Professional Documents
Culture Documents
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.
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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!
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Inform Inspire
Invigorate Questions
Answers
A Little About Me
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In 1974, if I wanted a
book.
No internet
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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
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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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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
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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Ian Ballantine
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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
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#1
What kinds of books are you
going to publish?
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Marketplace
Need
Sales
History
Successes
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Marketplace
Need
Sales
History
Success
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Passion
Interest
Expertise
Sales
History
Success
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#2
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Television
Newspapers
Websites
Social Media
Movies
Games
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Television
Success is tough here
but it can be done.
Papers
Websites
Social
Movies
Games
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Read
Magazines
Visit
bookstores
Visit
Websites
Talk to experts
Booksellers
Media
Publishers
Ask readers
Design
Format
Price Point
Value to reader
#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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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.
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Financing
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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)
Marketing
(3,500)
Distribution / Shipping
(4,200)
(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
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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)
Marketing
(8,750)
Distribution / Shipping
(10,500)
(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
Unfamiliar
Develops a backlist
which is a highly
profitable source of
revenue
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Publishing Law
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Publishing Law
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Subsidiary Rights
First Serial
Second Serial
Book Club
Permissions
Trade / Mass Market
Translation
Audiobook
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Source: publishingperspectives.com
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Curation
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Finding Authors
Agents
Book Fairs
Trade Shows
Newspaper
Magazines
Writers Workshop
Blogs
Websites
Podcasts
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Choosing Work
Quality
Authors Platform
Originality
Money
Market Viability
A future?
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Editorial Process
Your most important job as a publisher?
Editing
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Editing
Writers are experts, yes, but
Long-term Authors
Sales track
Original ideas
Money
Effective
Promoter
Relationship
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Distribution
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Distribution
10% were available in bookstores
10% were not available anywhere
City
Country
Region
Global
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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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Marketing
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Reviews
Media
Bookstores
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Campaigns of Today
YouTube
Bookgroups
Influencers
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
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Case Study
What it looks like when it all comes together
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Building a Bestseller
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
Editing
Editorial feedback on early drafts
Complex challenges of this book
Tightening and restructuring by author & editor
Fact-checking
Package
Whos the audience?
Subtitle
Image
Science vs Biography
Marketing Pre-publication
3000 galleys distributed to:
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
Excitement Builds
PW Cover Story
Author Tour
Publicity Line Up
4 starred trade reviews
O Magazine
serialization
Popular Science
Essence
Author Website
First Week
Standing-room only bookstore events
Major national publicity
Glowing national book reviews
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Reviews
One
Re-Orders Pour In
20 printings
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
Closing Discussions
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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.
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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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