S. public libraries rose 22.5 percent.
The one major public library usage measure that did decrease was the number of times library users asked questions of reference librarians, dropping 18 percent from 1993 to 2012.
The popularity of U.S. public libraries is, it seems, at least as strong as it was before the web became a household word (much less a household necessity).
Rise of the e-book
For academic libraries, the data are more mixed. Circulation of physical items (books, DVDs, etc.) in U.S. academic libraries has been on a steady decline throughout the web era, falling 29 percent from 1997 to 2011.
That fewer books are circulating is hardly a surprise given the vast amount of scholarly information (the bulk of it purchased with academic library budget dollars) that is now available to students via their electronic device of choice.
In 2012, U.S. academic libraries collectively held 252,599,161 e-books. This means that over the course of about a decade, U.S. academic libraries have acquired e-books equal to about one-fourth the total number of physical books, bound volumes of old journals, government documents and other paper materials acquired by those same libraries since 1638 – the year Harvard College established the first academic library in what is now the United States.
E-books are not only plentiful, they are popular with academic users (in spite of some shortcomings in usability). For example, data provided to the author show that when the University of California, San Diego made a collection of academic e-books available to students and faculty through the popular JSTOR interface, the usage numbers proved impressive.
In just under a year, UCSD students and faculty used 11,992 JSTOR e-books, racking up 59,120 views and 34,258 downloads. In response to user demand, the UCSD Library outright purchased over 3,100 of the titles offered via JSTOR, making those e-books a permanent part of the UCSD library collection.
Who needs the encyclopedia?
As with circulation numbers, reference questions asked of librarians in U.S. academic libraries have undergone a sharp decline – standing now at 56,000,000 per year, down 28.4 percent from 16 years ago. For the 60 largest U.S. academic libraries, the average number of reference transactions dropped from 6,056 per week in 1994 to 1,294 per week in 2012 (down 79 percent).
Today, students access information digitally. The Google app on their smartphones allows students to look up information they once would have found only in analog, library-owned reference sources. And as for that old reference warhorse, the printed encyclopedia – Britannica churned out its final set in 2010.
Further contributing to the decline of in-person reference service is the fact that students are increasingly able to consult with academic librarians via the Internet.
By 2012, 77 percent of U.S. academic libraries were offering reference services via email or web chat. Currently, over 400 academic libraries provide around-the-clock, chat-based reference service as members of OCLC’s 24/7 Reference Cooperative, a global library cooperative that provides shared technology services.
Given only the above numbers, the hasty conclusion would seem to be that everything is online and nobody uses academic libraries any more.
But not so fast.
Even while circulation and reference transaction numbers were tanking, the data show a steady increase in the number of people actually setting foot in academic libraries.
The cumulative weekly gate count for the 60 largest U.S. academic libraries increased nearly 39 percent from 2000 to 2012. Library gate count data for all U.S. institutions of higher education show a similar (38 percent) increase from 1998 to 2012.
So if students are not going to the academic library to access print collections or ask reference questions, why are they going at all?
The lure of the academic library
I believe that students are trekking to academic libraries because academic libraries have been actively reinventing themselves to meet the needs of today’s students.
Academic library square footage is increasingly being converted from space to house printed books to space for students to study, collaborate, learn and, yes, socialize.
Besides providing some of the last refuges of quiet in a noisy, distraction-filled world, academic libraries have taken such student-friendly steps as relaxing (or eliminating) longstanding prohibitions on food and drink, providing 24/7 study spaces and generally recreating themselves to be comfortable and friendly rather than cold and forbidding.
Examples of how forward-leaning academic libraries are attracting students include:
The Grand Valley State University Library’s Knowledge Market provides students with peer consultation services for research, writing, public speaking, graphic design, and analyzing quantitative data. Among a number of specialized spaces, the library offers rooms devoted to media preparation, digital collaboration, and presentation practice.
The libraries of North Carolina State University (NCSU) offer Makerspace areas where students get hands-on practice with electronics, 3D printing and scanning, cutting and milling, creating wearables, and connecting objects to the Internet of Things. In addition, NCSU students can visit campus libraries to make use of digital media labs, media production studios, music practice rooms, visualization spaces and presentation rooms, among other specialized spaces.
The Ohio State University Library Research Commons offers not only a Writing Center but also consultation services for copyright, data management plans, funding opportunities and human subjects research. Specialized spaces in the library include conference and project rooms, digital visualization and brainstorming rooms, and colloquia and classroom spaces.
