The Inevitable Shift to Cloud-Based Book Publishing:The Next Step in the Digital Transformation of BookPublishing May be Closer than You Think

Ted Hill

Published online: 19 January 2012

� Springer Science+Business Media, LLC 2012

Abstract Software used by book publishers to manage contracts, royalties, pro-

duction workflow, sales, and marketing have begun to migrate from relatively

closed systems that are internally maintained, to cloud-based platforms on the Web.

Business drivers behind this migration include a highly dynamic market for ebooks

and other digital products, pressures to cut costs, and a shrinking ROI horizon for

technology investments. While questions remain as to how quickly the transition

will take, the possibility of cloud-based book publishing promises to change the

nature of publishing infrastructure and with it the role of the IT professionals in

publishing.

Keywords Publishing � Publishing technology � Publishing IT �Publishing systems � Publishing infrastructure � Digital publishing �Digital transition � Digital transformation � Cloud publishing � Cloud-based book

publishing � Cloud infrastructure � Software as a service � SaaS

Background and History

The concept of hosting business applications on a shared platform can be traced to

the early 1960s when mainframe computer manufacturers such as IBM offered

customers the ability to share time on their machines as an alternative to buying and

maintaining these sophisticated systems on their own. One clear benefit of

‘‘timesharing’’ was that it opened up access to very expensive and complex

technology infrastructure to companies that would otherwise not be able to afford it.

Over time, as the cost of buying and maintaining business systems declined, more

and more companies found it to their advantage to own and maintain their own IT

T. Hill (&)

THA Consulting, 39 Sterling Place, Brooklyn, NY 11217, USA

e-mail: ted.hill@thaconsulting.com

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DOI 10.1007/s12109-011-9249-9

infrastructure. The benefits of on-premises IT infrastructure were also clear: many

of the companies who exercised tight control over their technology infrastructure

were able to gain a competitive advantage from being early users of new software

capabilities or from customizing more widely used applications to support unique

aspects of their business.

Starting in the late 1990s, however, the growing reach and stability of the Internet

supported a new model for software infrastructure in many ways reminiscent of the

old timeshare model. Marked by the advent of new products like Salesforce.com, the

business of providing computer-based services to customers over a network was

often referred to as the ‘‘hosted’’ or ASP model (for ‘‘Application Service Provider’’).

In this model, business applications reside on servers owned and maintained by an

external service provider (the software vendor or a third party). These applications

were made accessible to business users who accessed the product via a web browser

and paid for them on a sliding scale based on usage. This is commonly referred to as

‘‘Software as a service’’ or SaaS. Once again, the benefits of shared services were

clear to many business users. They could gain access to the latest industrial-strength

software applications without the high up-front cost of deployment or the ongoing

costs of a staff of technicians to maintain and support them.

In this article I address the technology infrastructure and software applications

that are more or less unique to book publishing—the publishing-specific ‘‘stuff in

the middle’’ between productivity tools and more general business management

applications.

The Rise of Publishing-Specific Software

Over the last 50 years, book publishers have developed a number of software

applications that derive from business practices more or less unique to the creation,

distribution, and sale of printed works. First and foremost, book publishers are faced

with the significant logistical challenge of managing a very large number of new

products every year and distributing them to an equally daunting number of

commercial accounts. In the late 1960s the rapid expansion of retail space offered

by the rise of the first two national book chains, Walton and B. Dalton, was

accelerated by the mass market distribution into newsstands and supermarkets

enabled by the first national book wholesalers Ingram and Baker & Taylor in the

early 1970s. Growing sales transformed book publishing into big business. Small or

mid-sized houses, which may have produced several dozen titles a year (primarily in

specific market niches such as popular fiction in hardcover, or general reference, or

mass market paperbacks) were assembled into corporate conglomerates that now

released hundreds or thousands of new titles every year across a wide variety of

formats and markets.

