FarmVille, ChatRoulette, Video Games: Publishers Look Beyond the Book

As the market share for digital reading grows, and more devices like the iPad and the just-announced stylus-based e-reader from Samsung (SSNLF) become available, the book as we know it -- text and images bound between covers -- is obviously going to adapt.

Some publishers already have plans to move far beyond that concept to take advantage of the big market -- and potential big money -- for entertainment only tangentially related to the act of reading. But if publishers loosen the strings on what a book can be, will that unmoor the companies -- or boost their relevance and the probability of their survival?

The public consumes movies, music, and video games in far greater quantities than it does books. Apple's (AAPL) iPad and likeminded devices will make it even easier for consumers to switch off from one thing to the next -- or to have it all integrated into one application. But publishers can't help but cheer that there are more book-related apps than gaming apps -- and they're hoping to work some magic to fuse the two together.

Publishers and Video Games

Random House, a division of Bertelsmann AG, thinks it's found that very elixir. This month, in tandem with a sweeping reorganization of their digital publishing division, the company announced the formation of a separate unit devoted to developing video games. This in-house staff of 15 will create original stories for video games and provide story advice for games in development, according to The Wall Street Journal. Two projects are being shopped around. Random House is also working with Michigan-based software developer Stardock on the launch of the strategy game Elemental: War of Magic.

Book publishers have long had relationships with video-game companies, producing tie-in novels that sell very well thanks to the built-in fan bases who play the games. So it's logical for Random House to venture further into video-game territory. What's curious, though, is that it doesn't have a business model in place. It comes down to one simple point, as Gina Centrello, publisher of Random House Publishing Group, which includes science fiction and fantasy imprint Del Rey, told the Journal: "We need more revenue streams."

An Open Valve

Publishers hunting for the best video-game-related business model, which could be applied to all digital models, should take detailed notes on Valve. The company behind such popular, addictive games as Half-Life 2, Day of Defeat and Left 4 Dead lets players download content easily through Steam, a free digital-distribution platform that isn't limited to Valve's games. Steam is available for a variety of different platforms, including, recently, Apple's Mac.

Valve not only bundles platforms together, it offers deep limited discounts: A half-price sale of Left 4 Dead over Presidents Day weekend in 2009 sent the game's sales through the roof. Such massive success hinged on several factors, Edward Champion wrote in an essay last year: a minimal entry point (Steam is free, so consumers buy only the games); a straightforward digital-rights-management policy (once you download a game, you can access it from any device); and a variable price point.

Valve's advantage is that it can do much in-house, from content creation to distribution to marketing, on video games, the genre it knows intimately. Publishers seeking an entry point for new revenue streams have a lot of catching up to do -- but they aren't lacking ideas for existing and forthcoming devices.

Reinventing the Book

Penguin's (PSO) "beyond the book" emphasis is geared towards the iPad. In a presentation at the Financial Times's Digital Media and Broadcasting Conference in London, Penguin CEO John Makinson demonstrated several ways for publishers to approach the iPad, ranging from an interactive online community for its Vampire Academy novels to three-dimensional depictions of the human body in an enhanced anatomy textbook. These may not be books in the traditional sense -- Makinson said, "the definition of the book itself is up for grabs" -- but his presentation illuminated some possibilities for how hybrid tablet-style devices could expand the e-reading market this year.

But publishers shouldn't limit their thinking to existing devices and storytelling vehicles, because possibilities come from unexpected places. One might be FarmVille, the real-time situation game that attracts more than 80 million unique users every month on Facebook -- and makes a great deal of revenue through the conversion of virtual cash goods into real products and the rewarding of longstanding loyalty.

Richard Caccapollo, president of social media payment platform Orca, offered suggestions to publishers on industry blog GalleyCat for using virtual cash goods, FarmVille-style, to attract consumers to online bookstores. "When the publishing industry starts thinking about how they chunk up content -- whether it be articles or chapters -- it shouldn't be a debate of whether an article is worth one dollar or three dollars," he said. "An article should cost 43 credits." A virtual price, he said, increases the chances of making a sale, disinhibiting consumers from deciding the actual price is too expensive.

Playing Roulette

Another avenue to reinvention and revenue is ChatRoulette, described in New York magazine as "a new website that brings you face-to-face, via webcam, with an endless stream of random strangers all over the world." His fascinating article underscores the trippy weirdness of shuttling forward through a sea of strangers engaging in all manner of activity. But a third-party software developer could configure that basic system to create streamlined virtual book tours, where an author appears at a bookstore or event, and visitors from around the world could join, and then buy books through a PayPal link.

ChatRoulette owner Andrey Tarnovskiy has no plans to expand advertising beyond what's available, but that day will probably come -- and publishers could insert book-related promotions in between shuffles from one webcam-enabled person to the next.

What's clear is that book publishers know they must adapt to exciting developments in digital distribution and social media. Publishing can keep pace, as novelist Alison Norrington recently explained, by "gatekeeping the 'story' and not the 'page'" -- a phrase we'll likely hear more as readers learn to expect more from books.

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