Penguin Random House c.e.o. Markus Dohle says Amazon must be seen as a vital component of the industry “ecosystem” but he still supports the “comeback” of physical bookstores.
Dohle was speaking with Adam Grant, psychologist and author, at a virtual seminar on Monday afternoon in the lead-up to the inaugural US Book Show, hosted by Publishers Weekly.
Dohle spoke about the growth during the pandemic and lockdown of the last year, saying: “In our company, last year was double digits – we don’t have that sort of growth... it is unheard of. That was the flourishing part of it. When people were suffering so much personal hardship [in the pandemic] the books industry went through the roof.”
Much of the discussion concerned digital innovation and online bookselling. Dohle said the company will still depend on physical stores and that PRH will support a “physical comeback". “That development to online and e-commerce shifted in the pandemic... but it has been going on for many years, for 25 years. In regards to physical retail and its future, we at Penguin Random House are working on a big, big comeback of physical retail post-pandemic, on the heels of a very strong physical product.
He said he believed the industry should not look at online selling as a competitor. “I've always said we are ‘channel agnostic’, we want to grow in all channels, it’s an ‘and’ not an ‘either’," he said. "From the get-go, this zigzagging thing, when the print book seemed under threat from the e-book 12, 13 years ago, we doubled-down on the physical product because we knew that bookstores are extremely important for the reading culture... for people to discover our books we need to make them visible and keep them available. So from the get-go I said we have to fight for as many retail locations as possible in the US and globally to carry our books so we started to invest more than $100m into the efficiency of our book distance and our speed.”
He also believes independents are important for the industry. “Indies are extremely important for us and for the reading culture. They are willing to give new voices a chance. They are willing to incrementally build voices over time until we can really break them out. They are extremely important for reading and for voices in this market.”
PRH US recently gave more flexible terms to independents to support them. He said: “A few weeks ago, we said again, let’s extend the payment terms for them because they need more flexibility and time to sell the books they order. So why don’t we give them more time to pay the bills to make sure they are more robust financially, in financial terms it’s saying ‘we give you more cashflow and financial leeway here’ and encourage them to give new voices and smaller voices a chance.”
Grant asked him about Amazon. Dohle said: “There is a lot of innovation that Amazon brings to the business. Yes they are disruptive, they have their own publishing, they are growing, they have Kindle Unlimited, they have their own publishing imprint and they have all this data and, of course, they are also quite disruptive for the physical marketplace and gaining market share. And they have become quite big, more than four out of 10 books globally and five out of 10 books domestically. And so I have said to publishers, ‘let them challenge us’. We have to make sure we bring enough value to the table and you know, more authors have come from self-publishing to traditional than the other way around.”
He also believes that Amazon is valuable in its reach. “Another thing is, they can distribute globally. So if someone wants to read a story in outer Mongolia I can reach that person in seconds through the digital format and days in the printed version in the English language. And Amazon has made that possible and has with that, extended the readership so beyond consolidation and disruption – we said it’s an ‘and’ not an ‘either, or’. I don’t want to tell my readers where to buy their books. But they also brought a lot of innovation, they brought a lot of challenges but also a lot of opportunities, I’ve always balanced that."
He added: "When we looked at the data, we said there is more opportunity than threat here and why are we fighting our largest customer, that doesn’t make sense, that’s not a strategy.”
When Grant asked him why there is not a discount for buying across formats, for example a cheaper audiobook after buying the same title in hardback, Dohle said "bundling" may happen in the future. “That is a big discussion, it goes into support of authors and agents to make sure we protect and support their income to make sure they get their fair royalty. I think this bundling thing is something we will figure out one day so we can buy in more than one formats going forward.” On the multitude of formats, be believes they all boost each other. “We are not really disrupting or cannabilising ourselves but let the creativity and vision for an idea flow."
Looking to the future Dohle said a larger literate population would mean further flourishing for the industry and that the company’s aims should come from its purpose. He said he believed data will be increasingly vital for publishing's success. “One challenge is the ongoing shift to online. What does that mean for me? It means I have to understand data even better. I have to complement my creativity in the company and editorial with writer support with even more data. With e-commerce and online, it’s a machine and an algorithm presenting a book to a customer, it’s not a person... That’s a whole shift in paradigm in everything marketing and sales-related, all those tools must be adjusted. That needs investment, re-thinking and to complement the creativity with a data-driven approach.”
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