02/07/06

Charkin discussions

As promised, here is a (lightly) edited trasncript of my discussion with Richard Charkin, CEO of Pan MacMillan, former President of the PA, and with his Sara Lloyd, Macmillan’s new Head of Digital Publishing Macmillan’s Director of Communications.

My original comment was solicited by the following statement by Mr Charkin, basically about how proud he is of the suite of Pan Macmillan (PM) websites,

And I want to show off a bit more about Macmillan Science. This is an experiment to see if we can take a particularly difficult part of general book publishing (popular science is in some senses a contradiction in terms) and create a different business model and still publish well. The model is that we only publish books where the author grants us world rights (no territorial restrictions, no arguments about who owns the Turkish book club rights etc), there is no advance but a high gross income related royalty, low expectations of bookshop support and hence lowish discounts, simultaneous global English-language publication, promotion to the scientific community through Nature and Scientific American, and most important of all an editor who understands popular science, scientific journalism and how to help authors promote their own work.

You only have to click on any of the covers on the website to get a feel for the quality of what we’re publishing and we’re doing it without all the hype of ‘traditional’ general book publishing. It’s a simple formula. Spend money only where it’s necessary. Keep editorial headcount to a minimum but make sure the editor is the very best. Reward authors who sell and don’t reward (via unearned advances) those who do not. And don’t forget that the world of books is global and that they do speak English in a little place called America.

To which I replied,

I’m delighted that Macmillan continues to investigate new business models within publishing and wish you and your authors every success – and avoidance of Hollywoodesque disaster scenarios etc.

In advance of what comes below I do feel that Mr Charkin is more clued in to the opportunities of technology than most of the CEOs of the major UK houses – to which this blog is a testament – and hope that my criticisms are taken with that in mind. Still, publishers have a long way to go before they realise the opportunities of the web and before they can hopefully claim back some of the ground (or margin) that has been lost to the retailers.

However, and I apologise if this seems churlish, I do feel that in some regards, both the Macmillan Science and the recently re-launched Macmillan consumer web site in particular (www.panmacmillan.com) are missed opportunities, and possibly expensive ones at that.

In an age of great possible online marketing innovations, and the increasing adoption of new technologies, both of these sites are resolutely ‘web 1.0′ and look as if they could have been launched in 1999. They also, vitally, seem to miss the point of their own existence.

Publishers – particularly in the consumer / trade arena – have to compete with retailers, amazon, supermarkets and other outlets, and should be using their web sites as a major weapon to attract consumers, to encourage those consumers to make purchases easily, and to win the chance to retain that customer for future purchases and marketing opportunities. Publishers used to ignore consumers – retailers were their ‘customers’ – but that is surely changing now, and the future of pubilshing will include greatly increased direct sales for pubilshers.

Publisher web sites should make explicit the added ‘value’ that a publisher can offer beyond a retailer – and use this difference as a way to make sure that their direct sales strategy delivers on the investment it has obviously sucked up in creating a web site.

But what happens? On PM.com we have enforced registration to purchase, zero discounts on your highest profile book (currently Bret Easton Ellis’ Lunar Park – available at amazon for £3.99 rather than 7.99 on PM.com) and a design where the ‘add to basket’ button is at the very bottom of the page. Furthermore, the registration system is long and rather offputting and only caters for the middle ground of ‘best-selling’ authors. The popular science site suffers from the same problems, combined with a (IMHO) horrible design.

In other words, the barriers to purchase, or subscription, are pretty high and in my experience I imagine the customers will stay away in their drives.

I am by no means advocating an indescriminate adoption of warm, fuzzy (and needlessly expensive) technologies but I do think that a little thought to the users in terms of exprience and technologies (RSS for a ‘community’ site perhaps? or is there no planned evolution of content once published?) – combined with some thought as to what kind of strategy would encourage readers to purchase and signup for (hopefully) well-written and clearly ‘added value’ newsletters – would have given this site a more focused purpose.

And as to discounts – the grounds on publishers all seem to believe that sales are driven through all outlets – if you can afford to sell to Amazon at a price which allows them to discount at 50%, then you must have the margin to offer better incentives to readers to then give you the opportunity to sell directly to them in the future? Consumers aren’t stupid but if they see the producer selling a book at twice that of the major retailers – they may well think the publishers think they are stupid.

