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Rüdiger Wischenbart White Paper Business of Books 2018: New tunes for an old trade. For more Business Insights, join us at the Business Club of Frankfurter Buchmesse for The Markets Conference and Frankfurt Rights Meeting. Order your Business Ticket now: book-fair.com/business
Table of contents Book publishing is facing many challenges as it adjusts to new consumer habits, new players and new business models. This white paper explores the underlying trends shaping the transformation, and takes a closer look at a number of case studies that show how new actors are managing to innovate in the business of books. In conclusion, the paper identifies a set of principles governing how the publishing industry is pushing back its horizons in an age of platform-based interactions, community- driven business dynamics, and crossmedia exploitation of intellectual property. 1. The big picture..............................................................................................................................................03 2. The many ways of reading (and viewing) books today...........................................................05 2.1. Juxtaposing the perspectives of publishers and consumers.......................................05 3. The new storytellers, and their new models for creating and sharing books..............08 4. How the new approaches are already reshaping different publishing segments ... 1 1 4.1. The example of children’s books................................................................................................... 1 1 4.2. Learning platforms.............................................................................................................................. 1 1 About the author............................................................................................................................................. 14 2 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club
The Business of Books 2018:
New tunes for an old trade.
1. The big picture
In 2018, book publishers face a number
of challenges that have built up Development of 6 leading publishing markets,
steadily in recent years. First and fore- 2006 to 2016, in %, year-on-year, deflated.
most, the great majority of book
markets have declined over the past
decade. Secondly, book reading now
contends with an array of mostly
mobile activities that compete for the
consumers’ attention and appeal to
their budgets and tastes. And thirdly,
the segmentation of the world of
books and of the media universe in
general has created a complex set of
dynamics, specific trends and scenar-
ios, which confronts a fickle audience
with an abundance of choice.
This means that, in order to build
strategies for any given action and at
any moment in time, publishers need
to balance often contradictory priorities: India with a market value of 6.7 bnUS$ in 2015 (est. By Nielsen), should be
// They must maintain the stability included, but no detailed yearly values are available.
of their ongoing business, yet © Rüdiger Wischenbart Content and Consulting, and www.BookMap.org
innovate and explore new oppor-
tunities, new models, new target
audiences. Revenue vs. production in the European Union,
// They must keep their focus on Germany and France (2008 to 2016, year-on-year in %)
revenues from printed books,
while extending their digital port-
folios with e-books and digital
audio downloads, and through
subscription and streaming platforms.
// Ultimately, they have to reach the
end consumer directly, which
requires a highly sophisticated
integrated digital workflow in-
house, while competing with actors
such as Amazon, or self-publishing
communities of authors and readers,
who are simultan-eously a traditional
publisher’s key business partners
and fiercest competitors.
A cold wind is blowing in the book- Data source: National publishers associations and FEP; Analysis
lover’s face. © Rüdiger Wischenbart Content and Consulting, and www.BookMap.org
3 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club1. The big picture
In Germany alone, over six million However, these economies were ferred means of accessing content,
book buyers disappeared in the five hugely strained in recent years, which and increasingly also for consump-
years from 2012 and 2016, reducing has had an impact on consumer tion and shopping. Most traditional
the publishers’ target audience to spending on books. book readers still take a different
30.6 million, its lowest level in a long approach, and the publishers have
time. This was the alarming finding of Numerous publishers chose to pursue yet to learn how to broaden and
a study conducted by the German the risky strategy of compensating optimize their presence, and that of
Publishers & Booksellers Association for their reduced sales by increasing their products in the mobile universe.
and the market research firm GfK, in their output of new titles – and by
early 2018 (www.boersenblatt.net/ raising prices. The sustained high For the ‘millennial’ generation, and
markt/marktdaten). level of production led to a widening increasingly for all consumers, mobile
gap between the number of new is a crucial point of access for their
For the past decade, however, shrink- books competing for the readers’ engagement with content – for
ing book markets have been a attention, and the shrinking sales exploring choices, identifying their
common feature around the world. figures. This pattern can be seen personal options, discussing and shar-
Of the six largest publishing markets across Europe, with Germany a rare ing content with friends and peers,
worldwide, only China has escaped exception. and making purchasing decisions.
