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Vision and Mission

Developing a Successful Publishing Strategy

Philip Patrick
Note: the following is based on the presentation given in class on
November 7, 2010. It is intended for educational and professional use
only. It may not be reproduced or shared in any way.
Thank you and good luck!

Introduction
Philip Patrick
Vice President, Digital and Marketing Strategy
Random House, Inc.
prp1@nyu.edu
Facebook
philippatrick.net

Who is here?
Professionals from 15 countries
Over 261 combined years of experience
One company founded in 1683. Another in
2006.
One company with over 300 employees.
Another with four.
4

And why?
Future of digital publishing in the
Middle East and Arab world

We are keen to
publish and
disseminate in
other languages

To learn
how to stay
competitive

Improving the
work & upgrading
it to world class

New contacts!
5

What can do together?

Inform Inspire

Invigorate Questions

Answers

A Little About Me

10

In 1974, if I wanted a
book.

School Book Fairs


Book Mobiles
Book Clubs

Nearest bookstore was 45


minutes away
No super stores

No internet
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15

16

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Part of Bertelsmann AG

Publishing in England,
France, Germany, Spain,
Italy, and more
Leader in commerical and
critical success
Books sold around the
world

Where did it all begin?

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Origins are entrepreneurial.


Growth is entrepreneurial
and opportunistic
and strategic.
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Overview

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Overview
Establishing the Context
Challenges in the Market
Three Most Important Topics
Five Essential Roles
When It All Comes Together
Break-Out: S.W.O.T.
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Establishing the Context

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United States Market


Trade Total Net Units by Year
Source: Book Industry Trends 2008, Book Industry Study
Group

1,200
Forecast

1,000

986.8

964.7

944.4

983.9

987.4

1,004.5 995.2

994.5

991.8

992.4

993.5

800

600

400

200
Bookspan Data

0
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

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Major Publishers
Market Development

Market Shares in the US (in %)

(in units million)


-3%
458.7

Macmillian
445.0

Random House

5.4%

Hachette
6.2%

15.5%

S&S 8.0%
12.4%
8.1%
Market

Harper

Penguin

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Mid-Size Publishers
Big Six = $23.7 billion
60,000 = $14.2 billion

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Source: Book Industry Study Group

Challenges

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Competing Media
% of US Online Daily
80%
70%
60%
50%
40%
30%
20%
10%
0%

2000

2007

Source: PewInternet.Org

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Competing Media
Hours Spent per Year in US by Individual

250
Books
200

Internet

150
100
50
0
2000

2002

2003

2004

2005

2006

2007

Source: PewInternet.Org

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Self-Publishing
2007 = 123,000 self-published titles
2008 = 285,000 self-published titles

132% increase

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Digital Publishing

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Challenges of Your
Marketplace

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What are your challenges?


Piracy?
Censorship?
Distribution?
Literacy?

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Ian Ballantine

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Ian Ballantines Early Career

Penguin UK cant
import into the US
1939

Finds loophole.
Becomes first US
sales rep for
Penguin UK

Lost at sea

1940

Starts Penguin
USA

Paper rationed

1941

Donates to
secure paper
contracts

Penguin UK
wants its
company back
1945

Sells for $ and


begins Bantam
Books. Over
3000 titles still in
print.
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Lessons from Ian


Constant adaptation to new market
conditions
Turn challenges into opportunities
Try new things
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Great Things Happening

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Great Things Happening

Mario Vargas Llosa


wins Nobel Prize for
Literature

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The Three Most Important


Topics Every Publisher
Must Address
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#1
What kinds of books are you
going to publish?

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What Kind of Books


Passion
Interest
Expertise

Marketplace
Need

Sales
History
Successes

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What Kind of Books


Passion
Interest
Expertise

Marketplace
Need

Success lives here

Sales
History
Success

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What Kind of Books


Marketplace
Need

Passion
Interest
Expertise

It can also live here

Sales
History
Success

.you just have to be


better than your
competition.

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#2

Who is your competition? How


do you find a niche?

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Who is your competition?


Books

Television

Newspapers
Websites
Social Media

Movies
Games

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Who is your competition?


Books

Television
Success is tough here
but it can be done.

Papers
Websites
Social

Movies
Games

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How do you find a niche?


Understand your competition
Attend
Book Fairs
Writers Workshop

Read
Magazines

Visit
bookstores

Visit
Websites

Talk to experts
Booksellers
Media
Publishers

Ask readers

How are they better than you?


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How do you find a niche?


And then differentiate
Editorial
Content

Design

Format

How you market

Price Point

Value to reader

How can you be the bestor at least different?


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#3
How are you going to make money?

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Making money
Sell More Copies

Control Costs

Profitable Growth

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Case Study: Ina Garten

The Barefoot Contessa


Cookbooks

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Understanding the Competition

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Understanding the Competition

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Difference: Packaging

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Difference: Design

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Difference: Promise

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QuickTime and a
YUV420 codec decompressor
are needed to see this picture.

60

Ina grew into a leading brand

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Ina Garten Lessons


Began with personal passion
Different: packaging, design, & promise.
Platform: books can lead the way.

