Book Industry Articles: January 2018
January 10, 2018
In this blog, we have collated a handful of articles we thought would be of interest to our readers. They range from research done by the Harvard Business Review to general trends in technology that will fundamentally change the way we consume and interact with the world around us. Staying up-to-date with the latest research, not only in the book industry but in all areas that impact your business, is essential to stay competitive in the market. On that note, we hope these articles will help you kick off the New Year and set your sights on what’s to come in 2018.
This first article we found in the Harvard Business Review shares some research on why consumers will not pay as much for digital goods. Lots of data and analysis to show what many of us already knew—the physical book is here to stay for a long time!
Customers Won’t Pay as Much for Digital Goods — and Research Explains Why
Article by: Carey K. Morewedge
Every day, we interact with two kinds of goods. The first kind is acquired and shared instantly, is weightless, impervious to damage, easy to customize, and impossible to lose. Even a child can carry thousands of it at a time. The second kind requires travel to acquire or share, is difficult to alter, cumbersome, easily lost, and can be damaged in a myriad of ways. Only a few of its kind can be crammed into a single bag. Despite the many advantages of the first kind –– digital goods — companies find again and again that people value and are willing to pay considerably more for the latter –– their physical counterparts. Our research aims to explain this puzzling behavior.
Modern life has been transformed by the widespread digitization of many consumer goods, from books, to magazines, newspapers, music, movies, airplane tickets, and calculators. Digital photographs, first commercialized in 1990, are now taken more often than print photographs. Yet, despite the many advantageous features of digital goods, physical goods appear to retain greater allure. Print books are still the dominant format, Blu-ray and DVD sales continue to grow, as does demand for physical prints of digital photographs people already own.
We began exploring this paradox on a bright summer day in Boston, by offering tourists on the Freedom Trail a souvenir photograph with an actor dressed as Paul Revere. We did not charge for the photograph, but asked each tourist to make a donation to the historical group maintaining Old North Church in exchange for it. Unbeknownst to participants, they were randomly assigned to one of two groups. One group received an instant digital photograph immediately via email, the other group received a still-developing Polaroid picture. While tourists in the first group chose to give an average of $2.29, remarkably, tourists in the second group gave $3.39 — 48% more for the Polaroid that they could touch and hold.
We find in our research that these tourists are not unique. Despite the many advantages conferred by digital goods, comparable versions of physical goods are valued more. When a physical good such as a paper book, a printed photograph, or a DVD is digitized, it loses some of its value to buyers. Our experiments suggest that the key driver of this value loss is not the resale value of the good, or how much it costs to make, or how long it can be used, or whether it’s unique or popular. We find that the key difference is that digital goods do not facilitate the same feeling of ownership that physical goods do.
The very feature that imbues digital goods with their unique abilities—their immateriality—is also what impairs our ability to develop a sense of ownership for them. Because we cannot touch, and hold, and control digital goods in the way that we interact with physical goods, we feel an impaired sense of ownership for digital goods. They never quite feel like they are ours, and when we feel that we own a thing, we psychologically inflate its value. As a result, digital goods don’t enjoy this premium we extend to things that we own.
In additional experiments we ran with online samples and business students, we found that the tendency to value digital goods less than physical goods extends to a variety of products, from popular films to novels to course textbooks. We observed the same effect whether we measured value by allowing research participants to pay whatever they wanted for goods, having them report the most they were willing to pay, or by measuring their likelihood of buying a digital or physical copy of a good when both were sold at the same price. The greater value ascribed to physical than digital goods persisted when we accounted for people’s estimates of production costs and retail prices. It even held for goods with no resale value. Plausible alternative explanations, such as physical goods lasting longer or being more enjoyable to use than digital goods, also failed to explain this difference.
Only a difference in the extent to which people feel a sense of ownership for digital and physical objects explained their preference for the physical format. Indeed, the value gap disappeared for goods participants rented and expected to give back. Students were not willing to pay more for a physical than digital textbook they would return at the end of a course.
This difference in ownership also allows us to identify when people will value digital goods no less than physical goods. Because ownership entails a link between a person and an object, we found the gap in their value increased when that link was easy to form and disappeared when that link was hard to establish. Participants valued a physical copy of The Empire Strikes Back more than a digital copy, for instance, only if they considered the Star Wars series to be films with which they strongly identified. Participants who weren’t Star Wars fans valued physical and digital copies similarly.
