One annual end-of-season rite in the publishing industry is upon us: when chief executives take stock of the year that was, and look ahead to the year to come. In their year-end letters to employees -- as well as in interviews -- publishing CEOs exhibit a mix of grim acceptance and varying degrees of optimism that 2010 will be a better year.Both Markus Dohle of Random House (a division of Bertelsmann Media) and Simon & Schuster's (CBS) Carolyn Reidy used remarkably similar terminology to describe 2009. "This year has been one difficult external and internal challenge after another for us," Dohle wrote in his end-of-year letter, while Reidy's missive to employees called 2009 an "undoubtedly...tough year in our business."
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Both Dohle and Reidy pointed to what Dohle calls "the impact of the worldwide recession and the continuing decline in consumer spending, including on books; the pressures of the retail price wars in the U.S. and U.K.; wide-ranging digital-publishing issues; and our divisional reorganizations and integrations."
Consumer Confidence Still Low
Bookselling took a big bite out of S&S's bottom line: "Books from many of our contiinuing authors, as well as our higher margin backlist, are selling at levels well below their peak," Reidy wrote. But Random House extolled the worldwide improvement in "year-on-year profitablity" in 2009, in large part because of Dan Brown's bestseller The Lost Symbol.
Reidy praised S&S's efforts to economize, being "determined to operate and publish with the utmost fiscal discipline from beginning to end," and the "seriousness with which each and every one of you treated our company-wide cost-savings efforts."
But there aren't many indications that consumer confidence or spending will improve next year. Dohle addresses that with guarded optimism: "We must focus on gaining market share, in both print and digital. Focus on maintaining our cost discipline. We have to attract, advance, and develop the best talent. This will enable us to publish our great books with the greatest skill and care."
S&S: Four-Month Delay for E-Books
Reidy is especially worried about the potential effects of piracy. "We must do everything in our power to uphold the value of our content against the downward pressures exerted by the marketplace and the perception that 'digital' means 'cheap.'" To maintain a "balance between two worlds," S&S will delay e-editions of key Winter 2010 titles for four months after hardcover release -- and if the move proves successful, this delay will become company policy.
Reidy's remarks has digitalists like Seth Godin seeing red: "Smart businesspeople focus on the things they have the power to change, not whining about the things they don't."
But other publishing executives have higher hopes for the new year. Dominique Raccah, CEO of midsize independent publisher Sourcebooks, says 2009 was the strongest year in the company's 22-year-history, with sales up 17% over 2008. Sourcebooks placed several books on The New York Times bestseller list, but Raccah attributes the company's sales boost to the cumulative effects of strategic tweaking of acquisitions and emphasis.
On-demand publishing group Author Solutions's CEO Kevin Weiss calls November the "best month ever" and says it will meet the needs of a "huge, huge market" by expanding its customer base to more than 360,000 people next year, up from 240,000 this year. Its controversial alliances with Harlequin and Thomas Nelson are starting to pay off, and discussions with other major publishers for similar arrangements are in the works, he says.
Skate to Where the Puck Will Be
Skip Pritchard, CEO of book manufacturer and distributor Ingram Content Group, expressed optimism to the Tennessean. "This is a very exciting time," he said. "Publishers are creative, and we're just starting at the tip of the iceberg, re-creating the book into a completely new format. I can't wait to see where all this is headed."
Pritchard invoked a mantra of hockey legend Wayne Gretzky: "I skate to where the hockey puck will be." Pritchard continued, "We're always trying to position Ingram where the puck will be. We're trying to anticipate where consumers and publishers are moving, and to grow or acquire businesses that serve those needs."
Raccah believes 2010 wil bring about two major shifts. One is the anticipated release of tablet-based devices that "could change what books can be, and what interactive books look like." Another is Google Editions, the e-book distribution service that Google (GOOG) will launch in the next few months, and other services that can potentially reach an array of devices already or soon to be on the market.
"If publishing stays on the road it's traveled on for all of 2009, that future does not excite me," Raccah says. But if, as she hopes, 2010 is a time of experimentation that "takes the sting out of failure," Raccah can see "a possibility as a culture, to push more books deeper into more people's hands."
Introduction to ETFs
The basics of Exchange Traded Funds and why ETFs are hot.View Course »