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Analysis of the publishing market following the 2012 World Digital Summit

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Publishing Market Analysis by Len Vlahos, Managing Director, Book Industry Study Group (BISG)

The world digital summit "April in Paris", organised for the second consecutive year last April in Paris by the Jouve Group in partnership with CIGREF, brought together more than 150 leaders and world-renowned personalities. Several round tables were organised during this day in order to allow them to share their experiences concerning new business strategies in a digital world.

In his presentation, Len Vlahos began by explaining the positioning of the Book Industry Study Group (BISG). The BISG "represents all the players" in the book industry in the United States and its mission is "to optimize the cooperation of the players in this ecosystem". The BISG, thanks to its volunteers, works in many areas:

- Metadata - BISG believes that "there is a direct link between quality, clarity and accuracy of metadata and sales.

- Product Identification - the BISG has recently published a position paper on best practices for the identification of digital products and is currently studying "Work level identifiers".

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- Rights management - the BISG is aware that "piracy has become a major problem to which publishers are devoting more and more time". However, rights management can be "a barrier to consumption".

Len Vlahos then presented key industry figures. Publishing is "about $28 billion in the U.S. book industry" or "about 2.5 billion copies.

Bookstore chains and wholesalers are the major channels for book distribution. Independent bookshops currently account for only 4 % of the total market and around 7 % of sales. "Our industry's mode of distribution has undergone a real revolution over the past two decades.

The current economic context has tested the publishing sector - "Hardcover books performed well at the beginning of the crisis and then began a significant drop in sales.

At the same time, "eBook sales literally exploded; they rose significantly in 2010 and continued to do so in the first two quarters of 2011.

This phenomenon is directly related to new products. For example, 40-50% of Stephen King's book sales are in digital format.

The electronic readers sold at Christmas 2010 caused the market to explode: "eBook sales doubled during this period". However, in 2011, "sales began to stagnate as the year progressed" and "this growth, initially explosive, became more gradual".

Events have taken a completely unexpected turn. Is this a sign that the market is maturing?

The majority of consumers still use electronic readers to read digital content. However, it is clear that for users of iPad and Android technologies, "reading is no longer their main activity".

Thus, for the BISG, the biggest challenge in the book industry is "distraction". People now only have to touch their screens to have access to "an unimaginable amount of leisure to occupy their free time. Tablets are being used to watch videos, play games, surf the Internet, and in the end, people are spending "less and less time reading. According to Len Vlahos, "this is a huge challenge for the book industry.

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The BISG believes that there are three potential scenarios to explain this market environment. Mr. Vlahos also told participants that it would be risky to bet everything on just one of these scenarios and told the audience that it is crucial to "anticipate as much as possible, according to your own economic model.

Scenario 1 suggests that this recent slowdown is just "the calm before the storm". Tens of millions of readers and about "50 million iPads are sold in China".

Scenario #2 is based on the notion of seasonality: "people buy equipment for their holidays". People buy en masse during the holiday period. The future will tell us if this pattern is confirmed.

Scenario #3 suggests that this slowdown is a "natural plateau". Despite the dramatic changes brought about by digital technology, about half of all music is still sold on physical media.

Asked about self-publishing, Vlahos replied that "it is very much in vogue in the American media" but that there is not enough data to "understand the breadth and depth of the market". Currently, the market appears to be stabilizing at about 5-7 % of sales for some eBook vendors.

Mr. Vlahos also highlighted the slow pace of digitalisation in higher education, especially among students, whose acquisition rate is very low. In the near future, however, we should see improved sales in this sector thanks to the collaboration of faculties and students on various projects and the launch of new digital and interactive training materials.

About Jouve :

As a service provider, the Jouve Group is at the heart of content, digital and new broadcasting media (Outsourcing of business processes, editorial services, printing and associated services, It solutions). Leader in the production of digital books, number 1 in legacy digitisation, the Group is also one of the leaders in the French BPO "Business Process Outsourcing" market. Created in 1903, Jouve is a family-owned Group with a stable shareholding, with more than 3000 employees on 27 production sites, including 16 in France. www.jouve.fr

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