this trend, at least once inflation is
factored in. Ultimately, declining average print In the past few years, millennials have
runs reduced incomes and hit the steadily increased the amount of
Spain, which was particularly strongly bottom line, especially for many of time they spend online on mobile
hit by the economic crisis, has lost over the mid-sized publishers. The option devices. But traditional readers have
a third of its turnover from books. The of setting higher prices has brought also exhibited a similar trend, albeit
fall-out would have been even worse slightly better news, at least in the UK at a lower level. Publishers need
without a steady volume of exports to and Germany for the time being, to understand this development as a
North and South America, which still where despite selling fewer copies, crucial strategic challenge: the smart-
account for up to half of the big pub- the raised priced have still generated phone has become the most impor-
lishers’ revenues. Italy has achieved a a slight increase in revenues. tant point of access for people’s con-
level of relative stability only in the last sumption in general, including the
couple of years, following a steep A much more profound challenge books they choose to read – even if
nosedive. Even most of the emerging has come from a fundamental shift in they ultimately decide to buy a
economies ran into significant difficul- consumer behaviour. “Mobile is eating (printed) book. Publishers must find
ties. Countries such as Brazil, Mexico the world,” said Silicon Valley analyst out how to have a strong presence
and Turkey had been considered Ben Evans, as early as in 2014, when on mobile devices.
promising new markets, with new mid- he pointed out that, especially
dle-class readerships hungry for better among the younger generation,
education and more entertainment. smartphones are now by far the pre-
Mobile Time Rising Steadily Mobile Time Rising Steadily Millennial
2:52
2:37
2:29
Traditiona
18% 1:49
2:12
1:25
Millennial Book Lovers 1:08
Traditional Readers 100% 0:56
72% 0:46
0:41
0:33
0:26
Millennial Book Lovers
2:52
2012 2013 2014 2015 2016 2017
2:37
2:29
Millennial Book Lovers Traditional Readers
2:52
2:37 1:49
2:29 2:12
1:25 Traditional Readers
Fig. 4: Even though older ‘book lovers’ still spend less
1:49
Fig. 3, GWI 01 2:12
time on their mobile devices than millennials, the share
1:25 1:08
% of online activities that are more likely to be carried is steadily increasing
0:46
for
0:56 both these target audiences of
0:41
out on mobile vs. PC/laptop © GlobalWebIndex 0:26 2018.0:33 1:08
publishers. © GlobalWebIndex 2018.
0:56
0:46 2012 2013 2014 2015 2016 2017
0:41
0:33
0:26
2012 2013 2014 2015 2016 2017
4 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club2. The many ways of reading (and viewing) books today
2. The many
2.
waysTheof reading
many ways of reading
(and (and
viewing)
viewing) books today
books today
There have always been significant and various online communities for ent points in their lives, people may
differences between the book markets creating and consuming stories have opt for a self-published quick read or
in different countries. The consumers’ soared in importance. Newspapers watch a TV episode when commut-
choices in allocating their time and and magazines have become less ing in the morning; they might choose
spending on books – for educational influential as providers of information more complex leisure time reading
materials or entertainment, or as gifts to about new titles and topics to con- when on a vacation, and educate
their children – reflect not only pro- sumers, who now prefer to discuss themselves for a new job in between.
found cultural habits, but also the aspi- their daily intake among themselves Publishers and traditional retailers
rations and affluence of the respec- on social media. must find a dynamic and competitive
tive societies. approach that enables them to
Most importantly, boundaries related address all these new offers. But at
The share of children’s books and to the culture and business of books the same time it is becoming more
textbooks varies from 24 % in Italy have become highly blurred. and more difficult to maintain an
and Brazil, to well over 40 % in Spain, One book’s fiercest competitor may overview over these multiplying offers.
Australia and New Zealand. Reading not be another book, but rather a
for pleasure, which arguably drives video, a TV series, a game, or some-
sales of fiction, accounts for less than thing entirely different – a chat online 2.1. Juxtaposing the
a quarter of spending on books in with friends or anyone connected to perspectives of pub-
New Zealand, Australia, South Africa one’s virtual neighbourhoods. lishers and consumers
and India, compared to an impres-
sive 39 % in Italy. The direct result is a radical segmen- Among the professional observers of
tation in the business of books. 100% publishing markets, and certainly
In recent years it has become ever New actors are emerging (first and among the trade 24%media, many still 20%
more challenging to map book foremost, the not-so-new Amazon), 80%
33%
consider 36%for
the bestseller42%charts
38%
4
markets, as the consumption of books new business models such as sub- hardcover fiction as the gold stan-
and the cultural habit of reading scription and streaming services are dard when it comes to identifying
60%
have become more segmented. spreading, and habits of the fickle important new 37% works that merit
57%
Publishers are no longer the only audience are becoming more fluid. media
43% attention as well as marketing
40%
36% 31% 44%
providers of books. Self-publishing At different times of day, or at differ- budgets. 3
20% 39%
26% 27%
International Markets by genre 24% 20% 23% 2
0%
UK Ireland Italy Spain SA India A
100%
Children's inc Text
24% 20% 24% All Non Fiction
80%
33% 38% 36% Fiction
42% 46% 44%
60%
Fig. 5 International markets
37% divided respectively into
57% 48%
43% 36% children’s books (including
40% 31% 44%
31% 34% textbooks), non fiction and
fiction titles. © The Nielsen
20% 39% Company
24% 26% 27% 23% 23% 29%
20% 22%
0%
UK Ireland Italy Spain SA India AUS New Brazil
Children's inc Text Zealand
All Non Fiction
Fiction
5 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club2. The many ways of reading (and viewing) books today
By mid-February 2018, when the offered by traditional publishers. They for this one author’s books.
