Audiobooks could be the next big thing, says Penguin Random House’s Markus Dohle
Penguin Random House global chief executive Markus Dohle on the changing face of the publishing industry and its future
Markus Dohle is a man on a mission. Since 2013, when he was appointed global chief executive of Penguin Random House (PRH), Dohle has managed the operations of the world’s largest trade publisher—in 20 countries, with sales in over 100—while grappling with the rapid changes that have hit the industry during this period.
With the evolution of digital publishing, business models have undergone significant shifts, and new opportunities for growth have opened up alongside challenges. In India for the 30th anniversary of PRH’s chapter here, Dohle spoke to Mint about his ambitions for the subcontinent and why he believes publishing is in a phase of unprecedented optimism. Edited excerpts from an interview on the sidelines of the Jaipur Literature Festival 2018:
With the closing of major bookstores across the world and independent publishing facing a crisis, is the industry going through a moment of panic, globally?
The international consumer book markets are going through a very positive phase. As I said in my speech at the Frankfurt Book Fair last year, this is perhaps the best time publishing has had in the last 50 years. From my perspective, there are essentially five reasons behind this growth: consistent growth rates of consumer book markets around the world over the last 15 years since the digital transformation started; a healthy coexistence between print and e-formats; relatively stable business models for both print and e-formats; tailwind for reading through demographic change, growing world population and rising literacy rates; and the rapid growth of the children’s and young adults’ segments in the last five years in all our major markets.
We feel very optimistic about our primary goal, which is to create the future of books and long-form reading in our society for generations to come.
It’s been over 10 years since the Kindle was introduced. What does the business of e-books look like now?
In the last two-three years, e-book sales have been under pressure in our mature markets. After the steep growth of the e-format for several years, sales levelled out a bit, and since then have been declining. Globally our print-to-e-book split is 80:20.
What’s really encouraging is the emergence of digital audiobooks as a growing format in our mature and developing markets. Audiobooks go back to the original experience of storytelling around a campfire. We see a lot of growth potential for the audio format going forward.
Does the digitization of publishing make business sense?
At Penguin Random House, we have always been format-agnostic. We want to get our books into the hands of as many readers as possible in whatever format they prefer. We’ve invested in both print and digital over the last decade. As I mentioned, the current split globally for Penguin Random House between print and digital is 80:20 and digital audiobook sales are up. We have found a healthy coexistence between print and e-formats. The strength of the printed book is actually stabilizing in the markets and the entire book ecosystem.
We need bookstores for our readers to help them discover their next best read. But physical retail has been under pressure in some of our markets because of mainly two developments: the rise of the e-book and the sales shift to online/e-commerce, for both print and e-formats.
Audiobooks are believed to be the fastest-growing segment in the industry. In 2015, the audiobook market was valued at $2.8 billion. Tell us about PRH’s ambitions in this segment and whether you’re planning tie-ups with related digital services like Netflix, Amazon and Spotify.
Audiobooks have a combination of à la carte sales and an element of streaming as well. The good news is that people are listening to books while doing something else. And that goes across all demographics and all activities—be it gardening, jogging, cooking or commuting. So while there is growing competition from other media categories and electronic devices, audiobooks present a huge growth opportunity for us as publishers.
To your point about Netflix and others: whereas in the past we were basically dependent on movie tie-ins for additional book sales, now with Netflix, Amazon Prime Video, Hulu and others, there is even more demand for great stories to be translated into series and shows. That’s why we now refer to media tie-ins rather than movie tie-ins.
What is the fastest-growing market for PRH globally?
Through the Penguin Random House merger five years ago we already hold market-leading positions on all continents. We have recently made huge strides in the Spanish language world, especially in Latin America, including our shareholding in Brazil. As in India, these markets have young demographics. For example, Mexico and Brazil together have around 330 million people, which is as large in terms of population as the US or central Europe for us.
India has been a great success story for us in the last five years. In countries like India and China, the growth of e-commerce has also helped us reach audiences in rural regions where people may not have access to bookstores. Today, we are selling our English-language content in more than 100 countries around the world.
Which aspect of publishing hasn’t been adequately monetized or has more potential to grow?
As I said, it is a good time for the publishing business globally. Authors have different avenues to reach audiences. I think that’s a good thing. We believe that publishers are service providers between authors and readers; we serve authors, we strive to connect them to the largest possible audience. The combination of the printed word with audio and video has the potential to develop further.
The podcast is a new and growing format which presents an interesting opportunity for us. In many of the counties in which we operate we have established speaker bureaus for our authors’ speaking engagements and additional book sales. Another example is that we have started to develop e-courses for authors in some genres for educational purposes.
There is more room for additional revenues from merchandising ideas and products. And Hollywood has never been thirstier for stories to translate into video formats as TV series and movies.
How does the vast size of the global market challenge you to rethink outreach plans and discoverability of titles?
I call it the inflection point in the digital transformation of the publishing business: we need to crack the code of discoverability in a world with fewer bookstores. How do we make sure that people discover our books, amid all this digital noise around them, in a world where the display of our books in stores is under pressure? That challenge is more important than worrying about the e-book format.
The shift to e-commerce and online sales presents a huge challenge around discoverability—and with that for creating enough buzz and word-of-mouth for our books. There are 50 million different books in all formats available on Amazon.com. How do people learn about their next best read in this sea of publications? The inflection point, to me, is how we market our books in this new world—in other words, how we combine our traditional marketing and publicity with new digital and social end consumer outreach to make sure that we find the largest possible audience for our books in the future.
Your ambitions for the subcontinent...
We have been investing in our publishing here and our ambitions are high. The addressable audience is rapidly growing in this country. We are publishing in some local languages, which is a potential area of growth and development for us.
If, say, around 10% of the Indian population is fluent in English, that’s about 130 million people, almost twice as many as the UK. The opportunities for the English and local-language book market are significant. We’ve been here for more than 30 years now and we’re here to stay for the long term to further develop and grow the Indian consumer book market.
How important are translations as a mode of expanding your business globally?
Penguin Random House is a multi-local, multi-domestic business. We support local culture, local talent, local topics, and a diversity of genres and voices. In addition, we have a robust global rights business, which enables us to expand the reach of some of our books and to share content among our territories.
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