Transcript: Predicting the Present

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Predicting the Present
An Interview with Joseph Esposito

Record at the 2012 NFAIS Annual Conference, Philadelphia

For podcast release Monday, March 5, 2012

KENNEALLY: Predicting the future is a dangerous proposition, so predicting the present ought to be an easier task. We’ll find out when we chat with Joseph Esposito, who is going to be presenting the keynote closing speech for the annual NFAIS Conference in Philadelphia, and Joe, welcome to Beyond the Book.

ESPOSITO: Thank you, Chris. It’s a pleasure to be here.

KENNEALLY: It’s a pleasure to have you join us. We should tell people that you are a management consultant working in the world of digital media, software, and publishing, that a good deal of what you do concerns research publishing, which is, of course, the focus for the NFAIS Conference.

Prior to setting up the consulting business you now are in, you were CEO of three companies, Encyclopedia Britannica, Tribal Voice, and SRI Consulting, which all led to successful exits. And in your consulting work, you advise CEOs and boards on strategy issues and direction. So you’re someone eminently qualified to talk about predictions.

In your closing keynote today, you’re going to be predicting the present, and you take note of a fairly well-known quote about the future and its distribution. Tell us that and how that sort of became a kind of motif for your talk.

ESPOSITO: The science fiction author William Gibson, who among other things is the creator of the term cyberspace, has a quotation, which is, the future is already here. It’s just not evenly distributed. And I think that’s a really profound insight, that in fact, when we try to think about the future, we tend to think about things that are very far off, but if we look around us today, we will see that many of the things that are going to become more prominent in the future are already in existence.

So my point of view is that rather than try to go to the crystal ball and to peer into the future as though it’s some distant place, we should look around us to things that are a little bit out of the ordinary, things that are out on the fringe, and try to make an assessment of them and make some evaluations about what they could become with a little bit of luck and some management grease.

KENNEALLY: Right. And that’s obviously critical, because the people you’re advising in your work have to grapple with what they’re going to be doing a couple of years from now, but at the same time, they’re still flying that plane, so they really need to be looking at the present moment. It’s not something you can kind of put aside.

ESPOSITO: Well, that’s absolutely true, and it really bears on what I would consider to be a larger point, and that is that all of us who work in the publishing industry today are used to getting beat up wherever we turn. We’re regarded as having our heads in the wrong anatomical position. We’re regarded as being fools and stupid, that we don’t take chances, we don’t innovate, etc., etc.

The fact of the matter, though, is regardless of the industry – it doesn’t have to be publishing – there’s a very big difference between the strategy used for a startup and the strategies you use for an established company. And if you are in fact running an established company, you have to think long and hard before you really begin to embrace the disruptive technologies that some of the startups are using. In fact, many times, what you really want to do is to co-opt it, not disrupt it.

KENNEALLY: Well, that’s a good point. And you talk about something called extensionism, and this is what is leading to that kind of paralysis, or an attempt to stave off the inevitable. So tell us what that’s about.

ESPOSITO: Extensionism is like having a good ground game in football. You grind it out. You’re not really throwing the long ball. You’re not trying to run around to the end. You have a business that’s in place and you say, how can I get a few more yards? And you come up with ways of extending your franchise.

So, for example, you might now be delivering content to PCs and laptops and you may then say, well, let me see what my opportunity is to go to some of the new mobile platforms. That would be a typical thing. Or another example might be that you have a very large position in library sales and marketing and you then start to take on more properties for that channel because you’ve already got a good channel in place. There’s nothing wrong with a strategy of this kind. It essentially says you’ve got assets in place and you try to see how you can deploy them further and extend your range in that respect.

The limitation of that, of course, is that people who aren’t married to those legacy operations may come up with something that’s even more radical and may really overturn some of the things you’re doing in due course.

KENNEALLY: In this publishing world, which as you say, kind of unfairly gets tainted as being stuck in the mud but in fact has innovation in its bloodstream – you and I were chatting earlier and you talked about the simple fact that publishing is by definition innovative. It’s constantly putting out new product. How can they incorporate – how can publishers incorporate their internal sense of innovation with the external demands on innovation that’s going on in the marketplace?

ESPOSITO: Publishing is the most innovative industry in the world. Just to use the book industry in the United States as just one example, there is someplace in the area of about 200,000 new books published every year. That’s 200,000 new products. There’s no other industry anywhere that publishes that many new products in a year.

But all of the innovation in publishing is between the covers of the book, or for that matter, within the confines of the screen, if you want to use a different metaphor. The innovations tend to be largely editorial. As a species, we publishers are people who go out looking for new ideas. We track new ideas.

