ReBoot 2021: The Repair Shop. Assessing the damage, and fixing it.

After a widely received first season in fall 2020, with four Preparations Workshops and a 6-hour state of the industry debate on October 13 ‚Äď attended by 200 experienced industry leaders from 28 countries in a unique mix of heads of worldwide corporations and small local innovators ‚Äď, it is time to move on.

In the first half year of 2021, ReBoot proposes a systematic assessment of the damage, based on a rich survey of multiple data sources and intertwined with a structured set of workshops, with the goal of comparing lessons, experiences, and proposed solutions.

ReBoot will focus on how authors, publishers, suppliers, and retailers:

  • Operate in highly dynamic markets, defined by changing consumer habits and mounting competition for consumers‚Äô attention and budgets;
  • Manage seamlessly multiple formats, business and distribution models, while new entrants from other media industries approach the same audiences;
  • Learn to directly target consumers, build sustainable communities around more granular audiences, and attract the best creative talent for books and readers.

The Repair workshop calendar foresees three units of 2-4 hours in the first half year of 2021:

  • 18 FEB 2021: Assessing the damage, and identifying the key lessons for looking forward;
  • 21 APR 2021: How to fix what is broken, and who can offer the best tools for that aim;
  • 22 JUN 2021: Navigating to new islands and sailing with the winds of change.

You can subscribe to all three ReBoot units plus get permanent access to the ReBoot Box, which contains rich and relevant documentation plus video recordings of all sessions,¬†at a flat rate of ‚ā¨ 149, or buy tickets for each unit separately at ‚ā¨ 99.

We invite sponsors and partners to engage with ReBoot on a continuous basis, with customized cooperation packages starting at ‚ā¨ 5,000 for 1HY2021.

Find out about all details, and register right away at www.rebootbooks.org.

Follow us for updates on Twitter at @rebootbooks

You can recap ReBoot in fall 2020 in 3 blogposts:

  • Workshops 01 and 02 (on consumer habits and on hybrid publishing here)
  • Workshops 03 and 04 (on supply chain and on bookselling here)
  • ReBoot: The Conference here.
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At BookExpo in May 2018, a CEO roundtable with, from left, the Association of American Publishers’ Maria A. Pallante, Macmillan’s John Sargent, Simon & Schuster’s Carolyn Reidy, and Penguin Random House’s Markus Dohle. Photo by Porter Anderson, Publishing Perspectives, used by permission

At BookExpo 2018, a publishing “CEO¬† roundtable” hosted by the Association of American Publishers‘ Maria A. Pallante, had 3 heads of New York Big Five publishing corporations debating the future of the industry. I don’t recall details, but am certain that all three speakers were upbeat.

Two years and a bit later, Carolyn Reidy of Simon and Schuster has passed away, John Sargent has quit Macmillan and Holtzbrinck, and only Markus Dohle is still in his position as CEO of Penguin Random House, and announced just a week ago that his group would pick up Simon and Schuster. Another major American trade and educational publisher, Houghton Mifflin Harcourt stands for sale.

And now, BookExpo, together with its consumer sibling BookCon, the by far largest industry gathering in the US, and the States’¬†only public platform for welcoming international publishers and other vendors of the book business, has been “retired“, as the press release of Reed Exhibition, the parent company, camouflaged their decision of pulling the plug. (See the summary in Publishing Perspectives)

My personal¬†book fair calender for 2020 saw me packing for London in April, and shortly thereafter for Riyadh, Saudi Arabia. I was considering Leipzig, and would have observed closely Bologna and Paris from afar. Already, I did not plan to attend BookExpo in New York in late May, as I couldn’t anticipate any business for me at the event. Beijing in late August was still undecided. In fall, I obviously planned for Frankfurt, and then Ljubljana in November. I was considering Guadalajara, as my interest in Latin America had seriously increased lately, while working for Cerlalc, the UNESCO partnering organization based in Bogota, Colombia.

None of these events would have any physical presence or attendees, it turned out.

Instead, together with a few friends like Carlo Carrenho and Klaus-Peter Stegen, we decided as early as late April to launch our own, purely digital conference format, ReBoot: Books, Business and Reading, which eventually took place with 4 workshops in September and a 6 hour marathon series of industry debates on October 13, 2020, which normally would have been Frankfurt’s opening day.

I summarize these details not out of nostalgia, nor anticipating any “return to normal” in 2021. Yet I am an optimist. I am confident that the vaccine will have a – hopefully broad, and not limited to the rich countries and mega cities only – impact on our lives and businesses.

