The rate at which the book business is changing in response to new developments in digital publishing can sometimes seem dizzying. To take the pulse of this rapidly morphing digital side of the industry, PW polled top digital execs to get a broad sense of where each company is with its digital publishing programs, and where they're heading.
Through partnerships with technology companies that have resources and experience publishers lack, a number of houses are accelerating their entry into this new marketplace. Still others are are opting to handle conversion, warehousing and distribution in-house. Either way, they are striving to make digital a viable and increasingly important part of their business.
The question of how people will read comes up again and again. While many publishers agree that devices like the Kindle and Sony Reader have accelerated the growth of digital publishing and sent a message to both publishers and readers that it's time to get on board, several respondents also wonder whether the ideal medium for digital reading has yet to present itself: iPhone? Color e-ink? Flexible screens? Who knows?
Also up in the air is how publishers will reach consumers with their products. The vast digital marketplace gives publishers unprecedented access to their consumers. Yet, books are competing as never before with music, movies, TV and anything else that can be downloaded to a computer. And will handselling go the way of the horse and buggy?
Still, everyone is optimistic and excited about new opportunities. It seems clear that digital has sent a bolt of electricity through this industry.
Company: Random House
Digital spokesperson: Matt Shatz, v-p, digital
What are you most excited about?
Digital and online afford publishers the opportunity to connect more effectively with consumers and, ultimately, to make more and more interesting products. In a digital world, we can expect international opportunities to open upwhere they might not have made sense economically before (though all kinds of rights and territorial issues would need to be resolved).
How are you handling the warehousing/conversion/distribution of:
E-books: We handle them in-house.
Downloadable audiobooks: We're just starting. We've mainly worked with Audible. Now we have an internal archive.
Mobile phone distribution: We have no set program at this time. Overall, we're looking at where mobile fits in strategically.
What worries you?
There's such an explosion of content options—books are competing with so many more things than they were 10 years ago. From a marketing perspective, there are so many titles and fewer stores that do handselling; the traditional sales and marketing process in the overall industry doesn't work as well as it used to. Also, people are time challenged.
How will publishing change in the next two to five years?
People will read a lot more on devices. How much of that is dedicated reading devices versus phones remains to be seen. Partners with whom publishers work to get their content out will expand a lot, whether cell phone operators or tech companies.
Company: Penguin
Digital spokesperson: Genevieve Shore, Penguin Group digital director
What are you most excited about?
We are always looking for ways to reach new readers, open up new international markets and new channels domestically. We are still seeing e-books as a rapidly growing area, and the downloadable audio market will continue to open up further in 2009 as new customers recognize its value and potential. Penguin Group USA's net e-book sales are up 500% over 2007, and we expect e-books to continue to sell strongly.
How are you handling the warehousing/conversion/distribution of:
E-books: We handle this internally.
Downloadable audiobooks: We work with a variety of partners, including OverDrive and Ingram Digital Group.
Mobile phone distribution: Motorola, Samsung, Verizon, Bell and MobiFusion are among the companies that handle distribution of our books to mobile phones. Our e-books are also available via eReader on the iPhone.
How will publishing change in the next two to five years?
There will be more ways for readers to access content, interact with content and talk about books, authors and reading. We will also have more ways to reach new readers in such countries as China, Japan, India and Africa.
Company: Houghton Mifflin Harcourt
Digital spokesperson: Gary Gentel, president, trade & reference division
What are you most excited about?
Our e-book sales are 10 times a month now what they were three years ago for the entire year. That's a relative term, because we weren't really talking about much of a base. There is no doubt that this is a business that's very quickly arriving. We're just trying to be prepared to be at the forefront.
How are you handling the warehousing/conversion/distribution of:
E-books/audiobooks: Right now we do not have a digital warehouse. We've done a lot of things internally. In terms of trade publishing, we are now considering some digital asset managers. We'll be making a decision by the end of the year. Because of our reference line, Houghton has been in the electronic world for a couple of decades.
What worries you?
The practical business side. I don't think that the pricing structure has sorted itself out yet. Ultimately, usage and practice will define how we end up pricing these products. We are trying to create incremental sales, and our intent is to reach a new market.
How will publishing change in the next two to five years?
To put a line in the sand, and just speaking for Houghton Mifflin Harcourt, I think that over the next two to five years, e-books can come up to 4% or 5% of our total business.
Independent Publishers
Company: Kensington
Digital spokesperson: Steve Zacharius, president & CEO
What are you most excited and worried about?
