What I learned exploring a potential ebook startup idea.

1. eBooks
What I learned from exploring a startup
idea in the space
Alicia Morga

2. The Big Trends
Technology Meets Book Publishing
Big trends:
• Growing ranks of self-publishers
• Authors posting book content before publishing
• Increased online marketing of books
*I don’t include conversion into .epub and .mobi files because that’s already becoming
a commodity
by Alicia Morga

3. Current eBook Trends
Discovery of ebooks – players include Wattpad, Goodreads
Subscription services – ebook clubs; players include Farfaria
Interactive ebooks – line blurring with apps; players include mainly children’s book
developers like Duck, Duck, Moose
Personalized story-telling – choose your own ending; content based on reader
engagement; players include Coliloquy
Content meets commerce – starting to see with magazines (Lifestyle Mirror); hasn’t
been done yet in ebooks but example would be Stipple meets Tapestry
by Alicia Morga

4. Old vs. New Publishing
Old Publishing Model New Publishing Model
Title Acquisition Agents Crowdsourced
Payment Advance, limited royalties Limited adv, more royalties
Editing Editors Editors
Publishing Print/retailer distribution Digital/online retailers
Sales Sales teams court bookstores None
Marketing Pay for placement, PR Email, online promotion
But in many ways the new ebook business models I’ve seen are just replicating the old
model in the digital space.
by Alicia Morga

5. New New Publishing
A Digital Publishing Company has to look different:
• Has to do user research (e.g., technology to uncover emerging
content)
• Publish in more digestible formats
• Provide immersive experiences
• Establish direct consumer relationships and services
Natural extension of all this will be a new definition of “ebook.”
by Alicia Morga

6. U.S. Market
Book Market Size: $27.94 billion Target eBook audience:
Female (women account
eBook Market Size: $2.07 billion (2011) for 64% of all sales)
eBook sales account for 15.5% of publishers’ revenues 35 to 65 (average age of the
American book buyer is 42)
764,448 self-published titles in 2009
Household income of $40K
6 major publishers
plus (in 2009, 32% of books
purchased were from
8-11,000 new publishing companies created each year
households earning less
than $35K)
3-400 medium-sized publishers
86,000 small publishing companies
by Alicia Morga

7. The Landscape
Ebook authoring tools eBook discovery eBook Payments
eBookBurn GoodReads Ganxy
Vook Findings Gumroad
PressBooks Wattpad Valobox
Smashwords FanFiction.net
Social Reading Apps
Bookit Copia
Copia
Lulu Social Samba
ReadSocial
Inkling Kno
BookShout
Adobe Indesign Libboo
Readmill
Calibre Zola Books
Aspindle
BookBaby BookPsychic
eBookCake Anobii
Readlist Shelfari
ReadOyster
by Alicia Morga

8. The Landscape (cont.)
eBook Analytics Author Events
Hiptype Togather
eBook Subscription eBook publishers
Farfaria Coliloquy
Bardowl Aspindle
Sourcebooks
Paper Lantern Lit
HyperInk Press
eBook Marketing
Plympton
PubMark
Atavist
BookDaily
Authro
by Alicia Morga

9. Industry Feedback
I talked with a number of publishers and no surprise, they say rumors of their
demise are greatly exaggerated. Why? Because they understand the secret-sauce
that is not dependent on the format of books; they know how to edit, package and
market stories.
What are they concerned about?
Publishers say physical bookstores are disappearing and the two big consequences for
the publishing industry are
(1) Content discovery is more difficult
(2) Amazon becomes the only channel
by Alicia Morga

10. Industry Feedback (cont.)
Other comments from publishers and experts in the space:
• Most book marketing is through public relations; the best way to sell a book?
Get it on The View.
• Most books not viral – books require a different time investment; but virality
does exist
• The first 4-5 weeks after release accounts for the majority of a book’s sales
• Publishers have very little money for marketing, are fickle and lack patience
• 24 months ago, 31% of books bought were found in physical stores; today it’s
17%
• Title, graphics, description matter – it’s what you react to when you’re
browsing. If it doesn’t engage you within one second it’s not going to work.
by Alicia Morga