I am fairly confident that the book business overall will cope, and adapt – which is synonymous to ‘deeply transform‘ – in the course of the pandemic. But I am also convinced that the same may not necessarily apply to book fairs. At least those in North America and in large parts of Europe, plus Japan. For all the rest of the world, this is a different story, which I’ll address another time.

There surely will be industry gatherings in the future, with actual visitors, with some kind of exhibits, and certainly with receptions and parties, probably as soon as in early summer or fall of next year. But I would wish to be a fly on the wall when a sales representative of Frankfurt or London will call up the person in charge for marketing budgets at Penguin Random House, Macmillan, HarperCollins – or, very similarly, at Planeta, Bonnier, or German Bastei L√ľbbe in spring 2021, in the ambition to sell some significant booth space. ‘Best of luck‘, as those hard nosed sales reps would say.

All the big, and many medium sized companies have their finance people right now spending hours and days in home offices and zoom calls to figure out how to slash office space and rent, shift resources into a more de-centralized model of organization, invest – hopefully – heavily in streamlining their workflow and otimize their processes (ERP companies, but also Salesforce/Slack and other will further expand), AND they will be, at the front end of their operations, all about¬† ‘the consumer‘.

“D2C” – Direct-to-Consumer will be the magic formular for 2021, I am sure.

These moves will fairly quickly result in shifts in companies’ internal power balances, hopefully by just even more strongly separating what, on a day-to-day basis, editorial does, and what the ‘back office‘ does with what editorial is proposing to them – or in return, by drastically re-framing the set-up in which editorial is supposed to do their work.

That swing does not necessarily clip the aisles of good editors in theit creativity. But it may rewrite the overall playbook of book publishing.

To give just one example: Anything more ‘niche‘ may be handed over to some ‘special arms‘ of the organization, or be delegated into new (or already existing) ‘author platforms‘ – as in publisher + Wattpad cooperation deals.

In less fortunate organizations, which will be around too, it will be a new regime that hardly breathes that old air of sniffing out that new genial literary hero who might be a winner of some award half a writing life later.

These are, of course, just a few guesses. But for traditinal book fairs, they carry a few clear lessons. First of all, there is little reason for publishers to spend a fortune on renting huge booth space, add more money for flashy cusomized stand constructions, and send over hald the company staff for a week.

Fairs will be closer to festivals on the one hand, and on the other hand to the more operational, small-table plus hotel-bar-and-dinner-separ√©e type of the rights business. In addition, the ‘industry talks‘ will be hybrid at best, and much debate will be within closed¬†settings– e.g. behind corporate community walls, rather than public.

For the ever more pressing opening up, embracing new ideas, interact with an ever growing number of new comeptition from new entrants and start-ups, this may become a huge problem. For letting in new company talent, the result may be a desaster, really endangering a necessary renewal of the professional book communities.

But, as an optimist, I see all these ‘problems’ mainly as bringing some transformative strains that we all have seen coming already before the virus struck, didn’t we?

With regard to BookExpo, Michael Cader now wrote in his Publishers’ Lunch: “The show itself had diminished for years.” So let’s move on, and make the best of it.

PS: David Unger, of Guadalajara FIL, commented in the Facebook group Publishing without borders: “Rudiger: for many years BEA was running itself into circles and into the ground. It had no identity and changed its focus and format sometimes twice a year. It cannot be compared to other international book fairs that have very clearly defined roles and focuses. I know you agree with me.”

This allowed me to specify, how I would differentiate between 3 types of international book fairs:

¬†Full agreement on part 1, BEA. Not so sure on part 2, which I would split into a) Frankfurt, London, Bologna, b) Beijing, Sharjah, Guadalajara, Madrid/Barcelona, perhaps Italy Paris, G√∂teborg and c) the many ‘other’
To a) frankly I see no way back to the old ‘charging high price booth space’ business model for any of that top tier group. No way.
To b) These are different, as hubs for specific, commercially relevant regional markets, plus their price tag is much smaller, due to local subsidies, subsidies to national collective stand models and much more affordable booth spending anyway, so they make more sense perhaps, economically,
To c) an entirely different kind of beasts, either as national show cases of local industries (my domestic Austria being such, or focused on selling books! (All across the Middle East), etc.
So we have a LOT to figure out, I guess.

