Episode 2: Brian O’Leary on the Future of Publishing

In this episode of the BookSmarts Podcast, Joshua interviews Brian O’Leary, Executive Director of the Book Industry Study Group (BISG), the US book industry’s trade organization. Brian and Joshua talk about three areas where Brian sees the industry struggling now and with space for continued growth in the future.

First, Book Publishing is a small industry, so it is important that we leverage our collective strengths to solve problems and become more forward-thinking, using standards and other technological investments to do so.

Second, we are seeing a growing emphasis on rights sales and information sharing, but there are some large technological limitations that still need to be overcome in that area.

Third, the “last mile” of publishing is shifting, both for retail and for libraries, but the industry does not yet have enough data about how books are found, evaluated, and purchased. We need to better understand our market and the path book readers and consumers take.

Transcript

Joshua Tallent
So this week on the BookSmarts podcast, I have the pleasure of talking with Brian O’Leary. Brian is the Executive Director of the Book Industry Study Group. Brian, thanks for joining me.

Brian O’Leary
Oh, it’s great to be here.

Joshua Tallent
Yeah, I appreciate you taking some time. So just before we dive into some of the deeper conversation, why don’t you give people a little bit of the background on who you are, your background in the publishing industry, and what you’re doing at BISG right now?

Brian O’Leary
Well, it’s kind of hard for me to get my arms around. But I’ve been working in publishing for 38 years, which has been broken up into a variety of different things. I started actually in magazine production for TIME Inc. I worked on the weeklies for about 12 years, most directly on Time Magazine, but I also worked on people and the launch of Entertainment Weekly, which was a very fun gig. After that, I spent three years working for a mapping Atlas book publisher in New Jersey, and then became a consultant for book magazine and association publishers for about 18 years. And in 2016, about four and a half years ago, I came to the Book Industry Study Group as its executive director, and we’ve been trying to make a dent in the book industry ever since.

Joshua Tallent
That’s awesome. Yeah, long time in the industry. So you’re a perfect fit for that role in BISG. So let’s talk a little bit about BISG. For people who may not be familiar, can you give us the elevator pitch?

Brian O’Leary
Well, we’re the supply chain organization, which up until about a year, year and a half ago, meant that people said what? Now supply chains, particularly during the pandemic, have become second nature to us. We’re a horizontal organization. So our membership comes from across the industry. It’s everybody from publishers, and manufacturers through to wholesalers, distributors, retailers, libraries, and the industry partners who support them. We try to solve problems that affect two or more parts of the industry, and our core topics are things like metadata, or rights, the supply chain subject codes, which is the BISAC standard that we maintain, as well as workflow. So we’re all kind of broadly based, we don’t lobby on any—we really just try to solve problems.

Joshua Tallent
That’s great. Yeah. And obviously, the industry itself is very broad with a lot of different moving parts. So having one centralized organization that can help bring people together and keep communication lines open and bring about some change is a really good thing.

Brian O’Leary
I think so!

Joshua Tallent
Awesome. So okay, so obviously we could talk forever about BISG. But let’s talk about the future of publishing. You know, you’ve been around for a long time, you’ve been in the industry for a long time, you’ve seen a lot of the back-and-forth, and the pros and cons, and all the good and bad. Obviously, I think both of us are very optimistic about the future. I think publishing has a long way to go and a long path in front of it. I’d love love to hear your thoughts about where you see the industry at right now, what you see the opportunities are or struggles are, and what you think the future is—what the big questions that are on your mind about the future?

Brian O’Leary
Sure. So we’re coming out of a year largely dominated by the pandemic, in which book sales went up. I mean, depending on the segment that you’re looking at, somewhere between 10 and 25%. So it was a pretty good year for book publishing overall. And I think if you look historically, people are continuing to pay for book content in a way that is not necessarily true of other types of media. And in some cases, you’re seeing significant price inelasticity. So you see Barack Obama’s book that came out last November, was put in the marketplace at a price of $45. That’s a pretty hefty price—it was heavily discounted in a lot of outlets, but still, you’re seeing significant willingness on the part of consumers to pay money for book content. That’s really encouraging.

