Three Kinds of Digital Book Publishing Start-ups to Be Bullish About | Digital Book World

Three Kinds of Digital Book Publishing Start-ups to Be Bullish About

Jeremy Greenfield shares some thoughts from the Tools of Change conference:

As I circled the room hearing from the various start-ups, I had a sad epiphany: Most digital book publishing start-ups will fail.

1. Starting any new business is hard and most start-ups fail.

2. Book publishing is and continues to be a low-margin, slow-growth business, meaning that there is no prevailing economic reason that dozens of new companies and hundreds of new people should enter this business.

3. Trade book publishing in the U.S. is a $14 billion business and one that isn't growing. The opportunity is in "disrupting" some of that revenue, which is already happening and it's the big opportunity for start-ups in this space. That said, I don't understand how a venture-capital firm looks at that number ($14 billion) and thinks that getting a small piece of it is worth making a bet on -- which makes me think that a lot of investment in start-ups in book publishing are made with the heart and not the head. People in the ebook start-up world agree.

That said, I think there are three kinds of digital publishing start-ups that have a better chance than others to find success in the growth of ebooks:

1. Digital publishing. This one is simple: a company that brings new ebook content to market -- a publishing company.

Why I think these could succeed:
At least for the time being, there's still a lot of money in producing highly sought after content. I think that this will always be the case. Despite what you may have heard, books aren't a commodity. Each one is unique and takes some combination of quality, timing, hard work and luck to make into a success. The barriers to entry are low, overhead is relatively low, start-up costs are nothing by comparison to other kinds of start-ups (no need to build new technology) and the potential for a good return is relatively high.

One interesting aspect of this business that I like:
If you follow a consistent publishing schedule, you can start to build a list of ebooks that should generate an increasing amount of income over time. At the same time, every time you publish a new one, it's like "swinging for the fences," so to speak. It could become a best-seller and if it does, you get a huge return. And if it doesn't, add it to the pile of income-producing ebooks.

The challenge:
There are two main challenges to these kinds of start-ups that rise above all the other challenges of starting a new business. First, it's hard to find good content, make it better and then bring it to market. It's a matter of skill, luck and timing. And, in the era of self-publishing, what's to stop one of your potential authors from doing everything themselves and taking all of the rewards? Second, marketing and discoverability are a huge challenge for all publishers, let alone a tiny digital one with no big authors, no big back-list, no platform and probably little staff or money to spend on the endeavor.

The other two are online book retail startups and author services.