 

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First and foremost, I have no clue what regulators will say about the purchase. This is not my turf. But I have a couple of observations on the underlying stories in the move of German Bertelsmann group, parent of Penguin Random House, picking up the 1924 founded book publishing jewel, Simon and Schuster, for $2.175 bn.

In terms of turnover, Simon and Schuster is relevant for Penguin Random House (PRH), but certainly not a game changer.  But the relevance lies underneath that surface perhaps.

mEUR mUS$
PRH ¬†‚ā¨¬†¬†¬†¬†¬†¬†¬†¬†¬† 3.371 ¬†$¬†¬†¬†¬†¬†¬†¬†¬†¬† 3.782
Simon ¬†‚ā¨¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† 726 ¬†$¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬†¬† 814
Combined ¬†‚ā¨¬†¬†¬†¬†¬†¬†¬†¬†¬† 4.097 ¬†$¬†¬†¬†¬†¬†¬†¬†¬†¬† 4.596
Source: Global 50 World Publishing Ranking 2020
(Data from company reports)
www.wischenbart.com/ranking

#1 An ironic tale

All the sales reports and revenue banked from John Bolton‘s “The Room Where It Happened“, Bob Woodward‘s ” Rage“, and Mary L. Trump‘s “Too Much and Never Enough” will be consolidated, together with earnings from Barack Obama‘s “A Promised Land” in 1745 Broadway, New York City, and then reported to G√ľtersloh (around 100,000 inhabitants), North Rhine-Westphalia, South-West of Teutoburg Forest, Germany, home of Bertelsmann.

Speaking symbolics, we may see here a reflection on the loss of American supremacy in the globalized cultural footprint.

This does not mean, of course, that some obscure people from German backwaters would direct what is fit to be printed in New York City, certainly not. Even without Simon and Schuster, German PRH revenue accounts for a mere 7% of PRH global, and editorial decisions are made in New York, not G√ľtersloh, already for many years. But no US power game may have an upper hand under such an umbrella, when already in 2020, well before the deal, any efforts failed in challenging Simon and Schuster’s controversial books on American politics.

So, ‘Simon’ is adopted by ‘Hans’ in a way, rather than married, but Hans and Simon have each a colorful, adult persona already, besides Hans’ clear German roots.

Much more relevant is the second point.

#2 A global strategic bet

Since German Bertelsmann acquired Random House, for $1.8bn in 1998 – back then, as much as today, the world’s largest consumer book publisher, and a strategic expansion that signaled “globalization” to the cozy, national emporiums of books and reading -, a lot of mergers and acquisitions and restructurings took place in the global book business. But the odd riddle of what is the path to success remains unsolved:

Is that consolidation about scale – having more books, more authors, more markets under one company’s clout – or is it about scope – controlling books plus movies plus games plus whatever other form or format for the best exploitation of (‘authors’, or ‘creators’) intelectual property?

Not long ago, the French media empire of Vivendi acquired the country’s second largest book publisher, Editis, in the clear ambition of reading these books first hand, for subsequent cross-media exploitation. Author platforms, from Chinese Tencent Literature to Canadian/global Wattpad launched ‘Studio’ divisions to do just this, turning stories into other formats. Netflix has developed multiple axes to lure (often book) authors to turn stories into TV formats.

Bertelsmann is clearly a multimedia behemoth, with a turnover of over 18 bnEUR coming from TV, books, magazines, music, education, services and print.

But PRH, under its current CEO Markus Dohle, has a 100 percent focus on – books. Fullstop. “A very happy Dohle told¬†PW¬†today was a ‘good day for books, book publishing, and reading.‘‚ÄĚ (Publishers Weekly today)

Of course, Dohle includes under ‘books’ any format, print, ebook, audiobook, and distribution model (even as in the latter, he is more restrictive, when it comes to any all-in or digital lending offerings).

But strategically, not just in the actual acquisition of Simon and Schuster, but in a more long term view on consumers, Dohle’s is a bold bet.

Frankly, I like Dohle’s clear and bold stance (against my personal cross-media intuitions) – which is, by the way, mirrored by others throughout the industry internationally, which, by the way, is really under-reported.

Dohle argues that a book is a book and addresses a reader who is a reader (a clear cut target audience to adress – as opposed to any fluid other things). And, to give one example, by initiating right now a big initiative towards Latino reading audiences, in Spanish, Dohle turns this into a very inclusive – and not just exclusive white middle urban class strategy -, which is great!

