Tom Weldon became the first CEO of Penguin Random House UK in July 2013, having started out as an editor at Macmillan in 1985. At Penguin Random House he has worked on developing new revenue streams, new ways of connecting with readers and expanding the children’s sector beyond books. Penguin Random House will be relaunching their site later this year, though they currently have no plans to break out into retail. Masoud Golsorkhi sat down with the man at the helm of the literary behemoth.
Masoud Golsorkhi If Penguin didn’t exist, would you invent it today?
Tom Weldon By the way, it’s Penguin Random House.
MG Sorry, Penguin Random House. I admire your branding acumen.
TW Yes, I think I’d definitely invent it today, partly because I feel hugely optimistic about the book industry – and we can talk about that – and also because Penguin is the only truly consumer-facing brand in publishing. And I think, in this day and age, curation is more and more important, and to have a publishing brand as powerful as Penguin is critical for the whole industry.
MG Does that mean that you intend to be a consumer-facing brand?
TW I think the author brand is still the most important by a distance. People buy books because of authors. But the fantastic thing about the digital revolution is that it gives us the opportunity to get so much closer to the end users: the readers. So we’re doing that in a whole host of ways, which I don’t think is rocket science. It’s social-media channels, our website, live events and so on. I feel that the book industry has adapted better to digital than almost any other part of media and entertainment. The challenge isn’t digital, the challenge is, how do you get your books noticed? And one way to do that in a fragmented media landscape is through your own brand, and we’re lucky enough to have the only publishing brand, which is Penguin.
MG Could you elaborate on the digital challenge facing book publishers and why it’s less scary than for other content providers?
TW Sure. For one thing, our business model is independent of advertising. That’s a massive help. Over the last five years our business has grown, with e-books now representing about 25 per cent of our sales. We’re more profitable. None of our authors has jumped ship to big technology players. We’ve learned how to market our social media and we’ve got much closer to the end reader, although there is more to do.
We haven’t any unsustainable business models, unlike the music industry. And we’ve developed different pricing strategies depending on different formats. So the last five years have been the best in our financial history, which is certainly not true of newspapers or magazines.
MG Don’t rub it in. HarperCollins is on a different course, though.
TW I totally don’t understand what they’re doing with subscription, and just to explain that: 85 per cent of our books are sold to people who buy more than 10 books a year. And the problem with the subscription model is that it cannibalises your existing sales. We have a very robust business model, unlike the music industry, and therefore, why change it? I would only be interested in subscription if it genuinely took us to a new audience of non-traditional book readers. But the only way you can do that is with aggressive marketing. We’re not totally closed to subscription, and in fact we’re experimenting with audio subscription, and possibly in emerging markets it could be interesting. There are some subscription companies I admire. But the subscription companies that are mainly operating in the UK and America, they’re doing none of that, and my personal theory is that they are venture-capital backed and they’re strapped for cash. And so, I don’t know what business models HarperCollins is on, but just getting a little bit of cash upfront and then selling to consumers who are already a part of your business doesn’t make sense.
MG The problem with the sort of people who already buy 10 books a year is that they are an ageing audience. The challenge is regenerating audiences. Do you have any evidence to back up your view?
TW I would turn it around. Until a subscription company gives me evidence that they really are appealing to new readers, I’m not interested. The burden of proof is on them. I’m not going to risk my existing business until I have empirical proof that they are reaching new audiences.It’s just common sense. The interesting thing about music is that no one’s making any profit out of subscription, including Spotify. With music, everything was already free or there was a lot of piracy. We don’t have that problem in publishing.
I dislike the inference that, oh, well, if you’re not adopting new business models then you’re being a Luddite! It’s absolute nonsense. I just think people should be envious of the book-publishing industry. We’re trying lots of new things; we’re just careful around subscriptions.
MG Sure. I’m curious about one of those, which is being a broadcaster.