We are looking forward to the time when all of the accounts will accept just the ePub format. We've focused on romance and women's fiction titles, as well as gay and lesbian and mystery titles; we're looking forward to broadening our offerings. I think it's safe to say that as we make more new release titles available, as well as backlist titles, the business will probably double each year for several years.
How are you handling the warehousing/conversion/distribution of:
E-books: Our digital conversions are handled by Publishing Dimensions—they send our files to all of the digital retailers and wholesalers. We also maintain our own digital storage on site and handle sending out all of our files to various look-inside-the-book search engines. We are currently in extensive discussions with a few companies to act as our complete digital repository.
Downloadable audiobooks: We license our audiobook rights.
Company: Macmillan
Digital spokesperson: Fritz Foy, senior v-p, strategic technology
What are you most excited about?
Although we don't have a true business transformation, like the music industry, we have something that's moving very quickly from being a sideline. There's also a nice convergence of publishing technology and business technology, as well as partner interest, that's driving this much faster, with announcements coming almost daily.
How are you handling the warehousing/conversion/distribution of:
E-books: We work with Ingram Digital and Lightning Source, plus a combination of internal translation tools and outside vendors for transformation.
Downloadable audiobooks: Ingram Digital also handles our audio.
Mobile phone distribution: No mobile yet. We will have tests with three partners, most likely in the first quarter of next year.
What worries you?
The reading devices are doing a tremendous favor to publishing in creating a message, but everything we've seen about consumers is that they want easily transportable files rather than devices. Also, there's a lack of definition about what we're going to need to do in college and scholarly markets. On other hand, there's the possibility for true sudden revenue growth.
How will publishing change in the next two to five years?
We're going to see e-books not just be a sideline. We'll see more simultaneous publications, more formats, attempts at minimizing DRM, and big search engines reappear in this market with true commerce initiatives.
Company: Simon & Schuster
Digital spokesperson: Ellie Hirschhorn, executive v-p, chief digital officer
What are you most excited about?
Publishers now have an unprecedented ability to reach readers and consumers, delivering the book in new forms, targeting them and cultivating communities and networks based on their interests, and involving them with our authors in new ways. The universe of potential marketing partners, new business models and revenue sources has also expanded greatly.
How are you handling the warehousing/conversion/distribution of:
E-books and downloadable audiobooks: We are in the advanced stages of building our digital warehouse, with Libre Digital as our digital distribution partner for both books and digital audio.
Mobile phone distribution: We recently announced a non-exclusive agreement with MPS Global. This summer we partnered with CBS Mobile to deliver Stephen King's “N.”, a series of original graphic video episodes, to mobile users around the country.
Company: Hachette Book Group
Digital spokesperson: Neil DeYoung, director of digital media
What are you most excited about?
Our main focus is building the foundation—getting the backlist converted and available. Second quarter last year we moved to ePub-only distribution and promised to up our frontlist title count. We now have about 90% of the frontlist titles that make sense as e-books. Next year we are looking forward to doing more account development, looking forward to e-ink devices with color screens. We're excited about the new Sony device.
How are you handling the warehousing/conversion/distribution of:
E-books: Most books are converted to digital by the typesetter, then sent to distribution partners including OverDrive, Lighting Source and Ingram Digital. Then to Amazon, Sony and other e-book retailers.
Downloadable audiobooks: We send CDs to accounts but are looking to change that process and send them digital files directly.
Mobile phone distribution: We have worked with Mobipocket for several years, and now with Fictionwise and eReader on iPhone. We are looking at a couple other options.
What worries you?
Not a whole lot. The economy and the high price point for the devices. I'm a little anxious to see if Sony and Amazon and the iPhone can really maintain that upward trajectory that they've been showing for the last year. We're growing a lot because of those devices, and because of adding titles. Once all our titles are in, we'll have to think of ways to grow our business.
How will publishing change in the next two to five years?
More functionality will allow us to develop more interactive types of content. We're going to have to look at how we're organized in-house. Obviously, digital allows you to look at the content differently.
Company: Graywolf Press
Digital spokesperson: Rolph Blythe, marketing director
What are you most excited and worried about?
At this point, this is an ancillary stream of income for us. Right now, selling 50—75 copies in a month is good. It's a case-by-case basis on all of these books. We're feeling our way.
How are you handling the warehousing/conversion/distribution of:
E-books: We have a couple titles active in the Kindle marketplace—Per Petterson's Out Stealing Horses, as well as To Siberia. We are negotiating with BookMobile Design and Publishing Services, and they will act as our e-book distributor for a fee and a percentage of sales. By early in 2009, we should have 50—75 titles available as e-books.