I am more cautious though, and even deeply worried, how that bold stance of the global book market leader PRH can be translated into a viable formula, all the way down, to the lower levels in the global book and reading ecosystem. We need the many small and mid-sized independent ventures and platforms, beneath the corporations, and in the many small markets and the thematic niches, in order to maintain the diversity in what books – in whatever format – can offer to readers.

So perhaps the book as a “Jack of all trades” format, which can incorporate any story and any piece of knowledge to any audience anywhere, oddly needs at first a good craddle, to develop its many talents, and thereupon go beyond?

At this point, I have no ready made answer, but encourage thinking, and input, and initiatives on that fragile bottom of our industry.

For more details about Penguin Random House, Simon and Schuster and the onging consolidation in global publishing, see the Global 50 World Ranking, a 260+ page report with facts, figures, 50 extensive company profiles and analysis, for free download at www.wischenbart.com/ranking – and subscribe to our newsletter to be updated on new research.

Addendum:

Bertelsmann Annual Report 2019
Germany Other Countries Total Operating EBITDA EBITDA in % of revenue Turnover in % of total divisional
RTL 2138 4513 6651 1439 22% 36%
PRH 265 3371 3636 561 15% 20%
Gruner+Jahr 913 442 1355 157 12% 7%
BMG 46 554 600 138 23% 3%
Arvato 1697 2478 4175 549 13% 23%
Printing Group 948 620 1568 68 4% 9%
Education 2 331 333 84 25% 2%
Investments 0 13 13 -1 -8% 0%
Total divisional results 6009 12322 18331 2995 16% 100%
Control 6009 12322 18331 2995 16%
% of German vs int’l 33% 67%
PRH Germany in PRH 7%
PRH + Simon (converted 2019 turnover) ¬†‚ā¨¬†¬†¬†¬†¬†¬†¬†¬†¬† 4.097

Source: Excerpt from Bertelsmann Annual Report, 2020, analysis by RWCC for this article.

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Two seemingly separate pieces of news came in this morning: The International Pulishers Association released a survey¬†on “Covid-19’s impact on global publishing“, based on a broad roundcall among their members worldwide. And perhaps surprisingly to many observers, the first challenge that the IPA study adressed was NOT bookshop closures due to lockdown – but an article on how “Supply Chain Disruption Leads to Ecosystem Stress“!

Books in a box with a flowerpot ready for delivery

Books in a box with a flowerpot ready for delivery (Photo: Ruediger Wischenbart)

Incidentally, German trade media like B√∂rsenblatt and buchreport reported yesterday that one of the leading scientific publishers, Springer Nature, ditches their German logistics partner KNV Zeitfracht, and switches across the border to the Dutch “Centraal Boekhuis” (CB),¬† a collaborative initiative owned by some 800 Dutch publishing stakeholders, with a history going back 150 years, and active in both the book and – since a few years – in the health sector.

The IPA report summarized: “Publishers operate in a complex ecosystem with
printers, logistics providers, distributors, and retailers, meaning the supply-chain effects of COVID-19 control measures caused significant supply disruption.

KNV Zeitfracht had indeed drawn criticism recently for underperforming in the strained times of Covid-19 challenges.

But there is a much deeper, and more fundamental underlying issue which gained wider visibility only now.

Under pandemic conditions, with consumers migrating to online and digital purchases, especially smaller independent bookstores suddenly had to rely dramatically on their online capacities for their survival. But many discovered not just limitations in their own digital setup. The challenges were multiple:

  • Ordering books from wholesalers became fragile;
  • Catalogues of titles available for ordering by their clients had many blind spots;
  • Delayed delivery to the costumers required apologies;
  • Wholesalers like KNV in Germany suddenly announced plans to cut down on their traditional service of daily delivery, to just bringing orders to stores only twice a week.

To give just one example from my own customer experience: When I ordered, as a gift to the daughter of friends, a hardcover copy of the English original of the new Stephenie Meyer book “Midnight Sun” – certainly not an exotic title -, the online order was confirmed by my favorite indie bookstore with a note of caution that they couldn’t give me a precise date for delivery, due to supply chain issues.

In return, for a publishing giant like Springer Nature, their market and customer base are global. The Dutch Centraal Boekhuis, Springer Nature said, will take care of all their distribution worldwide. National services alone are simply not good enough anymore.

All these highlighted shortcomings are not only an involontary PR campaign to the advantage of Amazon.com, wich hosts a multilingual, ever expanding catalog of available titles, ready to be served to consumers around the world.

It much more highlights the fault lines of what will shake up the foundations of the book business, in getting their post-pandemic strategies right.

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