The Future of Publishing: AI, Mixed Reality, Machine Learning And More With Thad McIlroy

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In 2007, Apple released the iPhone and Amazon released the first Kindle. A LOT has changed in the publishing world since then. Technology has shifted reading as well as writing and new companies spring up every day that may disrupt the old order of things. Today I talk to Thad McIlroy about the future of publishing.

In the introduction, I talk about what it means to me to be a finalist for the ITW awards in the Best Ebook Original category for Destroyer of Worlds. Plus, the launch of Amazon Cash and what that might impact in terms of global sales.

This podcast is sponsored by Kobo Writing Life, which helps authors self-publish and reach readers in global markets through the Kobo eco-system. You can also subscribe to the Kobo Writing Life podcast for interviews with successful indie authors.

Thad McIlroy is a journalist, author, speaker and publishing consultant and he writes about the future of publishing.

You can listen above or on iTunes or Stitcher or watch the video here, read the notes and links below. Here are the highlights and full transcript below.

Show Notes

• What is artificial intelligence?

• The Bestseller Code: Anatomy of the Blockbuster Novel and how it applies to authors

• Should we be branding in a way that teaches algorithms about our books?

• Why an author's website matters so much in terms of metadata

• Quantum computing and its effect on books and authors

• Start-ups, the future of publishing and world markets

You can find Thad at TheFutureOfPublishing.com and on Twitter @ThadMcIlroy

Transcript of Interview with Thad McIlroy

Joanna: Hi everyone. I'm Joanna Penn from thecreativepenn.com, and today I'm back with Thad Mcllroy. Hi, Thad.

Thad: Hi, Joanna, how are you?

Joanna: I am good. It is so great to have you back on the show. It's been over 18 months since you were on the show in July 2015 and a lot has changed in the future of publishing, hasn't it?

Thad: It certainly has. Thank gosh for that, it's very interesting for all of us.

Joanna: So we have a lot to talk about, but just a little introduction.

Thad is a journalist, author, speaker, and publishing consultant specializing in the future of publishing, and he actually has the website, Future of Publishing, which is just amazing. I mean, such a good URL.

We're going to start straight away with publishing and machine learning. We've both read “The Bestseller Code: Anatomy of the Blockbuster Novel” by Jodie Archer and Matthew Jockers which came out last year, and you wrote a blog post on it, several actually.

What are your thoughts on how publishers are using or will be using machine learning in this kind of bestseller way?

Thad: Good question, tough question because you're starting off with maybe the toughest one because it's complicated on a couple of sides. On the one hand we have to get some definitions out of the way, right away. I've been talking to some colleagues a lot about this the last few weeks.

We all say artificial intelligence and artificial intelligence then makes them think about IBM's Watson Computer, taking on and winning in chess. And you think about Google's language translation. Some really heavy duty technologies that are reliant on something that could be described as AI.

On the other hand, much of what people are referring to when they say AI is more pedantic or down-to-earth or simpler technologies such as being able to crunch through 10,000 novels and try and find a repeating word pattern in there. And there's no sort of intelligence per se, other than the programmer who put the thing together.

You're really using the horsepower of a lot of computers that you can access through things like Amazon's web service and at the same time what you're accessing that's new. These large databases of text information, of demographic information. And you go in and you can crunch things that we didn't have the power to crunch before and we didn't have the information that was worth crunching.

And so, for people who want to get a hand on this, I'd really recommend their first step is to go to Wikipedia and start with artificial intelligence. Get a hand on how that's defined and keep a sceptical eye on some of the more grand claims about it, but then go to machine learning.

Go to NLP, natural language processing, text mining, and see what the definitions of those are. And you think that through because if you want to understand what the opportunity is for the book publishing industry and self-published authors, it has to be something that some more nitty-gritty than some nefarious, magical, AI cloud type of thing.

Joanna: Yeah, and I was going to say that, the natural language processing, I think is what is interesting because, of course, as writers, we're always thinking about what word to use in this way. And as you say, all they did really was tell a machine, tell a database to pull out emotional words and where they were in a percentage of the book, and say, “The Da Vinci Code” and “Fifty Shades of Grey” have the same emotional journey even though they're completely different books.

So as you say, how intelligent is that?

From an author perspective, should we be looking at books like “The Bestseller Code” and trying to reverse engineer or should we just kind of go, whatever, and just carry on writing what we love.