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A Publishers Five Essential Roles

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Five Essential Roles

Financing

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Profit and Loss Statement


The Profit & Loss statement is one of the primary
building blocks for any business
Different assumptions to see how changes can
have a positive or negative impact on profitability
Multiple p&ls create a business

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P&L Exercise
Scenario #1: Royalty-Free Model
Assumptions
Paid author 10,000
Book retail cost 10.00
Discount to retailers 30%
Books are non-returnable
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Income
Units

Euros

Sales
Reorders

5,000
0

35,000
0

Net Sales

5,000

35,000

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Cost of Sale
Euro / Unit

Plant
PPB
Author
Cost of sale

25
1.00

Euros

(1,250)
(5,000)
(10,000)
16,250
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Gross Profit
Units

Euros

Net Sales
Cost of sale

32,500
(16,250)

Gross Profit

16,250

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Direct Expenses
Units

Overheads

Euros

(5,250)

(15% of net sales)

Marketing

(3,500)

(10% of net sales)

Distribution / Shipping

(4,200)

(12% of net sales)

Total Direct Expense

(12,950)

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Profit
Euros

Gross Profit
Total Direct Expenses

Profit

16,250
(12,950)

3,300
EBITA (profit/net sales) = 10%
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Royalty-Free Model
Advantages

Disadvantages

Simple

No long-term
relationship

One-time payment to
author

No backlist

Familiar
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P&L Exercise
Scenario #2: Royalty Model
Advance = payment against future earnings

Royalty = payment after a book earns out advance


Allows you to reprint successful books

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P&L Exercise
Scenario #2: Royalty Model

Assumptions
Paid author advance 10,000
10% royalty on list price
Book retail cost 10.00
Discount to retailers 30%
Books are non-returnable

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Income
Units

Euros

Sales
Reorders

5,000
7,500

35,000
52,500

Net Sales

12,500

87,500

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Cost of Sale
Euro / Unit

Plant
PPB
Royalty (Earned)

Cost of sale

75
1.00

Euros

(1,250)
(9,375)
(12,500)

23,125
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Gross Profit
Euros

Net Sales
Cost of sale

87,500
(23,125)

Gross Profit

64,375

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Direct Expenses
Units

Overheads

Euros

(13,125)

(15% of net sales)

Marketing

(8,750)

(10% of net sales)

Distribution / Shipping

(10,500)

(12% of net sales)

Total Direct Expense

(32,375)
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Profit
Euros

Gross Profit
Total Direct Expenses

Profit

64,375
(32,375)

32,000
EBITA (profit/net sales) = 36%
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Royalty Model
Advantages

Disadvantages

Books can stay on


your list for a long time

Unfamiliar

Develops a backlist
which is a highly
profitable source of
revenue

Potential for unearned


royalties which equals
big loss

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P&Ls Build a Business

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P&Ls Build a Business

The combined total Gross Profit for


all the books you publish in a year
must equal your expenses otherwise
you are losing money.

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P&L Closing Thoughts


Every book has to pay for your business
Understand your overheads
Make realistic assumptions

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Five Essential Roles

Publishing Law

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Five Essential Roles

Publishing law varies from country to country


An agreement between you and your author
protects both parties.

85

Publishing Law

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Publishing Law: Contract


The Work
Description of Work
Grant of Rights
Advance
Delivery & Acceptance
Publication
Copyright
Royalties

Subsidiary Rights
First Serial
Second Serial
Book Club
Permissions
Trade / Mass Market
Translation
Audiobook

87

Publishing Law: eBooks


Author Grants:
Exclusive rights to print, publish, distribute, sell and license
Any and all editions or formats of the book

In any and all countries specified in the agreement


Throughout the copyright term

88

Publishing Law: Copyright


Copyright is the legal principle that expresses
society respect for authors and publishers, and
protects the commercial interest in their creation.

--Herman P. Spruijt, President of the


International Publishers Association

Source: publishingperspectives.com
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Five Essential Roles

Curation

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Five Essential Roles


Nothing is more important than the editorial
quality of your books.
Distinct and delivers an excellent experience to
readers.
Choosing the right books is single most important
task facing all publishers.
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Finding Authors

Agents

Book Fairs
Trade Shows

Newspaper
Magazines

Writers Workshop

Blogs
Websites
Podcasts

Help them find


you

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Choosing Work

Quality

Authors Platform

Originality

Money

Market Viability

A future?

93

Editorial Process
Your most important job as a publisher?

Editing

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Editing
Writers are experts, yes, but

A skilled editor will make a work better


Fact checking removes doubts, questions
Proofreading is professional
The reading experience is better.
You have a competitive advantage. Period.
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Long-term Authors

Sales track

Original ideas

Money

Effective
Promoter

Relationship

96

Five Essential Roles

Distribution

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Five Essential Roles


Knowing how to develop new markets is
essential to the growth of any publisher.
Do it better than your competition and you will
grow market share.

