The future of (alternative) revenue

Scott Winner
Opinion - Publishing Tuesday, 23rd October 2018

Scott Winner argues that publishers need to find new ways of working with authors, and of generating revenues

In the last 10 years academic, scholarly and trade publishing have all changed dramatically. Digital publishing has become an ever-present reality. Open Access has expanded the reach of research, but impacted subscription income and author payments; the internet, self-publishing, ebook pricing and trade subscription services have eroded the earnings of the written word; and consumers have begun thinking that content should be "free".

Increasingly, publishers and authors are looking at adjacent markets to provide alternative revenue models to unlock their full monetary potential. A few methods on which publishers are starting to focus are profit sharing with authors, advertising and product placement.

Probably the most prevalent revenue restructure is publishers shifting their financial relationship with authors. Historically, publishers have borne far more of the risk for a published work's success through large advance payments, the financial risk of high print runs and marketing costs; in return, they have reaped most of the profits. However, when faced with declines in individual journal and book revenues, payments to authors have reduced, with a shift to profit-sharing arrangements on the back end. To a large degree this is aligning more with models that have been heavily used in media and the music industries.

To allow publishers to maintain their position and be a vital part of the process, they have turned to new ways to engage authors and partner with them on each publication. Publishers can leverage profit-sharing systems that allow both parties to be equally invested in the success of the publication and make sure that their costs are better covered in the process. Once a publisher has recouped the publication costs, both parties share in the profits and future rewards. By giving authors more transparency into the complete process, publishers have seen unified support for the marketing and promotion of the work, and increases in author participation throughout the process as well as a better, more equitable financial relationship.

In scholarly and educational publishing, there has been a strong resistance to advertising, because the validity and integrity of the content is vitally important. There cannot be any suggestion that research and studies are being influenced by companies looking to increase sales through advertising alongside scholarly works. Even the perception of influence through advertising can negatively impact the way in which the research is perceived. Yet advertising can create a powerful revenue stream that would enable a much broader dissemination of vital content to the world without such a reliance on limited government or non-profit funding sources. It is likely scholarly and educational publishers will need to find a way to navigate the ethical dilemmas to keep both high content integrity while enabling some additional revenue streams.

Trade publishing has been somewhat resistant as well, and has had difficulty finding the appropriate way to incorporate advertising into paper works. In fact, there is a long history of advertising in mass market novels - but mostly focused on selling that author's next book or a book by a similar author.

Targeted advertising
Today, with more sophisticated advertising delivery and tracking systems, and digitally delivered content, a more targeted approach to deliver appropriate advertising to the reader can greatly enhance earning potential. Moreover, what content providers are learning is that segments of consumers are willing to watch ads in order to have free content - whereas other segments will pay a premium to avoid advertising, as seen through successful models like Netflix and Spotify.

Another form of advertising that may become more prevalent in publishing, largely due to its success in the movie and gaming industries, is product placement. Authors and editors are wrestling with the idea that by shifting the products and how they describe them in books they can earn additional revenues. It is an area where an artist may decide to make a trade-off from their original idea to use a different brand so that they can earn the product placement revenues. If you look at how social media influencers (YouTubers and Instagrammers in particular) generate revenue though the promotion of brands to their audiences via sponsored content, it is likely a matter of time before we see more lucrative product placements throughout books.

And as brands and advertisers become increasingly savvy at understanding consumers and finding ways to serve up targeted ads and promotions, this methodology may be far less intrusive than ever before.

Publishers will need to adapt their thinking, and establish new sorts of relationships with their authors, forge new types of relationships with advertisers, and work with vendors who will enable them to take advantage of these opportunities and provide transparency in the publishing process to all parties.

Scott Winner is acting ceo of Ingenta.

This article first appeared in the Publishers Weekly/BookBrunch Frankfurt Show Daily.