{"id":19732,"date":"2016-11-18T17:07:54","date_gmt":"2016-11-18T22:07:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/will-harpercollins-be-left-in-the-dust-as-consumers-move-their-libraries-online\/"},"modified":"2016-11-18T17:07:54","modified_gmt":"2016-11-18T22:07:54","slug":"will-harpercollins-be-left-in-the-dust-as-consumers-move-their-libraries-online","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/will-harpercollins-be-left-in-the-dust-as-consumers-move-their-libraries-online\/","title":{"rendered":"Will HarperCollins Be Left in the Dust as Consumers Move their Libraries Online?"},"content":{"rendered":"

HarperCollins Publishers, a subsidiary of News Corp, is the second largest publisher of consumer books in the world with a print and digital global catalog of more than 200,000 titles1<\/sup>.\u00a0 Book publishing accounted for approximately 20% of revenues for News Corp at $1.6 billion in 2016 and digital sales accounted for approximately 19% of this revenue2<\/sup>.\u00a0 While digital sales have remained roughly constant for the past few years as a percentage of total revenue for HarperCollins, the firm has expanded its digital offerings significantly, as the number of publications offered in digital format has increased from 30,000 in 2013 to 100,000 in 20163<\/sup>.<\/p>\n

HarperCollins has consistently been at the forefront compared to competitors in responding to the digitization trend in the publishing world.\u00a0 In response to the advent of e-reader devices such as the Kindle, iPad and the Nook, HarperCollins has ensured that nearly all of its new releases as well as most of its older catalog of titles is available digitally.\u00a0 In 2013, HarperCollins also launched a \u201cdigital-first\u201d series through its romance segment Avon that releases one new title each week in digital format4<\/sup>.\u00a0 HarperCollins has also been a first mover in engaging with new subscription-based distribution models, such as Oyster and Epic!5<\/sup>.\u00a0 Oyster launched in September 2013 and charges $10 per month for access to their library, where users have access to an unlimited number of titles.\u00a0 HarperCollins was the first of the five largest publishing houses to sign on and was later followed by Simon & Schuster6<\/sup>.\u00a0 For the time being, publishers such as HarperCollins have been able to adapt to digital disruption by migrating their content to a new format and engaging with new models for distribution, but have not changed their business or operating model substantially in order to achieve this.<\/p>\n

As the gatekeepers of content produced by authors, HarperCollins still relies primarily on brick-and-mortar locations and now electronic channels to distribute their content but do not directly interact with consumers.\u00a0 With Amazon, Oyster, Barnes & Nobles, e-readers and smaller book stores, HarperCollins continues to provide content, but is not directly involved in the process of reaching consumers and the changing operating and business models of the distributors of this content.\u00a0 This will likely change as the distributors move into creating their own content, similar to shifts made by Netflix and Amazon in the video streaming industry from distribution to content creation.\u00a0 Distributors such as Amazon and Scribd are moving into the content creation space, now acting as direct competitors to HarperCollins and other publishers as they integrate vertically7<\/sup>.\u00a0 This poses a significant threat to HarperCollins, as their business model relies on being able to source content from authors and bring it to market through distributors and their operating model has focused solely on building relationships with distributors, not with the ultimate end user of the content \u2013 the consumers buying and reading their books.<\/p>\n

In response to these developments, HarperCollins has started to venture into the direct-to-consumer market.\u00a0 In 2013, the firm launched CSLewis.com and Narnia.com in order to sell the works of author C.S. Lewis directly to consumers, bypassing the distributors8<\/sup>.\u00a0 This has been an opportunity for HarperCollins to interact directly with consumers and allowed them to start gathering data on consumer preferences and behavior that previously was only available to distributors9<\/sup>.\u00a0 In order to stay competitive and continue to support their business model of providing relevant content, HarperCollins needs to stay on top of what consumers want to read and not allow distributors to control access to this data and replace publishers by starting to generate their own content.\u00a0 The launch of these two websites is a positive start for HarperCollins, but they will need to continue to invest in this direct dialogue with consumers in order to remain relevant.<\/p>\n

In order to achieve this dialogue, HarperCollins will need to continue building out websites directly targeting consumers, build out teams that can gather and analyze the information that is generated from these consumers and build out distribution channels to reach these consumers.\u00a0 The shift into digital publishing makes the distribution aspect easier from an operating perspective, as HarperCollins can distribute e-books to consumers in much the same way that they distribute e-books to sites such as Amazon already.\u00a0 However, in order to serve consumers who want to purchase print books, Amazon will need to make the decision to either build out a distribution team to ship books directly to consumers, or partner with a logistics company to handle this distribution now that they are not delivering mass quantities of books to retail locations but rather shipping directly to people\u2019s homes.\u00a0 Making this investment in direct to consumer distribution will be important for HarperCollins going forward to stay relevant in a world where books are moving off the shelves and onto computers.<\/p>\n

 <\/p>\n

(Word Count: 798)<\/p>\n

 <\/p>\n

1<\/sup>News Corp, Annual Report 2016, p. 9, http:\/\/files.shareholder.com\/downloads\/AMDA-1ZMCJ9\/3237472482x0xS1193125%2D16%2D679975\/1564708\/filing.pdf<\/a>, accessed November 2016.<\/p>\n

2<\/sup>Ibid., p. 51-52.<\/p>\n

3<\/sup>Ibid., p. 9; News Corp, Annual Report 2013, p. 11, http:\/\/files.shareholder.com\/downloads\/AMDA-1ZMCJ9\/3237472482x0xS1193125%2D13%2D373501\/1564708\/filing.pdf<\/a>, accessed November 2016.<\/p>\n

4<\/sup> News Corp, Annual Report 2013, p. 11, http:\/\/files.shareholder.com\/downloads\/AMDA-1ZMCJ9\/3237472482x0xS1193125%2D13%2D373501\/1564708\/filing.pdf<\/a>, accessed November 2016.<\/p>\n

5<\/sup> Jack Smith IV, \u201cFreshly Minted: For This Book Subscription Platform, The Publishing World Is Their Oyster,\u201d Observer, May 23 2014, http:\/\/observer.com\/2014\/05\/freshly-minted-for-this-book-subscription-platform-the-publishing-world-is-their-oyster\/<\/a>, accessed November 2016.<\/p>\n

6<\/sup>Ibid.<\/p>\n

7<\/sup> Ellen Harvey, \u201cPublishers Must Embrace Data-First Thinking,\u201d BookBusiness, 4 March 2014, http:\/\/www.bookbusinessmag.com\/post\/publishers-must-embrace-data-first-thinking\/#<\/a>, accessed November 2016.<\/p>\n

8<\/sup> Ibid.<\/p>\n

9<\/sup> Ibid.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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