The Lulu.com IPO filing underscores that the digital and on demand book revolution (and most online commerce) needs to learn from the digital music revolution, it’s not about distribution, it’s marketing.
The process of automating on demand publishing gets cheaper every year. You can spend $40 million on a system today, and someone will do it for $40,000 tomorrow. The key problem we all learned with mp3’s and the digital music revolution is that the distribution doesn’t matter nearly as much as the discovery.
From http://www.publishersweekly.com/article/453321-Lulu_Looks_to_Raise_Over_50_Million_in_IPO.php
According to the prospectus, Lulu has invested $40 million to develop what it called “a robust, scalable and highly-automated open publishing platform.” And although the company has yet to make money, it has increased the number of people who use its services with 1.1 million registered creators as of the end of 2009. The number of units sold rose to 2.6 million in 2009, up from 2.3 million in 2008 and 1.7 million in 2007.
Authors much like musicians don’t know how to market themselves. That’s why MySpace boomed so rapidly, it provided a system for musicians to labor at their own marketing (unfortunately for fans it did not evolve very much). Lulu should get a cash infusion from the market if it can prove that it can enable and assist Author’s to market themselves. What’s the point of collecting inventory, even if it is digital, if it is never gonna move through the online shopping carts?
Now I should probably give Lulu.com a break, many of their sister online media companies were already acquired, sometimes by companies that really didn’t care about revenue, but traffic growth. Always a bridesmaid but never a bride. That said, even YouTube is expected to post a profit this year having labored and lobbied advertisers and content owners to play on its massive network.
I think Lulu.com was hoping for a Harry Potter series or a Davinci Code to break on it’s service, but frankly any author that starts generating those kind of numbers through their own marketing and distribution is likely to have the business sense to publish in bulk. Lulu needs to arm their authors with knowledge of fan building and provide them with real tools to build and retain a base of readers. If they can do that, it’s money well invested.
That’s why you can build the best retail site on the planet, fine tune it for search engines, and still not make a dime. You need to go out into the conversational wilderness. You need to join communities, study their needs, jump in on conversation, and invite them to discover you.
The initial novelty of MySpace was creating a community of fans who could connect based on similar interests. That was the missing factor with MP3.com. We had similar streaming and retailing available for musicians, but no social rewards for fans to stay on the site and discover new artists. MySpace created a community that essentially made fans sitting ducks just waiting for musicians to hunt them. It was a great success for a while, they just got so lost in their acquisition that they never protected that community from being overwhelmed and spammed. The musicians essentially annoyed all of us away. That is why Facebook rose so quickly on the idea of privacy and yet why they are also so quickly dropping the walls between users.
Communication is a delicate balance of listening and speaking, you have to master it if you want to facilitate the discovery and sales of your products.
