The ongoing strength of print books and the possible uses of AI were among the topics discussed by HarperCollins CEO Brian Murray on December 10 at the UBS Global Media and Communications Conference. While sales of digital formats have grown, “the strength of print books has been surprising,” Murray said.
The most recent example of the format’s resiliency is from this holiday season, Murray said, pointing to the willingness of readers to buy deluxe editions of mostly backlist titles. Deluxe editions of such HC titles as Wicked and books in the Bridgerton series “are selling like crazy,” Murray said, and helping to drive the overall market.
On the digital front, Murray said, sales of audiobooks continue to grow, while e-book sales have declined. The entry of Spotify into the audiobook market has provided a spark for the format, he added, pointing to Spotify’s ongoing international rollout of audiobooks and Audible’s new aggressive marketing efforts in the U.S. and suggesting that more growth lies ahead.
However, Murray doesn’t see such other tech giants as Apple of Google getting deeply involved with audiobooks. “They seem to have bigger fish to fry,” he commented. HC remains committed to supplying books in all formats to customers, Murray said, while also ensuring that the economics work for authors and the publisher.
The fast-evolving AI sector could deliver new types of formats for books, Murray said, adding that HC is experimenting with a number of potential products. One idea is a “talking book,” where a book sits atop a large language model, allowing readers to converse with an AI facsimile of its author. Speculating on other possible offerings, Murray said that it is now possible for AI to help HC build an entire cooking-focused website using only content from its backlist, but the question of how to monetize such a site remains.
All the various AI products are “kind of interesting, but I don’t know how you market, price, or sell them,” he said, adding that he can’t predict when these products “may move the needle on our overall economics.” Instead, HC’s immediate focus is on using AI to help its teams work more efficiently in such departments as sales, marketing, and editorial, Murray said: “We have dozens of initiatives to empower efficiency.”
Murray didn’t provide any more details on HC’s recent licensing agreement with a large tech company alleged to be Microsoft, and while he said other deals are possible, “we are an IP company at heart, founded on copyright,” he observed. “There may be other deals, or there could be lawsuits.” He was confident, however, that the explosion of low quality, AI-generated books will not pose a threat to HC’s business.
Murray also sees AI playing a potential role in increasing the number of translations HC publishes, as well as upping the count of audiobooks the publisher produces—both areas that have prompted concern from many in the business. He stressed that the majority of audiobooks HC produces will continue to use professional narrators, but that in some categories, the economics of professional narration don’t make sense, leaving AI narration a potentially attractive option.
Overall, Murray said that, while many aspects of AI still need to be explored, he believes that the technology presents “more opportunities than risks” for publishers. “We’re spending a lot of time figuring things out,” he said.
Discussing the overall financial health of HC, Murray said that after a year-long sales decline following the pandemic bump, he is now happy with the company’s sales momentum. In the fiscal year ended June 30, HC reported a 6% increase in sales, while profits soared 61%. Part of the reason for the jump in earnings was the restructuring the publisher went through for the better part of a year, resulting in some layoffs. Murray told attendees that the publisher has now gotten its cost structure back to an “appropriate” level.
HC has been aggressive in using acquisitions to grow in recent years, and Murray said that the company remains open to more deals, noting its recent purchase of German publisher Gräfe und Unzer. Asked if HC would make another run at Simon & Schuster if it comes back on the market, Murray said that it probably would. “I think we have looked at them three times,” he chuckled. He noted that, in today’s business world, scale remains important when dealing with giants like Amazon and Spotify. To that end, he added, HC’s size, and its place as part of News Corp, has been beneficial.
The presentation closed with a discussion of the impact of current affairs on HC. The company is closely monitoring president-elect Donald Trump's proposed tariffs on imports from Canada, China, and Mexico; since tariffs were imposed during Trump’s first administration, HC has reduced the amount of printing it does overseas. Still, there are concerns, Murray noted: some printing, especially for Bibles and certain children’s books, is done in China, and while black-and-white books are mostly printed in the U.S and Canada, the vast majority of paper for U.S. printers comes from Canada.