It should come as no surprise then that some of the first publishing management

tools were ERP systems (for ‘‘Enterprise Resource Management’’) built to handle the

growing scale and complexity of these financial transactions. Inventory management

and logistics tools were also developed to take advantage of the growing scale and

complexity of book distribution operations. These systems were built at first by the

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largest publishers and distributors and then made available to the smaller publishers

who bought distribution services from them. As the ‘‘business of publishing’’

continued to grow, P&Ls once done on paper were now run and rerun in Lotus 123

and Excel, and rolled up into sophisticated financial models; business productivity

software became a standard part of the acquisitions and planning process. On the

production side, the advent of desktop publishing applications such as PageMaker in

the late 1980s began to transform the way books were made from an entirely physical

process based on printer’s plates and camera-ready copy to digital processes that

were increasingly dominated by the manipulation of different kinds of files. Binding

the financial and production tools together were a number of department-specific

applications. Contracts and royalty management, title management, production

scheduling, and other department specific applications were often custom-built

internally in Access or created with third party software developers and loosely knit

together on internally-managed assemblies of proprietary servers.

In some instances, the developers who created these solutions for publishers

started their own companies to re-sell what they had created to the larger market.

Through the end of the 1990s, the book industry saw a proliferation of publishing

software providers who developed overlapping solutions to book-centric problems.

The publishing executive who wanted to bring the advantages of technology into

their company now had a choice: do we buy existing applications or build our own?

The buy versus build debate often ended with a compromise to buy an existing

platform, but then customize it to fit in with other legacy systems and meet needs

not addressed by the application ‘‘off the shelf.’’ For many houses, the end result

was a sprawling assembly of systems and applications that sometimes is referred to

as an ‘‘Amish house’’: complex solutions built out over time to take advantage of

new technologies. At times this approach locked in vestigial workflows, or created

systems that were not fully integrated, thereby creating disconnected ‘‘islands of

information’’ within the enterprise.

For the purposes of this paper, when I refer to publishing-specific software

applications, I am primarily referring to the processes beginning with the acquisition

of book content and ending with sales. Setting aside for the moment applications

common to all businesses (such as financial management, inventory management,

human resources) these systems include:

• Contracts & Royalties Management

• Editorial Acquisitions & Title Management

• Production Management & Workflow

• Prepress & Conversion Processes

• Digital Asset Management & Distribution Platforms

• Marketing & Publicity Management (and their associated tools)

• Commerce Platforms

In recent years we have already witnessed how basic business tools like word-

processing, email, presentation software, and spreadsheets have been reinvented as

cloud services (e.g. Google Docs). Moreover, many publishing professionals in

editorial, production, marketing and sales have grown used to using web-based tools

for research, sourcing content, and customer relationship management. It should

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therefore come as no surprise that we have also seen the proliferation of increasingly

specialized cloud-based software applications specifically for publishing profes-

sionals—applications that may have once lived on company servers, but are now

accessed through shared platforms on the Web. Edelweiss and NetGalley are two

prominent examples of innovative web-based marketing platforms rapidly changing

the way publishers think about their catalogs and advance reading copies. Given the

richness and low cost of these services, there are very few publishers today who

could justify building their own online catalogs or digital galley delivery services.

Even more important, there are now also thousands of marketers, sales reps, and

publicists working to develop new practices to make the best use of these shared

marketing platforms.

Going deeper into the publishing process, we are also seeing the rapidly growing

acceptance of digital asset management, production workflow, rights management,

contracts management, and other software applications that are licensed and used as

hosted solutions rather than being installed and maintained in-house. Today, one can

buy full-featured publishing-specific software applications from a host of service

providers including codeMantra, Firebrand, Impelsys, Ingram Content Group,

Klopotek, MetaComet Systems, R-Suite, and many more. It is not hard to imagine a

day when the entire book publishing process could be successfully managed by a

virtual infrastructure of skilled professionals with nothing more to support their

labors than access to the Internet. SaaS or ‘‘Cloud-Based Book Publishing’’ models

in fact exist in the form of companies like Smashwords, Lulu, Blurb, and perhaps a

dozen or more other publishing platforms that cater to the self-publishing market. It

takes a greater leap of the imagination, however, to envision how an end-to-end

SaaS solution might play out in the industrial-strength corporate book publishing

business that currently generates the vast majority of book sales and revenues, but at

some point that day will surely come.