We think that the difference in ownership that people feel for digital and physical goods may be due to a weaker sense of control over digital objects. People feel ownership for a good to the extent that they can touch, hold, and control it. Indeed, we found that people with little need to feel in control over their environment reported no preference for physical relative to digital goods, whereas people with strong need to feel in control reported a substantial preference for physical relative to digital goods. Participants in one experiment reported how much they would be willing to pay for a new copy of a book by their favorite author, how much they anticipated feeling ownership for that book once they acquired it, and their need for control – an index of the extent to which a person needs to be able to exert control over his or her environment. We found that participants with a higher need for control were most likely to believe they would feel greater psychological ownership for digital than physical copies of the book, which in turn lead them to place a greater value on physical copies than digital copies of the book, even when their estimates of its retail price and production cost were included in the statistical model. Perceived ownership and valuation of physical and digital books did not differ as much for participants with a lower need for control.
Our results both identify the source of value lost through digitization, and how goods can be designed to recapture this lost value. Digital goods can be made to visually resemble their physical counterparts — using skeuomorphism — like Apple’s display of digital books on a virtual wooden shelf in its iBooks application.
Ownership may be achieved by increasing users’ feeling of control through touch interfaces, and customization opportunities that involve users in the production or design of the product. In this vein, our findings foreshadow a looming friction in the adoption of autonomous devices such as self-driving cars. Just as modern automotive purists reject automatic transmissions, which are technically superior but allow them less control than manual transmissions, people may devalue autonomous devices that require little or none of their input. This lack of physical input is likely to dampen their feeling of being in control of autonomous devices. As a result, they should be less likely to establish a feeling of ownership for autonomous devices, and those devices will not benefit from the value premium extended to goods for which people feel psychological ownership.
Finally, our findings provide a window into the different perspectives that people apply to the theft of physical and digital goods. Because perceived ownership is impaired for digital goods, people may not feel that their piracy causes the same harm to their owners as does the comparable theft of physical goods.
The digitization of content frees us – and the environment – from the burden of accumulating material objects for our information and entertainment. Despite the considerable gains in consumer welfare that digital goods thus provide, our preferences are not solely determined by how useful or practical we find these innovations. Our research demonstrates how new technologies can collide with the architecture of cognition, and the cognitive taxes that the mind can impose.
In this next article, the editors at Scholastic reveal what they believe will be the biggest trends in children’s publishing in 2018. You’ll want to read this as they’ve made predictions in the past and often get it right!
Trends in Children’s Books: Five 2018 Predictions from Scholastic
Article by: Porter Anderson
In a series of five points, the editors of Scholastic have set out predictions of what they think will be the top trends in children’s books for 2018:
1. More books will highlight strong female characters
2. Kid-friendly nonfiction will continue to grow as a draw
3. “Iconic series and characters” will return with new stories
4. Fantasy worlds and creatures should maintain popularity
5. Activity books will be engaging, especially in the STEM arena
In a prepared statement on the newly released round of predictions, Scholastic Book Clubs president Judy Newman is quoted, saying that the company’s editors gain deep insight into their market and its potentials, not least because they must “feature a wide range of choice all year long in our monthly, in-classroom flyers.
“Their expertise,” she says, “helps more children find just the right book at the right time to encourage a love for independent reading.”
“As we predicted last year,” she says, “kids gravitated toward books that made them laugh—as seen with [author-illustrator Dav Pilkey’s] Dog Man, which has appeared for more than 52 weeks on The New York Times bestseller list to date and was also one of our most popular titles in Scholastic Book Clubs.
“We look forward to seeing how our predictions will play out in 2018 as more families take time to read aloud together—and laugh together—and work closely with their children’s educators to build a home-to-literacy connection through books.”
Not all has been laughter this year for the company, however, which is generally recognized as the world’s largest publisher and distributor of children’s books.
In the most recent earnings report, as covered by Publishers Weekly’s Jim Milliot, “Sales and earnings fell in Scholastic’s second quarter ended November 30, compared to the second quarter last year, but company chairman and CEO Dick Robinson said the company remains on track to hit its financial targets for fiscal 2018.
“Revenue declined 4 percent from a year ago, to $598.3 million, and operating profit dropped 4 percent, to $107.2 million.”
Among the house’s most critical difficulties has been the lack of new Harry Potter titles, accounting for an 18-percent fall in trade sales in the second quarter, Milliot reports. In fact, taking the first two quarters of Scholastic’s 2018 fiscal year together, sales fell 13 percent from the same timeframe in fiscal 2017.
Let’s look at some of the commentary offered by the company on each of its five predictions for 2018. In each case, Scholastic references titles not only from its own catalogues but also from those of other publishers. Our listings here are selected representative books mentioned.
Strong Female Characters
“In addition,” the guidance says, “many new nonfiction titles will explore stories about notable women who made history, as well current changemakers that continue to advance social progress.”
