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opportunity/publishing
New-age publishing A host of opportunities beckon entrepreneurs in the publishing space, which has moved beyond the realm of printed books
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f a book is a man’s friend, then Badri Seshadri, K Satyanarayan and R Ananthkumar make plenty of new friends every day. The trio founded New Horizon Media, a Chennai-based publishing house, in February 2004. In the last four years, they have churned out over 700 books in three languages (Tamil, Malayalam and English), and release 30 new titles every month. Not just printed books, the company also publishes e-books and audio-books. “In 2004, our aim was to merely learn the book publishing business in Tamil. If it looked interesting and profitable, we were planning to jump in. We learnt quite a bit,” says Seshadri. Move to the west of the country and you meet Leonard Fernandes and his wife Queenie in Goa, who co-founded CinnamonTeal Print and Publishing, a print-on-demand and editorial services provider. The couple entrepreneurs moved back to India in 2006, after
BHUPESH TRIVEDI
CEO, Chronosphere, a custom publishing firm
We have grown 100% in the last one year in terms of revenues, customer base as well as employees. 34
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/Vimarsh Bajpai spending seven years in the US. They initially started an online bookstore, but were soon flooded with requests from authors seeking to get their works published. “Initially we recommended them to publishers, but the economics of publishing doesn’t afford everybody to be published. So we started our print-on-demand service in August 2007,” says Fernandes. They began with five titles a month. Now, CinnamonTeal publishes 50 titles a week. Both New Horizon and CinnamonTeal reflect the modern face of the Indian publishing business, driven by entrepreneurial spirit. Not just printed books, with technology carving new imprints on our reading habits that have changed with hectic lifestyles, the future also looks bright for the growth of audio books and ebooks that can be loaded on to your laptop and iPods. In this article, DARE looks at some of the opportunities that beckon entrepreneurs in the publish-
DARE/take your pick 1.
Printed books
2.
Custom/Contract publishing
3.
Audio books
4.
E-books
5.
Print-on-demand
DARE/new kids on the block Audio books: These are narratives of books or documents, recorded by voice-over artistes. These are available on CDs, cassettes or in MP3 format. Audio books in the children, non-fiction, and management category are gaining popularity. Apart from Karadi Tales, which is the pioneer in audio books in the country, and New Horizon Media, there are not very many dedicated audio book publishers around. Many audio books are imported and sport a price tag of anything above Rs 300. E-books: These are books available in electronic formats (most popular being pdf) and can be read on a computer, an e-book reader such as Amazon’s Kindle or a mobile device that supports Microsoft Reader, Adobe Acrobat, or Palm format. A volunteer effort, started in 1971, aimed at digitizing books in the US came to be called Project Gutenberg. Today, there are over 25,000 free books in the Project Gutenberg Online Book Catalog. In total, however, over 100,000 titles are available at Project Gutenberg Partners, Affiliates and Resources. Print-on-demand: In this process of publishing, a document is printed only when someone orders a copy. Thus , commission of the publisher depends on the demand for the book/document. As offset publishers assess the cost of printing, marketing etc before agreeing to publish a work, many authors are turned down by them. Many of those approach PoD publishers, who print only limited copies. Custom/Contract publishing: As the name suggests, this form of publishing is done exclusively for a targeted reader, and is aimed at delivering a clear marketing message. As cost and clutter of advertising is going up, most companies prefer to reach out to their end-customers through magazines, pamphlets, newsletters etc and thus give contracts to publishers for tailor-made documents. While the print-on-demand concept has more to do with the volumes of the print, custom publishing is more about design, number of pages and size of the document.
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opportunity/publishing ing space and talks to the people who have “been there, done that.”
