What Is the Profit-Earning Mode for Digital Publication?

On August 29, 2011, at the Foreign Expert Forum of “China Book International(CBI)”, President of China Renmin University Press, Mr. He Yaomin and Cambridge University Press Mr. Stephen Bourne delivered the theme speeches on “Commercial Modes for Digital Publication”.

He Yaomin:

Puzzles and Thinking for Chinese Digital Publication

Since the 21st century started, the development and application of digital technology has induced digital publishing forms and advanced the fundamental reform in the value chains and operation mode of the entire publication industry. The trend for the digital to change the conventional publication becomes increasingly strong.

As a new business form of publ-ication, digital publication grows at a rate of several times faster than the conventional publication, as has made us full of expectation for its future development. However, with the rapid expansion of industrial scale, in its development for digitalization, the conventional publication industry has always failed to make a substantial step. The unclear commercial mode for digital publication causes the digital publication to be full of challenges in its future development.

Puzzle 1: When will digital publication hold a leading position in the industry? What force can promote the great development? Such problems cannot be resolved without a successful commercial mode.

Puzzle 2: What is the profit-earning mode for digital publication? This is the biggest puzzle for the conventional publishers. In view of the enterprise operation, we show more concerns over the input-output rate and control of operation risk. In the practice of digital publication, we have observed that the input is huge and continuous, but the return is less and in a long period. Due to this, the conventional publication hesitates in digitalization and many of the publishing enterprises dare not input on a large scale and carry out the total transformation, worrying about a sacrifice like flying moth catching fire.

Puzzle 3: where is the terminal market for digital publication? This is related to source and foundation for the long-term development of digital publication. A potential market does not necessarily equal to a real market. In making great efforts for development of digital publication, conventional publishing enterprises target at the market and profit-earning. In 2010, the digital publication in China earned RMB100 billion yuans ,but the actual share associated with conventional publication industry is less than 10%. In reality, the conventional publication has neither any clear idea about where the market of digital publication is nor how to integrate the existing publication resources to create demands. The commercial modes and service methods of digital publication are still rather strange for conventional publication to follow. All these are big challenges for us.

In a vertical view of digital publication in China, due to the imperfect industrial chain and lack of effective integration to form a sophisticated commercial mode, the maximum value of digital publication has not yet been explored. Because of this, in my opinion, the conventional publication should make positive efforts to think about and discuss on the commercial modes of digital publication. We also hope our mutual enlightenment today will advance, to some extent, our discussion on new commercial modes.

Thinking 1: It is necessary to, with a wider heart and open vision, maintain a positive mind for accepting and participating in application of new technology, as it will be a good start for use to accelerate the commercial modes of digital publication in China.

The biggest worry of conventional publication in reality is how digital publication will earn profits. Due the relatively long payback period of digital publication, the rather strange market environment for and relatively backward operation and management of conventional publication are all unfavorable for the development of digital publication. But, taking an earlier advantage, an enterprise is much likely to enjoy, later, the whole industrial scale. The biggest barrier for development of digital publication does not lie in shortage of technology, funds and talents, but comes from the resistance and ignorance of the conventional publication sector. In my personal opinion, in the near future, there will definitely emerge a number of industrial giants that hold the control point, while other enterprises will become a segment on the industrial chain dominated by such giants. If any enterprise does not want to be set aside in the future industry, it must take positive action to respond to digital publication.

Thinking 2: It is necessary to give adequate play to the advantage of conventional publication in contents, which is the core competitive strength for conventional publication to explore the commercial modes for digital publication.

For conventional publication as well as digital publication, contents will be always their most fundamental part. Without any flow of materials, transportation will not be called transportation. Integration of content resources is the most important as well as most fundamental strategic factor for advancing digital publication. As for conventional publication, contents will be always the base for survival and development. Conventional publishing enterprises are fully capable to develop and transform to the modern service industry of knowledge resources. By exploring the commercial mode of driving with content resources and capital operation, establish the content operation platform of core resources and it is a relatively practical choice.

Thinking 3: It is necessary to actively try to break through the role oriented as a content provider and actualize, at the earliest, the transformation from content supplier to resource service provider.

The role orientation of conv-entional publishing enterprises as content providers is mostly endowed subjectively by the technical service providers and channel providers. The product and service mode of digital publication by “creating contents with users” will overturn the cognition of people for acceptance and innovation modes of conventional knowledge, while the dependence of technical service providers on the contents of publishing enterprises will tend to be weakened. As a highly creative service, digital publ-ication will have to activate and create potential demands to a great extent. Conventional publication faces the reform in such segments as production, distribution, exchange and consumption and has to welcome not only the changes in concepts, but also and more importantly, the integration of content resources and transformation of operation modes.

