Andrew Savikas Keynote With Notes

Digital Publishing at
O’Reilly Media
http://oreilly.com
http://toc.oreilly.com
http://twitter.com/andrewsavikas

Tuesday, December 8, 2009

Good morning. I’m honored to be here speaking with you, and would like to thank Sophie for
inviting me to be here, and thank you for making me feel very welcome on my ﬁrst trip to
Taiwan.


If you’re not familiar with O’Reilly Media, we’re best known as the publisher of the iconic
“animal books,” books on computer software and technology with funny looking animals on
the covers. We also publish a series of consumer books, the “Missing Manual”` series, and a
magazine for do-it-yourselfers and tech enthusiasts called “make magazine.”

In addition to books, we also run more than a dozen conferences each year, mostly in the San
Francisco Area, and mostly about technology, but we also produce the Tools of Change for
Publishing Conference every February right in New York, and we’ve also done one in
Frankfurt with the Frankfurt Book Fair.

“The Future is here --
it’s just not evenly
distributed yet”
William Gibson


This is a quote from science ﬁction writer William Gibson, and it’s a great way to describe what we do
at O’Reilly. There’s a lot we can learn not by guessing what might be, but by trying harder to interpret
what’s already happening. That’s what I’m going to talk about today, in terms of some of the things
that are on the O’Reilly “Radar” that are keeping us excited about what’s on the horizon.


A lot of what I’ll talk about today relates to technology, and it’s important to remember that
this, what you see on the screen, is also very much a technology. Books are devices for
sharing ideas, and their development over time isn’t much different from how most
technologies develop.

Some Publishing Innovations
• Word spacing
• Punctuation
• Title pages
• Index
• Table of Contents


These are just a few of the “features” that have been added to those devices over time, and
are a reminder that books did not always look the way they have during our lifetimes, just as
they will not always look or act the way they do now. For most of the history of books, to
“publish” meant to read aloud in public, and for most of the history of the written word,
reading was a very social activity. Our modern habit of private, silent reading would seem very
strange to a visitor from 300 years ago. You can see echos of that social past watching
someone’s lips move while they read a book on the train.

For some examples, consider that word spacing developed over 300 years, starting in around
1100. Or consider another great innovation in Western publishing -- punctuation. The
hyphen ﬁrst appeared in the 11th century Europe, and took another 200 years to reach
England. The colon ﬁrst appeared in the late 14th century.

The written word is one of the most powerful technologies humans have created, and like any
technology, it changes and evolves, and is subject sometimes to rather disruptive changes.

photo credit: moon angel

This is one of the original early warning systems. This little guy isn’t in a coal mine, but a few of his
ancestors probably were. And I’m sure they’d agree what was a “faint signal” to the miners was
anything but faint to them. Much of what I talk about today is based on our own experience as a
publishing company, one that sees itself as having a bit in common with those canaries.

It’s easy to dismiss a lot of our experiences at O’Reilly to the subject matter of our books, or the
technical nature of our audience. But we believe that we are very much like a canary in the coal mine.


First, the bad news from that bird cage. This is Nielsen Bookscan point of sale data for the entire US
retail computer book market, not just O’Reilly. This data goes back to 2006. If it went back further
you’d see that sales in our part of the market -- as measured using printed books sold at retail -- has
been ﬂat or declining for nearly a decade, and doesn’t look to be getting better any time soon.


But there is good news on the digital side, including statistics like these from the
International Digital Publishing Forum, which suggest that we are nowhere near satisfying the
existing demand, much less the constantly growing demand, for digital books and other
digital media.


Here’s data from oreilly.com showing the growth of ebooks over the past 18 months.


Here’s a more direct comparison showing print vs. ebook revenue during the past 18 months.
You can see from the red line showing ebook sales that they now outsell print books on
oreilly.com by more than 3 to 1

Ebook Revenue


We’re not even into the fourth quarter, and we’re already ahead of last year’s ebook revenue,
and this doesn’t yet include much of our mobile sales, which have really picked up in the past
couple months. At the current rate, our ebook sales for 2009 will end the year more than 75%
above 2008, and 2008 was more than 50% above 2007.


While downloadable ebooks are performing very well for us, they are just a small piece of where much
of the opportunity lies for new ways of doing the job that books have long done so well, to transmit
ideas. And it’s an opportunity that matters to us in the US, and it matters here in Taiwan.

It’s doubtful this man has a laptop or an ereader, much less much of a bookshelf at home, but like
billions of people around the world coming online, he has a mobile phone -- and one that is probably
connected to the Web.

According to IBM research, there will be a billion web-enabled cell phones by 2011, and in India cell
phones already outnumber PCs by 10:1.


I saw this item in the news last week, demonstrating the government here in Taiwan also
believes digital reading is a real opportunity.