spring programmes entered the exclude most of the self-published (www.catherine-shepherd.com)
bookshops, four new titles had market segment, despite its continu-
entered the top ranks of hardcover ous growth in recent years. They are Seven of the top-10 listed authors
first editions in Germany – all of them also 'tidied up’ to exclude titles the publish with Amazon directly, or with
written by authors with an already editors think might distort results, one of Amazon Publishing’s imprints.
high international reputation: notably all educational and related Six of the top-ranking titles fall in the
“Still Me”, the third volume in British materials, as well as calendars and “romance” genre. Only one author on
writer Jojo Moyes’ widely acclaimed books from non-conventional the list is in translation: J.K. Rowling,
Lou Clark series; the fourth volume of sources, like most of the production with a set of digital editions for Kindle
Elena Ferrante’s globally hyped saga from Amazon Publishing. as well as digital audio downloads of
of Neapolitan women; German star her works, which have been trans-
author Bernhard Schlink’s “Olga”, the By contrast, Amazon’s listings portray lated from English and released by
story of another heroine struggling to precisely this mix in its raw form, just her own, innovative online platform,
find herself; and Japanese Haruki as the consumers pull it into their Pottermore. (www.pottermore.com )
Murakami’s latest gift to his world- virtual shopping baskets, including
wide community of dedicated fans, self-published titles, and – increas- In Amazon’s top-10 listing across all
“Killing Commendadore”. ingly relevant – sales of all formats: categories (books, Kindle and audio),
print, Kindle and audio. In this respect, Shepherd comes in second, behind
A more realistic bestseller list, includ- Amazon’s charts look at the business Rowling. Two authors published by
ing not just novels but any output of books through a consumer’s eyes. traditional houses made it into the
from publishers across the board, is higher ranks: the US journalist Michael
certainly less flashy. By mid-January, In Amazon’s list of top-10 titles for Wolff, whose “Fire and Fury” about
Bernhard Schlink’s “Olga” was num- mid-January, the “Literature and President Donald Trump is counted
ber one, followed by a tale about the fiction” category did not have a single with combined sales figures for the
meaning of life from superstar coun- author in common with the more English and German editions, and
sellor John Strelecky, a surprise hit traditional charts that excluded long-standing blockbuster author
from the Norwegian Maja Lunde, self-published works unavailable in Dan Brown.
“The History of Bees”, and a guide to ordinary bookshops. Instead, the list
healthier aging by a doctor and a TV was headed by Catherine Shepard, a It was only in the “Books” category
personality. At number five in this list German crime writer with an English that a more conventional mix of pub-
was the paperback edition of a basic pseudonym, who focuses on her own lisher types could be found behind
law volume, which always records community of readers and publishes the top-listed titles, as nine of the
high sales figures. through Kafel Verlag, set up specially bestselling books had been released
Indeed, all these books sold more
copies than any other new fiction German Amazon TopByGermany
10, byAmazon
publisherpublisher
type (Jan 2018) type (Jan 2018)
Top 10
from traditional publishers in Europe’s 100%
largest book market. These lists 90%
aggregate point-of-sale data from a 80%
representative mix of bricks-and- 70%
mortar stores and online purchases, 60%
including Amazon, which is Germany’s 50%
leading book retailer and the largest 40%
point of access to reading, world- 30%
wide. 20%
10%
The online retailer’s own perspective 0%
All categories Books Literature & fiction crime & thriller
is clearly different, though, as its Amazon Non-traditional Traditional Top self-published
notion of the book-buying market
includes all kinds of books, be they Fig. 6 Comparing the contributions to Amazon’s sales by traditional and non-
from traditional publishers, self-pub- traditional publishers (the latter including innovative publishers such as
lishers or from Amazon’s own publishing Pottermore.com), as well as self-publishing and Amazon’s own publishing venture,
services. Charts based on point-of- across different genres and publishing categories.