Thad: Yes, exactly. It is intriguing and again, I guess we want to recommend to people that they pick up “The Bestseller Code.” It's a fascinating book, and the authors are scientists, they're both PhDs in their subject area and they have done truly extensive research in building the book. When I first heard about the book I thought it was going to be by two people who just saw an opportunity to take advantage, but didn't really know their stuff.

These folks really know their stuff. And again, some of the technologies are just talking about they have an appendix to the book that gives a pretty good description of how to apply these technologies to the analysis of manuscripts.

They took, as I recall, about 5,000 bestselling books and went in and try to find things, such as you're saying, emotional arcs within certain kinds of words. The one that always amuses me was that you have a better chance of a bestseller if there's a dog than a cat in there. That's one of the things they counted up.

With all of those things then they were able to come up with a fairly elaborate description of the kinds of components that you would find in these bestselling books. They have about an 80% accuracy.

When it came to the obvious question, okay, should an author follow the formula, they're very clear that, that's not what they're suggesting. And yet as I noted in my blog post, they may say they're not saying that. I think they're really sort of covering their behinds on that sense because, in fact, it is quite prescriptive.

It's very prescriptive as to the types of things that authors should do if they want to get this kind of a bestselling structure.

However, the last thing on that is, as I was reading that through, I was thinking, “Gosh, this could be any of dozens of books on how to write a great novel. How to write compelling fiction. How to create great characters.” It didn't seem at that level all that extraordinary.

Joanna: I totally agree with you. For example, I think they said something like shorter sentences will keep a reader's attention and that's one of the things that people tell you. I thought it was a really interesting book and reading it made me think more. And in fact, machine learning in general, of course, Amazon's algorithm is a machine learning thing that we don't know how it works, but people make educated guesses every single day.

Thad: Yes, they do.

Joanna: And last time, we talked about how hopefully, the book itself will be metadata. That hasn't happened yet, unfortunately. I hope it does at some point.

One of the things that a lot of authors are asking me is, should we be, as authors, trying to make sure the algorithm can tell what type of books we write and the audience we have? I have two author names, Joanna Penn who writes nonfiction for authors and J.F Penn writes thrillers. It used to be yes, that's a branding thing for covers and everything, but now, is this a big data thing where we should be trying to educate the algorithms with very clear distinctions.

Is that something that we're going to see more of?

Thad: That's a wonderful question. And that's really the heart of the matter in many ways.

Let's start with the thing that you and I enjoy the idea of the book is metadata, which I think we're the two holders of that idea. It intriguing that if we can abstract the title, a short description of a book, then surely if we can delve in with machine power to the whole book, we can extract a tremendously larger set of information.

Of course, with nonfiction it's easier, but even with fiction, I mean, you can pick up themes, you can pick up vocals, you can pick up types of activities. And that is a metadata abstraction from the book.

I spent some time trying to understand how Google Scholar works. People think that Google Scholar is an extension of the Google search engine, but in fact, it's a separate technology. It was built in a different way using different kinds of software to detect responses to queries.

Google Scholar does serve us a lot of books, generally, not fiction. But what Google Scholar insists in order to quickly serve as a piece of information is that there be a meta description of that information. And it's like, “Oh, so what's that mean in terms of a book?”

I've been thinking of it in terms of nonfiction books, and I got in touch with the folks who were behind the science there, and they said, “You actually have to do an abstraction of each chapter and we're going to search the description of the chapter, not the chapter itself, as a more efficient way of accessing, getting results to searches, getting accurate results.”

That got me thinking more where, okay, yeah, the book itself is meta data, but in fact, what the book is about can be described separately from the book itself. So if you say it's a book about the tragic death of a child and the impact that has on the family and the community, that concept would be difficult to abstract from the book. It never says that exactly in the book, sort of thing.

If people are searching for books that represent the tragic impact on a small community. That might not show up in the data within the book, yet it will show up in the data that's on Amazon and the description of the book. It will show up in some of the reviews of the book, that language, in particular, will show up.

All of this is pretty complicated. I think from an author's perspective if anything, I mean, the meta data that they create of the book itself is done. You wrote the book. That meta data exists if you put it into Google Books it's searchable and researchable by Google, so you're already making the meta data available.

