While Random House will continue to devote significant resources to improving its core publishing operations, the country's largest trade publisher is evaluating a range of new initiatives to help boost profits, company chairman Peter Olson wrote in his annual letter to employees. "If we are to substantially increase our bottom line, we must generate organic growth by building on the strengths of our core publishing and service divisions," Olson wrote.
Among the possible new opportunities that Random has begun examining is online sale of books directly to consumers. Discussions about direct sales are only in the "exploratory stages," Random spokesperson Stuart Applebaum said. According to Applebaum, no decisions about direct sales have been made, "other than to look at it from every possible angle." Even if Random were to begin selling direct, Applebaum expects that "traditional channels of distribution will be our primary selling avenues far into the foreseeable future."
In another departure from traditional publishing, Random is also considering expanding its proprietary publishing operations. Under one scenario, Random would use its reference content to develop custom publications for retailers, such as mass merchandisers, or for corporate clients.
More immediate business extensions include adding more distribution clients to Random's current roster of seven houses. It is also evaluating new content formats and platforms as well as new pricing models.
Finding ways to leverage its existing strengths is crucial to Random's growth because of a sluggish book environment. Olson said he was especially proud that "every one of our North American publishing divisions will be very profitable" this year, given the "unrelenting marketplace competition." Olson noted that Random is "on course to equal or exceed 2003's record full-year operating results worldwide," despite "sluggish demand for new trade titles industrywide these last few months." In his mid-year letter, Olson warned that strong gains in the first half of 2004 may not be repeated in the second half of the year, pointing to a slowdown in summer sales.
Olson used his year-end letter, which goes to all North American employees, to tout Random's international strengths. Random's units in the U.K., Australia, New Zealand and South Africa have had an "exceptional year," Olson wrote. Random House Mondadori, after a "tremendous turnaround" is now "strongly profitable," Olson reported. Random House Kodansha is off to a "promising start," Olson wrote, while its Korean joint venture, Random House JoongAng, is already profitable.