Source: Informa Telecoms & Meidia; ITU; Forrester Research


According to the One Laptop Per Child project, 97% of adolescents alive today live in the developing
world. More than half of India’s population is under the age of 25. And in the same way that many
emerging markets skipped landline telephones all together, it’s quite likely they’ll skip building out a
costly and often inefficient retail distribution system, in favor of something natively digital, and very
much mobile friendly.

By 2011, some forecasts such as this one reported in a recent issue of the Economist show that mobile
broadband will surpass ﬁxed broadband as the primary way that people access the Internet


At the Web 2.0 Summit a few weeks ago Morgan Stanley Managing Director Mary Meeker did
a forecast of Internet trends, and made a startling case for mobile as the next computing
stage -- think mainframe, mini-computer, PC, then Web. This is a slide from her deck. If you
thought the Web took off fast, compare the adoption rate for AOL and Netscape with the
iPhone and iPod touch.


And one more from Mary, showing that each of these new stages reaches 10 times the users
as the previous one. The future is here -- it’s just not evenly distributed yet.


And as we heard from Neelan this morning, there’s a lot of people reading on mobile devices. Sales
data for our books shows these are not merely substitution sales. These are often new customers who
would not otherwise purchase the print book, as well as customers who are purchasing both print and
digital versions. We’ve seen a similar trend with Safari Books Online, our joint-venture subscription
service with Pearson, and we have nearly a decade of data to look at. The print market is in terrible
shape, but Safari has been growing 40% year-on-year. And these are additive sales -- our sales
volume in the print market relative to other publishers has steadily increased since Safari launched in
2000.

http://bit.ly/ORMiTunes1

At O’Reilly we’re moving very quickly into mobile publishing, in particular on the iphone.
Here’s our page in itunes.

Note there are 51 more pages of apps.

We have more than 500 apps in the app store, with more to come in the weeks and months
ahead.


At ﬁrst we weren’t sure whether people would really want to read books on often-complex
technologies, books that include complex formatting like tables, computer code, and ﬁgures
on a mobile phone, but as you can see from this review, there absolutely are readers who
want and read these books on their smartphones. [READ REVIEW]


Note the high-resolution, full color images, as well as the blue text, which is of course -- a hyperlink.

We released our very ﬁrst app back in December of last year through a partnership with Lexcycle,
makers of the popular Stanza iPhone App. It was a previous edition of this one, iphone the missing
manual by New York Times tech columnist David Pogue, which we replaced it with a newer version this
summer. But during the life of that app, we sold more units of the app than of the printed book.

And this is a print book that is not only the top seller among consumer titles about the iPhone, it was
the best seller for all computer books during the holiday season, and was the number six computer
book overall during that period!

Units Sold

O’Reilly Print Book O’Reilly iPhone App #2 Book in Category
Units sold December 2008 -- April 2009


Here’s a relative comparison in units of the iphone missing manual app, the print version,
and the next-best-selling book in the category. This is measured by units, not revenue, but it
helps illustrate the size of the opportunity.


And here’s some data from the ﬁrst set of 17 other apps we put out. The blue segment
represents units sold as iPhone apps. The red segment the units sold at retail as measured by
Bookscan. You can see that for several of the titles, there were more units sold on iPhone
than in print at retail. So there are deﬁnitely people reading -- and importantly, buying --
books on their mobile phones.


But one of the most important characteristics of these new mobile markets for digital media
is that they are truly global markets, which is something vital to keep in mind in the context
of this international event on the eve of an international book fair.

These are the recent rankings for the free “lite” version of that iPhone Missing Manual app.
The lite version contains one chapter as a sample, with a call to action to buy the full version.
The list actually goes further down, but this is the most I could ﬁt on screen to take a
screenshot. That free app is among the top free book apps in nearly every country where
iPhones are available. That’s an opportunity to convert sales in parts of the world that we
simply can’t economically market to through traditional channels.


Here’s a geographic breakdown of sales of our iphone apps by country. this list goes quite a
bit further down, but this is the biggest screenshot I could get. You can see that a lot of
European countries are represented here, and while overall sales in any individual country are
often quite small... [TURN]


... when added together they make up more than the sales in the US. This is how the sales
breakdown overall around the world. Note that 56% of sales across those 300 iPhone apps are
outside of the US, and again often in parts of the world with little or no access to our books
in printed form. This is an opportunity to grow our audience and reach into parts of the world
that we could not otherwise proﬁtably serve.


And again because this a global market, there’s little reason to limit it to English-language
content. This is one of the books published by O’Reilly Verlag, our German subsidiary, and
there are about a dozen of these titles now available worldwide through the App store.


Here’s a screenshot from within that app.