sales data in both traditional and Analysis © 2018 Rüdiger Wischenbart Content and Consulting, and www.
online retail reflect the products BookMap.org
6 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club2. The many ways of reading (and viewing) books today
by traditional publishers, with just
one author having self-published. German Amazon Top 10, French Amazon Top 10,
Yet even here, half the titles fall into by category
Germany(Jan 2018)
Amazon Top 10 by category (JanTop
France Amazon 2018)
10
By category (Jan 2018) By category (Jan 2018)
the subcategory of “self-help”. 100% 100%
90%
90%
Only two were fiction titles, one by 80% 80%
70%
70%
Rita Falk, a hugely popular German 60%
60%
50%
50%
author of local crime stories, and a
40%
40% 30%
30% 20%
modern classic written by the Swiss 20% 10%
0%
10%
writer Friedrich Dürrenmatt. 0%
All categories Books Literature & fiction Audio Kindle
All categories Books Literature & fiction Kindle
non fiction selfhelp fiction fantasy crime, thriller, mystery romance
non fiction selfhelp fiction fantasy crime, thriller, mystery romance
In the wider perspective across four
Italian Amazon Top 10, Spanish Amazon
Spain Top
Amazon Top 10 10,
European markets, Germany, France, Italy Amazon Top 10
by category (Jan
By category (Jan 2018)
2018) by category (Jan
By category (Jan 2018)
2018)
Italy and Spain, comparing Amazon’s 100% 100%
90%
charts for different categories reveals 90%
80% 80%
70%
70%
a remarkable divergence. In all four 60%
50%
60%
50%
40%
markets, the hugely popular genre of 40%
30%
30%
20%
20%
romance fiction has risen 10%
0%
10%
0%
All categories Books Literature & fiction Kindle Romance
to take an astoundingly prominent
All categories Books Literature & fiction Kindle Romance
non fiction selfhelp fiction fantasy crime, thriller, mystery romance
non fiction selfhelp fiction fantasy crime, thriller, mystery romance
share of readers’ purchases.
Fig. 7 Analysis © 2018 Rüdiger Wischenbart Content and Consulting, and
With many of these titles being self-
www.BookMap.org
published and sold at very low prices,
and backed by Amazon’s marketing
muscle, romance has become a large
commercial segment in which tradi-
Amazon Top 10 in "Books" (Jan 2018)
tional publishers now participate
from an outside position. By category & country
In all four countries, titles from tradi-
tional publishers only maintained a
dominant presence in the category
“books” thanks to a strong showing
by general fiction, crime fiction and
self-help books. In fact, the book
business has become segmented by
publisher type – with a sharply com-
petitive rift between publishers and
Amazon’s own production – as well
by genre and format, with mass mar- Fig. 8
ket publications, e-books and the
growing digital audio section brought
together under the widening umbrella uses to create these charts have sense to use both perspectives.
unfurled by Amazon. been widely and critically debated, Comparing these detailed snapshots
as they combine actual sales num- across countries helps us develop an
Amazon’s charts from mid-January bers with the statistics for loans and understanding of country-specific
2018 for four non-English-language streaming through Kindle Unlimited, developments, compared to those
European markets – Germany, and more recently also the Amazon occurring across the board.
France, Spain and Italy – are puzzling, Prime programme, and it does not For publishers, such analysis is there-
yet they also highlight significant reveal details for each platform. fore a crucial strategic exercise
national differences. At the same through which to gain a better under-
time they reveal a unifying approach For the purposes of this paper, this standing of the competition and of
that promotes books independently allows the juxtaposition in a single consumers’ expectations, and help-
of national preferences, across for- case study of two divergent per- ing them match their supply with
mats – with no strong bias toward spectives on the business of books, demand.
print, Kindle or audio formats – and both of which are valid and mean-
always with the clear aim of setting ingful. For a realistic assessment of
lower prices. The algorithms Amazon the book business it makes a lot of
7 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club3. The new storytellers, and their new models for creating and sharing books
3. The new story-
tellers, and their new
models for creating
and sharing books
The continuous decline in overall book
markets coincides with an astonishing
growth in the number of new ventures
and new concepts for bringing
authors’ work to audiences. Often
enough, these ‘new models’ are
hybrids, inasmuch as they team
together true and bold innovation
with well-established services.