Joshua Tallent
Yeah, and that’s pretty different than what we see with HBO Max and all the other subscription services in other media industries where you’re paying for one thing, you know, one service and getting a lot of content out of it. In the publishing industry it really is more focused on, “we’re going to sell you a book” and that’s a that’s its own independent thing.

Brian O’Leary
Yeah. And if you think about when digital books were first introduced in 2000—well they have a longer history in this, but when the Kindle was first introduced in 2007—there was concern that book publishing not have happen to it what people perceive to have happened to the music business. The music business has had a long road to come back, and it’s still not—it’s maybe just about where to where it was in 2000. Whereas the book publishing businesses has maintained a relative stability in terms of total revenue throughout that period of time. So that’s an encouraging sign. But I think there are, at least in my mind, three issues that are kind of tied together in one big bowl, which is—book publishing for all of its strengths is still a small industry. It’s about, in terms of producer value, $25 billion, in terms of retail, it might be in the range of $40 to $45 billion. A $25 billion industry is probably about 1/7 of the cash flow, or the cash on hand that Apple has. So when you look at Walmart, or Amazon in their annual sales, you know, they’re between $200 and $350 billion. So a $25 billion industry in that environment is, is relatively hard to sustain. We have limited resources. We have—it’s relatively highly fragmented, particularly on the producer side (so publishers). There is relative consolidation in the middle, and increasingly at retail. And it’s not really tech-forward. The business has evolved a lot. Most manuscripts and books are now created digitally first, and then perhaps rendered to print. But it’s not the most tech savvy business going. And it doesn’t necessarily dedicate money at any level, to investing in technology in a way that makes it more competitive going forward. So the question is, how can we leverage our collective strengths to solve those problems and become more more forward thinking?

Joshua Tallent
So what do you think about that—especially in the tech-forward side of things, because obviously, on the BookSmarts podcast, we talk about technologies and publishing and how those can impact positively the whole industry. When you’re thinking about how we need to move toward a more tech-forward perspective, what do you think needs to happen on that front?

Brian O’Leary
Well, I am a fan of standards, not for the sake of standards, but for reducing the cost of implementing new and different technology solutions. And I’m a fan—as you and I’ve talked about in other forums—of API’s, and being able to make it easier to access and share information. Those aren’t things that are native to book publishing right now. And I think as somebody who works in an environment where you’re—not necessarily trying to sell, but to try to implement technology solutions, for the benefit of your customers, as you said, the most important measure is, “Can this help us sell more books?” Generally, we have a fair amount of customization that makes it harder to share solutions that help us sell more books. People are still operating as publishers and, to a lesser extent manufacturers and distributors, with a high degree of of customization and non-standard workflows that make it hard to save money or to take advantage of something that’s new in the marketplace.

Joshua Tallent
Yeah, so standards allow those independent companies to work together without having to be in the same business organization, right? Everybody can be on the same standard and working within the same standard and that helps everyone—a “rising tide lifts all ships” approach

Brian O’Leary
Agreed. And you see some of the things that are outgrowth—so we have a non-standard approach to how we collect retail information, and we depend upon companies like NPD BookScan to be the intermediary there. They’re relatively good at reporting a cross section marketplace, but to get a full picture takes us generally, two months from for AAP to generate its snapshot from its members. And it’s another six months before we’ll get from the end of a given year, so in this case 2020, before we get the full picture for 2021. That’s not a healthy sign for the marketplace. That’s a sign that there are impediments to collecting and managing and analyzing information.

Joshua Tallent
Okay, so we’re small industry, limited resources. What’s the next big thing? What’s another big topic that you are looking at and thinking about challenges for the future?

