The Outlook for Publishers in 2023
The Roaring 20s–Not!
After a turbulent 2022, there is little relief in sight as the inflation clouds gather with the looming prospect of a recession. We are faced with uncertainty, and at this point, it’s a brave soul who predicts much better for 2023. The layoffs in high-tech, significant cutbacks in Amazon orders, and merchandising changes at Barnes & Noble do not bode well. Globally, there is a steady increase in raw material costs, energy, and wages. And with war in Eastern Europe, concerns about potential actions by China against Taiwan and global supply chain constraints, we may well see an escalation in protectionism, and a return to more on-shore book production in the near term.
The pandemic leaves us with permanent business changes that are beneficial, but in the main we are overwhelmingly cautious and concerned with the “here and now” and not so much with the future. In addition, sustainability is a growing issue and privacy protection laws are lurking. Much depends on the new Congress, but increased regulation may be comforting for consumers but not so much for business.
B2B publishers are anticipating a challenging ad market that will likely continue through 2024. 2022 has been a transitional year for Trade publishers. Revenues have shown a drop of about 9% from 2021, which had benefited from increased reading habits during the pandemic. US Trade over the last 5 years has been flat, buoyed by a boost from audio. In the religious sector, congregations are picking up, albeit still in a hybrid mode – on site and virtual.
That’s where we are today. None of this is a recipe for a boom year in 2023. So much of what publishers do in 2023 will be determined by a combination of the broader economy, channel partner behavior (i.e. Amazon), and at best, it looks like a challenging year for all sectors of the book publishing industry.
Consumers are dedicated to their mobile devices, and Americans spend far more time on mobile digital media than reading books. Much of what we consume is informed by social media, and with the chaos at Twitter, there is an increase in concern about safety and validity. Mobile-first is a good mantra here.
Amazon controls almost 50% of the eBook market, and with the entry of Donald Trump into the 2024 election, there will again be an elevated demand for political books. BookTok and Bookshop.org will continue to have influence and beleaguered small bookstores will still enjoy some of the profits from the latter. Consolidation of the Big 5 will probably be on hold for the foreseeable future after Justice blocked the PRH/S&S merger. Audio will continue to thrive, and we will see more competition from the big players. Consumers will demand a healthier public debate on privacy and social media but don’t expect Congress to do much about it in 2023. The question is, will consumers continue to buy?
As we recover from the closet of the pandemic, there is a clamor for community on all sides. Publishers understand this and will expand their efforts to build audiences with their readers through podcasts and personalization of content, tailored to individual preferences. Highly targeted digital content based on a subscription model will become even more prevalent. The more publishers understand their audience, the more successful they will be, and they will increase their efforts to do so. All of this will elevate the need for better use of technology.
As trade publishers drive to re-establish the relationship with their readers, hitherto relinquished to Amazon, the use of technology will become a competitive differentiator. 2023 will see more publishers seeking to take this relationship back by implementing Direct-To-Consumer (D2C) sales and marketing efforts through their own active website sales. This has been underway for some time, but 2023 will see more of this commitment. Consumer cash follows ease-of-use. Website design, speed and infrastructure are at a premium for publishers. Consumers expect content to load just as quickly on their mobile devices as it does on their laptops and publishers will continue to support it.
Many publishers have already made the move to cloud services away from on-premise IT solutions and that will deliver more extensive use and security of data, better disaster recovery and more skilled resources to enhance their drive to build community with readers. The industry is already committed to greater use of AI and machine learning in publishing processes as the shift to digital publishing continues, and that technology will pay a bigger role in 2023.
For religious publishers, the nature of worship changed during the pandemic. With fewer people gathering for worship in person, there was a reduction in the need for church supplies. While worship attendance is up from the time of pandemic closures, it hasn’t yet rebounded to pre-pandemic levels in most congregations. For this sector, technology will provide an early warning system to reduce operating costs. They will be concerned about distribution and fulfillment options to bring those costs down and will be focused on aggressive cash management. Discoverability is critical to all sectors in the age of the “thumbnail cover” with the continued struggles of bookstores especially in, but not limited to, the religious specialty market. So there will be an emphasis on how to get to a more rich metadata status, and how to keep it there.
Technology will help publishers comply with threatened regulation on PII data privacy. In addition, publishers will engage their supply chain partners in embracing sustainable business practices, and the shift to remote work and less travel will enhance our sustainability contribution.
In short, 2023 will be a year of Sustainability. It’s time for the industry to recognize real consumer demand and print only the quantities that retailers need, instead of the model we commonly use today. Most of the publishing industry has been built on overproduction, based on the false notion that manufacturing more books brings down the cost per unit, regardless of whether those books have been sold. This practice is clearly unsustainable, as evidenced by the 320 million books the US dumps in landfills annually. knk has blogged on this. We have the technology. Publishing must reinvent itself and momentum is building.
The adoption of “Sell-First-Print-Later” technology, as epitomized in Print-on-Demand strategies will become more attractive as publishers hesitate to convert cash into finished goods that are not needed by consumers. This will eliminate much of the waste at the back end and reduce the excessive number of “book-miles’ that we incur today. In inflationary times, cost of production is a Key Operating Statistic (KOS) and the industry would be better served using a total cost of ownership model to include end-of-life book costs.
One of the lasting consequences of the pandemic has been recognition of our need for community. We are all suffering from Zoom-fatigue. This is seen in the surge in travel and the enthusiasm that we are showing for live events and social interaction – the human need to gather is strong. 2023 will be a year in which publishers take advantage of this need and continue to invest in developing reader communities and events that build brand loyalty, and hence sales. As publishers collect more first-party data from their own D2C channels, they will enhance their brands by personalizing the experience for each individual. They are doing this with podcasts and content platforms. Sadly, for the consumer, as visits go up, so will the paywalls.
Digital publishers will make greater use of SEO. Social Media will continue to be important with the ascent of BookTok and LinkedIn, to the continued detriment of Facebook and Instagram as industry marketing tools.
In summary, publishers will find ways to reinvent the supply chain to contain costs and improve sustainability, and to expand the notion of “the book” to deliver new options for content delivery to a wider audience than just readers. Spotify’s acquisition of Findaway in June 2022 tells us that companies will create new models to scale content, and leading publishers will do the same.
Discoverability continues to be an issue and all technologies that enhance publishers’ ability to generate and maintain an enthusiastic audience through better metadata and Customer Relationship Management (CRM) will be a valuable tool in 2023 and beyond.
The need for community is a natural backlash from the pandemic and publishers will monetize this most human of motivations. If there’s anything we’ve learned from being cooped up for most of the last three years, it’s that the human connection is of paramount importance to us all. However, the balance between work and recreation time changed during the pandemic and we seem to be trending now away from the “work” side as we recover. Unfortunately, an extended period of inflation and recession may well push that indicator back towards the “work” side for many of us. 2023 will answer that question and many more.
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