98

Distribution
10% were available in bookstores
10% were not available anywhere

80% were available only within 5 kilometers of


the publisher
Source: publishingperspectives.com
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City
Country

Region

Global

100

Keys to Better Distribution


Quality of the work.
Appeal of work
Standardized business practices
Delivery
Wide marketing support

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Get Creative
Can you go beyond bookstores?
Can you partner with other publishers?
Are there freight forwarders to use?
Distributors?
Working with local schools?
Door-to-door?
Selling from a website?
eBooks?
Attending KITAB Book Fair to sell rights?
Identify scouts in foreign marks?
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Five Essential Roles

Marketing

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Five Essential Roles


Knowing how to market your books is an
essential part of their success.
Build a marketing campaign that includes
publicity, advertising, and social media.

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Campaigns of the Past


Advertising

Reviews

Media

Bookstores

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Campaigns of Today
YouTube

Bookgroups
Influencers

Facebook

Twitter

Search
Advertising

Media
Reviews

Bookstores
Online, too

Blogger
s

Websites

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Effective Marketing
Cover, cover, cover
Authors platform -- TV, newspaper, blog,
lecturing, teaching, etc
Social Media -- let your content sell for you
Knowing influencers in each category
107

Case Study
What it looks like when it all comes together

The Immortal Life of Henrietta Lacks

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Building a Bestseller

CBS SUNDAY MORNING

Challenges of Nonfiction
236,000 non-fiction titles published annually
Average editor sees 225 books a year
Buys 8-10 books a year
Authors often need to more time to write

Curation
Book sold to W.H. Freeman

W.H. Freeman dissolved. Book taken over by Times Books.


Author & editor do not agree editorially vision. Contract cancelled

Book is sold to Crown.


Books editor at Crown leaves company & book reassigned three
times
Manuscript delivered years after the contractual due date

Editing
Editorial feedback on early drafts
Complex challenges of this book
Tightening and restructuring by author & editor
Fact-checking

Author builds platform


Developed relationships with science & other reporters
Wrote many articles for Oprah Magazine
Became board member of book review organization
Developed relationships with science & literary bloggers
Early adopter of Twitter and Facebook. Built early.

Package
Whos the audience?
Subtitle
Image
Science vs Biography

Marketing Pre-publication
3000 galleys distributed to:

Bookseller and industry big mouth mailings


Random House with letter from publisher

Amazon Vine
Academic and Library Accounts
Read It Forward Social Media Platform
ScienceOnline conference in January 15-17, 2010

Academic Pre-Publication
First-Year Experience (FYE) directors and academics

Large Advance Copy mailing with flier to professors


Received dozens of emails with advance praise from
academics
Sent postcard mailing to 23,000 professors

Excitement Builds
PW Cover Story
Author Tour

Stellar Early Blurbs


Early Reviews
Lots of In-house Buzz

Barnes & Noble Discovr


Amazon selects as Best of the Month
Powells staff picks for February

Stellar Early Blurbs


"Passionate and full of revelation." Ted Conover
"Extraordinary...beautiful and devastating." Adrian Nicole LeBlanc
"Haunting and beautifully told." Eric Schlosser

"Marvelous...Defies easy description." Carl Zimmer


"Science biography like the world has never seen." Melissa Fay
Greene

Publicity Line Up
4 starred trade reviews

New York Times Book Review

O Magazine
serialization

New York Times daily


New York Times Science

ABC World News


Washington Post Book World
NPRs Fresh Air
Wired
NPRs ATC

Popular Science
Essence

Unique Author Tour

40-city, 4-month long tour subsidized by universities

Author Website

First Week
Standing-room only bookstore events
Major national publicity
Glowing national book reviews

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Reviews
One

of the most graceful and moving nonfiction books Ive read in a


very long time. NY Times
Thanks to the authors narrative skills, it is a tale that one
experiences rather than reads. Science Magazine
I could not put the book down.Entertainment Weekly
Compassionate account can be the first step toward recognition,
justice and healing. Washington Post

Far deeper, braver and more wonderful. Made my hair stand on


end. New York Times Sunday Book Review

Re-Orders Pour In
20 printings

Debuted at #6 on NY Times Bestseller List

Stayed on list for 31 weeks peaking at #2

Lessons from HeLa


Quality matters
Authors platform & connections are important
Multi-tiered marketing campaigns are effective

Potential for massive reorders

Break-Out Session

S.W.O.T.

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S.W.O.T
Strengths
Weaknesses

Internal

Opportunities
Threats

External

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S.W.O.T.

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S.W.O.T. Exercise
Break into groups of 6-8

10 minutes: each person to fill out a S.W.O.T. worksheet

30 minutes: share your discoveries

10 minutes: designate one spokesperson to share


Opportunities discussed by the group
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Closing Discussions

What are your Opportunities?

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With Thanks To
Everyone at NYU, ADACH, and KITAB
Chip Rossetti, Edward Nawotka, and Michael Zaug
My Random House colleagues including Doris Cooper, Tina
Constable, Mary Choteborsky, Steve Ketchum, Carly Gorga, Pete
McCarthy, Matthew Martin, David Sanford, & Dave Thompson.

And all of you.

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Visit me at
Philip Patrick
Vice President, Digital and Marketing Strategy

prp1@nyu.edu
Facebook
philippatrick.net

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