Brian O’Leary
You know, we’ve spent a fair amount of time since I started in an area that I didn’t really understand fully before I came to BISG. And that’s rights and rights transactions. The US market is the single largest for book sales in the world. You know, in terms of—bigger than China, although that in terms of units China’s now producing more on an annual basis. But still, we have the lion’s share of the intellectual property, and that’s been the case for the better part of the 20th and now 21st century. Ae haven’t done as good a job at managing and monetizing rights. We’re still working through marketplaces that are generally called London Book Fair and Frankfurt Book Fair. It’s a lot of in-person and relationship-driven transactions. And I don’t think that those will go away, that’s still an important part of what the book—how the business operates, and how deals get done, particularly larger deals. But there are lots of different rights transactions that could occur, particularly in emerging markets that will continue to grow and for whom literacy will be significantly increased over the balance in the 21st century. Most projections indicate that we’re going to be approaching 95% to 100% literacy worldwide, by the end of the 21st century, we’re probably in some markets in the region of 10%, or 20%. Particularly if you look at Africa, and some aspects of Asia. There’s going to be tremendous demand for content, and we are in a really good position to provide it, but that’s not going to be an opportunity that we can take advantage of at scale, if we’re doing it only an in-person transactions. So we’ve been working on a few things, at BISG. But I think more generally, the standards for communicating about rights need to be more readily available, and we need to create marketplaces that don’t require you to travel to Frankfurt, or London, or to the United States to meet somebody to acquire the rights. There’s the second piece of that puzzle, which is sometimes you want to acquire rights, you don’t know the publisher, if even if you know the publisher, you don’t know who at the publisher to contact, we need to have a mechanism to be able to break that down and create transactions where both parties don’t know each other.

Joshua Tallent
Yeah, that makes sense. And again, that’s—looking back at that tech-forward approach—you know, the future of publishing requires advances in technology that will help make those things happen. So it makes a lot of sense for publishers to be looking at not only what they can do individually, but also looking at the industry as a whole thinking about the standards for that right data and thinking about the ways of generating that information and delivering it out where it needs to go.

Brian O’Leary
And, and there are there’s a lot of variety in how our rights are both bought and sold. And I don’t I don’t think the standards would necessarily collapse that—there probably will be more rather than fewer different types of deals in the future. But I think that if we can make it simple. I mean, some of the things that we’ve been looking at are pie-in-the-sky at this point—blockchain solutions as an example, maybe that’s not the right solution for us. But it’s essentially we’re looking at mechanisms to put people who otherwise don’t trust one another and don’t know one another, into an environment where a deal can get done. Because that’s the environment in which I think we’ll be able to both grow revenue for right sales, which are typically between 2% and 5%, for a lot of publishers, to a much bigger share of the pie.

Joshua Tallent
Yeah, that makes a lot of sense. And, you know, we’re still competing—like we were saying before—we’re still competing with those other types of media, that are very large industries on their own. So making sure that content is available, but also making it available to those other industries, you know, the media industries that can turn a book into a into a movie or into a TV show, or, you know, take advantage of things in serial ways and stuff like that. There’s a lot of rights of that could be available to expand the content that publishers are creating, as content creators, expanding that into other ways and making more more profit for the companies that are doing it.

Brian O’Leary
Agreed. And the only other thing I throw in there that I think is a good argument for growing our ability to both offer and execute on rights transactions, is that I think it’s a potential tool to combat piracy. Availability goes a ways but there are other aspects of piracy that this won’t help with. But I think that the when a book is not available in a given market, that’s a recipe for somebody making it available, and not not sending money back to the publisher, and ultimately to the author. So we think that this is an opportunity as emerging markets get the money to be able to invest in books and other reading materials that were there with what they need when they need it.

Joshua Tallent
Yeah. That’s great. Okay, so what’s what else are you thinking about? What’s the other big thing that you’re considering as, as the big picture in the future?