One prominent example of such an
unlikely combination is aimed at a
surprising global audience – young
girls. “Good Night Stories for Rebel
Girls”, first published in the autumn of
2016, contains biographical portraits
of 100 outstanding women from
around the world and throughout his-
tory, accompanied by colourful,
expressive illustrations.
Created by authors Elena Favilli and
Francesca Cavallo, the book has sold
over a million copies worldwide. Its
import can only be fully grasped if we
look at the extent of the entrepre-
neurship that turned a brilliant book
project into the seed for a new media
company, Timbuktu (www.timbuktu.me).
Fig. 9 Good Night Stories for Rebel Girls, Vol 2, 2018.
Favilli and Cavallo originally moved Portrait of Beyoncé. © 2018 Timbuktu Labs.
from their native Milan, in Italy, to
Silicon Valley, where they established an
accelerator for a social community For their principal product set-up Remarkably, the book’s title manages
project labelled Timbuktu. Their ambi- and strategy they were betting on to highlight all the critical elements of
tion was to re-invent ‘play’ with ideas innovation, but to get the book the success story in just five words.
ranging from the architecture and published Favilli and Cavallo signed “Good Night Stories for Rebel Girls” is
design of playgrounds and a smart- licensing deals with leading tradi- a book for a target readership defined
phone app that enhances the experi- tional publishers. These included by age, ambition and vocation (and
ence of children playing outdoors, Penguin Random House in the UK, perhaps also the wishes of their mid-
to the publication of bedtime stories. and Mondadori and Planeta, the dle-class parents); it is for young female
The guiding idea linking these diverse dominant houses on the Italian and readers who want to stand out,
things is the wish to empower those who Spanish markets respectively. become empowered, and even rebel;
play through ingenious product devel- In Germany, on the other hand, the and it is a book they should read at a
opment and ultra-professional market- independent literary publisher Han- time when nothing distracts them
ing. They obtained their initial financial ser secured the deal, and in France from reading, and when even their
resources from record-breaking crowd- it was the small Editions Les Arènes. parents can be kept outside the room.
funding campaigns at Kickstarter.
8 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club3. The new storytellers, and their new models for creating and sharing books
The very act of reading this special rate giant Hachette recently acquired Pottermore was initially conceived in
book binds the readers into a tight another boutique publishing and 2008 to distribute digital versions of
community. The sequel, “Good Night marketing platform, Bookouture, the seven Harry Potter books, built on
Stories For Rebel Girls Volume 2”, was which has been particularly effective a community of its enthusiastic read-
released in early 2018. at pushing genre fiction titles into the ers. From these early and modest
higher ranks of Amazon’s Kindle list. beginnings, an integrated digital
Most major markets have seen an publishing, e-commerce and enter-
explosion in the number and diversity Meanwhile, the German arm of the tainment company has evolved which
of new publishing enterprises explor- Swedish Bonnier group has devel- is now re-defining the underlying driv-
ing new ways of doing business based oped “Vorablesen”, an online reading ing forces of publishing. In the context
on books, or of established older community based in Berlin, which now of the 21st century digital industry,
houses setting up new departments counts 52,000 members who get the that is not unlike what Walt Disney
or acquiring start-ups. In Germany, chance to read excerpts of books achieved with Mickey Mouse in the
many observers were surprised by the prior to publication, and to win copies first half of the 20th century.