I know I’ve been talking a lot about mobile markets, but it’s important to put some numbers around the size
of this emerging opportunity. This is data from a company called Flurry, which provides tools to mobile
developers.

According to their data, “At this rate, by the end of 2009, the App Store will easily surpass 100,000 apps. To
put this in context, the App Store soon will carry more items than the world's largest retailer, Wal-Mart,
which merchandises about 100,000 items per store.”


As far back as March of this year, we were paying close attention to the activity in the “books”
category of the iPhone App Store, when it really started picking up steam. (It’s worth noting
that there was no books category when the app store launched, they added it later in
response to the high number of book apps submitted). At last check, Books are now the #2
category after games in the app store in terms of the number of apps available.


The iPhone rightfully gets most of the attention when it comes to smartphones and mobile
marketplaces. But when you take a closer look at the data, it’s becoming clear that phones
running the open source Android operating system will be a major player in the next 12-18
months.

This data is also from Flurry, and they’re seeing a noticeable increase in Android projects
relative to iPhone projects. Draw those lines out and they meet within two years. Some
estimates are that by next year there will be as many devices in the market running Android
as there are iPhones.


And here’s some more data from that same study, which shows the growth among users of
ebook reading apps on smartphones.


And we’re moving into Android too, with more than 200 books available. Well before the end
of the year, we’ll have as many or more Android apps as iPhone apps.

Again, the customer feedback on these has been quite positive. [READ ALOUD}

“I wonder if we accelerate
this Pocket Guide into an
iPhone app for 1.99.. and at
least get mindshare and some
market presence while our
other books are coming out. I
bet this could boost our
iPhone apps visibility too...”


Mobile markets also mean the opportunity to generate early interest in new releases. For us,
it’s a constant battle to try and get our books on the shelves when new software releases.

This is from an internal email thread about what we could do to promote sales of a book
about Apple’s new Snow Leopard operating system.


By the end of the day, the app version was assembled, and by the next business day it was
submitted for approval from Apple, even though the ﬁnal ﬁles hadn’t been sent to press.
Nearly all of our books are available in digital form before they’re in the bookstore, which
gives us days and sometimes weeks of extra sales, worldwide.


And again to underscore the global nature of these emerging mobile markets for digital
media, here’s the geographic breakdown for sales of that app -- you can see that in this case
less than a third of sales have been in the US. Nearly a fourth of sales were in Italy, where the
book was ranked #1 in the Books category of the Italian App Store for several days.


One beneﬁt of publishing a book as a mobile app is that you get to take advantage of the built in
features of the phone.

Here’s one of our apps about how to get noticed on YouTube. Again on the right you’ll see a page of
content, and near the top there a hyperlink to another chapter within the book. Hyperlinks to web
pages open up the built in web browser of course.

But notice that other hyperlink -- it’s a link to where? Yes, YouTube. And what video player does an
iPhone already come equipped with?


That’s right -- clicking those links brings up YouTube videos right on the iPhone. And when you’re
done watching the video, you can just click right back to where you left off in the book.

That’s a book behaving like the Web that it’s now a part of, and it’s the single most important thing we
can do with our content as we prepare to make it available in digital formats.

But making book content web friendly and porting it to digital devices and formats is just the ﬁrst
step. This is a new medium. These devices have eyes, and ears, and mouths. They have a compass,
and geolocation, and a nearly always on Web connection. How do you rethink content in the context of
a device like that?

TV and Radio
• “The first TV shows were basically radio
programs on the television — until
someone realized that TV was a whole new
medium. Ebooks should not just be print
books delivered electronically.”


My colleague Joe Wikert, who you all met this morning, said it very well when comparing the current
state of digital books to the transitional period of another popular medium, television. [READ ALOUD].

And the same has been true of other media -- many of the first films merely recorded plays performed
on a stage. It took time for those working in the new medium to understand there were entirely new
characteristics that set it apart from theatrical performances. Multiple cameras, lighting and staging,
special effects -- these all evolved with the changing medium.


Here’s a fantastic example of someone starting to really take advantage of what a device like
the iPhone can do. A few years ago, this might have a been a series of small printed guides to
birds of different regions. You’d take one out with you, and try and match the moving,
singing bird in your binoculars to the static photo and description on a printed page.

But with this app (there’s a series of them covering different regions), you can quickly drill
down along a variety of characteristics, and you can play the actual bird call from the app to
help you identify what you’re seeing.

It’s conceivable that eventually you’ll just hold up the phone and let the app “see” or “hear”
the bird to help you identify it. How well do you think those small printed guides will stack up
to apps like that?


And the opportunities today aren’t just in new devices or formats, but also in new business
models. You may have seen news recently that Disney is now making a library of their
childrens books available for subscription access online.