What I think is most important to authors is the external meta instances of the book. And this is why I believe authors need rich websites, because the website becomes the biggest proxy for the finding of the book. It's the place where you can most control the kind of content that you make available.

People think about keywords on Amazon, but keywords are really something far broader and should be built in, for example, into the meta headings of a website. For authors I think the meta choice is really an elaborate in-depth strategy that needs to cover off through a lot of different channels.

Joanna: And everyone's freaking out now because that sounds like a lot of hard work.

Thad: It might not be quite as hard work, it's getting your mind around it, is the top thing.

Joanna: I agree. You and I are obviously still annoyed about this, and I didn't say this in the notes I sent you, but quantum computing which I've started to see things about which I can't explain. I think Justin Trudeau explained it recently.

But in terms of where we are now, you're saying even Google have a smaller version of the book in order to do things in a timely manner. But Quantum computing, from what I've heard, will change the way calculations are done and the amount of data that can be held, and a shift like that which seems almost like a big shift could mean that more data could be used in a deeper way.

Ay thoughts on how that kind shift would change things?

Thad: We've seen in computing for a long time, that increase in power, there's Moore's law that every 18 months the processing power doubles, and generally along the same time the cost of that power goes down by 50%.

And that law, some people have argued is reaching near its technical limit, but then I've been reading other really fascinating papers that show that the rise in computing power is, I mean, for all intents and purposes is limitless. The power that you've got at your disposal with the IBM system, Deep Blue, is so enormous that there's really no problem that even today cannot be addressed by the computing horsepower that anyone has access to.

If ever people are thinking, well, gosh we have to go through 50,000 books to try and extract a certain kind of data and apply it against a certain question, you can do it. Sometimes the computing might run for six straight hours, but you can do it.

So the limits become more about formulating the problem that you're trying to solve. I mean, that to me is the big thing is trying to get that kind of intersection. Well, if all of this is possible, if this is what we're doing now, how do I think about the kinds of issues I'd like to see addressed and then try and map them up against that technology. And that's what I've been going through working with other people trying to think about startups in the AI space. It's like, what are the problems that we need to solve and can AI address those problems?

Joanna: Now you've mentioned it. Let's talk about your report on publishing startups, looking at innovation in the industry over the past few years. What has survived? What has thrived?

I've picked up a couple of ones I wanted to mention.

Yesterday in Britain, Hachette bought Bookouture, which is one of these big startup digital publishing. There's new details on the money, but this is huge because Bookouture was the most successful digital publisher startup in the UK bought by Hachette, Bonnier, launching Type & Tell, a self-publishing platform offering 100% royalties at London Book Fair next week.

Type & Tell, kind of a startup, bought by Bonnier, another traditional publisher, off the back of Macmillan, another big publisher buying Pronoun, a self-publishing platform.

I was fascinated because these are two self-publishing platforms and a digital publishing platform, which are all kind of startups all being subsumed into big publishing.

Coming back to your report, what have you seen has survived? What's been bought? What's died?

Thad: Yes, yes, well, it's actually great, the ones you just raised, because they are asymptomatic of certain things that I saw on the report.

Bookouture, when I read about that yesterday I was like, oh, that's interesting. First I'll go to my spreadsheet there's Bookouture there, it's not there. How did I miss that one? I've got 900 startups on my spreadsheet. I've been collecting them like a mad man for over 5 years now, and some still slip my notice.

But then, when I looked more closely at Bookouture, I thought, is it in fact a digital publishing startup? They call themselves that, what was described primarily on the website was that their technology is essentially the same as anybody else's.

What they say as their primary distinction is the amount of detail that they put into the editorial and to the design, and certainly into the promotion and the online marketing, and any publisher should be doing that.

Joanna: Yeah, you're right.

Thad: I think that they were acquired by a larger publisher is kind of an admission of failure on their part to have done what they should have done by this time, right? Nonetheless, hats off to Bookouture, right, they grew very quickly, very successful smart people. Congratulations, that's wonderful.

Starting as a self-published service within the ages of a larger publisher, I mean, they're two they should be coming with very red faces saying, “Why didn't we think of this sooner?” We're trying now to kind of apologize with a startup that it will offer all of these royalties and they're there undermining the other large self-publishing services who cannot compete on price, right? Who cannot compete on margin, and so from a self-published author's perspective, “Oh, well, should I go to Pronoun now instead of Smashwords, Lulu,” you name it.