Thoughts? Peter Collingridge

Then came Geoff Dufffield, PM Sales & Marketing Director,

Hi Peter

Thanks for your feedback about panmacmillan.com.

The design question is obviously one of personal taste, but we did a great deal of customer research before the site launched to choose this design, and actually users preferred it and found it more user-friendly than that of any of our competitors. On the registration process, we are aware that it could be more streamlined than it currently is, and this is an improvement we’re planning to make to the site.

And as for online discounting – interesting to hear your views, but think we’ll leave this one to the retailers for now!

Geoff Duffield
Sales and Marketing Director, Pan Macmillan

and Sara Lloyd

Peter, I am in the happy (or at least useful) position of being both Pan Macmillan’s new Head of Digital Publishing (as of three weeks ago) and Macmillan’s Director of Communications – so it is perhaps appropriate that I respond to your extremely apposite comments.

First off, I have to say that I couldn’t agree more with pretty much everything that you say. You are absolutely correct that Richard is streets ahead of most UK publishing CEOs on all this stuff. But however advanced he is, he still heads up a huge heffalumping publishing beast of more than 150 years of age, with all the history, ingrained publishing culture, people and processes that brings. He certainly does a valiant job pushing, pulling and shoving to move this beast into the twenty first century – and much to push the general industry in that direction too.

I think Macmillan has – probably rightly – focused most of its digital efforts in areas where the market was moving most swiftly towards an electronic focus – so STM and then academic and educational publishing. So if you take a look at what the Nature Publishing Group, publishers of the leading scientific journal Nature, are doing in this space, it is certainly a great deal more forward thinking than what you are witnessing in the general / trade publishing space upon which you have commented. They have, for example, developed social bookmarking software designed specifically for scientists (‘Connotea’), experimented with online open peer review and moved their business firmly over to a web subscription model. I could go on, but you can find out more if you are interested at www.nature.com.

However, as I said, in the general publishing arena there is a hell of a lot to do and in some ways rather an uphill climb faces us here. Some very basic things need to be addressed in order to move general publishing businesses from Web 1.0 companies to Web 2.0 companies and beyond. First of all, we need to educate our own staff to be more ‘e’-savvy, effect cultural and process change internally and change our thinking about some of the qualities we look for when hiring new staff; then we need to get the basic ‘building blocks’ right – develop a digital platform for delivery of our e-content, work out how to budget and resource for new ‘strategic’ web developments which do not deliver traditional cash flows, develop leaner, swifter decision-making processes, and, of course, get our marketing site 110% right, including a much greater focus on the end-user… and that’s all before we do anything creative or ‘blue sky’ with our content or services. More than anything else we need to start focusing on readers as our customers, not just retailers. It is no accident that the most successful web companies are those who have harnessed consumer power, recognised the value of peer-to-peer-generated content and focused on developing global, online-only brands (I’m thinking Amazon, Google, de.lic.ious, Flickr and many more). It is also no accident that so many of these were initially set up by geeks sitting at computers in their pants – they could move so much faster than lumbering publishing beasts….

The questions for us as we consider how to become more of a ‘Web 2.0’ style company are: how do we develop content, products, resources and services that continue to give us relevancy in the markets we serve? And how on earth do we move away from some of the bricks and mortar, historically-inherited constraints that prevent us moving fast enough for the pace required in this new digital age?

Having said all this (excuse me if I was ranting there…) the specifics you mention regarding the PM and Mac Sci web sites are in fact generally pretty simple to amend, and you can be assured that further updates and improvements are already scheduled. Following the now-established ‘Web 2.0′ model our web sites are now ‘perpetual betas’!

and my reply

Sara, what a thoughtful and lengthy response to my post. Congrats on the job by the way – what a phenomenally exciting post at an equally exciting time in publishing.

I wasn’t making an isolated attack on Mr Charkin or even Macmillan. I singled out the panmacmillan.com site as (1) it’s the newest but not the worst, although most of the bad ones were built many years ago and have that as an excuse; (2) mr charkin blogs and dialogue is what blogs are for and (3) having watched and heard of the development of the pm site for some time (I talked to Geoff Duffield [Macmillan Marketing Director] at Frankfurt 2004 when the site had just been commissioned, and was involved ironically enough in an online campaign for the hbk of Bret easton Ellis’ Lunar Park which expected the site to have been ready for publication last July) I had high hopes for it to be the best publishers site… So please take
this as dialogue rather than vituperative.