sudden success of the “Schmahamas of new e-books. Impressed by its suc-
Conspiracy”, a story derived from the cess, it has since decided to roll out Many more permutations of this plat-
popular video game, Minecraft. It was localized versions of the community in form approach have emerged over
co-authored by a YouTuber under the the USA (Bookish First) and the UK the past decade or so. In China, online
alias “Paluten” and a staff writer of the (Readers First). communities that connect writers
publisher, a spin-off of Bastei Lübbe directly to readers began running
founded in late 2016 with the specific Most of these innovative models dis- several years before those in America,
remit of reaching an “influencer- play the same distinctive traits and where digital publishing and self-
driven” millennials market niche. The patterns: publishing only started in 2007, when
parent company, Bastei Lübbe, had // They are all highly entrepreneurial, Amazon’s Kindle Direct offered a pub-
been experimenting for a while with with a book, a series or a set of lishing environment to aspiring
new business models, and making characters conceived in ways authors. From its earliest days, this
investments at the peripheries of tra- that allow for their exploitation immensely popular publishing model
ditional publishing. It even had to across media formats and has been fuelled by serialized fiction
undergo deep restructuring after a territories, driven by highly consumed in small packets, mostly on
series of failed strategic ventures. professional branding. smartphones. With sound commercial
logic, the online gaming company,
In the UK, the boutique publisher // Platforms are a key concept, as Shanda, acquired the ground-break-
Unbound, which was co-founded by they enable enterprises to cater ing platform Qidian, just as the online
author John Mitchinson, specializes in directly to the end-consumers, community was gaining serious
the crowdfunding of non-fiction allowing the distribution, not just momentum, with millions of active –
books. As such, it always generates of books, but of any products and paying – users. However, this turned
valuable data on its target audi- services through digital channels, out to be just a passing phase, once
ences. Unbound has issued numerous while at the same time optimizing Qidian’s founder Wu Wenhui recog-
successful books, such as “The Good marketing and sales activities by nized the ultimate business potential
Immigrant”, devoted to specific com- force of the user data they generate. of observing the authors and stories
munities and areas of activism. How- that caught on particularly well with
ever, it halted its recent expansion // Through the creation of fan readers. These contributors could be
into genre literature as it could not communities and personalized approached with incentives to turn
meet its initial expectations. interactions with the audiences, their stories into other media formats,
the sale of items one-by-one is including games and video series,
Quite a few innovative approaches to increasingly being replaced by and even printed books. Following his
publishing focus on the development continuous exchanges framed as intuition, Wu started an entirely new
of characters, and illustrative story- subscription models, with stream- ‘literature’ division at Tencent, one of
telling formats. Examples include the ing replacing delivery by down- China’s leading digital behemoths.
internationally expanding London- load.
based children’s publisher Nosy Crow, Among its major assets Tencent owns
and the Finnish Kaiken Entertainment, This bundling of new ways of WeChat, which combines the country’s
a spin-off of the marketing agency, organizing the entire value chain, from most popular messaging application
Rovio, whose Angry Bird brand creation all the way to consumption, with e-commerce functionality.
became a worldwide hit. Through its was pioneered by British author JK As such, it provides digital, smart-
British subsidiary, the French corpo- Rowling, with Pottermore. phone-based tools to almost all Chi-
9 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club3. The new storytellers, and their new models for creating and sharing books nese for organizing their daily lives. Another asset of Tencent is its video streaming division, which commis- sions movie productions similar to Netflix in the West. Thus investing in a story-generating community for authors and readers presented a perfect opportunity. In the second half of 2017, Tencent listed its now re-branded “China Lit- erature” division on the Hong Kong Stock Exchange, thereby raising US$ 1.1 billion and making it the “most prof- itable IPO debut in a decade,” according to the South China Morn- ing Post. Comparable experiences of online writing and reading in the West are probably less spectacular, but they still follow the now-familiar tale of crossmedia exploitation of intellec- tual property generated in their com- munities. The Canadian authors’ community Wattpad was founded in 2006, a year ahead of the launch of the Kindle. With 2.5 million registered writers in January 2018, it has now been rebranded as Wattpad Studio to become a hub where, according to the company’s mission statement, “the entertainment industry finds its next great idea.” Several deals have indeed recently been announced in which WattPad authors have signed contracts, not just to publish with the likes of Penguin Random House or Harper Collins, but also for subscrip- tion video streaming projects with Netflix and its peers. 10 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club
4. How the new approaches are already reshaping different publishing segments
4. How the new
Leading authors and brands in 2017
approaches are Despite decline, Harry Potter stayed on top
already reshaping
different publishing
segments
Big-brand authors creating and
dominating specific market niches in
an increasingly segmented environ-
ment – an environment in which readers
attach their loyalty to authors rather
than to formats like books; an
environment in which those who
succeed find opportunities to estab-
lish an even wider international reach. Fig. 10 UK sales by leading authors and brands in 2017 © The Nielsen Company
These factors – now familiar to read-
ers of this paper – are the strongest
forces shaping the most rapidly
