Publishers do not count haste among their failings. Nor do the British. Hardly surprising, then, that British publishers have been dawdling along the path to the door marked Digital Future. But at last they are reaching for the handle. In the past year they have finally stopped talking about "the digital marketplace" and actually started to plan for one.

Why? Because they now accept that such a thing is truly on the way, though few expect much from it any time soon. But also because, for a business in thrall to deep-discounting retailers, preparing for a digital world feels just a bit like reclaiming the future.

Of course, the industry has not been a completely byte-free zone. Legal and academic publishing is thoroughly digitized. A few of the more proactive trade publishers were excitedly talking up e-projects back at the turn of the century, before the dot-com bust blunted enthusiasm for all things electronic, and e-books have been appearing since 2001. But while the digital audio market is showing distinct signs of life, there is no serious market for e-books and won't be until a decent reader comes along. So committed preparation for a d-world has to be based partly on faith.

That faith is being inspired by U.K. consumer behavior, which is changing visibly. As more Brits sign up for broadband connections, they are belatedly but enthusiastically taking to Internet shopping and electronic consumption. In 2006, Internet purchases rose by more than 50%, to account for 10% of all U.K. retail sales, compared with 0.5% in 2000, according to Interactive Media in Retail Group (IMRG), a U.K. industry body.

The enthusiasm is not confined to the young. A recent survey [by insurance company AXA, Feb. 2007] revealed that using the Internet is now the favorite occupation of retired Britons.

In that sense, Britain is simply catching up with a more technologized U.S. One feature that sets it apart is its mobile phone saturation, and the growing use of those devices to surf and to shop. The country has more than 60 million mobile phones in circulation—that's roughly one per person. In December 2006, nearly 16 million people connected to the Internet by mobile phone, the Mobile Data Association reports, compared with 13 million in July. Some publishers would like them to use their phones to read.

If the consumer is pulling publishers toward digitization, the forces of competition are pushing. As search engines put on the pressure for searchable consumer titles, trade publishers have realized it makes sense to digitize their own content first and negotiate later.

The upshot is that the largest U.K. firms are thinking seriously about digital strategies, and at least some are implementing them. Leading the charge are Random House and HarperCollins—it may be no coincidence that, among the U.K. Big Four, they have the strongest U.S. connections. Each is busy digitizing some 25,000 titles.

They regard that as prudent planning. Right now they are more excited, however, by digital marketing. All publishers have become acutely conscious of retailers' close control over the relationship with book buyers. In e-mail and Web technology, and with the help of print-on-demand, they see ways to claim some of that ground, and to promote titles and authors that retailers are ignoring.

Random House, newly relegated to second place in U.K. market share, is keen to lead in the digital stakes and has earmarked a reported £5 million to develop that side of its business. It hopes to finish digitizing its backlist by May 2007. It already offers, via its Web site, a POD service under the Lost Classics label. Some 100 titles are available so far, with a one-week delivery promise for freshly printed copies.

"Our strategy is to invest heavily in digital over the next few years," says Peter Bowron, Random House group managing director. "We expect a digital market to develop in the form of e-books and, certainly, in downloaded audio. The digital portion of turnover may be small—paper books are our meat and drink—but we think being ready for the digital market is the right strategic move."

The group has more than 200 audio titles available via iTunes and, though still relatively small, this is its fastest-growing business, says Bowron. Most titles sell in the hundreds rather than thousands, but turnover tripled in 2006, and he expects it to double again in the current year.

The group's Web site is due for relaunch this spring. Direct sales to consumers are planned—customers can buy via the site today, but are funneled off to a choice of online retailers. "Publishers have never had a direct dialogue with the people who buy the books—and they are very important to us," Bowron says. In a polarizing retail market that is promoting fewer books, a general publisher has to do more to support all its titles, he adds. "We need a way of having a shop window ourselves."

Late last year, the group mounted what it reckons was the most expensive U.K. book e-launch so far, for Thomas Harris's Hannibal Rising (Heinemann). It spent £30,000 on a press, e-mail and Web campaign that included MySpace and on YouTube. "Extending marketing into the digital world is very important," Bowron says. "You never know who's looking at a billboard, but with digital you can pinpoint your marketing."