TW I’m not sure that we’re quite a broadcaster. We are investing much more broadly in children’s intellectual property, co-owning, co-producing and co-creating intellectual property – first animation and then consumer products. Traditionally, book publishers never acquired anything other than book rights, and if they did they would license them to third parties, whereas we are investing millions of pounds. We’re always looking to buy more rights, so we did a very successful book with the YouTuber, Zoella, and we own the film rights on that. Another area is live shows. We did one at a theatre in Drury Lane to celebrate Roald Dahl and streamed it to 350,000 kids around the world. We did a tour with Caitlin Moran last year, where we sold 10,000 tickets in 24 hours after two tweets. It’s trying to take our brand and amplify it further.
MG Past the page. I can understand that. And what time frame do you have for this series of ideas?
TW I think in terms of children’s IP, we’re getting a huge return on investment already. I think in terms of the direct relationship with the reader, it is more of a slow build and an evolution. I mean, 900,000 people follow us on Twitter. I don’t think we’re going to turn ourselves into a retailer, but what we’re going to try to do is facilitate closer bonds between authors and readers, so they’re in a constant dialogue. Over time I think that will have a –
MG You’re not turning yourself into a retailer, but you’ve invested millions in building a consumer-facing e-commerce site.
TW Well, it’s not e-commerce – it’s the first user-experience publisher website. We’ve done a lot of research, and all the research showed us was that consumers don’t go to publishers’ websites to acquire or to discover. They go to forge closer bonds with authors. So, that’s the whole focus of our activity. It will have e-commerce capability, but that’s about selling more special, exclusive products and services to the superfan. We don’t see ourselves as competing with, say, Amazon. Again, some people said, well, why don’t you become one? You’re one of the biggest publishing houses in the world, why don’t you become a retailer? And, in my view, that’s kind of naive, because if huge global retailers like Tesco or Barnes & Noble have found it so hard to compete retailing e-books, I think it would be pretty hard for us as well.
MG But at the same time, you seem to be paying less and less to authors.
TW That isn’t my experience. By far the biggest financial hit to a publishing company is still, dramatically, in advances. One of the most crucial things a publisher does is invest in and nurture new talent. As a publishing company in the UK, we invest about £70 million a year in advances, which is a sizeable contribution.
MG Across how many authors?
TW We publish about 1,000 new titles a year. The common critique in the media is, oh, publishers – particularly large ones – now only invest in the safe and predictable. But we probably launch about 250 debut writers a year, and I can’t think of any other art form in this country that supports new talent in this way. Obviously I think it’s probably harder to make a living as a writer now, particularly because journalism has dried up. But I think the investment from book publishing is the same as it was five years ago.
TW I haven’t gone back further than five years, but my intuition says it is. Whether the market has been polarised, I don’t know.
MG Authors also gripe about the service they get in promoting their books. What steps have you taken to remedy that or deliver better promotional marketing services to your writers?
TW Publishers can always do better. It always worries me when I hear a bad experience from an author. The vast majority of authors we talk to seem very happy. I think that we have a brilliant team of publicists. But publishing is a complicated business, so things can always go wrong. We have more publicists than any other company and not just because we’re the biggest.
MG Can I ask you about my own hobby horse: audiobooks?
TW Well, that’s really, really exciting. Our sales have grown 30 per cent in the last three years. We’re about to appoint a new audio publisher as part of our commitment to audio [Caroline Raphael, formerly comissioning editor for comedy and fiction at BBC Radio 4]. Digital just completely changes the possibilities with audio. We have our own media suite here; we do our own recordings. We are getting an extraordinary quality of people to do audio, from Stephen Fry to Hugh Laurie and Kate Winslet. It’s very exciting.
MG Have you considered creating a kind of self-publishing platform as part of your offer?
TW I think self-publishing complements traditional publishing. I don’t think it’s a threat and I don’t think it’s antithetical to a company like Penguin Random House. We’ve had very happy experiences. Sometimes a self-published author decides that they then want to be published by us, because we can scale them to a bigger audience, or because they decided they don’t want to spend all that time marketing their work, they’d rather concentrate on their writing. I think there’s stuff we can learn from self-publishing. I respect the way indie writers really know their audiences. They’re often very strong at social media. But again, I don’t think self-publishing is our business. Other people can do that better. I am interested that you can count, literally by the handful, authors who have decided to go the self-publishing route.
MG You mean established authors?
TW Yes. So, we must be getting something right. §