McGraw-Hill's Digital Design: "Beyond the Book"
James Lichtenberg -- 1/29/01

The McGraw-Hill Companies' approach to e-publishing involves a new approach to publishing itself. As Ted Nardin, group vice-president, describes it, "We want to get beyond the 'book model' with e-publishing and e-books. That is, beyond selling one book, at a low price, to one customer, with whom you do not have an ongoing relationship."

Challenging as the change in business model may be, the effort is based on the company's many years of success with business, database and STM publishing. "We've been involved with digital publishing since the 1980s, long before the Internet or the World Wide Web," Nardin noted. In that period, the company had its first "big epiphanies" about the enormous potential of digital
MHC's Nardin bullish
on e-publishing.
technology to transform the publishing industry. "In a sense," Nardin explained, "this is part of our genetic structure, part of the basic McGraw-Hill vision that was articulated by [then president] J Dionne." Nardin was quick to observe, "We still haven't achieved the big dream--where you develop content once, as a single digital file, for whatever use, and that's it. Although we are getting there--for example, authors of 300 of our trade business books are writing to a precoded template to facilitate digital purposing."
Just as the 1950s were the crucible for the social changes of the following decade, the experience with CD-ROM in the late 1980s and early 1990s set the stage (for better and worse) for publishers' response to the Internet. Companies rushed to CD-ROM enthusiastically, without analyzing customer need or the realities of the retail channels, and ended up losing millions of dollars. "They woke up one morning," Nardin recalled, "realizing, 'Oh, my God, we have to face up to this,' initiating waves of layoffs. It was an all-or-nothing approach."

McGraw-Hill has taken a measured approach based on the vision that there are a variety of ways to bring content to the customer. One of the company's successful CD-ROMs has been Harrison's Principles of Internal Medicine. "It's clear that CD-ROM was an interim technology," Nardin explained, "but it laid the foundation for what is going on today, for what steps you have to take to create digital product. In fact, without the experiences and the expense of conversion and digitization, such as moving to SGML in order to create those early CD-ROMs, we would now be facing millions and millions of dollars of cost--costs which other companies are suddenly now facing in order to start their electronic publishing programs." Both Harrison's and the equally well-known Encyclopedia of Science & Technology have existed as SGML files for the last seven years.

The 20-volume encyclopedia, which had been revised every five years, was launched online last spring as Access Science (, and is now updated essentially every day. Along with all the original print matter--over 7,000 articles--the online version incorporates 60,000 article-to-article hot links, 1,500 Internet links, as well as an electronic "suggestion box" for users, be they librarians or individual customers.

"One of the beauties of online product," Nardin said, "is how much you learn. In the past, we would revise the encyclopedia and put it on the market for librarians and others, and not really know who used it or how they used it. Now, we are collecting more information than we know what to do with: zip codes, e-mail addresses, as well as an exact understanding of what is being looked at. It was no surprise to us that bio-medical pages are the most popular. The surprise was that the second most popular category, of the 10 or so we surveyed, was engineering. You can imagine how we will take advantage of this going forward."

As chair of the AAP's Professional and Scholarly Publishing Division, Nardin has had a good vantage point from which to watch the development of publishing online. He recalled that in 1993 there were still just books and journals, but in 1994 "the whole thing changed." Curiously, in his view, the leaders have been librarians. "They have been way out in front of everybody in understanding digital distribution and online publishing--just light-years ahead," he observed. "It's already a reality for them. Schools, universities, graduate students, scholars are online all the time. Academic journals naturally migrated to the Web, and that's what librarians are involved with."

Expanding Possibilities
In considering e-books, Nardin's view reflects a similar sense of expanding possibilities. "The way to approach this is 1+1=3. Again, it's not all or nothing. It's not a question of taking something away or substituting something for the print book. It's a question of leveraging your content and of solidifying your brand. We found, for instance, that rather than cannibalizing print sales, the availability of electronic versions of Harrison's drove up print sales" (a point ech d in the e-book meetings last fall). "E-books are still a very immature and complicated marketplace. As we seek to understand all the issues, we have to be agnostic about the pluses and minuses of the different platforms and technologies. We are working with everyone, whether Gemstar, Softbook or netLibrary, as well as Adobe and Peanut in terms of file formats. Of course, we are all waiting for the big breakthrough--what will be the format, the application, the device that makes it happen?"

Nardin views the price of the reading devices as critical in order to avoid what Henry Yuen of Gemstar called the risk of a crash landing in the e-book market even before takeoff. Mirroring the experience of those who have already seen them, Nardin observed, "The second- and third-generation e-reader devices are getting better in terms of ease of use and user experience. But enormous questions remain: Who is the market? Where is the market? What is the market? Is it mystery novels, dictionaries, medical books?" These questions lead right to a major frustration that Nardin has with some of the technology vendors in this space: their lack of attention to precisely identifying and developing the user groups, as opposed to "gee-whizzing" the technology. "They come into our offices and say, 'Give us all your books, as many as you can, 800 books,' without any thought about targeting and growing the marketplace."

As a whole, the McGraw-Hill Companies' e-strategy also reflects the view of industry economics. In Nardin's analysis, "Publishing used to be based on the economics of scarcity. Information was just plain hard to get. Look, for example, at international book distribution. Until very recently, we would mark up a U.S. book by as much as 40% even in Europe! Why? Because if you wanted it you would pay that much for it, because you couldn't get it any other way. Now you can get the book via the Web or on your visits to N.Y.C., and the book can be shipped to Europe fairly cheaply and quickly. With electronic publishing, we are witnessing the beginning of the end of information scarcity."