Reasons for the Shift: Internal and External Drivers for the Adoption of CloudInfrastructure

The problems inherent with internally-maintained systems are well known to

anyone who has worked closely with them. They can be very expensive to install, in

part due to the cost of integrating them with other legacy systems that may or may

not be a ‘‘good fit’’; but also because of the temptation to adapt them to existing

workflows and business practices—some of which may be unique to a company’s

business model while others may simply be long-standing practices that appear too

deeply ingrained into company culture to challenge. Over time, system customiza-

tions can accumulate, reinforcing a cycle of customization as new technologies are

mapped to entrenched architectures. One result is that the cost of maintaining these

systems expands over time, as even routine updates require some modification to

work smoothly within the technical environment. Moreover, a staff of technicians

familiar with such unique environments must be maintained so that the institutional

memory of how the different components interact will not be lost.

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Rising IT maintenance costs are an obvious drain on company resources—they

show up on the P&L in the form of salaries, project budgets, and licensing fees. Less

obvious, however, are the opportunity costs that come with a cumbersome

technology infrastructure. The transition from print to digital book publishing is

now being felt in the form of constantly changing product delivery formats and the

need for new workflows and financial models to support them. The faster the rate of

change (and for many organizations it is now happening at a dizzying pace), the

more frequently publishing practices and the systems that support them need to be

adapted. Usually change comes first in the form of complex manual workarounds

and short-term patches to existing systems. Over time, however, as these changes

pile up, it is harder and harder for internal development teams to keep up. There are

never enough resources to meet a growing list of development projects. For an

increasing number of book publishers, a wholesale replacement of legacy systems

has become a business necessity if they wish to take advantage of new ebook

products and markets before their traditional revenue sources decline to the point

where the business cannot be profitably sustained.

Unfortunately, one of the effects of a highly-dynamic technology environment is

to compress the amortization timeframes for technology investments. While in the

past, a book publisher may have been able to assume that their new systems would

continue to yield a return on their initial investment for 5 years or longer, in the

current business climate many financial planners are forced to consider that today’s

cutting edge technology may be inadequate or even obsolete in 2 years or less. One

result is that the competitive advantage that may have been gained from IT

investment in the past can easily become a drag on innovation and growth if the

wrong choices are made. For small or mid-sized publishers the problem is even

more acute as they must attempt to ‘‘keep up with the big guys.’’ Drawing from a

much smaller pool of financial resources and human capital, sophisticated,

internally-managed IT infrastructure is increasingly out of reach for many.

Growing IT costs, rapidly changing business requirements, and shorter amor-

tization cycles drive publishers to consider the benefits running their organizations

on shared platforms. Rather than providing competitive advantage, certain

infrastructure components such as production management or digital asset

distribution may now only provide a ‘‘parity function’’—having a better one will

not necessarily help you gain on your competitors, as long as what you have is good

enough to complete on a level playing field. It is useful to remember that there was a

time in the 1960s when some publishers (Doubleday being a prominent example)

believed they could gain advantage from owning their own printing plants and retail

storefronts. For a time this may have been true, but few publishers today would

argue that this would be a wise investment. As we shift to a book publishing

industry where profits are increasingly driven by the sale of digital products, it will

make less and less sense for publishers to build and maintain their own warehouses,

retail sales staffs, and other infrastructure tied to the distribution and sale of physical

books. As with physical infrastructure, IT infrastructure will surely follow the same

path.

The benefits of working on shared platforms are increasing for many book

publishers. In the not too distant past, the Internet was considered unstable, insecure,

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and too risky for mission critical business functions. High-level executives asked

themselves ‘‘What if there’s a widespread disruption caused by a virus? Will data

transmission times be too slow to handle large files at peak usage?’’ or ‘‘How can we

be sure our data and assets will be secure?’’ Today, the basic infrastructure of the

Internet is far more robust. We have hit a tipping point for broadband penetration,

reliability, and security such that a growing number of executives see the cloud as a

safe alternative (and in some cases as a safer alternative) to internally hosted and

managed systems.