11. Industry Feedback (cont.)
• Ask people if they want curation for books and they will throw up all over you – they find
it offensive; seems to say we’re smarter than you
• People do buy off of lists or rankings – not seen as the same thing as curation
• 5% of past book buyers visited GoodReads and just under 1% of books bought were
through that site – it’s proven more effective than social media but you wouldn’t touch
that site unless you were a really avid book buyer
• Books are going the way of the music industry and CDs
• Pure play bookstores are morphing into boutiques with emphasis on high-end stationery
and toys
• Publishers see self-publishers as part of a service business – some are entering that
market because they see it as another revenue stream; example Penguin’s acquisition of
Author Solutions for $116 million
by Alicia Morga

12. Industry Feedback (cont.)
• Publisher advantage used to be “come to me and I’ll put you in stores” but without
stores don’t have this unique advantage anymore
• Of note: JK Rowling’s PotterMore site – she’s taken control of her digital
distribution
• DRM not an issue; see Tor
• Non-fiction requires a level of credibility – so a publisher brand is important here;
but for fiction it is not
• Piracy is a red herring – Amazon is a much bigger threat
• Books in browser – it’s a question of connectivity – it won’t work on a NYC subway
• People don’t read on laptops for pleasure
by Alicia Morga

13. Industry Feedback (cont.)
• Interactive ebooks don’t sell well because it’s not as simple as sticking video in the file
• Enhanced ebooks are like a film – it’s not about the technology, it’s about the story
• On a tablet all media are equal in terms of access ; they are no longer single purpose
which is a problem for ebooks
• There is no programmatic discovery taking place; it’s mainly word of mouth and WOM
doesn’t support new books – only older books
• People who read a lot will find ways to get books – 40% of U.S. adults are regular
book buyers
• Occasional book buyers don’t really look for books
by Alicia Morga

14. Discovery
How do people discover new books/eBooks?
From Consumer Survey:
Learned of books through friends, NYTimes, blogs, Amazon, iBooks, 14% of
respondents mentioned GoodReads
From Industry Conversations:
Recommendations come first from a friend (75% of recommendations happen in a
conversation) and second from a retailer.
The main problem for a startup thinking it will tackle the discovery problem?
Most consumers don’t believe they have a discovery problem.
by Alicia Morga

15. What About Amazon?
Their retail front is a great beachhead, but the publishing they are now doing is
the real concern. In this space, content is king. You own the content people
want, you win. So the first way to beat Amazon is to simply be a better story-
teller. Other potential ways:
Amazon’s Weaknesses
1. Browsing is bad
2. Amazon doesn’t share data
3. Amazon doesn’t connect pubs/authors with
readers
4. Reviews can be gamed, no marketing help
5. Pareto effect
by Alicia Morga

16. What are the Opportunities?
I modeled out a few different potential business models and in every case, in order to
make any real money you have to own the content and to make even more, you have
to own the distribution.
At an average price of $2.99 for a fiction ebook you have to be able to take as much
of that $2.99 as possible and you can’t do that if you’re giving away 30% to retailers.
Publishers could create their own sites (and some have) that allow for direct purchase
and make them mobile accessible, but difficulty still exists: driving traffic to the site,
direct purchase is problematic (book delivery not simple), and discovery is limited.
The only way I believe you can get big then is to own the content, build a character or
story brand and if you can’t own distribution, derive ancillary income from other
commerce extensions – ala the Pixar/Disney model but for ebooks.
by Alicia Morga

17. Other Ways to Go
If you’re core competency is not story-telling, here are some other potential
opportunities:
1. Build a technology feature you believe one of the big six publishers will want and
hope for an acquisition;
2. Create ROI marketing tools for self-publishers (this is one of the most over-looked
problems with few real solutions)
3. Become the O’Reilly Media for self-help books or a category of non-fiction books
and supplement your revenues with conference fees
What do you think?
by Alicia Morga

18. Comments? Questions?
You can reach me
@AliciaMorga
or through my website AliciaMorga.com
by Alicia Morga