Cover Story: Embracing a Different Publishing World
Perspectives on the shifting publishing marketplace, and threats and opportunities surfacing as a result, seem almost to have divided the industry. Some see print as holding fast as the primary bread-and-butter for publishers, with e-books and other digital products growing, but remaining as incremental revenue. Others see the current growth in e-book and new digital reading devices, and a younger generation of digital-bred readers pointing toward a future where "e" will be the primary revenue driver in most publishing businesses.
Book Business interviewed the heads of several publishing companies in various market segments—Niko Pfund of Oxford University Press, Zondervan's Moe Girkins and Cengage's Ron Mobed—to gain their insights on an evolving publishing world. The good news: The shifts in the market seem to be borderline irrelevant. Of course, they require shifts in business strategies and models, and product offerings—no small feat; but the publisher's primary goal remains the same as it always has been—serving content that customers need and want.
Insights from … Niko Pfund
Vice President and Publisher,
Oxford University Press, New York. OUP.com
Oxford University Press Inc. (OUP USA) is a not-for-profit corporation affiliated with Oxford University Press in Oxford, England, the world's oldest and largest continuously operating university press. Together, OUP's companies publish more than 6,000 new titles worldwide, annually, and OUP USA produces about 250 scholarly research monographs, as well as trade books, textbooks and professional titles.
Noelle Skodzinski: Has the internal structure or culture of OUP changed to adapt to a shifting marketplace?
Niko Pfund: Yes, dramatically. Approximately three years ago, we underwent a press-wide reorganization, during which we reconfigured the press from a vertical structure—[where] each publishing unit had a separate editorial, design and production unit, a separate marketing department, etc.—to a horizontal one, whereby these functions became press-wide. This was intended to acknowledge the changes in the marketplace where "type" of book or online content matters less and less … and where we really needed to start focusing on new business models, online products and services, and licensing opportunities. We also wanted to rededicate ourselves to the [press's] core functions, which are to serve our academic constituencies, as a books publisher, journals publisher and publisher of online services. And I suspect we'll need to continue to shapeshift in the years ahead, as the needs and demographics of that audience continue to evolve.
NS: What percentage of your total revenue is generated from print books? What about e-books?
Pfund: This is the veritable chase after a moving target. … We're chasing the print train downhill while chasing the online train up, and it's not easy to see how fast each is going, especially given the way in which the financial crisis has muddied some of these trends. At present, on the book side, we take in about $1 in online revenue for every $19 in print; but this will likely be obsolete by the time this publication goes to press. And that 1-to-19 ratio pertains only to books. If we add in our [other] online products, that online percentage is already well into the double digits.
NS: What do you anticipate those percentages to be in two years?
Pfund: Again, very hard call. I would think 15 percent to 20 percent online, 80 percent to 85 percent print, but that really is just a personal guess. …
NS: What about five years?
Pfund: Thirty percent to 35 percent online, 65 percent to 70 percent print.
NS: Do you think e-books will eventually replace print books?
Pfund: No. We all need to give the book a bit more credit. It's an excellent technology, having been tested over five centuries. …
David Pogue wrote in a February 2009 New York Times column on the Kindle 2:
"So, for the thousandth time: Is this the end of the printed book? Don't be silly. The point everyone is missing is that nothing ever replaces anything. E-book readers won't replace books. The iPhone won't replace e-book readers. Everything just splinters. They will all thrive, serving their respective audiences."
That perhaps slightly overstates the case, since I do think the utility of print books for extractive research purposes (e.g., where a scholar dips in for one bit of information) is radically diminished by the availability of that content in a larger online aggregation of books. …
And … with the rapid development of digital printing technology, whereby it's possible to print single books at a time, this whole question has lost some of its bite.
NS: Do you have other significant revenue drivers?
Pfund: Oxford boasts a pretty diversified portfolio …, including higher education, Bibles, medicine, law, etc. The upside of this is that in some years, some areas are up, as with higher education this year … and some areas are down.
What was once our reference division has, within a decade, transformed itself into a largely online publishing unit, and this is one of the most exciting areas in the press.
We have a thriving translations, digital rights and new-business development arm that has been extremely successful in recent years, and changed the way we think about acquisitions and content development.
NS: What is its fastest-growing product segment or area?
Pfund: State secret. Although I will say … that, in a very challenging retail environment, our trade book sales increased over last year, due in part to a few particularly strong copyrights … and a very strong and steady new backlist.