In a list of representative titles, Scholastic lists books not only from its own catalog but also from Simon & Schuster and Hachette, among them:
- Marley Dias Gets It Done: And So Can You (Marley Dias, Scholastic)
- This Little Trailblazer: A Girl Power Primer (Joan Holub with illustrations by Daniel Roode, Simon & Schuster)
- Malala’s Magic Pencil (Malala Yousafzai with illustrations by Kerascoët, Hachette)
- Princess Truly in My Magical, Sparkling Curls (Kelly Greenawalt with illustrations by Amariah Rauscher, Scholastic)
- You Should Meet: Women Who Launched the Computer Age (Laurie Calkhoven, Simon & Schuster)
- Give Bees a Chance (Bethany Barton, Penguin Random House)
- Chasing King’s Killer: The Hunt for Martin Luther King Jr.’s Assassin (James L. Swanson, Scholastic)
- Finding Gobi: Young Reader’s Edition: The True Story of One Little Dog’s Big Journey (Dion Leonard, adapted by Aaron Rosenberg)
Iconic Series and Characters
“This trend continues in children’s books as readers revisit memorable characters like The Boxcar Children, The Magic School Bus and Jigsaw Jones, with brand new stories as these worlds expand with new characters and unexpected situations.”
- Motor Goose: Rhymes That Go (Rebecca Colby with illustrations by Jef Kaminsky, Macmillan)
- The Boxcar Children: Great Adventures (Gertrude Chandler Warner, with illustrations by Anthony VanArsdale, Albert Whitman & Company)
- Sink or Swim: Exploring Schools of Fish (Judy Katschke, Scholastic)
“Unicorns, narwhals (yes, we know they’re real) and dragons,” write the editors, “will lead the way this year with engaging storytelling that explores the beauty of being unique and staying true to oneself. These stories come with a healthy dose of humor–the number one thing kids look for when reading a book for fun.”
- Thelma the Unicorn (Aaron Blabey, Scholastic)
- Nella the Princess Knight (Christine Ricci with Alessandra Sorrentino’s illustrations, Random House)
- Narwhal: Unicorn of the Sea (Ben Clanton, Penguin Random House Canada Tundra Books)
Scholastic’s editors, in their 2018 predictions, seem to be aligned with this direction. “The call to educate children about STEM-related activities grows, and as a result, more book titles will feature special coding activities, scientific experiments, and more,” they write.
“Many books will be paired with popular characters and franchises to attract more readers to the world of STEM.”
Examples of this direction are the focus, in fact, of Scholastic’s Klutz series which, for example, in the first instance below, is a do-it-yourself night-light kit with transparent punch-outs that hcildren use to create 3D scenes that glow in the dark.
- My Little Night Light ‘Idea Book’ (Klutz editors, Scholastic)
- My First Learn To Draw (Melissa Webb, Silver Dolphin Books)
- CoderDojo Nano: Make Your Own Game: Create With Code (Jurie Horneman, Scholastic)
Although this last article from Fortune isn’t about the book industry, the technology trends they are predicting will have an impact on each of us in profound ways in 2018 and beyond.
4 Technology Trends That Will Transform Our World in 2018
Article by: Jay Samit
Original article: http://fortune.com/2017/12/26/4-technology-trends-2018/
Predicting the future requires hubris, and it should therefore be met with more than a terabyte of skepticism. In past years, I’ve made some calls that have proved prescient like predicting way back in 2011 that social media would determine the U.S. presidential election. Meanwhile, some took decades longer than I had foreseen such as my 1992 prediction that this new thing called the Internet would lead Hollywood studios to merge with telecommunications companies.
Over the years, I’ve learned that the best way to predict the future is to hang out with the people creating it. When you work with a top consultancy and have leading technology innovators as clients, it’s pretty easy to recognize trends that have the greatest potential impact.
Here are my top four tech trends for 2018:
1. IoT becomes BIoT
The biggest mistake most prognosticators make is underestimating the potential for fast growth in our hyper-connected world. Automobiles took time to catch on because would-be drivers had to wait for roads and gas stations to be built.
But today’s disruptive innovations rely on existing infrastructure for mobile devices that puts most companies just a few clicks from billions of consumers. One of those is the Internet of things (IoT), which involves adding smart sensors to connected devices so that users can do things like ask Amazon’s Alexa digital assistant to turn off the lights or order a pizza.
But blockchain, one of the underlying technologies for the hot cryptocurrency bitcoin, can make IoT devices even more useful. It creates a digital record across hundreds or thousands of computers, vastly reducing the risk of hacking.
Combining IoT with blockchain —or BIoT—ushers in a whole host of new services and businesses. For example, BIoT can be used to track shipments of pharmaceuticals and to create smart cities in which connected heating systems better controls energy use and connected traffic lights better manage rush hour.
In 2018, companies will begin to use Application Programming Interfaces, or software used to connect different databases and computer services. Combined with the blockchain Internet of things, it will be as easy to get data from sensors in a warehouse as accessing websites on our mobile phones. When manufacturers, retailers, regulators, and transportation companies have real-time data from sensors imbedded on products, trucks and ships, everyone in the distribution chain can benefit from insights that they were previously unable to get. With BIoT, companies and consumers can also be assured that their most valuable data on the blockchain cannot be hacked.
