Innovation Fatigue – the Start of an Analogue Fightback?
By Alex Crawford
5 minute read
At first glance, the numbers released by the UK Publishers Association (UKPA) tell a compelling story. Sales revenues of £4.8bn represent the highest ever recorded in this country – an increase of 7% on 2015 and the largest single increase since 2007, when digital sales were first included. Taken at face value, the implication is clear. The publishing industry has steadied its ship by embracing the digital revolution, placing innovation at the heart of its business model to chart a once-uncertain route back to commercial good health.
If you dig deeper, however, it is clear this is only half of the story. While digital sales have increased by 6%, and now make up 35% of total publishing revenues, total consumer eBook sales registered an extraordinary 17% decline in total sales to £204m. Over the same period, the UKPA reports that consumer print book sales have risen almost 9%, to £1.5bn, following an indifferent 2015. In the US, the story is similar: 3.3% growth in print, weighed against a 19% decrease in eBook sales.
The unexpected resurgence of physical publishing and the decline in eBook sales demands an explanation. Clearly, new pricing strategies, revised metrics, amended VAT rules and the release of blockbuster titles have all had a significant bearing on the attractiveness of both products.
There is also evidence, however, that physical customer experiences are becoming increasingly important to consumers as digital becomes ever-more integrated with their day-to-day lives. This positive emotional response to print was set against the findings that 52% of those questioned admitted to spending “too much” time on electronic devices and 53% said they are worried that their overuse of digital media could be damaging to their health - digital devices now dominate the attention of adults for 10 hours per day (a 400% increase on 2012).
The music industry offers a direct comparison in the form of vinyl record sales. In the UK, the once-obsolete medium defied the prevailing industry trend towards digitisation to achieve single-year growth of 53% in 2016, cementing a 25-year high. In the same period, digital download revenues declined 20.5%. For both print books and records alike, marketers have successfully leveraged their status as lifestyle products to create a distinct use case from their digital counterparts.
There is also evidence to suggest that the desire for physical touchpoints extends to the retail sales journey. The demise of the book shop was an early prophecy after digital technology began to disrupt the publishing industry. British book retailer Waterstones published pre-tax profits of £18m in 2017 – an 80% jump in annual profits.
Nowhere has embraced Oscar Schumpeter’s famous adage that technology and innovation produce a “gale of creative destruction” quite like Silicon Valley. For its first decade of operations, the walls of Facebook’s California headquarters were adorned with a slogan expressing the same sentiment (recalibrated for its millennial workforce) – “move fast, and break things.”
In most cases, the relentless urge to reinvent has been carried forward by a drive to satisfy unmet customer needs. In the case of eBooks, Amazon’s Kindle offered a host of solutions, both economic and functional – allowing users to buy titles at lower prices than their local bookstore, and transport hundreds of titles in a tablet-sized object. As a result, the threat to ‘break’ the traditional publishing industry became very real indeed.
The resilience of analogue products and the continued demand for a physical retail experience suggest that entertainment consumers are increasingly conscious about the format of the products they buy and how they buy them. In the case of books and records, the advantages conferred by the experience of browsing in a shop or having an object to display on the shelf at home challenges the advantages of speed and storage that digital services provide.
For businesses, the takeaway is to be more rigorous in understanding customers’ needs. Although speed and convenience may define the use case for a product, the automatic assumption of obsolescence in existing technology may amount to throwing the baby out with the bathwater. Amazon itself has attempted to turn threat into opportunity, opening its first physical bookstore in 2015, with 400 more planned across the US. Whether this hybrid approach, which encourages active choices about both the format of their products and the point of sale they use, takes hold will remain to be seen. It is clear, however, that for the time being, analogue is here to stay.