Macquarie Uni report reveals innovations, challenges in publishing

Macquarie University has released a report examining Australian publishers’ responses to industry changes, including 25 case studies of trade and educational publishers.

The report, ‘Disruption and innovation in the Australian book industry: Case studies of trade and education publishers’, is written by researcher Jan Zwar and is part of a three-year research project by Zwar, Tom Longden, Paul Crosby and project head David Throsby. The case studies are based on interviews with representatives of publishing companies, typically the CEO, MD or head of publishing.

Summarising the report, Zwar writes there has been ‘considerable innovation in response to the digital disruption’.

Disruption

The report ‘is predicated on the assumption that book publishers have needed to innovate to respond to changes in the industry that, in many cases, have been forced upon them’, writes Zwar. These changes include: the introduction of digital publishing, distribution and retailing; the introduction of ereading devices; the entry of large overseas players including Amazon, Google and Apple into the local market; changes in the bricks-and-mortar retailing sector; and the rise of online and social media as an important channel for promoting books.

Trade publishing

The digital marketplace (including print and ebooks) accounts for 19.7% of trade sales according to one estimate, but several publishers noted that continued innovation in the provision of ebooks was ‘a hard-earned achievement’. Many publishers noted that merchandising managers for most major ebook retailers are based overseas, with the exception of Apple. ‘This new digital marketplace poses unique challenges for promoting the books of debut Australian authors’, writes Zwar, with publishers investing more to gain prominence in overseas-based outlets. Booktopia, which works closely with Australian publishers, is a notable local exception.

The report notes that publishers are experimenting with new business models and pricing options. These include: new types of royalty agreements between publishers and authors, such as smaller or no upfront payments and a higher royalty split (Pantera, The Author People); new technology to make niche publishing projects viable (Pitt Street Poetry, ANU Press); experiments with ebook pricing, such as Momentum selling the first ebook in a series for free or for $1; and subscription models, such as Hardie Grant’s ‘Wine Companion’ site (built around James Halliday’s annual Wine Companion) and literary journal Overland’s annual ‘subscriberthon’.

Publishers reported that local bricks-and-mortar and online retailers are ‘critically important to the success of many new Australian trade books’. Examples given included the handselling of local titles The Lost Swimmer (Ann Turner, S&S), Lost and Found (Brooke Davis, Hachette) and The Tea Chest (Josephine Moon, A&U). Publishers also commented on the value of face-to-face events, despite the increase in online communication.

Publishers were wary about the growing influence of Discount and Department Stores (DDSs), with reports that DDSs are demanding an increase in their discount from 50% of RRP to 60%, as well as an increased rebate for paying for stock on time. The report also mentions that some DDSs are proposing to ‘develop their own branded book product at cheaper price points in popular categories that fit with the demographics of their customers, such as children’s books’.

The report also found that publishers are engaging with readers to an unprecedented extent. Hachette co-MD Justin Ractliffe said that over the past decade publishing has ‘reconfigured itself to focus more on understanding their customers’. ‘Jobs exist now such as content managers, consumer insight researchers, and social media managers that ten years ago didn’t exist,’ he said. Hachette Australia and Hachette UK have commissioned a study that segments readers by their reading preferences, rather than age, gender, income and other demographics. Ractliffe said ‘from two years ago we’ve come a long way’, noting that this research informs acquisitions, marketing, positioning, metadata and cover design.

Many of the innovations listed in the report ‘derive from the opportunities for publishers to connect directly with readers’, writes Zwar. Publishers also noted innovations in commissioning authors, including holding open submission days and competitions, and finding authors from YouTube and other new sources. Almost all of the trade publishers also commented on improved workflows in editing, design and layout, as well as reducing the amount of offshore printing, which has led to a reduction in print costs and ‘book miles’.

Educational publishing

Educational publishing ‘is arguably undergoing more radical transformation than trade publishing because it is also affected by disruption in the education sector’, writes Zwar.

Notable issues and innovations in the sector include: the pros and cons of digital learning; the industry’s ability to cater to different learning styles and help monitor student progress; testing to demonstrate publishers’ learning materials; partnerships with education providers; non-traditional models of educational publishing, including subscription models and other services; the gap between schools’ and higher education providers’ digital aspirations and the reality; the search for more business models; unrealistic expectations of digital publishing as a cheaper option; a decline in sell-through rates for textbooks; piracy; and the influence of government policy.

Case studies

Interviews with three genre publishers, Momentum, Harlequin and Pantera Press, are presented in the case studies. Both Momentum and Harlequin discussed their strategies for ebooks and the digital marketplace, with the latter also outlining its plan to expand beyond romance publishing. Pantera Press discussed its long-term strategy for risk-sharing and profit-sharing with authors.

In their case studies, multinational publishers Hachette and Simon & Schuster discuss their strategies and rationales for building up their Australian-authored lists; while large independents Allen & Unwin and Hardie Grant Books, notable for both having purchased small UK publishing companies in recent years, discuss their efforts to export the works of Australian authors.

Small specialist literary publishers Spinifex Press, Pitt Street Poetry, Overland and if:book Australia outline their funding models and attempts to increase their readerships; while scholarly presses ANU Press, Monash University Publishing and Re.press discuss their commitment to the open access movement and technology suited to small print runs.

‘Community-based publishers’ Magabala Books, Malarkey Publishing and Kids Own Publishing, as well as recent ventures The Author People, Hello Table and Accessible Publishing Systems, are also interviewed, as are educational publishers Pearson, Cengage, Oxford University Press and John Wiley & Sons.

Opportunities and constraints

The report finds that while there may be ‘greater opportunities for the publication of literary, scholarly and community-based titles due to the cost-effectiveness of new technologies’, most of these types of works are still selling in modest numbers. Literary works, aside from winners of prizes such as the Man Booker and the Miles Franklin, do not sell well in ebook format, the report notes.

Former Overland editor Jeff Sparrow said changes in the industry ‘have not resolved central dilemmas about the modest size of markets for many literary titles, with publishers and authors experiencing financial constraints’. He argues that ‘the contemporary marketplace favours the commissioning of accessible, promotable titles which have the potential for a short, intense sales burst’ ahead of literary titles with the potential for a longer tail.

The report also highlights the importance of considering the peculiarities of the publishing industry, such as its sale or return terms. ‘Policymakers and researchers who are interested in the health of Australia’s culture of books and writing may benefit from a greater understanding of this commercially sensitive aspect of the industry’s financial dealings,’ writes Zwar.

Opportunities identified in the report include tapping into international marketplaces, exploring risk and subsidy set-ups, and appealing to the next generation of book readers. However, constraints to innovation remain numerous, including limited budgets; the small size of the Australian market; heavy demands on staff to meet existing commitments; high cost of distribution; competition from overseas retailers; and high-risk/low-revenue stakes for potential innovation opportunities.

Policy-related issues also abound, including reduced government support to promote books and reading, reduced support for literary writing, and unfavourable postage rates and provisions in federal education legislation.

To download the full report, click here.

To coincide with the release of this report, Macquarie University has re-opened its survey for publishers, with findings due to be released in mid-2016.

Category: Local news