Business Musings: Digital Growth: Indie Publishing (Year in Review 5)

Business Musings: Digital Growth: Indie Publishing (Year in Review 5)

Okay. I just spent an afternoon expanding my brain. And it’s painful. It really is. I investigated a few things that I had put off during the semester, and decided that I will dig deeper for some later blog posts that are not part of the year in review.

I think there are some truly big and important changes on the horizon for digital publishing, and those require some deeper thought than simply discussing the changes that we’re seeing right now.

That said, I think there are some things to cover for the 2021 year in review. Although, in some ways, the next few blogs feel more like anticipatory 2022 blogs—with a lot of hope about the future.

Oh, man. After the past two years, hope feels pretty dang good.

Digitally speaking, though, the past two years have been phenomenal. The changes that those of us who went digital early had been expecting year after year after year have finally arrived.

I’m seeing a lot of acknowledgement in the business press that the world is going to online or at least to smart phone usage more and more. For example, an article in the Las Vegas Weekly titled “Cashless Las Vegas: A City Built On Currency Moves Toward a Future Without It” casually mentions the changes that COVID wrought. Essential to Vegas and cash is the fact that people are still leery about touching things that other people are also touching.

So many casinos are moving toward having clients pay for slots or even chips with their phones. The various apps will have a tiny learning curve. But that’s not important. What’s important to this particular post is what professional gambler and Las Vegas Advisor publisher Anthony Curtis told the Weekly.

He said, quite casually, “[Cashless gaming] is something for the kids who are already indoctrinated into this sort of commerce. But the current people, the Boomers and Gen Xers, who [are gaming now] are going to be a much tougher sell.”

I’ve seen a variation on this theme throughout the business community in the past year. Boomers and Gen Xers are slower to adapt to some kind of online commerce, but not as slow as they used to be.

The digital growth has been astronomical since the pandemic hit. As we got used to the nightmare that was 2020, we expected increased digital growth. We also expected in-person retail to bounce back somewhat when pandemic restrictions eased.

Which happened. In the U.S. third quarter in-person sales grew 11.5% over the previous year. (Duh) However, that didn’t impact online sales as much as analysists predicted it would.

According to Digital Commerce 360,

online retailers managed to not only sustain the massive gains they made in the digital sales channel since early 2020 but actually grow them year over year—no small feat given the unprecedented ecommerce demand during the pandemic that spurred shifts in shopping behavior.

This reinforces what many of us have experienced over the past twenty years. When someone gets used to online shopping, they continue to shop online. That doesn’t prevent the person from also shopping in a brick-and-mortar store. But ease, convenience and comfort all make a large difference in shopping online.

And, as I’ve mentioned before, people have become comfortable shopping on sites other than the big retailers like Amazon. I’ll deal with some of that in a later post on trends.

Here’s the important analysis from Digital Commerce 360’s article:

When comparing Q3 2021 to the pre-pandemic Q3 2019, ecommerce surged 45.6%. In fact, this year, the third quarter benefitted from an additional $19.11 billion boost in digital revenue thanks to COVID-19 spending patterns, Digital Commerce 360 estimates. If online sales had continued to advance at a pace similar to pre-pandemic years, ecommerce would have instead hit $185.50 billion in the third quarter of this year, and current levels wouldn’t have been reached until 2022.

If consumers spent six dollars in 2021, more than a dollar of that would be online.

Combine all of that with the quote from Anthony Curtis above—or a similar quote from a business analyst in most industries.

Everyone under the age of 40 has become comfortable with living their lives digitally. There have been problems with a digital life here in the U.S, particularly in rural America, but that will all change in the next few years, thanks to the infrastructure bill that became law this past fall.

The Infrastructure Investment and Jobs Act allocates $5.3 billion to the States to increase broadband access. It also includes money to subsidize low-income consumers so that they can access broadband affordably. And it provides an extra $1.5 billion to increase digital literacy, so that people who were previously left behind in the digital space will now be able to participate in the digital world—including the digital economy.

This is a U.S. program only, but I’ve seen articles about similar programs that are expanding digital access in other countries. (If some of you from other countries want to chime in here, that would be great.)

The point of all of this isn’t to tout a new program, but to point out how changes in the digital space will continue throughout this decade. We won’t just be ordering our food online or using our phones to hire an Uber. We’ll also be using it for pretty much everything.

The digital sales growth surprised Jessica Young, who wrote the Digital Commerce 360’s article. I think she (or the people in her company) expected digital growth to recede dramatically when people could return to stores.

But I watch things like casinos and some of the other development here in Las Vegas. The city is incredibly innovative. Companies come here to experiment. Sometimes the experiments fail (the self-driving tour bus downtown quietly vanished) and sometimes they succeed beyond anyone’s wildest imaginings.

Most projects fall in between.

The indie publishing industry has been a leader—in the publishing industry, anyway—in the online space. It’s been hard to get some indie writers to publish paper books, because they seem to believe that readers only want ebooks.

Not true. Readers want their favorites in whatever form they feel like. And, as usual, I watch the music industry for tips.

