PW: Publishers Optimistic About Spread of Technology

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Publishers Optimistic About Spread of Technology
Jim Milliot and Calvin Reid -- 1/3/00

The growing influence of the Internet on the book publishing industry was deemed the major trend affecting publishers in 1999, a PW survey of a cross-section of publishing heads found. And while the burgeoning growth of online bookselling was seen as the most important development on the Internet in 1999, publishers predicted that the Internet's role in publishing will change in 2000.

"The Internet is not for just selling books. Amazon can do that. Publishers need to devote their resources to other opportunities," noted Scholastic chairman Richard Robinson. Those other opportunities include using the Web to market titles as well as to sell digital content. "Publishers have made a quantum leap in their knowledge of how to use the Net to promote books and I think that will continue," said Jed Lyons, president of Rowman & Littlefield/National Book Network. He was less certain, however, about when the Internet will become a major source of revenues for content delivery. "I would estimate that less than 1% of our revenues in 2000 will come from the sale of electronic content," Lyons told PW, adding that the company will nonetheless "dip its t in every stream" of the evolving electronic delivery systems.

There was a general consensus among publishers that the e-book market is still years away, although Penguin Putnam chairman Michael Lynton thinks the e-book industry will establish a "beachhead" this year in that industrywide standards will be adopted and more titles will be converted to the e-book format.

There was much more excitement about the role on-demand printing will play in 2000. "I think we'll see a breakthrough in print-on-demand in 2000," Jack McKeown, president of the Perseus Group told PW. McKeown explained that he is not referring to the printing of single copies, but rather to using short-run printing methods to print galleys and core backlist titles that sell only a few hundred titles. Jane Friedman, CEO of HarperCollins, said print-on-demand "will keep more books in print and bring back books that are out of print, thereby offering more titles to consumers."

Benefits to Backlist
The confluence of print-on-demand technology with online bookselling is expected to have a positive effect on backlist sales. "Online retailers have shown us how strong backlist sales can be, and I expect print-on-demand will only improve results in that important segment," Friedman said. Walker publisher George Gibson said that sales of Simon Singh's year-old title Fermat's Enigma enjoyed a surge of sales this year through Web retailers following the release of Singh's newest title, The Code Book. "These are sales we wouldn't have had before," Gibson noted. Taking a somewhat different view is Lynton, who observed that because of their current emphasis on selling frontlist titles, "I'm not sure if online retailers are generating incremental sales." He was very hopeful, however, that in 2000 sales of backlist titles through e-retailers will increase, and as a result, net sales will rise.

The ability the Internet gives companies to sell content directly to consumers was seen by a number of publishers as the next step, as McKeown phrased it, in "blurring the lines of the publishing value chain." According to McKeown, publishers are acting like distributors (e.g., Bertelsmann's investment in barnesandnoble.com and the merger of its book clubs with Book-of-the-Month Club), and booksellers are acting like publishers (Barnes & Noble's 49% stake in iUniverse). McKeown expects to see more deals made in 2000 between companies in different parts of the industry. Charlie Winton, CEO of Publishers Group Inc., acknowledged that his strategy in developing the publishing side of PGI through Avalon Publishing "is to ensure we are a content owner. We want to be sure we are ready to take advantage of whatever opportunities come up in the electronic marketplace." Like other publishers, however, Winton is not entirely clear where those opportunities will be. Jed Lyons sees half a dozen formats competing to deliver content and said that it is far from certain who will succeed. "The eventual winner may not even be in business today," Lyons speculated.

For all of the talk of electronic opportunities, there was a near unanimous agreement that it will be the sales of traditional books that "will pay the bills in 2000," as Winton noted. "I expect the next 12 months to be much like the last 12 months, in that we will be heavily dependent on sales of printed books through traditional channels," Lyons said. And although there was widespread agreement that 2000 will mark another transition year in publishing, all publishers viewed the evolving changes more as an opportunity than a threat. "I'm optimistic about the changes that are coming," said McKeown. "Book publishers have shown they are determined to thrive" in the next century by incorporating new technology, added Robinson. And Friedman noted, "My mantra for 2000 will be to blend the old with the new."
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