For several generations, academic librarians were primarily preoccupied with the role of their library buildings as portals to information, print and later digital. In recent years, we have reawakened to the fact that libraries are fundamentally about people – how they learn, how they use information and how they participate in the life of a learning community. As a result, we are beginning to design libraries that seek to restore parts of the library’s historic role as an institution of learning, culture and intellectual community.
Any library, public or academic, able to live up to so important a role will never outlive its usefulness.
These days, when most of us think of a “book,” we have in mind something around nine inches by six inches, with mass market paperbacks shaving off an inch or two in each dimension.
But digital reading has redefined presuppositions about size and, more importantly, about what format is best for what’s being read: text messages, news articles, textbooks or fiction.
Conventional wisdom (including my own) typically suggests that serious digital reading calls for ample screen size (at least a tablet or e-reader), while one-off encounters with sports updates or tweets are fine on mobile phones.
But these rules of thumb are crumbling as users increasingly abandon larger mobile devices like Kindles and Nooks in favor of an all-purpose phone. While sales of e-readers and tablets are slowing, the real growth is in smartphones. In 2014, 1.2 billion smartphones were sold worldwide. With many newer generations of smartphones offering bigger screens – along with continued advancements in screen resolution – readers are turning to their mobiles for more and more of their onscreen reading.
Does size matter? For most of us, yes. When the reading platform size shrinks, it’s harder to focus on complex arguments or story lines. No wonder the bestselling e-books tend to be romance and erotica.
It’s become commonplace to invoke Herman Melville or Leo Tolstoy when arguing about what kinds of reading work (or don’t work) on which digital media. “No one would read War and Peace on a mobile phone,” you might say – but that’s exactly what journalist Clive Thompson did earlier this year. Expediency was his basic motivation – knowing he was unlikely to lug the print version around with him, he turned to the device he was already carrying: his phone.
Thompson’s success story (he went on to polish off Moby Dick and Crime and Punishment on the phone) can be interpreted two ways: “I told you so” or “the exception proves the rule.” Knowing Thompson’s work, I’m confident he proved a serious reader of these meaty texts. But when my university students try the same feat, they often admit the results are more questionable.
To be fair, the main challenge of reading on mobile phones or smartwatches isn’t size, per se. (Historically, readers have been absorbed in books fitting in the palm of their hand – especially prayer books or poetry.) Rather, for the majority of readers, the issue is mindset. For those lacking self-discipline, there is Freedom software, which blocks internet access on digital devices if you’re trying to get some work done. Either way, reading serious literature on a mobile phone (rather than restaurant reviews or gossip) takes a level of concentration and self-discipline that few have.
Five hundred years ago, when people prayed using a book no larger than a mobile phone, there was no chance of being interrupted by a text message or a tweet. Today, our handy pocket devices are laden with temptations that snatch our attention away from an author’s words.
And distractions aside, there’s still the question of whether or not we can comprehend text on small screens at a level comparable to text in printed books or magazines. Here, there are several intertwined components: size, text length and the digital (as opposed to print) medium.
For size, when reading on a small digital device, the number of characters visible at one clip is abridged, from around 200 (on a mini-tablet or large smartphone) to, at best, a few dozen on a smart watch. Digital reading entails continual scrolling, and there’s little prospect of seeing a two-page spread (an essential format of the codex for nearly 2,000 years). Reading specialist Anne Mangen argues that constant scrolling on digital devices undermines mental absorption.
Now think about how much text people are willing to tackle in the first place. In the age of tl;dr (“too long; didn’t read”), those who read onscreen – even comparatively big screens – show less patience with lengthy prose (longreads.com informs time-conscious readers how many words each piece contains and how long it should take to work through them). As screens get smaller, it’s wildly unlikely that even our current attention spans will hold steady.
Finally, consider the medium itself. My research on university students in five countries revealed that 92% believed they could concentrate best when reading in print, not on digital devices.
If you’re reading on a laptop or average-sized tablet or e-reader, at least the physical spread of text offers an in-your-face inducement to read. As screen size shrinks, so, I’ll wager, does the mental holding power of a tiny window that displays only a small amount of text at a time.
Once upon a time, reading was literally a big deal. Children actually learned to read by following the adventures of Dick, Jane and their dog Spot. My own first Dick and Jane primer was physically outsized – picturesquely called an elephant folio – measuring about 20 square inches and set in what seemed like 200 point type.
For me and others of my generation, those mammoth folios were a sign of the importance of reading. With today’s small-screen digital devices, can reading still be a big deal? For most of us mere mortals who yield to distraction and assume size matters, the answer will often be “no.”