2. The fintech renaissance
While bitcoin and blockchain were grabbing the headlines in 2017, social and mobile payments have fundamentally changed the financial markets. In China, mobile payment volumes now exceed $5 trillion annually.
All aspects of the payments chain are open to disruption as blockchain speeds clearing house functions while smart contracts handle settlements. In 2018, look for biometrics such as facial recognition, voice ID, and fingerprints to help make shopping far quicker —by eliminating the need to swipe a credit card at checkout, for instance. Instead, you will be able to verify your identity for a merchant scanning your eyes with your smartphone, in what’s known as a retinal payment. A bold clairvoyant could even predict that some major retailers will hop on the cryptocurrency bandwagon and issue their own secure currency next year.
Fintech will likely also become greener in 2018. With cryptocurrencies reaching over $300 billion in total value, there is now a financial incentive for investments into quantum computing, which involves using the behavior of energy at a subatomic level to process computing functions at a billion times faster than today’s microprocessors.
By some estimates, mining today’s cryptocurrencies, such as bitcoin, requires more electricity annually than the amount of energy used in 159 countries. With cryptocurrency’s carbon footprint rapidly growing, quantum computing has the potential to greatly reduce the estimated 28TWhs of electricity consumed by all of the current computers processing bitcoin.
Analysts now anticipate that banks will derive over $1 billion annually from blockchain-based cryptocurrencies within the next two years as traditional financial institutions start treating cryptocurrencies and other digital assets similar to traditional fiat currencies with more efficient payment systems, loan processing, and credit instruments. Going green by using less energy to create bitcoins, will translate into earning more green.
3. Augmented reality goes mainstream
Before smartphones existed 10 years ago, most people would consider spending five hours daily staring at your phone as crazy. In 2018, the bent-neck trend will start to reverse itself.
The mobile game Pokémon Go has unleashed a billion-dollar demand for augmented reality entertainment, and major brands are taking notice. Thanks to the introduction of affordable augmented reality glasses, our phones will remain in our pockets and Heads Up Displays (HUD) will improve how we work, shop, and play.
HUDs, best known today as the instrument gauges that fighter pilots monitor on their visors or windshields, will become a standard in consumer eyeglasses. Imagine walking down the street in a foreign country, for example, and having all of the store signs instantly translated into English thanks to your trendy sunglasses.
AR will customize in-store experiences with mannequins that match your body type and display enough virtual inventory to rival any online site. Merchants will create AR experiences with their packaging so that demonstration videos can appear when you look at the product on the shelf or celebrity spokespeople can magically stand in the aisle to pitch the product. Virtual pop-up stores can be built to appear anywhere that crowds are gathered (in a stadium, a busy street corner, or even inside a subway). These non-brick and mortar retail locations will bring new opportunities for merchants to create engaging shopping experiences anywhere with accessible bandwidth.
Li-Fi, a new light-base wireless connection with data speeds 100 times that of Wi-Fi, will bring high-definition virtual objects into stores. With Li-Fi and AR, consumers can see limitless virtual inventory in store, at scale.
With just a wave of your hand, a car salesperson can change the model, color, and customized features of the car “sitting” on the dealership’s showroom floor. Combining real and virtual objects can enhance experiences for all out-of-home activities. Sports stadiums will be brought into the 21st century with personalized HUDs of players on the field. Imagine watching a live football game in the stadium and seeing personalized stats floating above the fantasy sports players you follow. When watching sports from home, AR has the potential to bring the excitement of life-size boxing matches into your living room. The real promise of AR is to bring people the information they need without having to ask for it.
For many, 2018 will be the start of living an augmented life.
4. 2018 is the year of the bots
We all have gotten used to speaking with bots whenever we call to make airline reservations or to confirm our bank account balances. The use of natural language bots will expand from use as automated customer service agents to become routine for daily living.
Home bots will do more than just respond to requests, to being able to provide timely information such as, “It’s time to take your medicine.” You may even feel like Don Quixote as mobile bots become dedicated Sancho Panza servants—always at the ready and by your side.
Imagine a bot whispering in your ear “don’t make that purchase or you will be over your credit limit” or “your parking meter expires in two minutes.” Bots will help with the children, act as financial investment advisors, and be an omnipresent value-add from the brands you trust. With phones staying in our pockets, businesses will likely spend more on creating chatbots in 2018 than on apps in an effort to better serve their customers.
There’s always room for the future to unfold unpredictably
As timely as I believe these four predictions to be, the pace of disruption can be slowed by a host of issues, including cyber security, government regulation, and, most importantly, consumers’ ability to adapt and accept change. In this era of endless innovation, the only prediction you can be 100% assured of is that future will look very different from today.