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Macmillan Knows Publishing Is Doomed, So It’s Funding the Future

11 July 2012

From PandoDaily:

Even if the dominant players in a staid, legacy industry see the writing on the wall — that the Internet will eventually kill them — it’s not easy for them to do much about it.

Some publishers are merely waiting for Amazon to put them out of business.

. . . .

Macmillan Publishing has taken an entirely different route altogether. It’s one that, until now, has remained relatively under the radar. The company hired Troy Williams, former CEO of early e-book company Questia Media, which sold to Cengage. Macmillan gave him a chunk of money and incredibly unusual mandate:

Build a business that will undermine our own.

The publishing giant has given Williams a sum greater than $100 million (he won’t say exactly how much) to acquire ed-tech startups that will eventually be the future of Macmillan. The plan is to let them exist autonomously like startups within the organization, as Macmillan transitions out of the content business and into educational software and services. Through the entity, called Macmillan New Ventures, Williams plans to do five deals this year and 10 to 15 over the course of the next five years.

. . . .

But what do those inside Macmillan think about his plan to kill their business?

Long pause. “I don’t know.”

“At the highest levels, everybody thinks it’s where we need to go. But they think it’s 15 to 20 years off,” Williams says. “I think it’s seven to ten. The people at the very top plan to be retired in 20 years so they think they have enough runway.”

Link to the rest at PandoDaily

Big Publishing, Disruptive Innovation

8 Comments to “Macmillan Knows Publishing Is Doomed, So It’s Funding the Future”

  1. Terrific article. Private schools, with more forward looking parents, have already turned to ebooks. Last school year (Aug-2011) 1200 students attending Brophy Prep of Phoenix, AZ were issued iPads loaded with school books. A $500 reusable iPad versus $350/year of books. Easy math for a four year high school degree.

    MacMillan isn’t worried about a distant future. The business model they used in 2010 will not exist in 2015. They don’t have 5 years left.

    All Big 6 publishers have to do something dramatic or they will die. I outlined a few controversial ideas in my blog 5 Things the Big 6 Will Try.

    This year and next will be interesting…

    Peace, Seeley

    • The math isn’t quite that simple. You still have to pay something for the content for those iPads, and the textbook publishers don’t give away online textbooks. And, in a public school, the logistics are more complicated. Parents don’t buy textbooks, school districts do. Do you give iPads to students, or loan iPads to students? How do you support either scenario? What are the licensing costs for textbooks? Does your school have the WiFi capacity to support 1500 students online at once? Are you going to provide broadband at home to those students who don’t have it and can’t afford it, because all those textbooks won’t fit on an iPad and there’s no SD card slot?

      It’s not at all obvious that switching to an online model saves money at all at the high school level, where textbooks are considerably cheaper than at the college level. The cost structure that was announced with the Apple textbook model would have been no cheaper for the content, and often more expensive, not even factoring in the cost of the iPad.

      • Are you going to provide broadband at home to those students who don’t have it and can’t afford it, because all those textbooks won’t fit on an iPad and there’s no SD card slot?

        Do you know how many textbooks will fit on even a base-model 16GB iPad? Unless you’re doing something profoundly stupid like embedding videos in them (at which point they are no longer ‘books’ in any useful sense of the term), the number is at least in the hundreds, possibly thousands.

  2. Very interesting but not surprising. It has to be done. If you’re going to be cannibalized, you might as well cannibalize yourself. I would think as we approach the tipping point 7 to 10 years is a pipe dream though, I give it 4 to 5 max.

  3. Wowzer. So, I’m not a businessy type of person, I don’t understand the ins and outs of alot of business stuff.

    But something about this felt like the big-wigs were going to cash in and hang their employees out to dry.

    • It sounds like you know more about business than you think, Mira.

    • But something about this felt like the big-wigs were going to cash in and hang their employees out to dry.

      Those employees will be hung out to dry in any case, if Macmillan goes out of business. Considering that the most grossly unprofessional treatment I ever got was at the hands of an employee of a Macmillan imprint — well, I’m having a hard time feeling a lot of sympathy. Let them find another job that does not involve massively exploiting writers in order to compensate for their employer’s systemic incompetence.

  4. I don’t know anything about EBI (and their web site is…unhelpful…when it comes to figuring out what they actually do), but Macmillan certainly isn’t going make great strides with quiz engines and iClickers. The quiz engine is a wheel that really doesn’t need to be invented yet again, and iClickers require that the institution (and students) purchase dedicated hardware to perform a function that could just as easily be carried out by the phone that the student already has in his or her pocket.

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