Brian O’Leary
Well, I’ve been trying to get my arms around what the role of the—what the last mile looks like between book publishing and consumers. So in specific retailers and libraries, now, retailers can be online as well as in bricks and mortar in person. But there’s this—the market has shifted quite a bit, for both retailing and libraries, over the last decade. The growth of digital content has weakened or challenged a lot of both independent and chain, bricks-and-mortar retailers, and they’ve had to reinvent some aspects of the business model. And libraries, obviously struggling, some publishers more than others, but they’re struggling to figure out how to budget for digital materials at a time when the pricing is pretty high. And sometimes the terms are relatively short—a year-and-a half or two years, or a certain number of of book circulation—26 is a number that’s been used. And that changes the model where libraries had bought physical books, stored them in physical locations, and lent them in perpetuity until the book wore out. Now it’s—you can see a book that’s particularly popular in digital form, and you might need to buy it more than once, even in a given year, if you’re lending it quite frequently. So, trying to figure out how to support those models and how to create effective relationships between publishers, libraries, and retailers is important. But I think as well, we don’t really understand in the book business—because it is a fundamentally a trade business for retail—we don’t understand how books are found, evaluated, and purchased. So, in effect, the attribution model for retailing doesn’t really tell you very easily about the person, you know, the Joshua Tallent who walks into a bookstore, sees something, later buys online, later borrows in the library, maybe becomes a lifelong fan of a particular series, because he found that book first in the library. And trying to get at some of that data so that we better understand what’s happening in the ecosystem, I think is going to be critically important.

Joshua Tallent
Yeah, and that’s changing constantly, too. I mean, this past year, all the move to online sales, because of shutdowns, had an impact on that discoverability and on, you know, on which books were being discovered as a result. So I think that’s obviously going to be a continually changing the animal in the future as well.

Brian O’Leary
Yeah, we participated—we were funder for an immersive reading project at Portland State University conducted—Kathi Berens and Rachel Noorda at Portland State did the work. It was a Panorama Project, or umbrella, and we were just a participant. I’m not prepared today to go into great detail, but one of the things that was really compelling to me about it was that book consumers are also consumers of many other types of media. So they’re gamers, they’re television addicts, they watch cable news, etc., they do a variety of other things. And sometimes they multitask. So they’re watching a movie while they’re reading a book, I don’t know how you do it. But people regularly reported that they were very knowledgeable in that regard. We think that that’s going to become a longitudinal study, and we’ll continue to support it over time. But that’s just one aspect of trying to understand. And that’s really at an at a descriptive level. You know, we’re surveying people, and they’re providing information on what they’re doing. We still aren’t getting at the level of attribution where we can say, okay, somebody walked into a bookstore and bought the book because they heard about it through a video game, or they saw a promotion in a newspaper, or they read a review. Those kinds of things are tough to read right now. And developing and understanding how to get at that data is something that an organization like BISG could fund, but so too, can the industry more broadly.

Joshua Tallent
Yeah, that’ll be really helpful. Being able to see a little bit more about the the impact that those different channels have on the on the actual sales and where people are going.

Brian O’Leary
Yeah, and I think that there’s also a really immersive piece that we—people who buy books tend to buy a lot of books, I mean, and they account for a significant share of that increase in a given year. They also account for a significant share in every year. And I’m not sure that we have a really good way of reaching out to them and supporting them on an ongoing basis. And maybe that’s okay, maybe that’s done through retail outlets, through libraries, through other institutions that we support in a trade environment. But it’s risky when your supply chain is changing, and as you indicated, just in the last year, we’ve seen really big shifts. If you don’t understand what cause and effect is, you could easily find something weakened or, or even eliminated. That’s critical to the overall discovery and consumption of books.

Joshua Tallent
Yeah. All right, Brian, we’re out of time. I appreciate you taking a few minutes and chatting about these things, I think you made some really important points, and hopefully our listeners will walk away with some thoughts of their own about this. You know, we are looking at a need in the future for a more tech-forward publishing industry, digging out of that hole is going to be very important. Growing rights and the importance of rights and figuring out standards and approaches to handling right information, and making sure publishers are able to engage with that to make a bigger impact on the market. And, you know, like you were just saying, the last mile—getting into understanding more about how consumers are finding books, what they’re doing in that process, and the impact of libraries on retail and online and all the other aspects of this, and being able to make decisions based on based on those things. I think all of this is really important.

Brian O’Leary
Well, if there wasn’t something to do, we’d all be bored.

Joshua Tallent
That’s true. That’s very true. All right. Thanks a lot. And thank you for listening to the BookSmarts podcast. We look forward to seeing you again in a couple of weeks with our next episode.


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