What’s Next for Digital Asset
Distribution: An Introduction to DADs

by Mike Shatzkin

Digital asset distribution
was on hardly any radar screens a year ago. Now it is clear that distributing
content on the Web promotes sales—and equally clear that maintaining a digital
infrastructure is expensive. The bandwidth and server demands for sending files
to printers for a year’s worth of books are quite different than the demands
for sending many thousands, or tens of thousands, or even more, files to
individuals in a day. Or an hour.

On the other hand, a robust
digital distribution solution, once it exists, is easier to expand than a
physical plant. And just as adding volume in a physical warehouse enables
investments in technology that cut costs and negotiated agreements with
truckers that cut costs, so will the increased technical capabilities that come
with digital volume. Eventually, aggregation will increase knowledge of
developing digital sales channels and what content they can monetize.

We Dub Thee DAD

To help define this new world,
here’s some nomenclature. Digital asset distributors are DADs. Publishers who
are not DADs themselves are digital asset producers, or DAPs. And the targets
of all this activity—the digital asset recipients—are DARs.

In order to qualify as a DAD, a
company has to be attempting to provide a wide-scale, tending toward complete,
digital distribution solution. After all, Google and netLibrary distribute
content, but they aren’t DADs, because they do not offer a multifaceted distribution
solution for publishers; instead, like Donnelley and Amazon, they are DARs that
depend on DADs to get them the files they need.

At this writing, between 10 and 12
companies seem to be trying to be DADs, including codeMantra, LibreDigital,
Ingram Digital, and Value Chain International.

Ultimately, all DADs will have to
store publishers’ assets and convert them to different formats, providing DRM
as required and successfully delivering them to platforms and Web sites of
every description. Although some large publishers with substantial capabilities
of their own might pick one DAD for one digital service and another for a
different one, most publishers who need a DAD will want one to handle
everything for them.

Coming Up: Consolidation

In this scenario, consolidation of
digital distribution will be inexorable. This is partly because
distribution—whether physical or digital—is a parity function (parity functions
being the ones that you can’t gain much competitive advantage from if you
handle them better than the next guy, and that can really hurt your business if
you screw them up). It makes total sense for parity functions to be
consolidated and outsourced.

But the biggest drivers for
consolidation will ultimately be the DARs. The big publishers that are becoming
DADs are highly motivated to eliminate archiving of multiple copies of their
books on the Web. In the ideal world of HarperCollins or Random House, any site
that wants their content, such as Google or Amazon, would have to come get it
from the publishers, as needed, instead of keeping their own copies.

If their content is to be served,
publishers instinctively want to be the ones doing the serving so they can
exercise whatever controls—through recognition of the recipient or DRM
mechanisms—they see fit. But serving content for Google and Amazon and
Microsoft so they will need no archived copy, if that ever becomes possible,
will require adherence to the highest standards.

These Web businesses have set high
expectations for the speed of responses to any query or click. Can publishers
meet those service levels? Well, perhaps some can. But certainly not everybody.
So this necessity will lead to some sort of certification of capability, and
that will drive consolidation to those certified as capable.

Each new device—phones, PDAs,
e-book readers—requires IT bandwidth and collaboration. That also drives
consolidation. And assuming that certain B2B content shoppers will want
customized IP across a range of publishers’ offerings, that will drive consolidation
too.

Clearly, each new use case—a new
Web technology or e-book format, say—will require IT accommodation. The fewer
DADs there are, the easier it will be to spread new opportunities across the
publishing marketplace.

It could even be that uses will
arise that make a brand-new DAR with a brand-new idea want to work with a
single DAD on a pilot basis. Wouldn’t it choose the one that had the largest
aggregation of relevant content?

Shifts Shaping the Future

Once you have DADs holding files
and serving them, will the DADs get involved in content-management functions
that publishers have already taken on, often quite successfully?

Most publishers now deliver
digital files to their printers, and publishers have been forced to manage
their metadata and distribute it throughout the supply chain. Logically, either
of these functions might ultimately fall to the DADs; but delivery to the
printers is pretty simple, and it is not yet clear that the DADs will have the
ability to handle robust metadata demands.

In any event, publishers should do
their DAD homework before making substantial content-management investments.

Aside from the potential to sell
digital content, publishers have to focus on some important shifts affecting
channels they use to reach customers now.

Even in the largest houses,
marketing needs to shift from large-scale to niche-scale. That’s where the
audiences are going. That means 50 Web sites might be needed to reach the
audience that one TV show or newspaper reached in the past.

Marketing also needs to shift from
expensed to investment. That is, it needs to be about building connections to
the community and using those connections repeatedly. When the money spent on a
newspaper ad is spent instead online gathering email names and permissions, the
expense becomes an investment that will pay off over many books.

And, as has been eloquently
explained over and over by Seth Godin, marketing has to be less about
pontificating and more about conversing. Cost-effective conversation can happen
only online. And the content of the books has to be available and flexible to
enable it.

As publishers tire of sending
books to multiple DARs that create their own files, and as they contemplate the
cost and challenges of digitizing backlist, they will realize the urgency of
having a digital workflow for their new titles, so they don’t dig a deeper hole
of content that will have to be addressed again at great expense. And as
opportunities to expose content online proliferate, the ability to address
those opportunities with some measure of control and protection of copyrighted
material will feel increasingly urgent.

Working without robust digital
distribution capabilities will be an obvious handicap—the absence of a critical
parity function—and creating one’s own will be a nonstarter for most
publishers. And that’s why I believe this is the year that publishers will be
looking for DADs. Next year, I may be talking about the need for MUMs—managers
of unlimited metadata—to work with them.

Mike Shatzkin, founder and
CEO of The Idea Logical Company, Inc., has been helping publishers with the
challenges of digital change for almost two decades. Recently, he has been
involved in an extensive research, white paper, and conference project on DADs
(digital asset distributors), from which much of the material in this piece
comes. For further information or to obtain the white paper, contact Anna Roe
at Klopotek: a.roe@klopotek.com.