HarperCollins has stocked a group digital warehouse with 10,000 titles so far, according to digital development director Jim Green. "It's an international dynamic," says Green, who is also managing director of Collins Education. "Everything we do in the digital space is implicitly global. There has never been a more pressing need to work with our colleagues in New York, Toronto, Australia."

HarperCollins has bought a stake in NewsStand, the U.S. firm it employs to digitize, store and distribute its titles, and will offer its technology to other publishers. Readers can now sample extracts from certain titles on the HarperCollins Web site before buying (from Amazon) and the long-term intention is for the site to be able to sell digital versions of books directly to consumers. For now, the most immediate digital benefits are in e-marketing, Green says. "We are talking in a more direct way to the people who read our books, with newsletters and e-mail alerts, delivering information with the intention of bringing them back to the Web site."

Given HarperCollins's presence on both sides of the Atlantic, are there differences in competence or approach? "The sheer size of the U.S. market, and the fact that most major global technological companies originate there, means the scale of investment and the commitment to make things happen is stronger," Green replies. "But the U.K. is way ahead in mobile phone technology, and in thinking about how it can be used to deliver content."

Collins Guide to British Birds is a vivid example of what can be done. The physical book will come with a SIM card bearing a digital version of the contents. The idea is that, out in the field, binoculars in hand, a mobile phone is more convenient than a book. Book plus card will be priced at £50. Work proceeds on a version that can listen to a bird call, identify it and flash up the relevant entry.

Speaking of birds, Penguin recently declared its intention to collaborate with parent group Pearson—proprietor of the Financial Times—in the creation of a digital archive. It has been adventurous in its experiments with the new media, which include setting up shop inside Second Life, the virtual-world Web environment, and launching a wikinovel to which all comers may contribute, called A Million Penguins.

Of the majors, market leader Hachette Livre U.K. is the one still biding its time. "Our attitude is one of wait and see," explains commercial director Richard Kitson, a former COO of Little Brown. It's not entirely inactive—it has a "digital board" representing operations in France, Spain, the U.K. and the U.S., chaired by Maja Thomas, U.S.-based audio publisher and v-p of digital strategy.

"There is no e-book reading device that has blown us away, and no proven monetary gain [in a digital market] at the moment," Kitson says. "New titles and anything being reprinted are digitized, but elsewhere we pick and choose where we need digital content, rather than having a wholesale program." The first candidate for any accelerated program would be Hodder Education, which, together with Little, Brown, was the first in the group to introduce POD (courtesy of Lightning Source).

Kitson accepts that a digital marketplace will exist, "but I don't know when it will emerge. There will be an e-book market for particular genres, but it will affect mainly reference and nonfiction." He agrees that there is a market in audio downloads, and predicts that it will lead quickly to the phasing out of the physical product. Hachette had a taste of the strength of that demand recently when digital audio downloads of Sarah Waters's The Night Watch (Little, Brown) outsold the physical audio version—a group first.

Children's publishers are being thoughtful about the future, given that the reading habits of their customers are likely to be more flexible than those of their parents. "We have to think about how children will use this technology and what skills we will need as publishers for content generation," says Cally Poplak, director of Egmont Press. "Will there be a return to serialization—back to Dickens? Will there be mobile phone downloads? It's not about bestsellerdom, but about giving the backlist new life, keeping books 'in print' but in a different format."

Faber & Faber has earmarked its admired poetry list as an early candidate for digital audio treatment. "Readers and writers won't change," says Faber CEO Stephen Page. "What will change is the bit in the middle, the route to market. We don't know when it's coming, but Faber will start an e-program this year so that, when it does come, we'll be in a position to turn the lights on."

That is the prevailing attitude, and it is unlikely to change in the absence of any concrete revenue streams. "In science, we have a business model, and it's called a site license," says Macmillan CEO Richard Charkin. "For reference books you have Xrefer, whose business model is to sell to public libraries and share the royalties with publishers. But there isn't a business model for consumer books."

