1. National Research University
Moscow – December 5 and 6
BOOK PUBLISHING MANAGEMENT,
CHANGES AND BUSINESS MODELS
Paulo Faustino, MSc, PhD, PostDoc
faustino.paulo@gmail.com
Presidente of Media XXI/Formalpress
Porto University and Lisbon School of Mass Media
Centrer of Investigation in Media and Journalism/Nova University of Lisbon
Columbia Institute of Tele Information, Coumbia University

2. Key trends and main characteristics of book publishing business
i) tendency to ownership concentration in large groups
ii) pressure to increase the rates of return investment
iii) increase in the editions of different book formats
iv)obsession over bestsellers to save the balance results
v)more editions and need for high-rotation books
vi) maximization of the potentials of the technologies
vii)having trends and authors that are truly global
viii) growing interest in specialized niches to small companies
ix) book publishing diversification in a multimedia approaches
x) Importance of journalist people and celebrities as authors

3. Strategies and concentration in the book sector
• Editors publish more than ever and there is even a super-abundance of
new titles;
• Concentration removes the importance of the traditional territorial
distributors, favoring centralized retail;
• The economic gains – synergies - are considered one of the main reasons
for the operations of acquisition and business concentration;
• The major international publishers have some competitive advantages:
- economies of scale,
- adoption of technologies,
- marketing knowledge,
- experience and practices

4. Example of potential sources of additional revenues to publishers
based on digital book publishing business
Subscription Advertising – Sponsorship
Users pay a fee to access the content Free access to content supported by
for a certain period of time advertising or sponsorships
Aggregate Products Mobile Phones
Access to online content is included in Content is delivered via wireless
the purchase of the printed product devices, with revenue sharing with the
mobile operator
Electronic Commerce Electronic Commerce
Physical product or services are sold Contents are sold piece by piece basis
through an online channel for online or offline access

5. Business Models Concept
Not merely the revenue stream of a firm. Are a tool for understanding
and evaluating the business logic of a specific firm, namely:
1. Reveal the concepts and foundations upon which businesses and their
activities are built .
2. Provide the architecture of a business in terms of value created,
products/services provided, operational requirements, customers served, and
how it finances itself
3. Helps identify most important commercial aspects of their activities
4. creates understanding of revenue streams
5. Clarifies financial dependencies and vulnerabilities
6. Provides insight into potential for success
7. Helps identify its differences from competitors

6. Business Models Answer Questions
How does it create value for customers?
The real value is the satisfaction created to the wants and needs of
customers. Business models should answer:
- What wants and needs are you serving? - What is the central value
customers wish and receive from you? - What is your unique value
proposition?
-By serving human needs for diversion, relaxation, and emotional comfort
-By providing quality content that creates an enjoyable and satisfying
experience
- By being creative and innovative in approaches to drama and comedy
- By providing brand value, choice and ease of access
These are not enough for success. A firm has to do these in a unique
or different way

7. Business Models Answer Questions
What business is a firm in? Business model describes:
-The broad basic activity of the firm
-The product/service provided product/service provided
-The segment of the product/service industry in which the company
participates
-Rail companies thought they were in the railway business
-They didn't feel threatened when trucking and airlines developed
Problem: they were in freight and passenger transportation
Businesses.
Solution: for publisher the business is sell content; isn´t sell paper.

8. Business Models Answer Questions
How does it provide the product or does it provide service?
Business model describes:
- Its fundamental characteristics
- The frequency of availability
- When it is available
- Where it is available

9. Business Models Answer Questions
Who are its customers?
-Are there intermediaries involved?
-Are there firms or infrastructures that exist between the provider and the
customer? Example: Wholesalers, distributors, service providers
-What are their incentives to carry or service your product?
-Are required infrastructures already in place and readily available to you
and your customers?
-Who pays to create intermediaries or infrastructure? Your firm, other
firms, customers, or government
-Who pays for services of intermediaries and infrastructure?
- Who buys or uses the product and what needs and wants does it serve?

10. Business Models Answer Questions
How does it receive revenue?
FACT: AN ABSOLUTE: Someone has to pay!
The business model describes where the money comes from and how
it is generated. We mean, sources of funding:
-The Company - Investors - Advertising Sponsorship - Readers
- Government Subsidies - Foundation Grants
Possible Revenue models:
-Consumer payment - pay for use: single use, subscription low cost for basic use;
higher price for extended use (upselling)
- Advertising Payment pay for space/time pay for action: leads generated, click
through
- Sponsorship: pay for association with product/service B2B payment
- Licensing for use by other firms/publishers
- Some firms rely on only one source of revenue; some combine diffenrent sources

11. Business Models Change
WHY
- When they are not working as expected or not working as well as in the
past
- When the product or service is changed or the product extension
takes place
- When disruptive competitors appear: for example, Amazon
-Dynamic business models don't change everything all at once
small, incremental changes through improvements and innovation

12. Business Models Change
1. Require regular attention and review; should not be conceived
as permanent and stable change;
2. On their own can be deliberately changed to include new
products and revenue streams;
3. Firms in mature industries must revisit entire business model to
achieve growth and sustainability;

13. Pursuing Opportunities Requires Business Model Changes
- Changing the existing model. The business the company is in, how it
provides products/services, its customer base, it revenue model
- Expanding the existing business with similar new products/services
that have a similar business model
- Adding a new products with different models

