Auckland-based author-Gordon Dryden comments on The Financial Times article, A Page Is Turned, published on this blog earlier today:

Hopefully, every New Zealand publisher and author will read, and re-read, this thoughtful piece by David Gelles and Andrew Edgecliffe-Johnson.

Of all the world’s old technologies, the world of the mass-produced books is the last to be changed fundamentally by the online global, digital revolution that started almost 20 years with the World Wide Web, soared with the launch of the Netscape browser in 1995 and Google from 1998. Since 2000 it has exploded.

In 2000 only half the people on earth had ever placed a phone call. Only 12 percent owned mobile phones. Today well over 4 billion are registered cellphone owners—one revolution that has bypassed completely the previous non-digital age. More than 700 million of those mobile phone users are in China. Around 300 million of them are learning English — mostly through cellphones.

And who doesn’t know that eBay, Amazon, Wikipedia, YouTube, Apple’s iTunes, iPod, iPod-touch, Facebook, Skype, DoCoMo (in Japan), CyWorld (in Korea) and Alibaba and Foxconn (in China) have used the new technologies to completely reinvent entire industries?

Since the invention of the transistor and then integrated circuits in the 1950s, probably the most disregarded technology theory in history — Moore’s Law (that the number of transistors we can pack on to a silicon chip will double every eighteen months with no increase price)—is changing everything. Sure we sat up and marvelled at the first transistor radios, even the early 1970s personal computers. But from Google on (and its incredible impact on library research) Moore’s law has pulverised production and distribution costs.

When 32 transistors on a chip doubled to 64, the extra-powered transistor radio was appreciated. But now, when the doubling goes from 4 billion to 8 billion, that’s real revolution.

And, of all industries, the two I am personally involved in (education and book publishing) have been the slowest to change. If an imagined Rip Van Winkle awoke today after sleeping for 200 years, the entire world would seem different: instant electricity, cars, motorways, giant jet aircraft, satellite television. The only two things he would recognise: the printed book and the school classroom (only the slate has gone and the blackboard is green).

Clayton Christensen, the Harvard Business School expert in “disruptive technologies”, in 2009 applied his research to schooling, in his book “Disrupting Class: How disruptive innovation will change the way the world learns.” By 2012, he forecasts, 25 percent of all high-school-level courses (and above) will be available on online. By 2019: 50 percent. And in this book, and his previous ones, he points out that all the big disruptive-economy changes have been driven either overwhelmingly by new start-up companies and industries or by those companies sensible enough to set up completely new divisions to explore the new dominant growth-trends. All the list above, from eBay to Alibaba, fit into those categories: most of them completely new companies. http://compassioninpolitics.wordpress.com/2009/09/04/clayton-christensens-disrupting-class-how-disruptive-innovation-will-change-the-way-the-world-learns/

Apple, Amazon and YouTube (now part of Google) are the simplest existing “routes to the future” that book-publishing and distribution can choose from:

Apple, with its complete reinvention of the music industry: instead of music fans being forced to buy an expensive long-playing album at a retail shop to play their latest favourite tune, now they can download virtually an tune they, instantly, from the Apple iTunes online store, for under US $1. Result: iTunes is now the world’s biggest music retailer. And, most important, bands, musicians and singers can now sell their own productions through iTunes direct to millions of fans around the globe. And Apple’s iPod music player is, with the possible exception of the mobile phone, the most profitable new product ever launched.