Subscriptions and memberships are just one way to try new methods of offering content. And
while Disney got a lot of press and attention for their new program, the underlying approach
looked quite familiar to us.

http://safaribooksonline.com

Earlier I mentioned Safari Books Online, which was launched in 2001 -- during the last
recession. It’s a joint venture with Pearson Technology Group, offering online subscription
access to 10,000 books and videos. It’s now our second largest sales channel for books after
only Amazon -- bigger for us than the largest US retail chain, Barnes & Noble.


And there’s a mobile version of Safari as well, which makes it an even more valuable product
for subscribers who are increasingly carrying smartphones with them, and now have access
to those same 10,000 books from anywhere there’s a Web connection. Which is quickly
becoming just about anywhere.


The inﬂuence of the Web doesn’t start after a book is “done” and ready to be sold and
distributed. The Web is changing everything, and that certainly includes the way that we write
and collaborate. In that sense, we’re following readers to the point of content creation, giving
them the opportunity to become writers and collaborators, not just readers.

A few years ago some developers who were working on a book about Django, and open
source framework for building complex web sites used their own software to build a system
to solicit feedback on their book as it was being written. See those little bubbles next to each
paragraph? Those show how many comments were made on each paragraph.


This is a book that we published late last year about a very obscure programming language that has
nowhere near the user base as something like HTML or Java or any other language you might have
actually heard of.


It’s also now available as an iPhone App in the App Store.

realworldhaskell.org/read

Here’s a screenshot from the book’s website, which was custom built by the authors. But they didn’t
just write a book then post it online. They updated the book as it was being written, and again as you
can see from the links here, asked for (and got) feedback on every single paragraph in the entire book.


Clicking on one of those comment links pulled up a dialog like this one, familiar to anyone who’s
commented on a blog post. Every single paragraph in the entire book.

• 7500 comments during book development,
2000 more since publication

• Only 10% were anonymous
• 21 people left at least 75 comments


Here’s a few stats from the authors about the feedback they received. Note that most of the people
who commented (over 800) left their name so they could be acknowledged in the book (we printed
their names in the preface).

You can see that 21 people left more than 75 comments each. 75 comments is as good or better than
the level of comments and feedback we get from paid technical reviewers, and typically we only have 2
or three of those for a book. So this book got 10 times the level of deep review as most of our books
-- for free -- and is a better book because of it.

People want desperately to contribute, to collaborate, and to be part of a community, and if you help
provide the context for that community, you will be rewarded. As I said earlier, for most of the history
of the printed word, reading has been an intensely social and public activity, and the Web is bringing us
back to those roots, and extending that social nature to the writing process.

http://building-iphone-apps.labs.oreilly.com

We liked what the authors of that Haskell book did so much that we’ve built our own similar
open feedback system for use with other books.


This is now the second title to use our Open Feedback Publishing System, and there have
already been hundreds of comments on the manuscript.


The book is also already available as an iPhone app, months before it will be ﬁnished, much
less published. Customers who purchase the app of course get updates for free.


The book is also available already as an ebook, which is regularly updated. This has
expanded the opportunities we have to generate revenue for a book before it is published,
and at the same time make sure it’s a book that people ﬁnd useful. But will people pay for
something that is also available for free?

• Linux Network Adminstrator’s Guide: $3M
• Writing Linux Device Drivers: $1.6M
• Using Samba: $1.3M
• Asterisk: The Deﬁnitive Guide: $500K
• Version Control with Subversion: $300K
• Real World Haskell: $200K

These are lifetime sales for six of our books. It’s no Harry Potter, but each one of these is absolutely a
success for us as a publisher.

Every single one of these books is available completely for free on the Web, and in many cases right off
of our own website. One of the important things we’re learning about content is that people don’t
always pay just for the content itself -- instead they also pay for packaging and convenience.

ALL publishing is now
digital
These aren’t print books we happen to sell
digitally, these are digital books we might
happen to also sell in print.


Here’s the way we’re starting to look at the entire process of publishing. These are no longer print
books we happen to also sell digitally, they are digital books that we might also sell in print.

“The best way to predict the
future is to invent it.”
-- Alan Kay


Remember, if the World Wide Web were a person, it would barely be old enough to have voted
in last year’s US elections. On the other hand, in about 30 years, no one under the age of 55
will remember a world without the Web.

We’re just at the beginning of a transformation as important as Gutenberg’s printing press
500 years ago. There’s enormous challenges, to be sure, but there’s also extraordinary
opportunities for those willing to take risks and do what Alan Kay suggests here.

More information
• http://bit.ly/recreading
• toc.oreilly.com
• radar.oreilly.com
• toccon.com
• oreilly.com/ebooks
• twitter.com/toc
• twitter.com/andrewsavikas


Thank you.

Andrew Savikas Keynote With Notes

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