Apps: A Practical Approach to Trade and Co-Financed Book Apps

Pub Res Q (2012) 28:17 22 DOI 10.1007/s12109-012-9257-4 Apps: A Practical Approach to Trade and Co-Financed Book Apps Lasse Korsemann Horne Published online: 19 January 2012 Ó Springer Science+Business Media, LLC 2012 Abstract This article provides some of the answers and some of the practical solutions to the challenges of developing and recovering the financial costs of developing apps. Different approaches for the development and financing apps are presented. The focus is on children s books because these have proven to be the most popular book-apps in the Apple App Store especially in Europe. Keywords Apple Apps App developers Audio books Book app ebook Children s books Digital publishing Digital rights Eco systems ibooks Software Tablet computers Digital publishing is a global scale game to convert and publish books as apps is an even bigger scale game. So how do small publishers in small countries enter this market? This article will try to provide some of the answers and some of the practical solutions to these challenges by looking at the possibilities of develop apps contra trading apps and the in-between: co-financing book-apps. This article focuses on children s books simply because these have proven to be the most popular book-apps in the Apple App Store. What is an App? The first question we as publishers need ask ourselves is: What is an app? Basically an app consists of content in a digital shape. App stands for application which typically is a small, specialized software program downloaded onto mobile devices. L. K. Horne (&) Lindhardt og Ringhof, Vognmageragrade 11, 1148 Copenhagen, Denmark e-mail: lasse.horne@lindhardtogringhof.dk

18 Pub Res Q (2012) 28:17 22 An app can be software handling for example emails, photos or books. We, the publishers, are experts of primarily linguistic content; stories, recipes, dictionaries etc. Traditionally the publisher only knows how to package this linguistic content into one shape the book (sometimes packaged with an audio-cd). This definition is also applicable for the first generation of book-apps: An app is the digital shape handling our content by displaying text, illustration and narration. On the other side most second-generation book-apps are characterized by simultaneously handling multiple layers of content like speak, illustrations, films, interactive illustrations, sounds, texts etc. They are at a point where shape and content merge in a way where you cannot distinguish the one from the other. Such a book-app is, I would say, very close to a game. If you look at the German publisher Oetingers book-app The Little Pirate, you ll see the how the book is being turned into a computergame. The gameplay is very elegantly build around the story, and even the catharsis of the story is so you could say redeemed in the gameplay. Beside this gameplay the book-app is characterized by enhanced illustrations (the graphic), sound and a virtual joypad: the ipad itself (motor co-ordination). Alas, the app is tying up the four core elements of a computer game. This is the second-generation book-app. The third book-related app of significance is the in-app-store. The Danish publisher Lindhardt og Ringhof/Egmont has published two very successful apps which exemplifies the book-shop-apps: H.C. Andersen and Rasmus Klump. Often this sort of app is built around a strong brand. The app consists of various elements with independent games like Memory Game, Where s Wally-sort of games, movies etc. The books are just part of the package. Often these books are very simple Read Along-books. Such apps resemble a full-grown homepage a lot. Free access, free entertainment to get hooked buy the rest. Basically such apps are simple shops selling various digital content. This leaves us with three definitions of book-apps: The simple book-app, the gamified book-app and the book-shop-app. With this overview in mind each publisher can easily figure out what kind of app he is capable of building asking himself questions like: Does he still own the audio for the story? Has he cleared the digital illustration rights? Does he own the brand? In other words what content can the publisher produce and which brands are at his disposal. Based on such considerations the publisher can make up his mind either to license his content to app-developers/app-publishers or license the software to build apps himself. The Third Track Let us examine the first possibility selling the rights. In a new market every reasonable publisher will start publishing la crème de la crème of children s books. If you have cool brands you shouldn t sell the digital license at all. Keep them, but make them work. If you don t know how, then I suggest selling the license for a very limited period of time 1 year or 2 and make sure to obtain all rights to the source code after the license has expired. You will probably experience that most developers won t be that excited to obtain licenses because they don t believe they

Pub Res Q (2012) 28:17 22 19 can sell enough apps to make real money. They d rather sell you the service of building the apps. If they don t believe in the product, neither should you. If you have developed some sort book-app, you can sell the software too. This is starting to be common knowledge among publishers today but less than half a year ago many publishers seemed to believe that the value of a book-application was the software. Therefore they were not willing to sell this software. But the software does not represent the actual value of a book-application. It s still the content that matters. I substantiate this claim by referring to Apple s golden rule in the Apple App Store: Pick only your most popular titles for the app store. This means that your best title might be worth only a little in other countries despite your efforts to package it in a fancy app. Why? Because despite cool software, it s still difficult to export stories from one country to another. This is your premise whenever you try selling an app to a foreign publisher. But by selling or licencing the app the proprietor might earn some of his costs back. If the proprietor licenses a book-app to a publisher he can choose between different payment models: upfront payment, revenue split and so on just like you handle good old paper book rights. It is important to bear in mind that the proprietor has to sell the whole package of rights; say, rights for the story, the illustrations AND the software. The app market in most small countries is still so limited that the time the publisher would need to spend on clearing rights, would eat up the revenue. Customized Prices To exemplify this I will use our home market Scandinavia as an example. This market is a very small market with 3 10 million inhabitants in each country with approx 1 1.5 million ios-devices and an equal of Android-devices. However, it will always cost the publisher the same to develop a book, an audio book or an app for this small market as for the big market, say Germany. That s an important premise for rights managers to understand whenever they consider selling apps. Whenever the proprietor tries to sell digital rights ebooks, audio books, websolutions or apps the price has to be adjusted to the size of the market. In other words an app is worth only its potential revenue. Like every book. Apps: A By-Passing Format Now we have discussed the different book-apps and proposed the idea to trade apps like publishers trade books to try and squeeze the last coins out of those costly productions but, I think most book-apps will be replaced by the enhanced ebook in the near future. I don t think there is any doubt left that the future of the digital book market will be dominated by tablet computers and smart phones. This opens up for the second coming of ebooks. Have a look at the latest edition of ibooks.