It turns out that the under-forty crowd loves their streaming (don’t we all) and that will be the topic of a blog post upcoming. But they also want something tangible for the artists whose work they adore.

In 2020, vinyl record sales grew over CD sales for the first time since 1986. And vinyl records have grown even more in the year since. Vinyl record sales are up a staggering 108% in the first six months of 2021. This is causing some supply chain and manufacturing issues that I won’t go into at the moment, but…

Here’s what’s happening and why we should always watch the music industry: Vinyl has become important to Gen Z (the 9-24 year olds). They want something tangible…if it’s by their favorite performers.

Axios pointed out that for Gen Z (and many millennials), buying vinyl is the equivalent of buying a painting or buying a print of a beloved piece of art.

Sure, you can stream your favorite piece of music, but buying vinyl with the lovely cover art and the shiny disc makes the music tactile. Not collectible, necessarily (that’s what NFTs are for—also a future post{ish}), but something to own, something to physically return to.

For the longest time, the music industry thought vinyl was dead. Now, a survey of consumers under 40 found that between 11 and 15% of them bought vinyl in the past year.

Those of you who read this blog regularly know that I harp about providing different formats to readers. It’s impossible to get untainted statistics in the publishing industry about format perspectives, particularly with the split that has occurred between traditional and indie.

Traditional publishers are fighting hard to keep all books as a physical product; many indies—even today—see ebooks as the only viable format.

Both are wrong.

The music industry, which actually analyzes data, has found that consumers want as many formats as they can get. And the sales scale upward. Superfans want every format they can get as well as exclusive content. Some of us casual listeners only want to stream the music. And others only want digital content both streaming and purchased.

Format is and will be one of the many discussions we’ll continue to have in 2022. I’ll be looking at some formats—not in the year in review—in a few posts this spring.

The other thing that I stumbled upon in my glance at the music industry is this: 28% of Gen Z consumers find new music through video games.  I actually heard Paul McCartney speak about this not long ago, when he mentioned that one of the video games that the Beatles licensed (Rock Star? I’m not sure which one right now) introduced the Beatles to a brand-new generation. And sure enough, when Dean and I saw McCartney in concert in 2019—in a stadium, mind you, when his peers are playing tiny venues in remote locations—half of the audience was under thirty. And none of them were with their grandparents.

Music discovery does overlap with one site that book people are talking about: TikTok. 75% of Tiktok users discover new artists through Tiktok and 63% say they’ve found music there that they’d never heard of before.

Book people know about this, at least tangentially (and really, that’s the only way we book people know any of this stuff, dammit) because of that curious occurrence with an obscure 1930s novel, Cain’s Jawbone, that went from being unknown to selling 80,000 copies this fall alone.

There’s been a lot of anecdotal evidence about TikTok’s literary wing, BookTok, increasing book sales dramatically, but Cain’s Jawbone provided actual numbers for one of the very first times.

The important thing to note from this initial indie column of year in review is that thanks to changes in 2020 and 2021, use of the digital space will grow exponentially in this decade.

The question then becomes how we writers and indie publishers will use this growth to help our own businesses.

We are no longer in the era of post the book and those savvy folks online or the handful with a Kindle will find it. We’ve moved into something a lot more complicated.

A lot more interesting, mind you, but infinitely more complicated.

That’s why I spent a few hours expanding my brain today, and deciding that many things—especially things some of you readers pointed out—need deeper investigation.

That’ll be fun for me. Maybe not for Dean or the folks at WMG, since they got a barrage of email from me just today as I wrote this, with all kinds of ideas and plans to investigate some things further.

The digital space and its growth are a fun place to start. I had to look at that before examining where we indies are on other levels. You’ll see what I mean with the very next post.

****

I always plan to write the year-end blogs in November, but I never manage it until December.  I wrote all of the year-in-review posts in the weeks between December 15 and the new year. I will post them all on my Patreon page first, and then over time as 2022 progresses. If you want to read them sooner rather than later, then you need to go to Patreon.

If you liked this post, and want to show your one-time appreciation, the place to do that is PayPal. If you go that route, please include your email address in the notes section, so I can say thank you.

Which I am going to say right now. Thank you!

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“Business Musings: Digital Growth,” copyright © 2022 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / andrewgenn.

7 responses to “Business Musings: Digital Growth: Indie Publishing (Year in Review 5)”

  1. “Everyone under the age of 40 has become comfortable with living their lives digitally. ”

    Well, as a disabled person 72 with 74 year old husband, there is a huge contingent here being not counted: the disabled and the older adults.

    Yesterday I ordered potting soil from Amazon. And some plastic rocks for drainage. For a plant a friend gave me before the pandemic started, and for which I bought a bigger planter, on Amazon, a few days previously. POTTING SOIL. I use to jump in the van, drive to KMart, pick up the potting soil, and drive it home.

    We have been ignored by retailers and employers – and we’ve gotten a taste of how simple it is for them (if there is a big enough number of people requesting it) to provide accommodations we’ve begged for, for years. They were forced to – but we’ve benefited enormously. AND it serves as proof of principle: it can be done and it’s not that hard.