developing segments of the global Shanghai, has since been echoed GBP 16.9 million in 2017. She is followed
book business. in Beijing, where another international by David Williams (“Mr. Stink” etc.; total
event for the segment will be launched sales of GBP 16.6 million) and Julia
4.1. The example of in 2018. Donaldson (“Gruffalo”; GBP 14.9
children’s books million), both of which easily dwarf
This is far from being a universal trend, Disney’s combined sales (GBP 2 million)
As Italy apparently recovers after a as the children’s and young adult and those of the “Wimpy Kid” (GBP 6
long decline, it is children’s books that books segment remains largely flat in million), whose author Jeff Kinney has
publishers must thank most for the France and the UK, and is even declin- lost much of his momentum over the
light on the horizon. With “Good Night ing slightly in the USA. (In the UK, on last five years. (Source: Nielsen)
Stories for Rebel Girls”, Elena Favilli the other hand, the sub-segment of
and Francesca Cavallo, originally children’s non-fiction has experienced Sector-specific initiatives are not lim-
from Milan, returned to their home unbroken growth for the past five ited to branding or promotions around
market with a bang, selling more than years). Modest fluctuations often specific authors, nor to the accom-
300,000 copies in Italy alone. reflect the impact of a particularly panying expansion of merchandizing
According to Nielsen, that is four- strong title or author – or the lack or crossmedia exploitation such as
and-a-half times as many as the next thereof. with the British “Peppa Pig” series,
bestselling children’s title, Wonder, by which targets four-year-olds with
RJ Palacio. The German children’s book segment both books and videos. Entirely new
recorded a decline of 2.2 % in 2017, business approaches promise that
In China, the children’s book segment which should be seen in the context of the transformation has only just
grew by 17 % in 2017, after a stagger- a 9 % increase the year before, largely started. Amazon has moved into this
ing rise of 29 % the previous year, due to the “Harry Potter effect” field by launching a paid subscription
clearly illustrating the huge aspirations (Börsenblatt) arising from the release service with curated selections for
of parents (and grandparents) for the of “Harry Potter and the Cursed Child”. three different age groups: 3 to 5, 6 to
cultural education and entertainment The first four months of 2018 saw a 8 and 9 to12 years.
of their offspring. A government drive return to the modest growth rate
to promote domestically produced of 1.8 %. (Source: Börsenverein. 4.2. Learning platforms
books for younger readers over Branchen Monitor Buch)
imports has so far produced few TES is truly a veteran of British educa-
meaningful results. Nevertheless, the In the UK, JK Rawling is still one of the tional publishing. Founded in 1910 as a
enthusiasm for global characters and biggest selling authors. Her Harry pull-out section, the Times Educa-
brands, which already prompted Potter brand, including spin-offs and tional Supplement provided teachers
a dedicated children’s book fair in merchandising, achieved sales worth with learning materials for almost a
11 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club4. How the new approaches are already reshaping different publishing segments
century until it encountered severe solutions for specialized learning their business outlook, such as have
problems in the early 2000s. situations or specific topics – from already become familiar elsewhere in
Being entirely dependent on its medical training and beefing up this paper. The various platforms offer
declining print advertisements, it faced maths skills in school, to helping them new distribution channels, but
being closed down until, at the elev- establish collaborative approaches at the price of surrendering their con-
enth hour, it reinvented itself as TES, in the classroom and ensuring a tact to the end-users to the platform
an online platform with a digital mis- professional level of organization. providers. They can slice and edit
sion. Once again it targeted teachers Some of these new entrants have their content into smaller bits that can
with learning materials, yet this time successfully formed communities that be re-combined and re-purposed.
exclusively in digital formats. A attract hundreds of thousands of But that calls for new and costly tech-
decade later, TES now caters to a members. nologies, which come from far outside
community of over eight million the publishers’ core competency.
teachers and has recorded more than Here, too, we see a business area in Lastly, they must experiment with, and
a billion downloads. These include transition that has witnessed the invest in entirely new business models,
resources from educational publish- entry of new competitors whose like streaming, renting or subscription,
ers, as well as materials created by backgrounds and expertise do not lie while trying not to lose their incomes
teachers for their peers. in teaching and learning at all, but in from more traditional practices too
technology. Amazon, Apple and quickly along the way. This again
Higher education needs its “Netflix Google are each pushing tools and requires capital while raising the
moment”, declared Michael E. Hansen distribution mechanisms for a new entrepreneurial risk, and it is leading
in an article for the World Economic learning market, while yet another to a wave of consolidation.
Forum in Davos, in spring 2018. brand of start-ups are using machine
The CEO of Cengage can look back learning and artificial intelligence to However, learning is by definition
on his own challenging years, when he create an entirely new context about making new choices and
transformed the company, with of know-how, monitoring and optimi- crossing frontiers. Interestingly,
annual revenues worth US$ 1.5 billion, zation for the experience of educational publishing is a sector
from a traditional educational publisher knowledge generation. that boasts a remarkable number of
– formerly Thomson’s Education divi- companies over a hundred years old,
sion – into a company focused on its The transition is well reflected in a or companies with origins in family
end-consumers, the students. changing language. The teacher- business created in the 19th century.
