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Tag: publishers

Top 20 List: World’s Largest Publishers

The list of the 20 largest publishers in the world shows a profoundly changing landscape in book publishing. The chart below is provided by Rüdiger Wischenbart from Publishing Perspectives in Germany. He has contributed some good insights into the transformation of the publishing industry. I offer my analysis on the state of the industry and its future.

 

Some publishers are fairing much better economically, while others are steadily sliding downward in revenue and in their global standing. The changing dynamics between the professional information, education and trade sectors has affected this year’s ranking.  The good news is that publishers that have reinvented themselves (responded to market demand by listening to the customer) have done much better than most.

Pearson, Thomson Reuters, Cengage are identified as star performers on the list. Four out of five dollars is generated through the digital integrated value chain. The digital content and e-book industry for professional information content is the high growth segment of the publishing industry. As an industry, we are weak in our recognition of the current size and opportunity of the digital marketplace. Education publishers and trade publishers are having trouble evolving. There is broad need for knowledgeable skilled digital workers, experienced strategic thinkers, scalable and flexible technology infrastructure, and streamlined workflow/processes that allow publishers to execute on updated strategic initiatives.

Asian publishers are becoming a force, as they are in many other market segments. They include companies like Korea’s Kyowon and China’s Higher Education Press. Their strong suit is “localizing” content (i.e. cultural adaptation), and the power and economics of a huge growing audience. They are hungry. They want their piece of the pie.

Trade publishers, experiencing a steady decline in revenues, are poorly positioned to compete. However, the strong performance of Penguin and Hachette are current exceptions in this segment. It remains to be seen if trade publishers can transform into a sustainable business model. Trade’s poor performance and outlook is due to several reasons, beginning with the fact that they have the farthest to go to find and serve today’s and tomorrow’s readers.

We have seen endless debate in trade on digital pricing and searches for new business models. The best solutions will leverage and be respectful of the stakeholders…all of them! That includes, but is not limited to; authors, agents publishers, libraries, distributors, wholesalers, physical bookstores, digital bookstores, printers, service providers, the media, reviewers, technology companies, etc. If publishers burry their heads in the sand by refusing to experiment with new content, pricing models, and sales channels, then there will be serious trouble.

On the bright side, if publishers aggressively discuss new ways to sell content with their channel partners, and seek out non-traditional channel partners that have the audiences with the demand for their products, there is the potential, not to just maintain current revenue, but to actually grow the size of the pie. I know that is a radical statement to make, yet the ‘book’ is being redefined, and publishing is becoming something new.

Several key findings:

  • The majority of Top Ranked Global Publishers are based in Europe.
  • Professional/knowledge, STM publishers have course corrected and are doing well.
  • The first major Asian Publishers are positioning towards competing as top global players.
  • Education sector is unstable.
  • Trade Publishers are, and will be, hit the hardest in the rapidly emerging digital marketplace.
  • Publishers that have reinvented themselves…are prospering!

I have high hopes for the publishing industry. However, until we can meet Peter Drucker’s market-centric definition where he says “…the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” Are we there yet? When we achieve this value statement the industry will once again be healthy. As for me…being part of the solution? I am passionate about helping our clients build a stronger publishing industry that is focused on improving the reading experience.

What are you thinking now?

*The “Global Ranking of the Publishing Industry” is an annual initiative of Livres Hebdo, Paris, researched by Ruediger Wischenbart Content and Consulting, and co-published with buchreport (Germany), The Bookseller (UK) and Publishers Weekly (US).

Follow Ted Treanor on Twitter: twitter.com/ePubDr

A Kodak Moment

Last month, I had the privilege of being a guest lecturer at MIT for Howard Anderson and Peter Kurzina’s Course entitled “Managing in Crisis”. I prepared a case study about the current status of the College Publishing market. It included concerns about price pressures, used book competition, channel issues, new competitors and new media requirements, pending legislation about pricing practices, and the continued lack in the growth of unit sales.

The class was composed of 40 or so very bright students who did an excellent job analyzing the case. One student really captured the essence of the case when she said that it reminded her of the photography industry as the major players struggle with the transition from traditional film and paper products to digital photography.

While Kodak moments have long been associated with joyful celebrations, the aforementioned transition has been anything but a celebration. In fact, it is likely that this Kodak moment will come to exemplify the struggles of a powerful corporation as they strive and perhaps even fail due their inability to recognize the customer benefits, opportunities, and challenges associated with non-traditional types of photographic media.

Many publishers are struggling with their own “Kodak Moments”. And I think that the transition issues are similar to the photography industry. First, Kodak seems to have been focused on the products that people had been buying for years and trying to preserve the advantages that their film and paper technologies provided. Like many of us who have had market leading products, they were arrogant about their technology, processes, market position and quality. While they clearly were aware of digital photography technology, they dismissed digital products because the image quality was significantly poorer. Then they concentrated on turning digital photos into traditional photos. It seems to met hat they missed the potential in offering less expensive digital images that could easily be posted on the Internet or e-mailed to relatives.