Add to this the fact that the capabilities of SaaS platforms are increasing as they

mature. The companies that make them are ever more adept at development, with

improved usability, interface design, and the ability to configure separate instances

of the product to meet the unique needs of different customer types. The result: the

platforms are more stable, more robust, and easier to use. Perhaps most important,

the best of them are updated to support a rapidly changing publishing business at a

rate that would be extremely difficult and prohibitively expensive for individual

publishers to maintain. Recent acquisitions of cloud computing companies by

established ERP providers like SAP and IBM are further testament to the belief by

many that the future of technology infrastructure is in shared platforms on the Web.

Challenges and Opportunities for Cloud-Based Book Publishing

Like all changes in the book industry, adoption of a cloud-based book publishing IT

model will be inconsistent and will take place at varying rates depending on the size,

resources, and company culture of a given house. In one possible scenario, one of

the largest publishers may make a wholesale shift to cloud-based book publishing

infrastructure in an effort to dramatically cut back on IT overhead costs and leapfrog

over their rivals (think of HarperCollins’ recent move to shift the fulfillment of all of

their new releases to RR Donnelley as a strategy to reduce their physical inventory

fulfillment infrastructure costs).

Or, under another scenario, we may see some of the smaller houses adopt cloud

infrastructure out of pure economic necessity (think of the shift by many university

presses to POD and short run printing strategies to reduce their cost of inventory

management).

Or, we may see the emergence of a cluster of rapidly-growing, ‘‘lean-and-mean’’

new publishing houses that are able to create exciting, highly-saleable titles and

successfully bring them to market without the traditional trappings of book

publishers like formal editorial, production, sales, and marketing departments—and

the installed software systems that bind them together.

Or, most likely, we will see some combination of all of the above.

For smaller publishers, many opportunities emerge as they will be able to

compete on a more level playing field in certain areas. The same goes for innovative

individuals or departments within larger organizations who are able to take

advantage of new ways to create, market, and sell their titles more quickly, at lower

cost, and into markets that may have once been unprofitable. All publishers,

however, will wrestle with the decision of when and how to make the shift.

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One area to watch is the extent that SaaS applications indeed operate in the cloud,

intermingling with other platforms and applications via a robust suite of web

services, or whether they are more like ‘‘hot air balloons’’—free floating on the

Web, but essentially separate from other applications in the publishing value chain.

Another barometer of the state of the transition will be the rise of well-documented

APIs (for ‘‘Application Programming Interface’’) for the exchange of digital content

and related data, the emergence of controlled metadata vocabularies, and new

industry standards for the exchange of information that will enable diverse services

to interoperate. The extent to which cloud-based book publishing platforms promote

collaboration between partners at all points in the publishing value chain will

determine how the new technologies will support or restrict a robust publishing

industry.

The Changing Role of the Publishing IT Department

Cloud-based book publishing will not only reduce IT costs and enable users to get

better versions of the latest tools sooner. In addition, cloud infrastructure will force a

change in the role of the publishing IT department from that of a service shop that

builds and maintains infrastructure, to that of a governing body, with responsibilities

for the selection, integration, and management of hosted services. For the

foreseeable future, there will still be a great need for technically skilled individuals

who can perform these functions. One could argue that the right technology skill

sets may be essential to the very survival of many publishing houses as margins

from traditional product lines decline and the profitability of new digital ones

depends on content agility and low-cost product development.

It is one thing, to buy new technologies and another altogether to realize their full

benefits. New platforms will enable new workflows and methods and will inevitably

encounter resistance from users within the organization who are unable or unwilling

to adapt to them (or IT staff who fear SaaS models eroding their departmental

headcounts and control). The essential question here is whether IT professionals and

their managers are able to take a greater role when it comes to training, process

re-engineering, and promulgation of best practices than they may have in the past.

Their role is no longer to make sure the systems work and that workers can use

them, but to dynamically select, acquire and integrate a constantly changing set of

workplace tools. Can they foster an atmosphere where users expect continuous

improvement, rather than resist change? It’s a tall order. And unfortunately only one

of the many challenges we face as we continue to undergo the transformation from a

traditional, print-centric business to true digital book publishing.

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