Last month 80 executives from book publishers including Simon & Schuster, Random House and W.W. Norton & Company, gathered at a Manhattan hotel to strategize how to transform their stagnating print empires into thriving businesses by 2020.
Their radical solution: Invest in digital.
"Two years ago if we had this conference, these issues wouldn't have even surfaced, but now they're front and center," said Scott Lubeck, 59, executive director of the Book Industry Study Group, a trade organization that organized the conference.
Print publishers have watched digital revenues soar in the past few years as e-readers including Amazon's Kindle, Apple's iPad and Barnes & Nobles' Nook have taken off. For the first time in February, e-book sales outstripped any single print format, including mass market paperbacks. Digital book sales trebled to $966 million last year and are set to almost triple again by 2015, according to Forrester Research.
To capitalize on this trend and re-ignite growth, publishers are expanding their e-book operations. They're hiring engineers, app and Web designers, statisticians, experts in analytics, metadata managers, information architects and software and app developers, among others. They're also contracting with a whole new set of start-ups: small companies that specialize in transforming an old-fashioned paper product into a jazzed-up digital experience.
Lubeck, who was formerly vice president of technology at textbook publisher Wolters Kluwer and chief technology officer at Harvard Business School Publishing, said that judging by an informal poll taken at the conference, "maybe ten to fifteen percent [of publishers] have hired in these categories and the rest have a 'long' way to go to be properly staffed to meet the challenges of today and the future."
Many in the industry have embraced the opportunities for new products, but not all. "There's some who get it and they will sail through," said Lubeck. But "there are companies that are just not going to make it. They don't get it. It's too late. They'll be the subject of acquisitions or expiration."
Legacy publishing houses -- to varying degrees -- are adding to their digital staff, though budget constraints create a debate over which skill sets to hire and which functions to outsource.
HarperCollins wants to find a "happy mix" between hiring and outsourcing tech talent, with a splash of re-training existing employees stirred in, said Charlie Redmayne, executive vice president and chief digital officer. (HarperCollins, like Dow Jones, parent to FINS, is owned by News Corp.)
The publisher of Patti Smith's recent hit memoir Just Kids and perennial seller, The Alchemist by Paulo Coelho, HarperCollins said that it added 13 new tech-related positions in 2010 and its online job site lists nine tech-related openings, including systems engineer, digital product manager and SQL database administrator.
Competitors Penguin, Random House and Simon & Schuster declined to comment on specific hiring plans. Simon & Schuster has placed "great emphasis on making sure we are properly staffed" in information systems and technology, a spokesman said in an email.
Random House looks for candidates with technical skills and an "an affinity for the traditional editorial and marketing aspects" when "staffing for our current and long-term digital development," said spokesman Stuart Applebaum in an email.
The education unit of McGraw-Hill said it increased by 50% the number of its digital positions to 400 between the first quarter of 2010 and 2011. Over the last three or four years, McGraw-Hill Education has hired software engineers, usability engineers, content architects, application developers, technical writers and others, the company said in an email.
Publishing companies can have a hard time competing for top tech talent as they're often unable to match the salaries offered by the Facebooks of the world. According to Payscale.com, the median salary for a software developer at a book or newspaper publisher is $61,100, compared to $69,000 at Internet companies like Google or Facebook. For an IT product manager, the salary gap can be as much as $20,000, with book publishers paying $66,200 compared to $84,900 at an Oracle or Microsoft and $83,200 at a Google. (The data was compiled by Payscale from surveys of full-time U.S. employees from April 2010 through April 2011.)
"Then they have the challenge not just of attracting, but retaining the talent," Lubeck said. "There's a large demand for people with these skills."
The New Literary Landscape
The real future of eReading may be in interactive "books" that enhance the consumer experience with video, music, graphics and even games.
"What you have right now is a transitional period not un-similar to when the movie camera was first invented -- they set the camera up and filmed the stage play," said Bob Stein, the former director of the Institute for the Future of the Book, a nonprofit think tank funded by the MacArthur Foundation.
Stein is unconvinced that traditional publishers, despite their late embrace of digital, will be at the forefront of the book publishing industry when it emerges from its current transitional phase. Instead, it will be companies born of technology that will tell good stories through a variety of mediums.
"In all likelihood, the innovation won't come from one of the big six publishers. It's likely to come from someone who doesn't even consider themselves to be a publisher," Stein said.
A recent Reuters report posited new app-only publishers like Callaway Digital Arts, a startup that received $7 million in financing from venture-capital firm Kleiner Perkins Caufield & Byers, as the future of publishing.
Another startup positioning itself to create interactive book apps for publishers and authors is Vook, founded in 2008 by Internet entrepreneur Brad Inman. Vook, based in California's Bay Area, creates iPhone, iPod, Kindle and Android apps that meld text and video, like Reckless Road, a biography of rock band Guns N' Roses, and Deepak Chopra's Buddha Guide.
Vook founder Brad Inman said the company devotes two-thirds of its budget to technology and is hiring a half-dozen software developers and engineers. Right now, the company has 23 employees, half of which are focused on technology. The company is interested in engineers proficient in Java and mobile platforms like iOS and Android.
There are "major legacy changes" happening in book publishing, Inman said, "and behind that is engineers and Web developers."
Among other members of the nascent book publishing startup community are print refugees like Richard Eoin Nash, formerly the head of the small but respected NYC-based independent publisher Soft Skull Press.
Nash left Soft Skull in 2009 to start his own company, Cursor, set to launch in beta this month, that will create a Web and mobile platform for a community of authors to interact and decide what and how to publish.
Having decided that traditional publishers -- even ones like Soft Skull -- were not long for this world, Nash is skeptical about software and app developers joining ranks with what he considers an ancien règime.
Traditional publishers are hiring mobile developers and other IT professionals, Nash said, but he advises talented engineers against joining them. Their business model -- saddled with top heavy management and big distribution costs -- can't survive, he said. Tech-oriented professionals interested in books should think about starting their own companies.
"If you're a developer interested in this space, you would be best off finding a couple of good story telling collaborators and do it yourself, start your own company," Nash said. "Because even if you do a good job as a developer [at an established publisher], chances are you aren't going to change your employer's [financial] prospects too positively."
Whether Nash is prophetic or just overly-cynical is yet to be determined. It is likely, though, that new players with an innately combined tech and literary savvy will emerge to challenge established heavyweights like HarperCollins and Penguin.
"In the short run," Nash said, "it's going to be a little more collaborative, as we all sort of teach each other the things we didn't pick up in our English or computer science degree."
Write to Joseph Walker