NS: In which area of your business is OUP investing most heavily?
Pfund: We tend to invest aggressively in our core areas of academic research, higher education and online/reference.
NS: What do you see as the biggest threat to book publishers today?
Pfund: Anyone can get a book printed these days for a few hundred dollars. … Accordingly, publishers need to justify their role in the process not through words, but deeds—to show why editors, copy editors, designers, production, sales, marketing, publicity, etc., are critical to the success of a new book.
In the university press world, we already exist in a very nuanced and stratified subculture, and I think we do add considerable value …: soliciting expert outside advice to … improve submissions, developmental editing, line editing, copy editing, marketing to the very specific readerships to whom we cater, and … trying to keep our authors abreast of all these changes.
NS: What do you see as the biggest opportunity?
Pfund: What has been too often overlooked in recent years, given the barrels of ink devoted to e-books and e-book devices, is the transformative role of digital printing and print-on-demand technologies. For a "long-tail" publisher such as OUP, this is arguably the most revolutionary development since the roll-out of the paperback. I'm not sure this is actually really an opportunity at this point, since at most presses it … has now been fully realized …, but it has been a major, major factor.
NS: What is the best decision you've made in the past year?
Pfund: Keeping my editors happy, or at least trying. We have a spectacularly good group of people at the press—smart, professional, driven—and our success is squarely tied to the continuity we've enjoyed.
NS: What keeps you awake at night?
Pfund: What makes me a bit anxious is the advent of patron-driven acquisitions (PDA), a new methodology via which college and university libraries are beginning to order books [based on patron requests]. But, as with all the other various changes that have buffeted us in recent years, I have every confidence we'll figure out how best to continue fulfilling our mission in a PDA-influenced environment.
NS: What is your best tip for others navigating a rapidly changing market?
Pfund: … Publishers sometimes … presume that being an early adopter is preferable to sitting back and waiting to see how certain things shake out.
We're in this pre-Cambrian era of innovation, during which new products and platforms and business models are coming at us fast and furious. … But the old chestnut about incremental change often being more effective than radical change comes to mind here. … Over the last decade, if we'd leapt at every new business opportunity dangled in front of us, we'd have spent an inordinate amount of time and resource on projects that soon evaporated, and so I think there's a real utility to being at the table, but not necessarily being the first player to make a bet.
Insights from … Moe Girkins
President and CEO, Zondervan, Grand Rapids, Mich., Zondervan.com
Zondervan is a Christian publishing company owned by HarperCollins. For more than 75 years, it has published general and academic resources, and been honored with more Christian Book Awards than any other publisher. It conducts events and publishes Bibles, books, audio, video, curriculum, software and digital products through its Zondervan, eZondervan, Zonderkidz, Youth Specialties and Editorial Vida brands. Zondervan resources are sold worldwide through retail stores, online and by Zondervan ChurchSource, and are translated into nearly 200 languages in more than 60 countries.
NS: Has the internal structure or culture of your company changed to adapt to a shifting marketplace?
Moe Girkins: We expect a great deal more creativity inside a book with the advent of "enhanced" e-book products like the iPad, so we are creating strategic partnerships with some successful creative agencies.
NS: What percentage of your total revenue is generated from e-books?
Girkins: E-books represent about 5 percent of our total book revenues at this moment and rising.
NS: What do you anticipate those percentages to be in two years?
Girkins: We expect e-book revenue to exceed 12 percent next year, and 15 percent to 20 percent the following.
NS: What is Zondervan's fastest-growing product segment or area?
Girkins: … The fastest growing segment is fiction.
NS: In which area of your business is your company investing most heavily?
Girkins: Zondervan is investing most heavily in all forms of digital publishing.
NS: What do you see as the biggest opportunity?
Girkins: The biggest opportunity is obviously in the "enhanced" e-book.
NS: What is the best decision you've made in the past year?
Girkins: Digitizing a great deal of content.
Insights from … Ron Mobed
President, Academic &
Professional Group, Cengage Learning, Stamford, Conn., Cengage.com
Cengage Learning is a provider of teaching, learning and research solutions for the academic, professional and library markets worldwide. Its brands include Heinle, Gale, Wadsworth, Delmar, Brooks/Cole and South-Western, among others.
NS: Has the internal structure or culture of your company changed to adapt to a shifting marketplace?
