Michael Cader, Creator, Publishers Lunch, was the Moderator of this session on investing in the publishing industry. He started off by saying that publishing is undergoing a wholesale rearrangement of assets and ownership. Some examples of this is the merger of Penguin and Random House. Also B&N has been collecting investment capital and McGraw Hill has sold their education business.
Brian Napack, Senior Adviser, Providence Equity Partners, Former President of Macmillan then weighed in on the issue. He believes that there is an investment opportunity in publishing and that lot is going on in the marketplace from a structural perspective. The Random/Penguin deal is not about capital inflow, but about scale, and the McGraw-Hill transaction was partly a result of market punishing them for being a conglomerate.
He went on to explain that the publishing business is undergoing a tremendous amount of change, but that is due to be halted soon an things are starting to settle down and publishers are starting to feel comfortable about their restructuring. Publishers are now in a battle for the attention of the media consumer. They are faced with competition that is not necessarily from another book. All the structural change in the marketplace is about setting the value between creator and consumer. Scale matters more than ever in publishing now. It used to be that scale meant size, but not anymore. Scale matters because if you have a powerful balance sheet, you can invest in new product and in old product, such as a backlist. Scale allows you to invest in broad-based offering, and, most importantly, scale allows a publisher to invest in marketing. If you have the scale to win the battle for the author, you will then win the battle for the consumer. The clock has started ticking. Once investment and restructuring happens, then it will continue. In the next couple of years, it will go down from big 6 to big 4 or 3. We will have mergers rather than outside investors coming in. Big players will continue to be big, but there will be new players coming up from the bottom. In the media business, there is always innovation and new players coming into the market.
Barnes and Noble is currently facing two battles, Brian said. one is that the company has the battle for the survival for the bookstore. and the other, the battle for the digital consumer, is a wholly different battle from the bookstore battle.
Paul Biba is a retired corporate international lawyer who has worked in 53 countries. Since he is a very fast reader he came to ebooks out of self-defense in order to avoid carrying a suitcase of books on his travels around the world. An early ebook adopter, he has read on Palms, Pocket PCs and practically every device that has been out there. After being a frequent contributor to TeleRead.com, the oldest ebook/epublishing blog on the net, Paul became TeleRead’s Editor-in-Chief, a position he recently resigned. Send Paul an email to firstname.lastname@example.org