Foreword Random House TableAfter two consecutive years of declining sales and earnings, Random House managed to steady the financial ship in 2009 with profits holding even in the year and revenue eking out a small increase. Parent company Bertelsmann said Random was able to keep profits stable because of reduced costs in all divisions, a strong commercial publishing program, and the effects of currency translations. In its annual report, Bertelsmann noted that, in terms of revenue, a slight (0.5%) favorable change in exchange rates and changes in Random's business portfolio (including the acquisition of Ten Speed Press) offset a 1.4% decline in organic growth. Sales in the U.S. were in line with the overall revenue trend and were basically flat in the year. The U.S. accounted for 52.9% of Random's revenue last year, a slightly higher percentage than in 2008, and revenue stayed at about $1.28 billion.


Despite what Random CEO Markus Dohle said will be another tough year, in his letter to employees, Bertelsmann said it expects Random to have a slight gain in sales and earnings in 2010 and 2011. And while Dohle said that expansion of Random's digital publishing business is one of three primary goals for 2010, he expects Random's print business to continue to grow as well. As part of that strategy, there is an even greater emphasis on working with accounts to, as Dohle said in his letter, develop and implement “customized solutions in order to help [accounts] cope with their overall business challenges.” Random is now putting less effort than some other major houses in developing its direct-to-consumer business.

Random also remains cautious about its selling approach to e-books, despite e-book sales jumping by triple digits in 2009, as e-book sales still account for less than 2% of total revenue. At press time, Random was the only one of the six major New York trade houses to not have a deal to sell its e-book titles directly to Apple for use on the iPad. The lack of a deal reflects Random's concern about moving to the agency model, something that would be necessary to work with Apple. As Dohle told the Financial Times, adding the iPad and iBookstore would mean “changes, in particular for our stakeholders,” which would require Random to consult with its authors and their agents. Others have speculated that Random House is moving slowly to the agency model because it doesn't want to lose the extra margin provided by the wholesale model.