Thinking 4: It is necessary to positively respond to challenges, enhance cooperation in digital pub-lication and establish the industrial content alliance and publishing platform. The development prospects of digital publication are exciting, but its problems cannot be ignored. The core resource of digital publication industry is the scale of copyrights. To capture a huge amount of content authorization, conventional publication is especially required to open join-tly the industrial chain. Between digital publication enterprises and conventional publishing enterprises and between conventional publishing enterprises, it is necessary to cooperate in developing the digital publication platform and jointly expand the business of digital publication so as to make up the limitation and inadequacy of one single enterprise. Additionally, while competing with each other, conventional publishing houses and digital technical service providers must also communicate and cooperate with each other in operation to jointly serve the value reflection of digital publication clients.

Stephen Bourne:

Ten Prophecies for Digital Publication Mode

Prophecy 1:“Rational Mar-keting Mechanism Is Critical”

The primary point is to make sure your product can attract the attention of others. If marketing is slightly deficient or improper and product is not outstanding, your product is likely to be submerged in the huge amount of data released online by publishers and self-published authors. It means to stress on brand publications or “key” websites or bookstores. Such “key” will increasingly depend on the product groups or specific publication.

Prophecy 2:“Peer Review Is Inevitable”

Quality is a decisive factor for ensuring successful publication, while peer reviews will be still the key for ensuring the quality of non-fiction. We need to have an efficient publishing procedure. It is necessary to ensure the scheduled submission as well as to maximize the publishing efficiency, for failing to do so, the publication industry will become a high-cost industry, while consumers expect for a lower price. Therefore, online submission and peer review will become increasingly important.

Prophecy 3:“Academic Jour-nals Will Actualize Total online Processing”

Academic publication is sure to be online first. I think that by the end of this century, STM (Science & Technology Medicine) will be online. Afterwards, humanity and art science works will be also published in a digital form and some academic publication will be definitely first online. Therefore, such products can be taken into account in terms of digital publication, or first as contents for digital publication mode.

Prophecy 4:“Seek Effective Financial Support”

Since publications will be increasingly open to readers, it is necessary to find new financing methods. After all, the concept of open access is itself defected for there will be after all someone to pay for publication of academic journals. The payer may be the author himself, or member of an academic group, or advertiser, sponsor or other donators. I am especially worried about advertising revenue for many newspapers have found that they are not the reliable sources of income, but have become excessively dependent by the time when they came to know about it.

Prophecy 5: “Some New-spapers Will be online, but There Will Still be Many Newspapers Printed for Publication”

Paper magazines will still last for quite long a period of times, because readers will easily have a temporary idea to buy paper magazines and throw them away after reading. However, there will be many electronic magazines which will insert pictures, video hyperlinks and even music hot to improve quality and increase prices. Since the development space for magazines are far more than this, I believe that magazine digitalization will have a bright prospect.

Prophecy 6:“Paper Books Will Remain in Three Major Commercial Modes”

In the first mode, it is just like the current situation that publishers are facing a risk in terms of prints. Since prints may decrease, production cost will increase, risk will increase and prices will also go up accordingly.

In the second mode, books/journals will be printed strictly according to orders, i.e., printing as per need. Under this mode, considering the extra cost due to mail order, book prices may be equal to or slightly lower than that of the current paper books. (On the other hand, publishers do not have to have any stock, as is much beneficial for maintaining the cash flow and current capital).

In the third mode, continue to print exquisite books, usually hardcover books, for readers to collect, or meet the publication demands of printing quality pictures (such as medical and art books). Such books have more elastic prices (as it is now), so such special books are still observed an optimistic prospect for publication.

Prophecy 7:“We Are Walk-ing into an Era of Digital Depe-ndence”

In our life, we cannot do without digital products. Therefore, on the one hand, vendors must possess a powerful and flexible backstage supporting system, which is not available with the competitors; on the other hand, content products provided by publishers have to be applicable for different portable terminals of readers, such as Kindle, iPad, iPhone, Blackberry, Wristwatch, institutional data subscription, and other modes to be invented.

Prophecy 8:“Package Sales of E-books”

Since readers of e-books can store a huge amount of catalogues, many of the books can be packaged for subscription, somewhat like the subscription method of readers’ club.

Prophecy 9:“Authors Should Change Their Writing Method”

iPhone and other small-sized reading devices will become increasingly popular. Since it will be comparatively hard to read a long text by using such tools, publishers and authors must do something in the format of books, by taking, for example, the method of short serials. This method had been used by Charles Dickens long time ago, and now is also being used by Ian Rankin.

Prophecy 10:“Establish A Reliable Technical System”

Online publishers must establish a powerful framework to respond to the “traffic peak” at the beginning of publishing hot contents. In this regard, BBC has had experiences for long. For instance, when the World Trade Center in New York was attacked, people all over the world wanted to see the relevant news. For this, BBC established a system of variable capacity, which can be put into use when necessary.