Penguin Random House UK is to launch a multi-million pound Penguin-branded consumer website in the second half of this year, but chief executive Tom Weldon reiterated the company's view that it had no plans to become a retailer, claiming that it would be "quicker for PRH to burn the money".
Weldon, speaking yesterday (18th March) at the Guardian's Changing Media Summit held in London, said: "We are very lucky to have the one true powerful consumer facing brand in Penguin in the UK, and we want to amplify that brand." Weldon cited the group's recent shift of its social media activity, where its consumer messaging is now delivered from Penguin-branded accounts, and its corporate announcements from Penguin Random House accounts.
And he revealed that this presaged the launch of a consumer-facing website after the summer. He said: "We have invested millions of pounds in a new site that we are going to launch [later this year]." However, he added that the website would cater to the needs of readers, not simply be used to market books. "What consumers tell us is that they don't want to come to a website such as this either to discover books or to buy them, what they want to use the website for is to forge a bigger bond with authors. We see what we are doing as forming the bridge between these two." Weldon said he expected the site to give PRH a "real competitive advantage" over other publishers.
Weldon did not elaborate further on the site's content, but was clear about what it would not do, saying that there were no plans to to roll out more general transactional elements, except in niche areas, or around offering experiences for readers. "We really aren't going to be competing with Amazon. To be a retailer requires hundreds of millions of pounds in investment in technology, and a massive budget in customer acquisitions. Look at those companies that have failed to succeed [in competing with Amazon for e-book business]—Google, Apple, Tesco—it is scandalously naive to imagine that we could do that."
On new business models, Weldon said that he remained "cautious around subscription". With 85% of sales to consumers who buy 10 books a year, Weldon said, "If we were to adapt many subscription models we would be cannibalising those sales. We have a very robust model, why would we want to torpedo it? We are only interested in subscription if it takes us to a new audience."
Weldon's view countered that of HarperCollins c.e.o Charlie Redmayne who, speaking at Publishing Scotland earlier this year, said he could not understand why only a few publishers, including HC, had entered into subscriptions deals. He said: "It's beyond me why other major publishers have not followed us; the model protects authors' content and the value of it, and makes sure publishers make more money for the books."
But Weldon said: "Too many book subscription businesses are VC backed and they are looking for a quick return, and their marketing is poor. I don't understand why some publishers have signed up to them—they are getting some cash upfront, but who cares, they are not reaching new audiences, and are just cannibalising the market they already have."
Overall, Weldon said publishing was in a good position, with technology enabling the business to grow its digital sales, but also underpin its traditional business. "Technology is giving us, a book publisher, the reach of a broadcaster," he said citing examples as diverse as Zoella and the new Harper Lee.