For many years, publishers offerings have been closely related to technological developments in the Software and Printing industries. For example, software has enabled improvements in authoring, composition, and thereby lowered the costs of elegant or complex page designs. Printing Technology has made four color printing much more affordable and had made shorter print runs economical. These changes have been passed along to consumers of information. (While I understand that there are differences between the terms: content, information, and intellectual property, I will use the term information to subsume all three terms for purposes of brevity) In many cases, they have added value to the customer’s experience but there are cases where formats were enhanced and color offered because they could be rather than because they were beneficial. In reality, I believe that the net result was that the size, format, and frequency of the traditional economical delivery unit EDU (my term) of information (a book, journal, or magazine) were modified by technology advances but the traditional media form has remained essentially the same for 100+ years.

The Internet has presented publishers with a radical paradigm shift ( I don’t like the term either). All types of publishing entities have had to deal with changes in customer expectations that are easily as profound as those experienced by the Photography industry. They don’t just want their information to be more timely and less expensive, they also want their information to concisely answer their questions and seamlessly integrate with their work flows or learning styles.

Perhaps the most significant change is the redefinition of the EDU. In the purely print era, there needed to be a certain mass of information to build a product that would be economical to print and sufficiently valuable to consumers to generate a profit. In manycases, it was assumed that relatively few information consumers would use all of the information that was presented in a single EDU. Rather, the scope of the information (or content) had to be broad enough to attract enough customers without being so broad as to make customers feel that they were procuring too much information that wasn’t pertinent to their interests. Hence, we have witnessed a generation of books where authors and market researchers work closely together.

In the digital world, authors and publishers are potentially freed from the strictures of printing economies. Therefore, information currently found in textbooks, references, magazines and journals can be rendered as as short information objects or more comprehensive content modules. Or publishers can produce information objects or content modules that are not anticipated to ever take book form. The objects can be delivered in many ways including search engines such as Google. These new EDUs can be purchased or licenses separately or mixed and matched to create a course of instruction or a personal reference work. One benefit of these nimbler EDUs is that they blend nicely with software to offer increased value in the form of better instruction or more productive work flows.

The availability of these more compact EDUs will likely spawn many debates concerning academic traditions and learning methodologies that we have come to hold dear. It has long been the practice for students to read and master significant quantities of information with the expectation that many of the specific facts will fade from memory leaving a general understanding of the topic. And many people are considered well read because they have plowed through many traditional EDUs (Books) The question will be: Could one become well educated or well read by learning to explore topics of interest through smaller EDUs and/or what blend of contextual and specific information delivers the best and most productive intellectual outcome. There will be some interesting face-offs between technology enabled active exploration and discovery of information to allow students to pursue topics that they find interesting vs. the more structured mastery of a set of information presented in book form. Of course, it is not an either/or proposition as they methods must eventually be blended to enable meaningful knowledge acquisition.

The digital world has also created a demand for information that is developed and delivered as rapidly as possible. Where traditional publishers often justified their value by guaranteeing the accuracy and authority of their published information, many of today’s information consumers are willing to trade authority for velocity of information and now rely upon other information consumers to tell them what information is the most accurate and useful. Individuals now actively participate in communities that generate and evaluate large quantities of information objects and content modules. The Wikipedia/media organization and the MERLOT community are excellent examples of communities that produce quality information modules.

While many information consumers may still prefer to consume their information in print form, they may now wish to print their own copies or to create and purchase custom versions produced by rapidly improving print on demand technology. To many publishers, the perfectly formatted page has become almost an art form. They consider those pages to have many of the same aesthetic values that Kodak attributed to images produced via their traditional film technologies. Because customers rarely have the choice of formats, it is difficult to gauge the value that they derive from “perfect pages” vs potentially less expensive simpler pages. Chip Pettibone of O’Reilly Publishing reported at the recent Gilbane Conference that when readers of e-books were offered the choice between a simple HTML design and a faithful rendition of the original book page, 50% chose the HTML version and that population seemed to be gaining in numbers. Because books and computer screens represent quite different form factors, the value of the perfect page can actually limit rather that enhance the effective presentation of information in digital formats. Therefore, rather than trying to maintain the integrity of the printed page, modern publishers are designing their content to be presented equally well in a variety of media forms. Publishers that cling to the page metaphor are putting their futures in jeopardy.

This paradigm shift is replete with challenges and opportunities. Many traditional reference products (including Microsoft’s Encarta) have been decimated by new products created in the Internet Era. Newspapers and magazines have had to adapt to the challenges or multiple media environments by creating online products as they have seen their traditional readership dwindle. Journal publishers have had to derive new models to serve their subscriber base. Many categories of trade books now include websites with fancy multimedia elements and discussion groups. I think that some of the most exciting and interesting challenges and opportunities will be found in the world of educational publishing. As witnessed by the decisions of major publishing conglomerates to divest their educational publishing operations, the challenges of mastering the Internet paradigm shift are both daunting and expensive. To succeed, new generations of products will need to be built to take advantage of technology as opposed to being web versions of existing products. Business models will need to be revised and channel strategies re-engineered. One important outcome will be increased information accessibility for readers and learners with disabilities.

Over the next few years, the publishing industry will witness many Kodak moments…. Hopefully the majority will be the old fashioned Kodak moments of victory and celebration.

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