The economic decision is yes, and so now it becomes a question of the competition at the infrastructural level. And certainly, the players that have been playing for a while have really strong, they're plugged in now, they're plugged into library networks. Their marketing ideas are quite evolved and so on.

But all of that by saying that there's a continuing evolution in the types of startups that we're seeing and the kind of activity that that's engendering in the large publishing industry, applause there.

Joanna: It's interesting because Pronoun started off originally as Vook, I think, back in the day. And Vook, I remember interviewing the guy who started Vook about video books, that's why it was called Vook, it wasn't an app. It was like a video book and it was the book with the handsome video in it, and that didn't work.

And then they pivoted and did something else. And now have pivoted and now have got both. Which just makes me a little bit confused, but I wondered those are actual like publishing startups but the other problem, of course, is marketing.

The one I remember, of course, I think we mentioned it last time is, Small Demons, which I liked, because it was a kind of if a book mentions Oxford here are other books that mention Oxford. It was like more of a theme and place linking type of discovery engine which I really liked.

Have you seen the marketing startups appearing at all? I mean, Bookouture did really well off Facebook ads, but as you say, that shouldn't be anything special.

Have there been any special startups that you're really interested in?

Thad: The most successful one is a BookBub that does the free promotions. They've turned that into a very solid business.

And so what's the idea of the business? Real simple, a curated selection of free and low priced eBooks on short-term promotions, and you think, well, when that was described as a business plan, people must have eyes rolled over. But in fact, they executed so well that it's become a coveted promotional vehicle, but lots of copycat startups of that.

In terms of really innovative ideas, I'm not seeing a heck of a lot. Where you do see an idea, just when you start to get excited about it, you realize that the company's not very well developed and not financed. They haven't really thought through how to execute at scale.

And so, it's been disappointing to me in a lot of cases. One of the biggest conundrums around these startups is that anybody can start a website in 24 hours and put it up there and claim that it's an enabling service. And many, many of these startups are really just about, I call it, good intentions in a website.

And what we're hoping to see more of over the next few years is companies starting to operate at scale, in a way there's more than the founders available by email to reach, where that they've worked through some of the problems and figured out how to do the kind of pivot that Vook had to do before they became successful.

Joanna: What about Wattpad, because of course, they've just released Tap in the last week, which is really quite cool if you are a young person, younger than me. You tap and a new thing appears and you can find a story there, they've got Wattpad studios now, making films and IP off the back of that.

What do you think of Wattpad? Because they're one of the better-known startups, I guess.

Thad: I call them the poster child because everyone tends to reference Wattpad, because they're exciting, right? And they've been hugely successful and they raised a lot of money, nearly $70 million. And I remember when they got the last chunk which was about 45 million, they said, “Oh, we don't need the money we're just putting it in the bank should we need it down the road.”

But I was watching them and thinking, okay, $70 million? The usual number that we use in terms of what the expectations of the VCs are when they make an investment is that they realistically think they can get a 10 times payout. So you can sell this thing for $700 million, upwards of a billion dollars. That's a lot of money.

And so, then you look at Wattpad and say, “Okay. How are you monetizing using that word of how you're starting to find ways to attract income?”

As with so many startups that look for scale by attracting users for no cost, they've been hugely successful getting a very large number of users that albeit, with this you imply a kind of limited demographic. And then you see something like the studio idea and you think, “How much money is that gonna bring in?”

What's their cut of the action gonna be on that, 100,000 in a really big instance, if they can get that kind of money. So it points to another prominent, you see, when you look at my startup report. It's like what's the revenue model? They might have a pretty good idea. Wattpad is really interesting, and fun, and kind of, we're sort of thinking as this part of the future of publishing, but also, will they be around in five years?

Joanna: That's interesting, and I mean, being around in five years is something I've been thinking about in terms of Amazon, because in the last week we've seen a new author earnings report about the dominance of Amazon across America, UK, Australia, Canada, New Zealand.

Amazon won two Oscars with “Manchester by the Sea,” Amazon Prime TV is absolutely massive. Digital book world it was announced that 45% of all book sales are happening digitally including print sold online, and that Amazon has taken a massive share of that print.