Amazon, of course, had no background in book selling when Jeff Bezos founded it in 1994. Significantly, when he analysed the possible commercial impact of the Web on various products, and concluded that the book industry was the most vulnerable. And why? Because, particularly in the United States, the book publishing industry was hopelessly inefficient. Now 1994 happened to be the year that I first released a New Zealand book in the United States. And what I discovered about the US industry horrified me, as an author and a publisher. No. 1 horror: the mark-up structure; the “accepted” recommended-retail-price of a book was TEN times the direct production cost (ie, the cost of printing). That’s the major reason Bezos chose books as a “product” class (other “service” industries, such as banking with ATM machines and the travel industry with Travelocity and then national agencies, were already starting digital services). No. 2 horror: cash-flow, or lack of it. Unless a small publisher and/or author was fortunate enough to have a block-buster and win big orders from the handful of retail chains, books could be distributed to all non-chain retail stores through one of the two main national wholesalers. And they demanded all books on a no-risk (to them) sale-or-return basis, on six-month-credit terms. Thus, a day or two before the end of those six months, all unsold books were returned to the publisher for a full credit (even for those with damaged covers). No wonder Amazon is now America’s biggest book retailer. The incredible mark-up structure is sufficient to enable Amazon to slash its margins so that, if buying, say, three hard-cover books at the same time, I can (as I did last month) order three books from Amazon US on a Friday and receive them, urgent airfreight, to my home in Auckland on Monday, at cheaper than I can buy them here in many retail shops (especially those selling well above the recommended retail price).

YouTube is, of course, revolutionizing the video industry, with billions of “click-views” every month. The big beauty: any competent video operator (ie, an author) can shoot and edit a video (Apple’s iMovie software enables even six-year-olds at New Zealand schools to edit great videos, often to professional standards), and have it available for viewing almost instantly on YouTube—and on one’s own Website. As a publisher who tries to play ball with New Zealand bookstores, I now sell more books internationally each day from click-throughs to one video on our Website than any other source: http://www.send1keep1.com/tlw/bgo/

Now YouTube and Apple iTunes are both branching out as online universities: YouTubeU and iTunesU.

And of course Amazon with Kindle and Apple with iPad are at the starting gates for the digital-book distribution revolution, with Google, Amazon, Sony (and, I predict, the Chinese) ready to climb aboard.

But add both to Moore’s Law — and the other disruptive and converging technologies (3D graphics and textbook and travel animations; user-generated free content, often through online competitions; the online co-created textbook revolution launched by the Californian Department of Education at an estimated saving of US $400 million a year; much faster broadband access; free Skype video conferencing; and joint ventures between cellphone and telecom networks — and imagine all these factors growing exponentially: when in the next three years four biilion transistors on a microprocessor can grow to 16 billion.

Then think of the five big global music companies that did nothing about the Napster music free downloading piracy movement in 1999 except take legal action . . . and nothing happened until Apple’s Steve Jobs found a sensible alternative.

At its simplest, new digital technologies and instant communications are tearing “transaction costs” to pieces. And those twin factors are about to completely disrupt every industry with enormous markups and where its products or services can be digitized and sold on line.

Books are the classic example — along with daily newspapers (where 80 per cent of advertising revenue in most markets comes from classified advertising) — and are still make up the industry most facing complete disruption and reinvention.

Now I have great sympathy with authors, publishers and book retailers. In New Zealand I have, at various times, filled all three roles.

But times of great disruption are also times of great innovation: from everyone involved.

And if any industry should know that, it should be the book industry. Because it is there where the mass-produced printing revolution started over 550 years ago.
Then it took almost 200 years for “education” to catch up — and “the church” took even longer.
Today we don’t have the luxury of time.

Now I’m not the expert on writing and publishing fiction.
But I do have some background in non-fiction, especially as it applies to lifelong learning. And this I know about that combination:

1. Chris Anderson, the author of “The Long Tail” and its follow-up, “The Longer Tail” (Random House Business Books 2009) is right: everyone with expertise, talent and passion can now, through the Web, sell that talent online to profitable niche markets around the globe. Generally such knowledge has been communicated though non-fiction books.

2. That future is digital, multimedia, interconnected and almost certainly involved converging skills (so creative partnerships are needed).

3. Many new business models are needed to make that happen.

4. New Zealand has great expertise in inventing such models: as we can see with the House of Travel, TradeMe, Biozone (New Zealand online biology courses), blackmarket and vineonline (internet wine selling), NextSpace and Right Hemisphere (3-D visualisation), Peter Jackson and Richard Taylor and their Wellington (world leaders in movie animation) and with Eftpos and online banking. And, above all, with the incredible way in which well over 80 of New Zealand school students have now been trained to use new skills in interactive technology.

5. We also have a world-leading daily book blog.

And that is not a bad starting point.