Digital Strategy for Publishers

David Stephens, Managing Director

Liz Murray, Sales and Marketing Manager

www.ljinteractive.com

enquiries@ljinteractive.com

Digital Publishing – what are we talking about?- eBooks

- enhanced eBooks

- magazine type publications and partworks

- use of content in apps

- licensing content for other applications for example websites

We’re not talking about whether paper books are better than eBooks or whether we prefer them … that is a personal choice.

Paper is not likely to go away for the foreseeable future!

This is a question about what is the potential for the digital market and can we make any money out of selling our content digitally?

Are we “bovered”?

… what is the potential of the digital market?

Book Sales are going through a difficult time.

Total book sales : September figuresUS revenue down 7.7% to $1.51bn.UK revenue down 3.2% to £132.2m

Total book sales : Year Jan – Sept figuresUS revenue down 2.6% to $12.31bn UK revenue down 3.6% to $1.129bn

Publishers Weekly, quoting US Census Bureau figures, 16/11

How much should we be interested?

What is the market saying about digital?

Goldman Sachs report (April 2010)… eBook sales will increase fourfold in 2015 to $3.19 billion and print book sales will fall 4.9 percent to $21.7 billion.

The International Digital Publishing Forum collects quarterly US trade retail eBook sales in conjunction with the Association of American Publishers (AAP). 

Bain & Company, Patrick Béhar and Laurent Colombani. (Nov 2010)Between 15% and 20% of the book reading public will own electronic devices and up to 25% of books will be sold in digital form by 2015.

Steve Haber, president of Sony’s digital reading business division “e-books sales will overtake print sales within five years”

Forrester Research, Inc. (Nov 2010)“US spending on e-books was expected to total $966m this year, up from 301 million dollars last year and to triple, reaching $2.81 billion, in 2015.”

Cambridge University Press CEO, Stephen Bourne“The quality of publishing has improved markedly—some has been in print and some has been digital. The latter is making quite an impact.”According to the publisher’s annual report, 20% of sales for its past financial year are for digital products… this figure could rise above two-thirds by 2020.”

What are publishers saying about digital?

Random House Chief Executive, Markus Dohle “We’re at 8 percent in the US currently, I could well imagine that we get beyond 10 percent next year,” ... he did not expect e-books to generally overtake printed books in the next five years but expected eBooks to account for 25 to 50% of total sales by 2015.

Pearson“Soaring demand for digital books has led Pearson, the owner of Penguin and the Financial Times, to lift its profit forecast for the second time this year.”

Hachette UK appoints first digital director to drive sales of e-books, Sept 10Hachette UK (owners of Little Brown, Hodder Headline and Orion) says that electronic sales now account for eight per cent of their turnover.

HarperCollins UK chief executive and publisher Victoria Barnsley"In a tough trading year when the market dropped and home sales were down, HarperCollins UK managed to deliver significant operating profit growth on the back of a strong export market, exceptional rights income, higher digital revenues and cost savings related to prior year restructuring.

What are authors saying about digital?

Ian McEwan, winner of the Booker prize, signed an agreement with Rosetta Books, a specialised eBook publishing house.

Pressure from Authors to get into digital products?

• Self publishing market

e-reader buying behaviour

So what conclusions can we draw on the digital market?

• In the USA, digital is currently between 5-10% of some of the larger publishers revenue, probably slightly less in the UK.

• Digital sales in the USA are forecasted to rise to around 25% of book sales by 2015.

• Figures probably skewed by black and white titles?

• UK is roughly 1 year behind the USA?

• South Africa, Australia and New Zealand markets are further behind so should we be leading the group?

• it is likely that some publishers will encounter growing pressure from authors to make books available digitally

… what we can confidently say

• Digital is definitely on its way and at least part of the market has an appetite for it.

• Its currently only a very small part of the market but a conservative estimate is that it is likely to be 10-20% within 5 years.

Could be worth over £1m at current revenue levels to NHP UK.

So … are we “bovered”?

… we should be

… digital is not something we should ignore.

How does digital affect the publisher?

Does digital change the role

of the publisher?

Commissioning a print run or exporting an eBook isn’t the core activity of any publisher, or the difficult part of publishing.

The hard parts are still the same as they have always been• creating the content, dealing with authors, photographs etc.• design and editing• marketing and selling

Issues to overcome?

• Everything is still evolving, we don’t want to spend lots of time and money going down the wrong path.

• Publishing production processes are not suited to digital and digital conversion is a little convoluted.

• Copyright protection.

• No precedents set for pricing or business models or even contracts.

• Do we have research, development or innovation culture required to spot and develop new opportunities?

What is the technology and what opportunities does it bring?

Types of digital productsBasic ebooks

Many ebooks are simply a digital version of the printed product. … eg as a pdf

Enhanced ebooks or applications can provide extra features ...Multimedia such as videos, sound, music and various degrees of

interactivityInclusion of live content from wide range of sources such as

blogs and websites.Interactive reader participation in book content. Social networksdigital publishing has created a feedback mechanism, whereby

authors can communicate directly with their audience, and readers can communicate with one another.

Licensing content for Websites or other applications

Examples

Simple ebook- Christine Kringle

Illustrative ebook- Pilgrims Travels

Enhanced ebook- 90 Second Fitness Solutions

Apps- London City Walks- London Cycle - The Elements- Layar and Jack the Ripper Tour

Websites- Penguin: The 21 steps- http://wetellstories.co.uk/stories/week1/ - Eurostar Trip Planner- http://www.eurostartripplanner.com/en-uk/paris/search/index.aspx

eBooks/enhanced books/iphone apps etc – What do they cost to produce?

£50-£500 £2000-£4000 £3000-£20k

Standard eBook as an exact copy of

the printed book

(pdf, epub)

Book content

reformatted into an

application

Links to forums

and social networkin

g

weblinks

Ability to add or update

informationVideo

content

Audioconten

t

Search and indexing facilities

annotation facilities

Interactive graphics such as maps, charts, 3D

drawings

Ability to interact with or take part

in the book

The Christmas market for apps and enhanced ebooks

Publishers said they were expecting increased interest in digital products from consumers looking for electronic content after Christmas.• Faber will be releasing three apps linked to comedy titles in time for Christmas.

• Bloomsbury will be putting out two free apps to act as marketing support for two of its print titles.

• Random House has at least three apps slated for release before Christmas.- Tommy Cooper's Mirth, Magic and Mischief on 13th December for £1.19, including a

"Laugh-o-meter" where you can hear a slideshow of jokes.

• Simon & Schuster has two.

• PenguinPeppa Pig app, Stars, an interactive storybook app tying in to the picture book of the same name.

• Harper Collins, and Hachette are also offering Christmas apps.

Channels to market?

Google Editions is due out before Christmas.

Supermarkets such as Sainsbury’s and Tesco’s are planning digital downloads from their websites.

Selling through ebook retailers means we still need to market the ebook

• Traditional marketing.

• Websites.

• Social.

• Using Apps or ebooks for marketing.

Conclusions …

Key concepts

• In one form or another and whether we like it or not, digital is on its way!• Digital is currently only a very small part of the market but 10-20% within 5 years• Digital doesn’t change the core functions of a publisher but could change how we do things, from concept and production through to marketing and selling.• We will require an open minded and innovative approach to look for opportunities.• There is a risks that lack of action will mean authors/readers will circumvent publishers.• Marketing, niche digital and social marketing.• Digital is an opportunity we can’t afford to miss … but we need to be looking for opportunities and don't be afraid to try things.

Thankyou for listeningThankyou for listening

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