Unfortunately, we don’t always take those new ideas and bring them to bear on the operations of the business itself. That’s what we’ve not been good at. We’re good inside the box, and inside the box, we continue to refresh all of the products we do. We’re not as good outside the box. We’re not as good in terms of inventing new distribution mechanisms and finding different ways to take advantage of that content and new contexts.

So there’s a place for praising the worker publishers as innovative content creators, but there’s also a place to be critical of publishers as having really given way to other organizations that have taken the lead in new forms of distribution.

KENNEALLY: Let’s get some free consulting advice, then. If you’re going to a CEO of a publishing house and making this point, how do you then get them to the next step, which is sort of shaking them out of that box somehow and thinking differently?

ESPOSITO: Why don’t we take your own organization as an example.

KENNEALLY: Copyright Clearance Center, that would be.

ESPOSITO: Copyright Clearance Center. One of the interesting things that Copyright Clearance Center might want to ask itself is why does Creative Commons exist? Creative Commons came about because of the failure on the part of the management of Copyright Clearance Center to begin to extend its own business in a creative way into the whole area of self-publishing.

So you have to then say, well, how did we make that mistake, and are we still set up to make a mistake like that in the future? It would be very interesting to imagine Copyright Clearance Center as something that develops a strategy to co-opt some of the capabilities of Creative Commons and move beyond them. I’m not aware that anything like that is going on now, but certainly there’s a big space available for somebody to come up with a whole modified way – an enhanced way – of developing pre-negotiated contracts for extending copyright licensing into new areas.

KENNEALLY: I know that’s a subject of interest. I won’t speak for Copyright Clearance Center on the podcast right now, but I know that we have chatted with Creative Commons. We know people there. We understand that we kind of live in an adjacent space and it’s obviously an evolving one. So we will be having more to say about that, and in fact maybe I can give a plug for On Copyright 2012, which is coming up in March at the Kernochan Law Center at Columbia. We’ll be discussing some of those issues there on March 30.

But to the point of advising CEOs, let’s say you were going to give that advice to our CEO. What kind of response would you expect, generally speaking, when you’re trying to shake them out of that box you described they’re in?

ESPOSITO: I’m not in the business of shaking people out of the box. I’m in the business of listening to what people are trying to do and to try to improve the quality of the conversation through a dialogue.

Now, I was pulling your leg about Copyright Clearance Center just to be funny, but in fact, any organization has to deal with the fact that we have internal conversations going on all the time. And what you need to do is to bring in new voices to try to expand that conversation.

I think it would be a very, very big mistake for CCC or any other established organization to get the idea that their future is to do what somebody else is doing. Their future is to do what they uniquely can do, but they have to do it in interesting and creative ways.

KENNEALLY: OK. Well, a good point. And I think listening to others and hearing those voices and incorporating them, but doing it on your own is a great piece of advice.

One of the things that you chat about in the keynote today is hybridization, again, this adjacency, this overlap between the virtual world and the physical world. You cite the example of the revival of Barnes and Noble, which has managed to recoup some of its business through e-book sales. How do publishing houses approach that today?

ESPOSITO: The example of Barnes and Noble is simply extraordinary. I think a lot of people thought they were going to go the way of Borders, but they surprised everybody by using their bricks and mortar stores to set up boutiques to sell the Barnes and Noble Nook e-reading device. They now have a 25% market share for e-books, which I understand is actually a couple points higher than their market share for print books. Who could have imagined this happening?

For publishers right now, I think that one of the interesting questions is going to be, how does one marry virtual and online capabilities with bricks and mortar realities? It’s a very dangerous thing for the publishing industry, especially the trade publishing industry, to see the demise of all these independent bookstores. We also now have another bricks and mortar institution, the public library, that’s under challenge. This is not a good thing.

I would very much like to see publishers begin to think about creating new bricks and mortar venues for community interaction, lectures, author readings, things of that kind. These are things that would really form a bridge between the world we live in, the meet space of the physical world and the world that we’ve come to appreciate through organizations like Amazon, Google, and eBay.

KENNEALLY: That’s re-thinking the bookstore as the community space, and indeed, it occurs to me that it always was very much that, readings and lectures, and sometimes some corner of it might be devoted to a little bit of a café, that kind of thing, but its primary notion was as a bookstore. You’re saying to sort of realign that and think of it more as a community center?

ESPOSITO: Well, let’s not romanticize the bookstores of the past. Some of them were in fact community centers and some of them were fairly sterile operations. Some of them were poorly organized. There’s a reason that Borders and Barnes and Noble got as big as they did when they did, and there’s a reason that Amazon is as successful as it is today. So romanticizing the past really doesn’t get us anywhere.