20 Pub Res Q (2012) 28:17 22 The ebook can read along now. It can show embedded videos and the layout is for the first time perfect. Some ebooks are even interactive today. Six months ago we had to build apps to shape the ebooks the way ibooks can today. The important difference is that such an app would cost you thousands of euros just for the start up. Today most publishers have access to engineers based in India, Pakistan or China with great expertise to convert books into enhanced ebooks, the so-called fixed epubs. The expenses are very limited and the production pace very high. Because the publisher only needs to focus on the content the epub he can take advantage of the work the editor put into the paper book in the first place. And the engineer only has to build epubs for one reader and not build both reader and content. Today you can create fixed epubs that perform like apps for less than one or two euros a page. And very important sell this ebook in all other stores than Apple s which leaves you with a much better margin. ibooks are so to say one giant app offering thousands of titles, just like the bookshop-app-type. With ibooks in the market as the most advanced reader of fixed epubs at the moment I would say that app-publishing will make a shift from first generation apps to second generations book-apps and brand-focused apps. Therefore, I think that book-applications are a transitional format in between the simple text based ebooks and tomorrows enhanced ebooks. The in-app-stores will stay, but the first generation-apps are on the last legs. I am very sure this will happen, because the entire digital book industry needs better and more cost-efficient digital books. Eco System Furthermore there are some structural problems concerning apps. How can the publisher make his app visible in the narrow sales channel of the app store with more than 650,000 apps? How to compete with the low prices in the app store starting at 0.99 cents? The short answer is you can t. Ebooks on the other hand have their own local eco-system: The digital bookstore like Amazon, ibooks and all other ebooks stores which deal books at real book prices. This way an ebook at 18 euro is considered cheap in Denmark, whereas a fancy children s app at 4 euro is still seen as expensive by the Danish customer browsing the app store. Of course the publishers will start to compete very aggressively on prices in the ebook stores too very soon. But at least the small children s book publisher in a small country with a small marked does not have to compete side by side with global entertainment applications at no cost. New Strategy With the above mentioned premises, I think more publishers will start to publish their children s books as ebooks because these now handle narration, fixed layout and even limited interactivity at relatively low cost.

Pub Res Q (2012) 28:17 22 21 I also think more publishers will cooperate around book-apps across borders where they don t compete directly because of different languages. Why would the proprietor license a book-app to another publisher instead of translating and localizing the app himself? Because it simply might not be worth the hassle a local publisher will be better to localize, sell and market the application. This publisher might even have bought the rights to publish the paper book and naturally he should also publish the digital edition either as ebook or as a licensed app. As an example I can mention the cooperation between the pro-active German Oetinger Verlag and the Danish publisher Lindhardt og Ringhof. The Danish publisher is publishing three of Oetingers book-applications. This has let the Danish publisher to also seek the ebook rights and audio book rights and maybe some day the publisher will also publish the physical book. Lindhardt og Ringhof is excited about this partnership because it embodies all the above mentioned perspectives: low cost, but high end apps for a small market with a minimum of risk for both parties. And thus Lindhardt og Ringhof is still in the appmarket and can collect data about the level of quality and quantity of the book-app market. Conclusion I don t think there is an alternative for publishers in small markets or for small publishers than to license either the application-software, license their content or license and localize the entire book-application if they want to enter the appmarket at a low risk. The smart phones and tablets will dominate the digital book market, and the built-in reader applications of these devices will get more and more advanced. I think the ebook is the best, most flexible and most cost-efficient way to enter the digital book market. Apps are for bestsellers only the mass market is the advanced and cheap ebook. Very soon within months this article could be about trading enhanced ebooks instead of applications. In continuation hereof it s important to focus on the rights. From a publisher s perspective the proprietor should include all digital rights in the license arrangements. Most digital departments have a very limited staff and no time to negotiate and buy specific digital rights. Even the standard of 5 year contracts on books causes big problems. How can any publisher in a few years manage the rights of thousands of titles as ebooks? It is not possible agents come and go. Publishing houses come and go. How do you want your publisher to build the long tail in digital business with 2, 3 or 5 year contracts? The license period has to be longer in the future 1 at least for backlist titles. Furthermore the ebook has an eternal life and it s necessary for us as publishers that we can trade the digital rights independently 1 This is a byline but if agents and publishers don t start to structure the digital licenses (audiobooks, ebooks and apps), I fear that publishers and agents will end up neglecting the author s rights. Or the value of translated literature will decrease because the rights managing is too expensive.

22 Pub Res Q (2012) 28:17 22 from the physical rights from today! A digital license should cover all digital editions as long as they don t alter the original work. Less paperwork gives a better margin. Don t kill the digital book market before it has had a chance to grow.

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