  2. C.E. Petit says:

    Looking almost exactly one ply (in chess terms, the opponent’s next move) in advance:

    There’s a three-word pitfall waiting to sabotage any long-term move to ecommerce as the default — “shipping and handling.” Those of us who were mail-order pioneers back in the 1970s and 1980s (remembering the joy, while stationed overseas, of a new JC Penney catalog… and cutting two items out of the order because the shipping-and-handling charges would bust the budget otherwise) have already been through this once in our lifetimes. But we grumpy old farts are not in the prime 18-54 demographic, and those kids just won’t listen to us…

    All seriousness aside, there is considerable (and often justified) pushback against forcing the actual vendor to eat shipping and handling costs. Literally, in the restaurant industry — if you’ve watched any network TV of late, you’ve probably seen one of the D____’s commercials extolling their “good corporate citizenship” by giving local-restaurant gift cards away. (Whether that’s really good corporate citizenship if the local restaurant’s margin has been, pardon the pun, entirely eaten by the delivery fees is a different question requiring actual math.)

    And it’s just going to get worse as labor standards catch up with outsourcing of shipping and handling. Dynamex is real… and it arose from misclassification of delivery drivers as “independent contractors” in a way that saved their employer about 17-18% of its total labor cost. And there’s going to be a spike — perhaps only a couple of years long, perhaps longer, it’s impossible to say — as the delivery infrastructure shifts away from fossil-fuel vehicles.

    What this is going to do to total spending on products is pretty obvious, if not calculable with any credibility. It also runs into the fact that consumers actually, ya know, have budgets. And books are heavy, so the shipping-and-handling costs (however they are passed on to the consumers) will be nontrivial — meaning that there will be an effect on author income, whether “indie also doing print runs” or “commercial publishers.”

    This is only one ply ahead because it’s utterly predictable and the current gas-price spike has already forced increases in some shipping-and-handling charges (looked at a FedEx/UPS invoice lately?). It behooves all of us to at least think about it.

    • Books are heavy but ebooks are not. And there are ways for indies to handle shipping and handling. We do it all the time. It’s up to the consumer whether or not they want a paper version or an e-edition. Shipping fees have already gone up. They’ll go up some more. But there are a lot of people willing to pay for the convenience. Those shipping fees will also hit brick-and-mortar retailers, so it’s six of one, half dozen of another.

  3. I have The Beatles Rock Band on my games shelf right now, although I haven’t played in years. Funnily enough, last month I temporarily dug the microphone and stand out of the closet to use for online meetings until I get a desk model. My webcam mic has proven a little unsatisfactory.

    My stepfather loves The Beatles, and I grew up listening to all kinds of songs from them. I got Revolver for my birthday when I was 10 or so, and would listen to it over and over. When The Beatles Rock Band came out, I took it to Thanksgiving and Christmas with my parents and aunt and uncle and we all sung together after dinner. I remember the stops and hesitations and “Oh–are THOSE the actual words?” when the subtitles for “I Am The Walrus” started to appear.

    What I remarked to my stepfather a couple weeks later was that it wasn’t so much that it was fun to sing along to the music and pretend to play the instruments, but that the actual act of having the music broken down: three part harmonies that the game would grade you on, with the intervals marked on the screen, or the instrumentation that translated the pacing and intervals to buttons on a simulated instrument–gave me a deeper appreciation of the songs themselves. The playback felt participatory, and I was forced to concentrate on the intricacy of a drum part, or bass or guitar solo in a way I hadn’t before.

    That’s why it’s important to keep an eye on new technology. Guitar Hero and Rock Band introduced a lot of music to younger audiences , but it also invented a new way to actively experience and participate in the music.

  4. Gordon Horne says:

    The pandemic forced me to do many things digitally, both as a consumer and a producer. Some of those digital substitutions have been very lacking. Some have been excellent.

    On multiple formats, I like different formats of the same item or service for different purposes. My day job is teaching ESL. My employer has made two major mistakes in pandemic times:
    1) Simply moving in-person classes to online via Zoom and calling it good enough. It isn’t. And,
    2) Ignoring the possibility that a single product (course) can be offered digitally and in-person at the same time with different aspects of the course occurring in each realm.
    Their plan is to wait it out. They are going to lose customers to competitors who adapt to the new circumstances.

    The difference in experience between digital and print for novels–words on a page–is not as great, but there are novels where the design of the physical page is an important part of the experience that does not translate to flowable, resizeable text. Textbooks and other non-fiction are more dependent on form. There are things you can do on paper you cannot do in standard ebooks and vice-versa. Neither is innately superior, and both can deliver equivalent results, but like my ESL classes, you can’t just throw a textbook onto a Kindle and expect it to work.

    Also be wary of bells and whistles. I have purchased many textbooks as apps that no longer function or are not accessible at all. This touches on books as a service rather than a product, which is another topic.

    Thank you, Kris, for your always excellent and thoughtful Year in Review.

  5. Marie Dry says:

    In Kenya they’ve used cell phones to pay with for over a decade now. I might be wrong but I seem to remember at the time they said it was the first country to do this.

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