Last night, on the eve of the latest Knight News Challenge winner announcement, I was reflecting back on what I’ve learned from working on BookBrewer — a project that grew out of the 2008 Knight News Challenge-funded Printcasting — and what it says about how packaging and consumer expectations affect the monetary value content.

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These two products are essentially the same underneath the hood, but the expectations of the reader couldn’t be more different. The bottom line is that I now wonder if we ever could have made a successful business with Printcasting simply because it was built within the context of newspapers and magazines, which customers expect to get for free.

ABOUT PRINTCASTING

i-91e85034d618918984b2a6454c502357-printcasting.jpgPrintcasting was a web-based system that made it easy for people to create PDF magazines that they could distribute locally and pay for with local advertising. We launched it in November 2008. In case you’ve blocked it out, that was the beginning of the global economic meltdown, arguably the worst time in history to test a product supported by local business advertising.

By early 2010, we’d gotten 400 grass-roots publishers to use Printcasting in five geographic markets. As we watched them also struggle to sell local ads, we realized that Printcasting.com’s long-term future was not very bright. The service’s continued existence was thus 100 percent dependent on getting additional grants.

Rather than try to live grant to grant — something that grated against my entrepreneurial spirit — we decided to pivot to something with a better revenue model than local advertising. And that led us to e-books and BookBrewer.

ABOUT BOOKBREWER

BookBrewer is a web-based tool that makes it easy for anyone to build, publish and distribute e-books to popular devices and retailers such as Amazon, Barnes & Noble, Apple iBooks and Borders.

In stark contrast to Printcasting, BookBrewer came along at the perfect time in history.
In 2010, Amazon announced that e-books were outselling print books only three years after introducing the Kindle, and authors were just beginning to self-publish e-books that would later sell thousands of copies each month. According to Bowker, there were 764,000 self-published titles created in 2009, up from far less than 60,000 a few years ago. And the International Digital Publishing Forum shows e-book sales increasing 300 percent or more each year.

Unlike Printcasting, which could only be supported by grants, BookBrewer pays for itself with service fees and royalty share and has an audience of nearly 7,000 active users after six months. While we’ve talked to many investors, we’ve been able to bootstrap this far and our revenue continues to grow.

SAME PRODUCT, DIFFERENT PARADIGMS

While it may not be obvious up-front, Printcasting and BookBrewer are really about the same thing: turning the average Joe into a publisher. Their most obvious difference is that one is about physical media and the other tablet-based media, but that’s actually pretty minor. The major difference is the economic and cultural frameworks in which they operate.

Printcasting was built in the mold of free newspapers and magazines, while BookBrewer was built in the framework of paid physical books. This difference is extremely subtle and semantic, but it quite literally creates a rags-and-riches dichotomy between the writers who fill their pages.

On the one hand, you have journalists who, thanks to abundant online content and the collapse of local advertising, are getting laid off by the thousands and taking jobs as bricklayers and nannies. On the other, you have average people like stay-at-home moms who are paying for their kids’ college education with just two weeks of sales of their self-published romance novels. (I’m not exaggerating with the second scenario. It’s happening right now to one of our BookBrewer authors, and she’s not the only one.)

COULD NEWSPAPERS MAKE MONEY WITH E-BOOKS?

Because I come out of the journalism world and know so many journalists, I’m tempted to take this personally. What is it about news that makes people value it so little? But it also seems like there could be opportunities for news organizations to use e-books to generate revenue.

As I recently told Amy Gahran at the Knight Digital Media Center and a seminar of non-profit journalists at CU’s Digital Media Test Kitchen, there’s no reason that stories told by journalists couldn’t be repackaged and sold as e-books. But how many will actually even try?

Sadly, I think few newspapers will take advantage of the e-book revolution because they and their readers choose to be defined by their past relationship, which is all about free content. Magazines and newspapers have a history of being available for next to nothing and making the bulk of their supporting revenue from advertising. It’s hard to change that mindset. But I hope that some of you will prove me wrong, and I would love to see you turn your fortunes around by selling good journalism to e-reader audiences.

Meanwhile, e-books evolved from a completely different direction. Books have always required payment by the reader, with new hardbacks costing $20-$30 or more. When Amazon began selling e-books for $2.99, it was received by readers like the biggest Blue Light Special of all time. As a result, the same reader who may balk at paying $20 a year to subscribe to Business Week had no problem at all loading up her e-reader with $30 worth of $3 novels.

THREE MORE LESSONS

There are a few other lessons in our story for other News Challenge grantees, and innovators in general:

1) Listen to Your Customers: We were able to change focus from PDFs to e-books because of what Printcasting users were telling us. Every month, at least one new Printcasting publisher would ask us, “Can I publish my magazine to the Kindle?” which quickly evolved to “How do I get this on the iPad?” If we’d remain focused only on our grant obligations we would have missed one of the biggest opportunities in publishing history, but because we listened we were perfectly positioned to be a major player in the e-book space after our grant ended.

2) Change and Innovation Go Hand in Hand: When doing something that has never been done before, the way you start is just that — a start. It’s hardly ever how you end up. If you do manage to do something exactly the way you planned over many years, you’re either not innovating fast enough, or you have the gift of precognition. It’s for this reason that I have strongly urged the Knight Foundation to give grantees more flexibility to allow their projects to grow and change over time — something we weren’t allowed to do as much as new grantees.

My advice to you all: Change and evolve based on what your customers are telling you. If you’re afraid of getting dinged later by a grant manager, remember that it’s always easier to beg for forgiveness when you’ve created a new success.

3) Everything is a Business: Apart from tax law and management, there really isn’t a major difference between non-profit and for-profit enterprises. Even grant-funded projects need to make money (or in non-profit parlance, reach “sustainability”) or they can’t continue. If you’re working on anything with Other Peoples’ Money, you need to stop right now and figure out what your future business model will be when that money is gone, because that day will come sooner than you think.

GOOD LUCK!
I wish the new round of News Challenge winners the best success. I can’t wait to see what you all build over the next year, but I’m even more interested to see what you’re doing three years from now. The lessons you learn and the choices you make during your grant period will have more lasting value than any technology, program or process you create while funded.

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