Digital Book World: A CEO’s View of the Future Redux: Lessons Learned, Future ForecastsBy
David Nussbaum, Chairman & CEO, F+W Media, Inc.,Moderator: 2012 was the year of the tablet. e-Readers are more immersive. Mobile is the next great trend. Mobile leads to an increase in the application market. In the US, we are seeing fewer and fewer bookshelves and this leads to challenges of discoverability. Publishers had to hire more and more people into their quality control area once they went into digital.
Marcus Leaver, CEO, The Quarto Group, Inc.: We waited until tablets came in because we are mainly in the illustration business and are now seeing a huge increase. We don’t presume that any of the people who read our books read them end to end, anyway, and we so don’t see much of a difference. We are now waiting on mobile to see what happens. Only a small number of imprints have apps and the revenue numbers are small, but they make for good marketing. Apps that take into account parents and children together do well. Everyone in the company is involved in digital to some extent. The market department is becoming closer to the editorial department. Marketing is becoming ascendant in a lot of companies. It’s pretty good for selling in the US, but in England or Australia it is getting difficult to know whom to call on to sell hardcovers. We expect that eventually less that 15% of their sales will be in traditional bookstores. Customers will be looking at specialty stores, for example. In terms of physical books are getting more and more local to do marketing and sales. In terms of digital discovery a lot of experimentation is needed.
Being an illustrated book company are highly visual and this makes discoverability harder. They do sell from their website but not convinced that are very good at it. Frankly, they will never have as good a website as Amazon. Once things settle in there will be a lot more bundling. Free is not a business model, but it is astonishing to me that selling books at a lower price on Amazon will aggregate to a larger sales and revenue volume over time.
Karen Lotz, CEO, Candlewick Press: Tablets are transformative in the children’s book business. For kids, one needs a full color display. We waited until tablets took off before got into it. Mobile is dipping down further and further in age groups, so we are definitely looking carefully at it. We only limited experience with apps but are very optimistic about them, and have decided that digital was going to be the water that we would be swimming in. A lot of their people spend the majority of their time on digital. With illustrated children’s books, the discoverability in a bookstore or library is very important. Two thirds of parents still think that print experience is irreplaceable, even though they may like ebooks. There are no good ways to discover children’s books online. Also, direct to consumer in the US is different than direct to consumer in the UK. There are a lot of hurdles to selling direct to consumer, so we need to put a lot of infrastructure into place. Taxes in all 50 states are different, for example. Pricing is challenging. The average children’s book consumer is used to paying $16 for a kid’s book. Pricing of ebooks depends a lot on the promotion you are willing to put into the book.
Gary Gentel, Presiden, Houghton Mifflin Harcourt: The tablets biggest impact is that it forces us to be better at what we do. Someone who is using a tablet is one click away from the rest of the world, unlike an e-reader, so we have to be more engaging. People who use tablets tend jump around to different technologies, and we have to make sure that whatever we put into the tablet will keep that person’s attention. It may mean going for shorter publications. Huge opportunity. We are continuing to develop apps and some of them have large downloads. Apps are a unique situation and can do well. We are very excited about the increase in technology in other parts of the world, especially in the Pacific Rim. The bulk of their business is in education and this is a huge potential growth area. We tried to make sure that all of our processes are fulling integrated in the P and E sides and this has been going on for the past two years. Digital-only employees are mainly in the strategy and marketing sides. Publishers need to understand the paradigm of marketing directly to consumers. In the past, we have always used intermediaries and it is now becoming incumbent on the publisher to reach the consumer directly. This is not an easy thing to do and we have put a lot of resources into doing it. Kids are going to Amazon to look for materials, so we must find a way to reach those kids. There are modest sales direct to consumer and we are struggling to get better at this by investing a lot of time and money into improving their sales website. We are not experts at actually transferring our excellence in book-making to digital book-making, so we’re bringing more and more stuff in-house to develop the expertise. We will lower prices if it is needed for a strategy, but we won’t just lower prices for the sake of it.