But in fact, many of these bookstores do serve as community centers. People go there because they want to get out of their houses. They don’t want to sit inside their house in front of their home theater all day long. They like to be around other people. They like to be at places where you can do something other than eat. It’s increasingly hard to find places to go. You can go to movie theaters where most of the people are 18, 19 years old. You can go to restaurants, or you can look for a bookstore where you might browse around with other people with intellectual interests.

So I think that the bookstore as community space is a very real possibility and something that the industry may want to try to develop in a more serious way.

KENNEALLY: Another important community space involving publishing is the library. You referenced the challenge the public libraries are having, but you also look at the academic library and some of the challenges that publishers face moving forward in that space. Tell us about that.

ESPOSITO: The academic library is a difficult beast to get one’s arms around because there’s such variation. You have about 20 absolutely enormous research libraries out there, perhaps another 100 research libraries of some size, but then you have libraries in liberal arts colleges, libraries in smaller state universities, libraries at community colleges, and so on.

The issue right now in the world of libraries is that the funding for libraries is not growing at the same rate as the institutions overall. What this means is that libraries are finding it more and more difficult to provide the materials for their constituencies as they would like to.

An interesting question would be, what kind of efforts could be made by publishers and libraries alike in order to reduce some of the cost in the system but does not negatively impact the publishers and actually permits the librarians to fulfill their mission in a more serious way. I don’t really see those conversations going on right now.

KENNEALLY: You are trying to spark some conversation. You’re a contributor to the blog that SSP runs called Scholarly Kitchen, and you’ve made some interesting contributions. The one that I really thought was relevant to our discussion was the role that Amazon is playing in the publishing marketplace. And its reluctance to disclose numbers is really a challenge for publishers, particularly academic and university press publishers.

ESPOSITO: Let’s be clear that Amazon is under no obligation to disclose numbers to anybody, and they are a great company, and they got to be as big as they are not because they’re bad people, but because they’re brilliant business people. So I have tremendous admiration for them.

I also am aware that working with them can be very challenging. One of the things that is very distressing is that increasingly, publishers are not getting the kind of feedback about where their products are going, which affects the kind of products they want to create and the kind of marketing programs they wish to bring to those products. And Amazon, which is really serving as something of a black hole for information right now, isn’t cooperating in trying to get that information.

Now, again, they’re under no obligation to provide that information and one shouldn’t start to jump up and down or threaten lawsuits. That would be pure silliness. But I do think it would be incumbent upon the publishing industry to try to develop new venues where they’re able to get better information about their goods and services in order to improve them.

KENNEALLY: Right. Because without that data, moving forward becomes so much more difficult. You’re driving in a fog.

ESPOSITO: Exactly right. You publish a book and you don’t know who reads it, you don’t know where it ends up, you don’t know if it’s sitting on a library shelf somewhere unread.

KENNEALLY: You don’t know what they paid for it.

ESPOSITO: That’s actually an excellent point which I hadn’t considered before. You know what you’ve gotten for the book, but you don’t know what the end user is necessarily paying for it. That’s true.

KENNEALLY: It seems to me that the future is going to be about having access to this kind of data. You’re speaking today to an NFAIS audience. Is the appreciation of data as high as it ought to be?

ESPOSITO: Well, it’s as high as it ought to be and it’s higher than it ought to be and it’s lower than it ought to be. It all depends. This is one of those highly contingent questions.

I had a consulting client a few years ago that was absolutely determined to collect all the user data from its website. They were going to use that data, dataline that, and come up with new things. Well, this became a very successful website, and they had an enormous amount of data, and they actually had to rent a special room to store all of the records, the user logs. The amount of information was just overwhelming them. They never were able to get to it. So they had a situation where they had the data, but they had no meaningful data. That’s a real problem. So developing the tools that can actually sift through and find what is useful and being able to make constructive extrapolations is the real challenge.

I think this is the first inning of this ballgame. We want more data, but we also want tools to manage that data. We need new ways of understanding that data, and we have no idea how this game’s going to end. And I just can’t resist to say the game isn’t over until Rivera’s on the mound.

KENNEALLY: Well, I was thinking that we have to go to the bullpen, I think, at least at some stage in the game.

Joe Esposito, we’ll be looking for more of your observations on Scholarly Kitchen, the SSP blog, and otherwise look forward to your appearances at conferences around the country. Thank you so much, Joe Esposito.

ESPOSITO: Thank you, Chris. It’s been a great pleasure.

KENNEALLY: And for all of us at Copyright Clearance Center, thank you very much for listening to Beyond the Book.