Audio books These are narrations of the printed material distributed through audio cassettes and CDs. They are also available in digital formats such as MP3, and are downloadable on computers. Our busy schedules and match-box living is sure to drive the audio books market further. According to industry sources, audio books constitute just around 1% of the books in Indian stores. One of the reasons could be the price, as most books carry the tag of Rs 300 and above and are imported. Sensing the huge opportunity in the audio books space, some entrepreneurs have made quick foray into the sector. One of them is Vishwanath Parsuram, who started Karadi Tales in 1996. The first title of Karadi Tales featured Naseeruddin Shah as Karadi, the bear. New Horizons Media too, has published a little over 60 audio books in Tamil and 4 audio books in English. So what does it take to start a audio book publishing business? “Depending on the creative and production
values one chooses, the investment per title can vary from Rs 1 lac to Rs 10 lacs. A definitive creative edge is priceless, so the value of the product cannot be gauged by the investment alone,” says Parsuram. The cost of the first CD depends on the length of the book, which includes voice-over costs and studio rental time. “However, once you master a CD, cost of production per CD is the same irrespective of the duration. This is a major advantage in case of audio books vis-à-vis printed books,” says Seshadri. The price of Tamil audio books from the stable of New Horizon Media is higher than that of the printed books, while in the case English books, the audio and printed versions cost the same. As the business of audio books is all about good voice, getting the right narrator with the suitable voice is the biggest challenge of coming out with audio books. Famous film and theater personalities such as Naseeruddin Shah, Gulzar and Usha Uthup have narrated for Karadi Tales’ audio and video books. The company has also turned former President APJ Abdul Kalam’s autobiography into a musical audio-book.
DARE/the publishing market Printed books: There are no “official” figures available, but it is believed that the size of the printed books market in India is around Rs 7,000 crore. “But this is the only number that has been talked about over the last three years,” says Badri Sheshadri of New Horizon Media. English is supposed to be over 40% of this market, with all the other languages covering the rest, he says, and adds that this includes text books and educational books. Leonard Fernandes of CinnamonTeal says the book industry is assumed to increase at an annual rate of 12%. Audio books: As the market for audio books is still in a nascent stage, even the players in the business are not ready to peg a figure, but they are unanimous about the tremendous growth potential of this segment. As of now, they constitute a mere 1% of the books in Indian stores. Custom/Contract publishing: One of the major players in the business, Chronosphere, pegs the size of the custom publishing market at Rs 1,200 crore. However, the company’s CEO, Bhupesh Trivedi, hastens to add that the figures are “grossly underexploited/explored.” He says, “The current annual growth rate in terms of business generated by different companies in this space would be about 35%.” Print-on-demand: It is difficult to gauge the size of PoD at this stage, but believing that any book that can undergo offset printing can also be “published” on demand, the number is quite high. Add to this, PhD thesis, school text books, poetry, songs etc and opportunities are galore. E-books: Again, it is a new segment for Indian readers, but surely holds a lot of promise in view of increasing Internet penetration, changing lifestyles and the launch of compatible mobile devices. One of the world’s leading publishers is believed to have reported that its e-book sales in the first four months of 2008 surpassed the company’s total e-book sales for all of last year. The statement, however, could not be confirmed independently.
TERRIE L BALMER Founder & Editor, Club Lighthouse Publishing
While the e-book industry is still considered relatively new, in just over a decade, the demand for e-books has been steadily growing particularly amongst the younger generation. Custom publishing This is a fast growing segment of the publishing business, and offers tremendous opportunities on the back of companies wanting to cut cost by outsourcing their publishing needs. According to the US-based Custom Publishing Council, “Custom publishing marries the marketing ambitions of a company with the information needs of its target audience. This occurs through the delivery of editorial content, via print, Internet, and other media, so intrinsically valuable that it moves the recipient’s behavior in a desired direction.” Chronosphere, a Mumbai-based custom publishing firm, which has several international customers in its kitty, claims to have grown 100% in the last one year in terms of revenues, customer-base and employees. Although it started in 2002, Chronosphere still prides itself with the startup tag, primarily because its major business initiatives rolled out in the last two years. “The idea of custom publishing stems from the fact that media proliferation, media segmentation and rising media costs are pushing advertisers to look at more cost-effective media to reach JULY 2008
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opportunity/publishing
Vishwanath Parsuram Co-founder, Karadi Tales
How big is the market for audio books in India and abroad? There are virtually no other serious Indian players in the audio book business. So KTC is the one defining the genre and expanding the market. Anybody who buys a book is a potential customer for an audio book, so the potential is quite huge. What is the business model of audio book publishing? We conceive different series based on specific parameters such as age, subject focus, etc. We use both, in-house and select writing talent from outside to develop our scripts. Illustrations and music also follow a similar process. We work with well-known celebrities for narration. The primary channel of sale is retail. There is also substantial business from corporate and institutional bulk buying.