There was another thing that said Amazon's own imprints, so Amazon publishing is taking up to 50% of the top 20 books on Amazon Kindle Store. So you know, and Nook we've seen is the revenues are down again.

If you like look five years ahead, as you say, if things continue as they are, is Amazon gonna be the only one left selling anything?

Thad: Exactly.

Joanna: How do you see that playing out?

Thad: I'm frightened, frankly. Historically, if you look at the concentration of corporate power within a particular industry, it reaches a point where it's no longer productive, it becomes counterproductive. It tends to stifle innovation, it restricts the ability of other players to grow within that space.

On my blog, whenever I've criticized Amazon, I get deluged by self-published authors who, how dare you? They've made a huge difference…and I don't take anything away from them. I think they're brilliant, they execute again, and again, and again doing the right things, as you say.

There's Netflix, so well established and Amazon goes on to compete with Netflix, a hugely intelligent company and already they're succeeding at that as well. And they're also competing with Apple.

I was also surprised in the author earnings report to see how far Apple slipped, very low numbers. And you think about that and Apple should be ashamed.

Joanna: And Google's not even on the page. It's crazy.

Thad: Isn't it? It's extraordinary that way, which speaks both to Amazon's brilliance and to quite a bit of incompetence one would say and an under commitment on the part of those people.

But from an author's perspective, I think this is becoming a problem. You saw the Kobo numbers, right, now, that was only English language markets. They're still doing pretty well in Canada because of the launch having started there historically, but that has to be a concern to a self-published author.

And you look at this situation where do you only publish on Amazon because they're gonna cover off 80% of your sales, or more, for certain genres. And I think, no, that can't be a good thing. I can't find a way of saying, it's better that way than it would be if Amazon was at 50% and we had a strong set of competitors.

Joanna: You've got to blame Nook for this, as well, because they had a big chunk of the U.S. market and they just let it go. And when they shut down all their international stores I was just like, “I'm sorry, that's crazy.” really annoyed me.

Thad: Yeah, me too.

Joanna: And now, there's just a downward spiral, right?

Thad: And you say, they let it go, they actually, you know, the neglect would let it go. They were aggressively incompetent. They spent a lot of money ruining their business. They hired a lot of high priced staff to ruin their business. So it's done not by paying not enough attention, it was done by making a series of catastrophically stupid decisions such as shutting on the international market.

Joanna: Yeah, that was crazy. It's interesting, because as we're talking about this. It's the week before London Book Fair as we record this, and there's a massive talk about foreign rights being the biggest thing this year.

Everyone's looking at Amazon and going, “Our revenues are falling from English language sales. So we now have to make this up in the markets where Amazon isn't yet strong.” I mean, maybe I'm just making that up, but it kind of feels that way.

I'm wondering, is this because people's revenues are falling compared to the Amazon?

Thad: That's really interesting you would say that, that Author Earnings Report. My first interpretation of that is that it's a complete condemnation of the rights infrastructure on which so much of commercial publishing is based. And that has always been the way, right?

That the British publishers, American publishers, they want to sell rights in other territories. Sounds great if you actually sell them, but it's only for the most popular books that you get a consistent coverage if you're basing your international activities on rights sales.

And what the Author Earnings Report shows, is that in fact, to be a self-published author, working directly in those marketplaces, you're gonna sell a heck of a lot more books than if you worked with one of the big five or even similar size publishers.

And they're going to get rights sales and maybe they'll get one in UK, will Australia be an afterthought of that right sale that would get France, but not Germany, they'll get Poland, but not Turkey. This kind of thing is the standard pattern.

So for publishers to default to believing that, that's the answer or an answer to the current malaise, I don't think it is. The answer to the malaise is author earnings is proving is to be in your own driver's seat internationally. I think you've proven that with your books. I know that you get wonderful sales in multiple markets.

Joanna: What's interesting is, for me, now, is the translation model. You mentioned the Google Translate earlier. We're looking to license my books into foreign language markets because I tried self-publishing in German, and Italian, and Spanish, and it just didn't work because I can't market in those languages and there isn't a BookBub.

There isn't an ecosystem for marketing as in Indie, so we're looking at licensing. But I see this almost as a short term thing, because as you say, Google Translate. I have a vision, and we'll come back to augmented reality in a minute. But I have a vision that you just put on your glasses and be able to look at foreign language text and read it in English or…

Thad: Oh, I love that.

