Student Blog: The new publishing models

Skunkworks? Freemium? Service with distinction?

It is still the case that no one is in a position to say which trade publishing business models will be profitable going forward. Yet with old models under threat, publishers are developing a range of new business models and ways of working.

With Macmillan reportedly spending $100 million on purchasing companies to revolutionise its business model, assigning teams to ‘skunkworks’ – Lockheed Martin’s term for secretive new projects – can also be an easy way to waste time and money, as happened to The Economist with Project Red Stripe. However, it should be possible to spend less and acquire firms with innovative commercial structures, which then remove the risks associated with development. The 140,000 member Folio Society could attract investors with its £1.5 million turnover and ability to sell print innovatively. Other realistic purchase targets include Zero Books, specialists in turning blogs into physical books, and multi-media specialists Atavist.  

Investing in the purchase of a successful self-publishing company could provide a new revenue stream and an opportunity to influence how this competitive field is evolving. While Pearson’s purchase of Author Solutions remains highly controversial within the industry, I would expect attempts to purchase successful self-publishers like Smashwords or Lulu to be made in the near future.

One model publishers might be able to develop without an acquisition is freemium, the concept of providing some content for free while charging for other features. After all, with customers increasingly expecting free content, publishers need to create ways of making a profit while giving content away. Major projects like Pottermore and a ‘Spotify for books’ might make freemium seem complicated and expensive to operate. Despite this, a simple successful model is already being used in China. Websites allow authors to upload stories that can be read for free; once a work is read a number of times, the writer is labelled a ‘VIP’ and the site starts charging for their content. Payments are kept small so, as the UK lack China’s gigantic domestic market, British publishers would need to ensure any site could sell internationally.

Service provision between publishers is another growth area. While publishers have long distributed books on each other’s behalf, the complexities of digital are providing further opportunities to sell services to smaller firms, with the likes of Faber Factory offering ebook distribution, marketing and account management. As Mike Shatzkin has explained, smaller publishers are incentivised to outsource ‘parity functions’, essential business functions that fail to differentiate the company from rivals.

James McCall is studying for an MA Publishing at Kingston University

This blog is part of a series of blogs written by publishing students. Read the first two parts here and here.