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Et Cetera Interview

Reading the trends right

Charlie Redmayne, CEO of HarperCollins U.K., is keen on making the publishing giant future ready, but believes physical books won’t go out of fashion.

This year HarperCollins celebrates its 200th year of existence and 25 years in India. Charlie Redmayne, CEO of HarperCollins U.K., who is also responsible for the publishing house’s India business, was in Delhi ahead of the annual Jaipur Literature Festival when Fortune India caught up with him to talk about issues such as the increasing importance of publishing brands and why India is an  exciting market. Edited excerpts:

How was 2016 for HarperCollins in India and globally?
We had a successful year. The British business has been strong, particularly in children’s publishing. David Walliams [author of children’s books] had a great run on the bestsellers list and beat J.K. Rowling. I am very pleased with India, especially for trade and educational publishing. We have had some leadership changes but it presents an opportunity to expand.

Tell us more about the education business.
It is growing fast in terms of the number of people working for it, the number of schools it is reaching, and the kind of revenues and profits it is bringing. In trade publishing, where organic growth is quite difficult, growing at this pace is very exciting. In FY17, we are targeting a revenue growth of 28% year on year for the education business and 12% year on year for trade publishing. The education business is coming from a low base, so it is growing much faster, but is contributing significantly to the revenues from India.

What are you witnessing with regard to the sales of e-books in India?
E-books account for about 1% of sales, but it is a market that will grow. We have seen it in the U.S., Britain, and parts of Europe, where the market is much more developed. In Britain, the growth in e-books were driven by the Kindle and the launch of the kindle.co.uk store. In India, the growing number of smartphones along with the price and availability of e-books will drive the market. As a publisher, what matters to me is that books should be read; I don’t care in what form. There is also a growth in audiobooks in various parts of the world, but in India it is at an early stage.

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Are e-books a more appealing business proposition?
E-books are a double-edged sword. On the one hand there is no risk of making printing decisions and there are no returns. On the other hand, there is a consumer perception that the price of a digital product should be significantly lower than a physical one. But most of the money we spend is on large advances paid to authors and we don’t recoup much of that. So the cost is still there. The other aspect is that Amazon has become the predominant player in e-books and will get stronger, exerting more pressure on independent retail chains. Publishers and authors need several platforms to sell. Ending up with one platform will pose a big challenge. Therefore, even if I don’t care whether the book is read digitally or physically, in the long term I would be happy to have people reading physical books. I don’t think e-books will totally replace physical books. Historically, we have seen that when technology presents a new way of doing things, it tends not to replace the traditional way but introduces more choice.

What are the unique challenges of a market like India?
India has been focussed on certain types of books. Literary fiction, serious political books, and serious non-fiction have been a great success. Now there is a huge growth in homegrown commercial fiction, which is great as it gives us an opportunity to broaden our business. The channels through which we will sell our books are changing. The cash-based economy is challenging and so can be the politics of India. But there are more people reading books now. Overall, it is a fascinating place to do business.

Do you see self-publishing platforms posing a threat to publishers like you?
Amazon’s self-publishing platform is churning out thousands of authors every year. That’s great because it democratises book writing—lots of people who wouldn’t have authored books now have a chance. But it also creates a problem for discovery. Amazon is keen on promoting its self-published authors with Kindle Unlimited and the like, and it is doing so very effectively. So we have to work that much harder in terms of discovery. There is no doubt that it is a threat to us in that way.

Will self-publishing platforms face a credibility problem in future?
I think so, because I am sure some of the self-published books are very good, but an awful lot of them aren’t. As a result, the promoter of the book is ending up with some very disappointed customers. If you had asked publishers 10 years ago if brand was important, they would have said their authors are their brands. But now, publishing brands have become more important because more and more consumers, particularly on digital platforms, check who the publisher is. If it is a HarperCollins or a Penguin Random House or a publisher that they recognise, they are more likely to buy from them. They will not buy a book solely because it is from HarperCollins but they are more likely to do so it because of that. This is why we need to invest in building brands and making them recognisable.

What are your projections for the publishing business in India?
It is going to grow as it moves beyond the upper middle-class literati. We have to compete for people’s time, which they can now spend on portable devices, watching movies, or playing games. But more and more Indians are discovering that books can be a great escape and entertainment. [For example] commercial fiction is finding a space. I hope we will keep reflecting on the way we do business and the people that we work with.

How do you tackle piracy, especially in India, where there is a large unorganised retail market?
Any publisher that says it is not worried about piracy would be a fool. Back in 2009, publishers used to
say that we should learn from the music industry how to deal with piracy. I think we did. We can attack piracy by working with organisations that track down the culprits and also with the government to protect intellectual property rights. But you can also fight it by developing content that people want, making it available on the platforms they want to access it on and at a price they are comfortable paying. That is something the music industry didn’t do. It started to prosecute its own customers—which was lunacy. Does piracy affect my business? Yes. Do I lose money? Yes.
Is it a significant hit to my business? No, and that is because we do the
right things.

In terms of Government policy, what is your wish list as a publisher?
The first part of the answer came from Ananth Padmanabhan, CEO, HarperCollins India: I think we would like some clarity on GST (goods and services tax). There is a lot of confusion around what part of the business is going to come under this new tax. Also, we would like to know whether there will be separate rules for print and digital publishing.

Charlie Redmayne: We have faced a similar situation in Britain. But at the moment, e-books are taxed there but physical books aren’t. [In India] our big worry is that if the government taxes e-books, it could soon tax physical books, too. But a minister I was talking to the other day asked me, “Do you think any politician would want to put a tax on reading?” That is a good point because making books available as cheaply as possible is important for India.