Joanna: …vice versa. So you wouldn't even…are we looking at a feature with things like Google Translate which I haven't tried it, but you could be speaking in French and I could be understanding you in English, like, it's already that good.

Are we looking that coming into the written, and reading, and audio in the future do you think, so we won't even have to do translations?

Thad: That's great. A couple of questions here, you're thinking about a lot of these things it's fun to chat.

The translation; my first response would be that it's not nearly as good as the hype would have it. And the thing is that you can do a reasonable job pretty easily with the current Google Translate technology, it does, not a bad job, of a relatively simple document. I think one would look at and say, yeah, this is 85% as good as if we had a real translator working on it.

When it comes to a novel full of nuance, forget it, the translation is nowhere near there. I don't think anyone should be thinking of that on their radar, at this point.

Javier in Spain, the consultant there, he's a very, very smart guy and we were chatting at Digital Book World about the issue of placing books in foreign markets in English language. So you know, selling German, Italy, English language books, and he had a really good idea which is to make sure that you translate all of the associated marketing material.

He says, and it makes sense is that he said, you know, that you're in Germany, yes, you're able to read English, you have an interest in English language books, but far better, you get the description in your own language that your first encounter with that book is going to be in your own language. But he pointed out that the thing that was metadata, keywords.

Keywords in another language are going to be different keywords than the ones you would use in English, using English keywords in Germany makes no sense whatsoever. They're gonna be searching on in their own language for keywords, that's how books are going to surface. I don't think Amazon allows that, Onyx does if you use the Onyx metadata structure, you can do that.

Joanna: No, you can, I did that with mine. I got my translator to give me the words so she did the search and you can just put them in.

But the difficulty was just, there isn't the infrastructure in the book promotional sense, like a BookBub in German, for example, but that's probably a pick for the next five years is that this ecosystem in translation has to mature a bit more in the self-publishing space.

Thad: Yes. When you change the metadata into German for example, are you able to do that separately on Amazon Germany, so that, that metadata's ingested separately from English metadata?

Joanna: Yeah. Well, when you upload a German book, so it has to be a separate book. I know what you mean, so you're saying an English language book using German metadata. That's a really good.

This is one of the problems we have is that you have to publish one book once, otherwise you get a copy you won't notice. I would love to have a different cover in America than in Britain, because we have such different tastes in covers and that's why publishers do it. But at the moment we all have only one method to publish globally, so I think these things are gonna definitely change in the next few years.

I also wanted to ask you in terms of exciting things that are happening. One thing you and I did not see coming last time was the rise of Alexa, and I'm going to say her name live now. I was stopping, but they're releasing a voice recognition update, so hopefully, my voice won't trigger, anyone listening on her so, yes.

Amazon's in-home device, we have one and it's awesome, and Google home, of course, and Apple has Siri, but the Alexa, over last Christmas, just went nuts, right? And it's in millions of home. I'm excited about the rise of audio books and also any kind of voice activated technologies, stories, things that we just haven't even thought of yet.

What are your thoughts around Alexa and AI and how that can help publishing?

Thad: Great, fun, first of all, right, we're having a lot of fun with these. When we chatted before the call or email, but before this call, I've been frustrated with voice recognition technology over the years, and I use Dragon Naturally Speaking and it's up to version 15 and finally has got it. You now get about a 99% accuracy rate on voice dictation.

And that's something I've been working with that software for 15 years. I've probably given $2,000 in upgrade fees over the years and none of it quite worked. So by the time you get a Siri and Alexa, we still have to address some of the quality issues.

What makes Dragon work is that there's a training module, and none of the other off-the-shelf recognitions allow you to do the training. And so, you take a big hit in the accuracy. That's the first thing, but then I'm being a party pooper if I say that. So let's say, it is wonderful, it works beautifully. I think you're hitting nail on the head.

When we think of the future of publishing it's going to be enabled by technologies that are coming out of some other field. People are thinking of Alexa being able to help them with their shopping. And you're thinking in far more exciting ways, somewhere at the intersection of book publishing, audio books, voice recognition.

We're going to be seeing new ways of delivering content that, if nothing else, will promote the book, but even better will become another revenue stream another opportunity for authors to rethink the way they deliver to readers.

Joanna: I'm just super excited about. But then, you and I get excited about these geeky things anyway…

Thad: We do. Yup we do.