What are the resources needed to start a audio book publishing business? This is not a monetarily capital intensive business for generating the product itself. However, the creative capital required is huge and difficult to find. Depending on the creative and production values one chooses, the investment per title can vary from Rs 1 lac to Rs 10 lacs. A definitive creative edge is priceless, so the value of the product cannot be gauged by the investment alone. What is the value of Mickey Mouse? What is the value of Karadi? The affection that these brands inspire through their storytelling can be monetized for a long time and in a variety of ways. out to their target audience,” says Bhupesh Trivedi, CEO, Chronosphere. He believes that with the increase in the competition of advertisers and booming economic growth, more and more companies would have to use custom publishing solutions to get their message across. The business model for custom publishing is quite simple. You need to build a well-researched database, and then approach customers. As customers have varied requirements, it is very important to clearly understand their marketing needs, based on which you make the proposal to negotiate. “The tricky issue is getting manpower for content, design and sales,” says Trivedi.
Printed books If you thought that our declining reading habits mean that doomsday is near for printed publishing, you may be wrong. If fact, this sector has now caught the fancy of private equity players, with Beacon India, most recently, putting money into the startup venture New Horizon Media. It is believed that new funding would help New Horizon bolster its sales and distribution network in Tamil Nadu and Kerala for its vernacular titles, and also across the 36 JULY 2008
country for its English language books. The company availed its first round of external funding from Emergic Venture Capital in 2006. “The business model is simple,” says Seshadri. “The retailer/distribution sales channel is given a trade discount on the MRP of the book. In the English book industry, it is in the range of 50-60%,” he adds. The authors are paid on a royalty basis. The cost of producing the copies of any title includes the cost of print, paper and binding (PPB). This varies depending on the quality of paper used etc. “After that comes your overheads and the profit margins,” he adds. “Every publisher looks at the basic economics of the whole project. They do something called offset printing, which allows you to have a very small cost-per-copy. It also stipulates that
What is driving the growth of the print-ondemand service? Authors approach publishing houses either through their literary agents or personally send in their manuscripts. The publisher then whets these. Every publisher looks at the basic economics of the whole project. They do something called offset printing, which allows you to have a very small cost per copy. It also stipulates that you have to have at least a 1,000 copy run. Now if you have printed 1,000 copies, you have to sell those 1,000 copies. So there is the cost of the copy, cost of marketing, cost of warehousing etc. If your book is not Leonard Fernandes worth all this cost, you are rejected. Publishing Co-founder, CinnamonTeal statistics are that one in ten are accepted. Now what happens to those authors who have been rejected? Print-on-demand is exactly the reverse. We print only on demand. Technically, you print only after the book is ordered. It is kind of the Dell model with negative inventory, wherein you are paying first and getting the product later. So there are no 1000 copies to worry about. It could be one or 100. The breakeven point is around 200. Five hundred are too expensive in print-on-demand than in offset. What is the general profile of your customers? It is a very diverse profile. A typical customer is an author who wants to see his/her name on a book. My customers are those who have written memoirs, short stories, poems etc and want to get it printed. Now PhD students are also coming to us wanting to get their thesis in a book format. Sixty percent of the work comes from Indian customers and the rest from overseas. What are some of the challenges that you face? We have grown from printing five titles a month to 50 titles a week. Connecting to our customers is very important. Here is an author who has put all his emotions in a book he wants to get printed, that book means a lot to this person. So we try to connect with our customers. There are also the challenges of growing too fast. We don’t want to lose that personal touch. Talent and manpower challenges are many. People approach us for proofing, translation etc. We have now built a base of around 100 service providers. The business requires a lot of liasioning and real-time monitoring.
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opportunity/publishing you have to have at least a 1,000 copy run,” says Fernandes.
