Publishers need to know their readers to survive in digital era FRANKFURT (Reuters) - Publishers need to get to know their readers and find out what they want if they are to halt the loss of market share to online powerhouses such as Amazon, industry figures say. Until a few years ago, publishers wielded power over readers' selection of books though in-store promotions and newspaper reviews. Now readers increasingly order their books online or download them onto electronic reading devices, write their own reviews and get ideas for what to read next from peers online. "With the shift to digital, publishers are confronted with an entirely new way of dealing with content and stories," said Sebastian Posth, chief executive of Berlin-based Publishing Data Networks, which offers analytics to the industry. Amazon and Apple have used terabytes of data on their customers' reading and other habits to gain control of the market, leaving traditional publishers scrambling to find a way to get through to their readers. Data analysis has become a necessary means for publishers to deal with the new digital era, Posth said. "The publishing industry needs to learn this lesson if it wants to survive," he said. The music, television and film industries have already gone digital with software and platforms that tap into consumers' demand for on-the-go media content for mobile devices and customize content based on users' habits and preferences. "Most folks in the editorial and content production areas of mainstream publishers are unable to give even the most basic metrics on who their actual customers are," said Kristen McLean, Miami-based founder and chief executive of start-up Bookigee, speaking at the just-ended Frankfurt Book Fair. The publishing industry has been "super resistant" to the idea that it should let audience insights drive content development, McLean said. "Big retailers know our customers better than we do," said Nathan Hull, digital development director at British media group Pearson's Penguin business. A hurdle that publishers must overcome in building a relationship with customers is the market dominance of Amazon and Apple. In the United States, 44 percent of books - paperback or electronic - was purchased online in 2012, up from 39 percent in 2011, according to data from service provider Bowker. In Britain, the picture is pretty much the same. Amazon offers not just a virtual book shop but has expanded into many services traditionally provided by publishers, such as translating and marketing, and has a fast-growing self-publishing business. According to estimates by Austrian industry consultant Ruediger Wischenbart, Amazon has a 65 percent share of the U.S. market for e-books, bolstered by its Kindle device. Apple, which has integrated books into its iTunes platform, has 20 percent. A number of initiatives have sprung up around the world to launch competitor products to the Kindle, such as the Tolino, born from a collaboration of several German retail book chains and telecoms company Deutsche Telekom. Europe is expected to be the largest e-book market by 2017, worth $19 billion, according to Forrester Research. Wischenbart said the battle against Amazon is not yet lost. "Look at what happened to Microsoft," Wischenbart says. About a decade ago they practically had a monopoly in software platforms. This is very different now. One tool publishers have started using is "social reading," which refers to reading-focused social networking sites such as Goodreads, recently acquired by Amazon. Goodreads has 20 million members, providing Amazon and connected publishers access to users' personal information, their reading habits, favorite authors and reviews. Random House has introduced its own reader's circle with Scribd, a document-hosting site with around 80 million users. These sites are "global and give publishers a one-stop opportunity to reach markets beyond their natural national audiences," said U.S. publishing consultant Mike Shatzkin, CEO of The Idea Logical Company. At the Frankfurt Book Fair, a German reader community called "flipintu" was launched, which applies the concept of online music streaming services such as Spotify to the book market. To battle the status quo, Penguin and Random House merged this year to gain an upper hand in the digital book market, but so far CEO Markus Dohle has kept a low profile. "We're doing our homework, our research and development with different business models and we are doing it cautiously," he said at the book fair. We will take our time, we want quality over speed and there is no rush. We are building a company for the next 100 years and not for 100 days. Additional reporting by Harro Ten Wolde; Editing by Angus MacSwan