Digitization in the Publishing Industry: how the way of thinking the product has changed throughout the productive chain

After years of indecision and pessimistic proclamations, in 2010 most of Italian publishers decided to enter the new digital marketplace, in light of the development of the US market, typically more advanced and receptive to technological innovations, where both eBooks and eReading devices are experiencing a growing customers’ acceptance.
In 2009 the Italian eBook market was basically inexistent (only 0.03% of the global sales) and the few existing digital publications were concentrated in the professional and reference segments, where the digitization process started earlier and with different dynamics (for example publication on DVD and other digital media).
Before last year, content producers often justified the lack of investments in the creation of an eBooks offer for the Italian market with the almost total absence of an installed base of devices capable of accessing the new digital contents. As a matter of fact, European booklovers have been less receptive in the adoption of eBook readers, but are also generally less inclined to purchase traditional books through online e-commerce channels.
While 2010 cannot be considered the “year of the eBook” (sales expectations were still a mere 0.1% of the Italian book market), it was at least the year that marked the change in publishers’ mindset and approach towards the digital world: indeed, also in Italy traditional publishers and distribution channels began to set up a strategy to enter the world of digital publishing.
Innovative medium and small actors were the first to understand the potentials of the eBook market: in March, Giunti Editore, one of the oldest Italian publishing houses, acquired a 20% participation in Simplicissimus Book Farm, a small independent player operating since 2006 in many segments of the digital publishing industry.
A few months later, three of the principal Italian publishers – Feltrinelli, Rizzoli and Gems – presented their plans for the EDIGITA consortium (that includes their own brands but is open to any other publisher willing to join), aimed at promoting eBooks through the creation of a distribution platform, in conjunction with other associated services (such as online storage, catalog management, DRM protection and business-related consultancy).
BookRepublic – a newcomer with similar intents and services, but addressed to small and independent publishers and with an integrated online store – marked another important step towards the creation of an Italian eBook market when it was launched in July. However, even if almost every player in the publishing industry had plans to face the eBook transition, only few promptly acted to enter the market, while most of them stalled waiting for further developments and less uncertain outcomes.
For example, Mondadori, one of the main incumbents, did not publish any eBook until the launch of Biblet, a distribution and sales platform powered jointly with Telecom Italia on the example of the Amazon Kindle model.
The outlook on the actual Italian eBook industry highlights a highly fragmented market structure where multiple actors are competing for overlapping spaces (also given the general tendency of digital good markets to integrate different phases of the traditional value chain).
This situation is also influenced by a diffused distrust of the major companies that are dominating the US market (Amazon, Apple and Google) and by the tendency of part of Italian publishers and distributors to preferably develop online stores and distribution channels at national level, consequently creating an obstacle for the international players. In fact, although in other European countries (in particular UK, Germany and France) Amazon, Apple and Google are present with their digital stores (respectively Kindle store, iBookstore and eBookstore), in Italy the negotiations with most of the Italian publishers for acquisition of the sales rights are in many cases still in a stationary phase, thus delaying the entrance of major international players in our market.
This skepticism is often motivated by publishers’ fear of losing their central role and consequently their bargaining power, but also because they are afraid that these companies might use eBooks as a tool for different purposes (i.e. for the further development of businesses that are unrelated to the traditional publishing industry, such as connectivity, hardware and advertising). However, having a highly balkanized structure could prevent the achievement of a critical mass of customers, with the risk of seriously slowing down the development of an eBook market.