Ron Mobed: … We think that the education world is changing very much for the better as people start to think more about the best way … we can help teachers to teach and students to learn. … That's the goal of Cengage. … And so, … we've been introducing new products, new business models that help to add value and serve our customers better. And there are examples of that, whether they're … business model examples or … new books in new formats at lower price points that allow people to buy chapters from books … or rent books—we've added services around them. …
NS: What percentage of your total revenue is generated from print books?
Mobed: … The majority of the current revenue stream continues to be from print. The real story behind that is the acceleration of the digital or hybrid delivery of material, which is increasing, I would say, for all of us, but particularly within Cengage.
NS: What about e-books?
Mobed: Electronic books are clearly a part of it, but … we don't really see the story being only about digital; it's about what you do with the digital. … We've been using technology as a digital platform to do things like interactivity. We're doing a lot more in the assessment world, helping people to try to understand [a piece of curriculum material], and then check through an immediate assessment as to whether they have absorbed [it]—and if they haven't, very quickly get feedback on that. … We're moving down that track very, very significantly.
NS: What do you anticipate, in terms of print sales, in two or five years?
Mobed: We're looking at whether we are continuing to be at the forefront of the education experience. … So, … simply tracking the components of our business and e-books is not really giving us a sense of whether we are being successful. …
A slightly different question is the pace around which the company is moving toward more solution-based offerings as opposed to simple product offerings, and … we do see that the pace of that movement is accelerating, and we're pleased with that.
NS: So you can't speak about percentages opting for print versus electronic?
Mobed: We do look at what's happening to our print … sales. … Everyone does. But … that's not our main focus. … More important is whether they are using our material. … And luckily, the technology we are deploying allows us to track that very effectively. We can see how many users we have, how much time they are spending with our material. The instructors can see whether [students] are successfully absorbing [it].
… We're looking at the bigger picture. … Are the solutions we're offering … what the instructors and students want? Are we predicting where they're going?
NS: Do you think e-books will eventually replace print books entirely?
Mobed: … If we're delivering our material in an appropriate format, then our customers will buy. The way in which people are absorbing content today still is very much print-based. … It may not be as large as it's been; it may be more print-on-demand; it may be more customized. … It doesn't really matter to us. We're perfectly capable of delivering millions of print books every year; we're perfectly capable of servicing millions of online users. And we'll make that adjustment depending on how quickly things change in the marketplace.
NS: Do you have other significant revenue drivers?
Mobed: … …There's very big business in [curriculum materials]. …
We have a substantial business in providing reference materials to libraries and … students. And those are more and more being combined, … where students can read a standard text … and immediately move across to up-to-date reference material. We have products such as our "Global Economic Watch," standard economics textbooks that suddenly have been challenged to explain the recent economic crisis, and we've … [supplemented them] with reference and late-breaking material from our reference and news sections. …
NS: What is Cengage's fastest- growing product segment or area?
Mobed: [For] customer segments, the two-year college area in the United States has been a very high-growth sector for us, as kids want to make sure they're getting the right skills for a tough employment market. … And in terms of a product line, certainly the products that have … [a] solution component, technology component, … or interactivity component—those tend to be moving very, very fast.
NS: In which area of your business is your company investing most heavily?
Mobed: … Technology—platform investments [for the] … infrastructure, but more [to enable us to] connect the original curriculum content to a student in more exciting ways.
But … our majority investment [is in] making sure we're getting the right content. … We're continuing to sign up authors, and making sure the materials they're producing [are] up-to-date and in the right format, and … technologically enabled.
[So,] … we're thinking about the digital component at the time that we're putting new curriculum material together, rather than as an add-on—digital-first, if you like.
NS: What do you see as the biggest threat to book publishers today?
Mobed: … If organizations think of themselves as "book publishers," their challenge, I think, is adding value in an environment where there are other ways to deliver the best experience to the customer. So a static attitude [would be the biggest threat].
NS: What do you see as the biggest opportunity?
Mobed: The same thing. If you are thinking about yourself as a provider of learning solutions …, not as a book publisher—then … the threat is actually the opportunity.
NS: What is your best tip for others navigating a rapidly changing market?
Mobed: I think it's understanding where your organization can add value in a different environment. And I think that the biggest word in that sentence is "different."
- People:
- Niko Pfund
- Places:
- Oxford