Penguin Random House CEO Markus Dohle was joined by PRH author and organizational psychologist Adam Grant (Think Again: The Power of Knowing What You Don't Know) on Monday in a live online conversation entitled "Rethinking Our New 'Old' Business: Why Books and Publishing are Flourishing."
Presented as a combination of personal and managerial reflections on life and the book business under a pandemic, Grant and Dohle traded pandemic anecdotes and responded to a range of concerns about the current state of the book publishing industry. The two touched on such topics as the pandemic-driven demand for books, digital publishing, e-commerce and Amazon, the challenges facing physical retail, and PRH’s growing size, as well as the enduring importance of the physical book. The conversation closed with Dohle’s optimistic projections for the book industry as it warily emerges into a new and uncertain post-pandemic economic reality.
The talk began with references to a New York Times article written by Grant, “There’s a Name for the Blah You’re Feeling: It’s Called Languishing,” that addressed how he and other people were “struggling with pandemic fog.” He described the condition as languishing, “stuck in a funk and the feeling that the world is standing still.” Grant asked Dohle if book professionals thought the industry would grind to a halt and languish because of the pandemic.
But while Dohle was quick to acknowledge that it has been “a tough year for everyone,” he said, in fact, “business went through the roof last year," and growth has continued into 2021, with print unit sales up about 25% into mid-May over the comparable period last year. Rather than grinding to a halt under the pandemic, the book industry was flourishing. Indeed, Dohle continued, looking back over the last 25 years, he emphasized that the book industry has fared better than any other media category.
“That’s not what the public thinks, and, unfortunately, it’s not what publishing people think,” he said. Indeed, Dohle noted that, in 2017, he decided to go on a “global road show,” to impress on the industry and others that “this is the best time in publishing ever since Gutenberg,” highlighting the fact that “the vast majority of the growth comes from the printed format.”
Dohle offered six reasons why this is the best time in publishing, backed, he said, by data: 1. the continued growth of the global book market year over year; 2. the industry’s robust model for print and digital distribution; 3. the continuing strength of physical books and its coexistence (80% print, 20% e-books) with digital in the market; 4. world population growth and spiking literacy rates, creating new readers; 5. the especially fast growth of children's books, producing even more new readers; and 6. the boom in audiobook sales, which is not cannibalizing other formats.
Grant continued to question Dohle’s rosy depiction of the business, citing the mounting size of PRH (and its pending acquisition of S&S) and asking if his best-of-times characterization simply “supports your efforts to build monopoly power.”
“The Key Performance Indicators of this industry are all going in the right direction,” Dohle said, noting that revenue is growing for publishers and retailers, while author royalties also have increased. Addressing PRH’s size, Dohle asserted that the publisher represented about 20% of the book markets in each of the 25 countries in which it operates. He added that the publishing sector is fragmented, characterizing a 20% market share as “not that big.” (When told by Dohle of PRH's current market share, Grant said that didn't sound like a monopoly). Dohle also argued that, over the last 10 years, small and independent publishers have “outperformed the big houses," particularly those who are strong in a niche.
Dohle said that while publishing is fragmented, "Amazon has accumulated a lot of market share” on the retail side, noting that four of every 10 units sold by PRH are bought through Amazon. Having said that, Dohle said, PRH can work with the e-tailing giant. “They innovate, and they present challenges as well as a lot of opportunities,” he said, adding, “perhaps more opportunities than threat. Why fight our biggest customer? Complaining is not a strategy.”
While online sales jumped last year, Dohle promised that PRH will support both e-commerce and physical bookstores. "We want to grow in all channels,” he said, adding that the publisher has just extended payment terms for bookstores again to give them more financial flexibility and help their cash flow. In response to a question from Grant, Dohle said he hoped the industry would one day solve the question of bundling print and digital copies of books, noting that one challenge there is the pressure bundling could pose on author royalties. He even discussed the ability of PRH imprints to compete for book acquisitions as PRH waits for governmental authority to acquire S&S. (It’s allowed, Dohle said, as long as non-PRH publishers are involved.)
Dohle also hit back against the thinking that, as the lockdowns fade and people return to more normal routines, reading and book buying will decline. He said that the industry has a great opportunity to keep people who made reading a habit over the last year in the book-buying ecosystem and to raise the baseline of readers. His answer for how to achieve that? "Publish good books."