E-books These are books available in electronic formats (most popular being pdf ) and can be downloaded on a computer or mobile device that supports Microsoft Reader, Adobe Acrobat, or Palm format. ‘E-books’ is the latest buzzword in publishing. Made popular by Amazon Kindle and Sony Reader, more and more readers overseas are turning to online books as it saves them the trouble of carrying hard-bounds. However, India is yet to see the launch of these products. But this segment holds big promise for entrepreneurs, thanks to the growing reach of the Internet. There are several companies in India who are also in the business of publishing e-books for overseas clients. New Horizon Media has already created PDF versions of all its printed books, but is yet to bring it to the market. The firm is pinning its hope on the launch of e-book reading devices in India. Canada-based e-book publishing firm Club Lighthouse Publishing (CLP) started in the last quarter of 2006, with only eight books by way of inventory and had been written by the firm’s founder Terrie L Balmer under the name of T L Davison. Balmer started the business with a seed capital of around $5,000. “That was because I had already constructed the website myself, so that took a great chunk out of my startup cost,” she says. The average amount of books published since that time has been 20 per year. However, this year, Balmer hopes the figure would double. Science fiction, erotica, mystery and romance tend to be the top sellers, she adds. Balmer believes that while the ebook industry is still considered relatively new, the demand for e-books has been steadily growing particularly amongst the younger generation. “However, I sincerely believe that as environmental consciousness becomes more ingrained in the general population and they realise that we can’t keep decimating the world’s for-
What were the initial challenges that you faced? (a) Building a professional organization with qualified staff was the first problem. We found editors from weekly magazines and worked with them so they could adapt to editing books. (b) Sales were quite difficult. The Tamil book space is highly unorganized. We had to struggle to get qualified sales people. We had to hire them from other places and train them. (c) The book shops were not growing in number. Sales in the existing shops were also flat. We had to think differently to increase the sales. We started looking at books as FMCG products, and had to build a complete distribution mechanism with stockists, distributors etc, and also build Badri Sheshadri more display space through departmental Co-founder and MD, New Horizon Media stores, restaurants, textile shops, kirana shops etc. (d) Trade discount and credit period were a complete mess. We had to introduce methods by which we could get our monies promptly. This took a lot of effort and we had to forsake some business, as the retailers didn’t like our methods. But as we were producing high-quality, fast-selling titles, we succeeded in establishing ourselves.
What is the business model of printed book publishing? The retailer/distribution sales channel is given a trade discount on the MRP of the book. In the English book industry, it is in the range of 50-60%. In Tamil, the maximum will be 35%. The authors are paid on a royalty basis. In the English industry, in general, it could go from 5%, 7.5% to 10% or in some cases as much as 12.5%. It varies from company to company and author to author. The royalty percentages on overseas sales or translations may vary. The royalty maybe on the net receivables or the gross MRP. For us, we pay 10% royalty on the gross MRP on every title across all our languages. When translations are involved, we pay 5-7.5% royalty. Then, you have the print, paper, binding (PPB) cost, the cost of producing the copies of a title. Depending upon the print run, quality of the paper used, paperback or hardbound, this cost varies. After that come your overheads and the profit margins. In our case, we build multiple imprints for each language focusing on a specific subject. In Tamil, we have an imprint for general books covering literature, biographies, self-improvement, business and finance, politics and current affairs. Once the imprint is decided, then the titles that fit into that imprint are worked out, and then we start identifying potential authors who can write on those subjects. Most of our non-fiction books (more than 80%) are commissioned. We work with the authors and give them the outline, including the rough page count and the level of vocabulary. Once we get the manuscripts, we edit them and incorporate them into our publishing program. The sales team picks up from the production and builds sales volumes by promotion across various outlets. A title that sells more than 3000 copies per year, starts generating decent profits. ests for paper and other products, the general outlook will change,” she adds.
Print-on-demand Print-on-demand publishers publish only when someone orders a copy. In the US, print-on-demand is a pretty popular concept. In India, many people are now approaching print-ondemand service providers to get their name in print. On an average, PoD publishers charge anywhere between Rs 5,000
and Rs 15,000 for printing 50 copies of a paperback with around 50 pages. Some PoD publishers also provide value-added services such as ghost writing, editing, proof-reading, translation etc. Thus the business requires a lot liaisoning with editors, etc. You don’t have to own a printing press to be in the business. CinnamonTeal has tiedup with printing presses in Delhi and Bangalore. They also have a network of some 100 people who do the editing DAR E and proof-reading part. JULY 2008
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