I have read about, and been impressed by, the investments and progress Macmillan has made in the STM markets, including the projects you mention, and have been very excited by them and the potential of similar energies being focused on trade titles, either by Macmillan or more ambitiously by the industry as a cohesive whole. (I’ll admit to being personally seduced more by trade than STM books)

I am of course also aware of Macmillan’s heritage and the ‘historical’ problems inherent to publishing houses adopting new technologies. They don’t turn on sixpences. I am also pretty sure that the struggles going on at Macmillan are shared by most if not all UK multinationals and independents: they need to wrestle control of something that has for so long sat, ignored, in the ‘too hard’ box. But, these are not exactly new problems. My first job was at Canongate in 1997 and these issues were under discussion then.

Also, I’m actually not gunning for a digitised-web-2.0-at-all-costs-blue-sky-tagging-and-user-generated-content future. I’m not some dot com ranter trying to implement wacky designs and (god forbid) wacky names for 150 year old media company web sites. My job is to be focused on (and sometimes, advise) the strategies of these companies and to help them execute these strategies online.

So, my main issue with the PM site (and most if not all publisher’s sites) is the missed opportunity of going direct to consumer – which has been characteristic of the publishing industry for years. Until they understand their consumers (’end users’ in geek speak) publishers are very unlikely to get anywhere near the successes of web 1.0 companies let alone 2.0!

My point is just that given the current landscape, they need to put consumers more centrally in their sales strategies than they have done in the past, and to then find opportunities (through technology or, more importantly, develop creative thinking which can be facilitated by technologies) to build valuable relationships with those consumers. Only when those relationships exist can they consider ‘leveraging’ them in the ways we associate with the successful web 2.0 companies – and even then that may be beyond their remits.

Interestingly, your post partially leapfrogs my concerns for direct sales of trade editions and begins to deal with the ebook question, which is certainly riddled with very important and interesting problems but not necessarily yet the front on which the battle of the margins is fought. (Of course, I know it is vital and Richard’s work at the PA has been involved with that, and Google, and so on).Soon, indeed, if not sooner, these issues will be forced and the industry as a whole certainly needs to be prepared – including agents and retailers and I heartily encourage the unification of the industry around these topics.

But, without a direct sales infrastructure / strategy in place when this change comes, then the scene is set for someone (such as Apple, who has done it with music and is soon to do with film and will no doubt with books) to move straight in to create, and own, that market and relegate pubilshers (again) to bargaining over margins. And yet again someone else will control the customers and the distribution channels. And that would be A Bad Thing given that the opportunity exists for publishers to seize that opportunity in the same way that the music business could have done its own iTunes – but didn’t because they were (1) too slow to recognise what they thought was a threat as a massive opportunity (2) too busy trying to sue their consumers as a way to stem the flow.

From where I sit, publishing houses clearly aren’t web 2.0 companies, either in style or in content. No one I’ve worked with in the last 10 years is in their underwear. They can’t change their entire business models to become ‘MySpace for books’. But nor should they. They publish books and are staffed by people who understand this and who maybe, on the side, also begin to ‘get’ technology. But I fear (and I really do fear as I love publishing and the industry) that they may well, like the big beasts / dinosaurs you compare them to, be under threat of extinction (ok, that’s maybe an overstatement) unless they can actually make some money soon. And at the moment that means understanding consumers, selling books, as well as preparing for the future. Companies the size of Macmillan, and the other large UK houses, do have the resources to create a web 2.0 company, but trying to do this within the infrastructure of a 150 year old wildebeest is, as you say, Sisyphean.

Even though we both clearly find this a fascinating topic, I apologise for ranting back. I don’t really think what we’ve said really articulates our discussions – or our focuses – but at least we recognise that it is fun, and important, and that that a change is going to come – and hopefully both of us can effect some of it.

Peter Collingridge

Posted by Peter Collingridge in Design, Future of the book, Publishing.

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