Joanna: Even if they don't work out.

Thad: Can't help it.

Joanna: Oh, no, it's so cool. I love talking to you because I can just geek out and people can just turn off if they're not interested, which is fun.

I've just finished this book “The Fourth Transformation: How augmented reality and artificial intelligence will change everything” by Robert Scoble and Shel Israel‎. And what they basically talk about is the shift from handheld devices and the sort of head down approach into typing into a screen or talking into a screen to the head up approach of glasses.

Now, moving on from Google Glass which was a bit of a failure, it was a bit too early, they're talking about magic leap which is still under wraps.

But what they've sort of said with the patents and things and Apple, as well, coming out with things that just look like normal glasses and are augmented reality or mixed reality so you can see a layer on top of the world. It's not like virtual reality where you put on a headset and disappear. It's more that you're using it to see on top of the world, and that to me is very exciting.

First of all, just think about coming to Digital Book World as we do and seeing people's Twitter handles above their heads, seeing people's names, I mean, how useful would that be just on a basic level?

And then, I was thinking like I would like to record myself walking around London, and then if you're in London, you could turn on my recording and I could guide you around my London where I have my book set and everything. So you get like a personalized thought through your headset, but you're still walking through London, so you get that on top. I'm just so excited about this.

What do you think about augmented reality and this kind of level?

Thad: Your enthusiasm is wonderful. Your ideas make a whole lot of sense too. And when I think of the question I've got there's two sides.

Let's start on the real upside. I've been working on the future of publishing for a long time now, and when these startups that I did in the report, the 900 startups and I look at them and I say, “Where's the innovation in this? Where's the real innovation?” I'm seeing a little bit of incremental idea changes, but the real innovation, on the other hand the ones who have tried to innovate most dramatically have failed so far.

And what we've seen is that…let's think back for a moment to the enhanced eBook, right? And that was a no-go. There's a few of them that succeeded but TouchPress, the best developer of them, they had to abandon, and they were hugely successful in terms of number of units moved. They couldn't make the economics of it work. But something is going to, right?

When I present to people on the competition to book publishing for these startups, the competition's not other startups in the publishing space. It's the fact that people are becoming more and more attuned to audio and video stimuli let's say, than they are to the written word.

The written word is becoming quite flat for a lot of people. That's been sort of caution for a long time, but I think, when we used to worry about the decline of print, we are more worried that it was becoming less interesting.

I think what we learned is print hasn't become any less interesting, if anything, it's far more interesting because of writers like yourself who can tell wonderful stories and grab people and do continuous work within the genre. Put out a lot of material, so it's far more compelling than ever.

But over here, video, the transformation in video, in music, and the way these things are delivered, is so much more profound. And what book publishers, authors need to figure out, again, as with the voice recognition. How is this gonna intersect, how can we make this intersect? Probably we should be looking at it from the point of view of someone who understands VR, virtual reality for example, and doesn't know about book publishing. They can come to it fresh.

We bring too much baggage in our thinking about what makes book publishing, I think makes it hard for people to see some of the opportunities here.

Having said all of that, again, the cautionary note, right? I was thinking last night; 3D glasses, how is that working out for you? And there's technology that's been around for what? Quite a few years and had these various renaissance, and currently, supposedly is in some sort of renaissance, but is already being dropped by a lot of directors.

What went wrong with that? They don't want to put something on their face. Apparently, it's a very simple usability issue that as long as there's something that they have to wear, that only as a single purpose tool is not going to take off.

With VR, yeah, we're gonna have to look to Apple and the magic startup, to see some real innovation that allows us to use existing devices in some sort of augmented fashion.

Joanna: I think what's interesting in that book “The Fourth Transformation” which I really recommend people read if they're interested in this next level, is that a magic leap is really under wraps as they say, but some of the people who've seen it are some of the most senior people in these tech industries.

And they're calling it the first billion dollar industry straight out the gate. As in it's kind of gonna reinvent the way the Internet. Like you say, lots of hyperbole, but very interesting potential. If we talk again in 18 months which I hope we will, then we'd be like, “Okay, has it happened or not?” They're saying it's around 2023, so it's interesting to see how fast it will happen.

We could talk forever, but I'm very wary of time. But I want to just go to a completely different level, and again, I didn't put this in our notes. But thinking about what India has just done which is digitized their currency and move to micropayments.