Despite having defended Cengage’s centric term “educational” is being They grew up by spearheading the
strong market position in an otherwise replaced by “learning”, “textbooks” revolution in knowledge and mass
shaken educational sector, Hansen is become “materials”, which can be education in those times, finding new
currently facing a revolt from his “accessed” by students with a approaches backed up by the
authors. These are opposed to the subscription, rather than purchased. innovative technologies and organi-
subscription service “Cengage These materials can be blended zations of their day. Perhaps this
Unlimited”, which Hansen launched in to form a digital learning environment reference to a distant past represents
December 2017. with, ideally, more interactive their Ariadne’s thread to help them
exchanges between teachers and find a path through the labyrinth
Pearson, too, has opted for a sub- learners, who interact on “platforms” ahead.
scription service aimed at the “Spotify that allow the teacher to closely
generation”. It wants to replace monitor a student’s performance.
hugely overpriced textbooks with a In the best case, personalized hybrid
rental model to help make course learning situations emerge that are
materials affordable again – and to more flexible, more efficient, and more
steer the world’s largest learning readily adjusted to rapidly changing
company out of the rough waters of curricula and professional targets.
recent years, when it had to reduce its
staff on a grand scale. This at least describes the scenario in
a perfect world. At present, everyone
Such transformation is not the exclu- involved is still trying to cope with a
sive territory of the larger corpora- period of transition characterised by
tions. Lean start-ups are popping up massive uncertainty all round.
in many countries, proposing digital
solutions to bring together teachers For the publishers, this translates into
and learners, launching specific a set of challenges and ambiguities in
12 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business Club5. Conclusions
5. Conclusions
Publishing needs to confront change.
This mantra has been repeated in
industry reports time and again over
the past decade. Transformation is
today’s reality for any company
involved in this old trade. While the
details are only now taking shape
along the way, a few clear patterns
have already emerged.
The hybridisation and simultaneous
combination of new and old practices
that is so characteristic of this trans-
formation can be seen at all levels of
publishing:
// In the role and reach of authors,
as well as the empowerment of
the recipients, the consumers, as
they define the public space –
the agora – in which publishers work
// In the very concept of “storytelling”,
which no longer has a privileged
connection to books, but has
once again become detached
from formats as the boundaries
blur between different media and
channels
// Content is created across
formats and media, by any
participant in the community, by
professionals and by amateurs,
by industrial companies and by
lone individuals
// The power of digitisation has
been unleashed through mobile
devices, bringing reading, movies,
games and social interactions
seamlessly and coequally to the
attention of consumers
// The digital business models tend
to privilege subscriptions and
streaming over purchases and
ownership.
// In the end, the resulting dynamics
favour corporate super-organi-
zations, as well as individual
actors, putting the hardest
pressure on those occupying the
middle ground, who have hitherto
maintained dominant roles in the
creative industries for a long time.
13 / 14 The Business of Books 2018: New tunes for an old trade - presented by Frankfurter Buchmesse Business ClubAbout the author
About the author
and the
About the
materials
author and the materials
quoted in the Business of Books 2018
Business of Books 2018
Rüdiger Wischenbart This paper uses copyrighted
is the founder of statistical data and original charts
Content and Con- provided courtesy of the Nielsen
sulting (RWCC), Company, the GlobalWebIndex,
which specializes in BookMap and RWCC, as well as an
analyzing the illustration by Timbuktu Lab.
transformation of
international publishing, and related The BookMap charts were created
culture and media markets. with the support of Marina S. Silveiro
Bueno and Carlo Carrenho of
He also co-founded the non-profit PublishNews. Additional research
BookMap service. His reports include was conducted by Julia Coufal and
the Global eBook reports (since 2011), Michaela Anna Fleischhacker,
the Global Ranking of the Publishing RWCC.
Industry (“Global 50”, since 2007)
and “How Big Is Global Publishing”
(www.BookMap.org 2017).
He serves as a director of the Pub-
lishers’ Forum in Berlin.
www.wischenbart.com
Blog www.booklab.info .
Twitter @wischenbart
Imprint
Copy editor: Alastair Penny
The white paper “The Business of Books 2018”
Cover Design: Vier für Texas
is presented by the Frankfurter Buchmesse
Adaptation: www.weirauch-mediadesign.de
Business Club.
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June 2018
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