The blogging Charkin is one of the few mainstream publishing chiefs who seems to relish the digital challenge instead of merely responding to it (his academic publishing background may account for this). "The only way to get through this is by doing things, not thinking about them," he insists. What Macmillan has done is to launch BookStore, a searchable e-book repository. This will hold Macmillan's own digital files and those of anyone else who wants the service. Macmillan New Writing and Macmillan Science texts are already available on BookStore in formats including audio, Mobipocket and Sony. Börsenverein des Deutschen Buchhandels, which organizes the Frankfurt Book Fair, is the first signed-up external customer.

"I don't think there will be a huge market for selling electronic data in the short term, because there is not yet a reader for consumer books that has convinced the marketplace," Charkin says. "But publishers have to do it, because there will be a market. People will need ways of downloading a book or a chapter and we need to protect our authors. If we don't go to the trouble of digitizing and holding content securely we'll have lost the high ground. If the new world is anything like the old, we as an industry definitely don't want monopolies between us and our marketplace. We want as many routes to market as we can find."

A handful of new publishers embraces technology. One is the Friday Project, whose books are created around Web sites and their communities. The idea is that the communities will buy the books—and, so far, they do. Successes have included The Holy Moly! Rules of Modern Life, born of celebrity gossip site holymoly.co.uk, and Blood, Sweat and Tea, based on the popular blog of ambulance driver Tom Reynolds. This year's offerings will include Born to Be Mild, based on the Web site dullmen.com.

The Friday Project has chosen the new media as its habitat, and it digitizes most of its content, but it still publishes books made of paper. iCue, on the other hand, is a rare, perhaps unique, British child of the digital revolution. It sells what it calls m-books, downloadable to mobile phones via SMS (short message service), and has licensing deals with U.K. publishers. Revenue is split with publishers after deduction of operating costs. "Our publishers represent over 90% of the market share of nonillustrated titles," says iCue managing director Jane Tappuni.

iCue does not serve the same market as e-books, she points out. Aimed at people on the move, the technology allows readers to regulate the speed at which text appears on the mobile's screen, without having to scroll. The Web site lists around 500 titles, mostly ex-copyright, and iCue is taking 600 more from Penguin and some thousands from HarperCollins's digital warehouse. "We have sold 700 of our best titles, but that's not a fair representation of what we will be," she says. "This market will happen in the next two years."

The fact that digitizing and hosting services are becoming available should spur more hesitant publishers to address the digital issue. Printing group CPI, which claims to print 40% of Europe's monochrome books, has launched BookBank, a digital asset management and delivery service that allows publishers to store, manage and distribute their digital content. "Once you have control of your content, you can do a lot more with it," says Adrian Soar, CEO of CPI Publishing Solutions (and a former Macmillan executive). "In the 19th century, printers played a much fuller role in publishing. I believe they will again."

The tricky issue of rights sits at the core of digital publishing, and here the future is still on hold. Early last year, the Publishers Association began negotiations with the Society of Authors and the Association of Authors' Agents to establish guidelines for digital rights contracts. One of the key issues was reversion of authors' rights if print-on-demand means a book is never technically "out of print."

Terms and royalties were not on the table—they were left to individual authors and agents to work out—but Amazon's Search Inside feature and which digital rights should customarily be granted to publishers were. By November, the talks had collapsed. "The publishers were wanting more than we were prepared to give," explains Mark le Fanu, general secretary of the Society of Authors. There are no plans for resumption.

U.K. trade publishers are mostly as hostile as their U.S. counterparts to the scanning philosophy behind Google's Library Project, and are watching American legal developments with interest. They are less negative toward the overriding principle of Google Book Search, though most have so far withheld permission to scan their content. "We won't do it for two reasons," explains Macmillan's Charkin. "One is that we want as few versions of our authors' copyright material on the Web as possible—we want the Web to come to us. The other is that it's hard to do business with someone who, in another part of their world, is in flagrant breach of copyright."

So there is finally some action on the digital front in Britain, but nothing you would mistake for a sense of urgency. That may have to wait for what one U.K. publisher calls "the iPod moment"—a reader that makes e-reading make sense. Some believe it will have to be more than a single-purpose device.

"It won't be a specialist e-reader," predicts Malcolm Edwards, group publisher of the Orion Publishing Group. "It'll be a multifunctional, high-spec, really desirable piece of kit. And I hope I have the wit to recognize it when it comes!"