What we've got is one of the biggest, most populated countries in the world. Where so many people are rural, they don't have bank accounts, they don't have a physical address. And they're moving to micropayments on cell phone devices because that's what people have. They don't have a home necessarily, but they have a cell phone. So they're digitizing the economy, and the stuff I've been reading on in WIRED Magazine about the way they're digitizing the economy, this is apparently reinventing the block chain and going even further than Bitcoin.

Now, for me as an independent author, I want in on India. I want in on Sub Saharan Africa, Latin America. And to me micropayments, the kind of 0.0001 rupee per page read, of the whatever billion people in India, that's what I want in on.

So here's the complete radical shift. Could we see a way where publishing could shift to these micropayment models which the music industry is too, with the streaming, and people are getting these micropayments.

This is another idea that's exciting me, but any thoughts on that?

Thad: We've been hoping for micropayments for a long time because it does solve a big problem in terms of, how do you get a subset of your content, how do you get remunerated for some subset of your content. And the micropayment makes sense in that way.

It's interesting, but we haven't been able to make a system like that work in the Western world. India is a hotbed of innovation with their unique demographic challenges. And it's perfect that the market is moving in that direction.

Yes, the block chain technology can enable that. And then Apple Pay becomes part of the play in that. You can start to imagine that the seamless mechanism for micropayments may be a possibility in the next few years.

Everything that's happened with micropayments has fallen, again, on usability. You had to go through too many steps to allocate the payment, and register, and decide where the payment was going, and what the amount was going to be. What that comes up, again, is by coming back to the subscription model, and the book there that I've found intriguing is Kevin Kelly's, “The Inevitable.”

Joanna: That's a good one.

Thad: It's fun and Kevin makes a really good point where he says, it's around the sort of Spotify model. But he talks about books, specifically, and he said, “I don't need to own them anymore.” That paradigm for a man who's in his 70s and has owned books all his life and loves books and written a lot of books, I don't need to own them anymore. I'm happy to have them in the Cloud.

The other thing that was related to that is when I hear about a new book, our mode right now is, “Okay, I heard about a new book, sounds good. I'll go, I'll buy it. I'll download it.” And he's like, well, but if I know it's in the Cloud, I don't have to do that. I can keep track, keep reading the books I'm reading knowing that, if a couple of weeks from now I'm still interested it's there for me. I don't have to have made that transaction, so you get the streaming of books. And that, to him, is inevitable, as for the title of the book.

And I think about that and I think, yeah, the subscription model. In my startup list there's 19 different companies that started up to try and tackle this subscription problem, all of them except for Scribd, has gone, which has been very telling and the book publishers don't show any kind of willingness around the copyright issues to enable the subscription. But if you're Kevin Kelly it's inevitable and that's how I see solving the micropayments is, via the Spotify model, where there will be the agency that does the microtransactions but aggregates the transfer of wealth.

Joanna: I'm definitely aiming for that. I mean, again, I think as Indie authors and being able to pivot and take advantage of global things. The big publishers take ages to take advantage of this stuff. Whereas, if we can get in early.

I should email you separately about this, but I'm talking to a guy in the Netherlands who has a startup doing second-hand eBook sales.

Thad: Yes, that's been around for a while. Not that startup but that idea.

Joanna: Exactly, and I was like, wow, that's really interesting.

And Kobo has just launched Kobo Plus in the Netherlands which is a subscription model. So there's something in the Netherlands that means people aren't buying books, clearly, and maybe it's pricing, but maybe, yeah, prices are too high so there's other ways. But I definitely see there has to be a shift in this type of model over the next few years. So anyway, I've taken up so much of your time, but it's always awesome to talk to you, Thad. So tell people where they can find all your stuff online.

Thad: Everything's at thefutureofpublishing.com and this report that I do recommend people read it, it's kind of fun. It gives you kind of, “Oh, gosh. I would never have thought 900 of them.” Anyway, that's for download right on the home page and you'll see a blog. My latest blog entry describes it. And also talks about the machine learning things we've been discussing, those are my last two blogs…couple blog entries core as well. So there's some stuff there that people might enjoy.

Joanna: Thanks so much for your time, Thad. That was great.

Thad: Oh, I really enjoyed it, Joanna.