14. Pursuing Opportunities Requires taking Risks
- Potential for new product failure or outcome different than
anticipated
- Potential for financial losses
- PROBLEM: Publishing industries have not be risky for many
decades
- Lost opportunities
- Lost abilities to grow and develop in new ways.
- Forced to live on existing (declining) activities

15. It also allows to:
- Help identify the most important aspects of their activities
- Create an understanding of the revenue stream
- Clarify financial dependencies and vulnerabilities
- Provide insight towards potential success
- Help identify their differences when faced with the
competition

16. Business Models Strategies
• The innovative business models shoes the customer area which could be any of a number of
industry segments where technology information and innovation is at a premium;
• Within this customer area, key attention is directed by the new publishing organization to
teams involved in innovation projects such as staff working on new product development
• This focus establishes the purpose and context for the communication system or virtual
community to be established.
• Develop an innovation culture with clear methods to promulgate more and better innovation.
• Embark on experimentation with new organizational forms: Knowledge Based Networking
Organizations to develop network organizations and learning networks out of control-
organizations
• Support for new forms of organization may be engaged via development of an explicit
knowledge management strategy.

17. The added value of the new service-based firm comes from:
• Firstly, for the customer, the opportunity to interact with others to create new
knowledge to allow new products and services to be developed and to improve
existing business;
• Secondly, for the large publishing organization, the opportunity to test out the
networking model as a successor to the information provider model but with the
option of developing this business as a spin-out rather than risking a total
transformation of the current business model across the firm as a whole;
• Thirdly, for the small organization, the opportunity to reinvent and center the firm
along the lines of the emerging networking business model taking full
advantage of the interactivity of the Internet.

18. Ansoff Matrix/Intensive Growth Strategies
Products
Present New
Present Market Penetration Product development
-Attract competitor’s customers -Add functions and features
-Increase the global demand (usage -Increase product range
frequency, used quantities, new -New generation of products
uses)
Markets
New Market developement Diversification
-Geographical expansion -Horizonta
-New distribution channels -Vertical
-New segments - Lateral

19. Description of Ansoff Strategies
Market Penetration
▪ The point of market approach consists of achieving a stronger penetration using currente
products in existing markets
▪ This can be achieved through an increase of unit sales per consumer or through an expansion of
the numbers of consumers by adopting aggressive price and communication policies
▪ In a stagnating market, the strategy leads to an expansion of market share at the competitors
expense.
Market Develop Strategy
▪ A second strategy option is to advance into new markets with existing products and services.
▪ Market penetration and market development strategies can entail offering new applications for existing
products or opening up new market segments.
▪ In market development, the role of market segment plays is great importance. It permits a specific separation
of markets and become.The are formed in accordance with specific criteria

20. Conclusions and Workshop II
Product Development
▪ This strategie focus on developing products or solutions for existing markets.
▪ It must be taken into consideration that degress of innovation can vary considerably and are
frequentelly influenced by costumers perception.
Diversification
▪ Diversification introduces new products and services to new markets. There are three
relevant diversification strategies.
▪ Horizontal diversification. The new products are similar to the previous products. The actual connection
can be based on existing production technology, the imput factors used or the distribution channels.
▪ Vertical diversification. This strategy expands your own action radius in earlier steps in
value creation chain. For example: production and distribution
▪ Lateral diversification. In such a strategy, there is no longer a direct connection to the
previous products or market aspects. Example: education and training courses.

21. Ansoff Matrix applied to the book business
2.Current products for new 4.New products for new
market Market development markets; Product diversification
(E.g.: Internalization and (E.g.: Books and other
New exploitation of new locations; functions associated to the
books sold with newspapers and digital book, film adaptation,
magazines) courses)
MARKETS
1.Current products for current 3.New products for current
markets; Market penetration markets; Product development
(E.g.: Paperback books and (E.g.: Sale of book chapters,
Current deluxe editions; orders and audiobooks, or CDs attached to
services on demand - PoD) the book with additional
contents, Courses)
Current PRODUCTS New

22. Some market changes that impact the business model of the book
◦ Tendency to economies of global scale and micro scale. Less median scale
◦ Tendency to combine big hits and wait for their long-term sales. Longsellers
◦ Tendency to the decrease in the importance of traditional bookstores. Online
◦ Tendency to reinvent the life cycle of book and explore new markets. Supports
Over the years, the traditional book business has undergone various
competitive pressures, namely:
◦ first came the bookstore chains
◦ big retails – represent circa 50%
◦ then the number of readers begun decreasing
◦ more recently, Amazon introduced the process of disintermediation of sales
◦ finally, we have the possibility of digital downloads in various device applications

23. Transversally trends in the book industry
To summarize, we can mention some trends and changes that
characterize transversally the book industry:
– the transformation in the nature of the book market and business
– the increased concentration of resources from major publishers
– the growth of internationalization strategies in different markets
– the greater importance and impact of technologies and digital
– diversification of revenues sources based on different ways to sell

24. General Conclusions and Workshops
So, the Book Publishing Organizations need to:
• Develop an e-business strategy and vision that takes account of the likely
emergence of a new style “network economy”;
• Monitor the extent to which the potential for interactivity with the Internet is
actually being exploited and involving author and readers;
• Take on the battery of methods required for digital publishing innovation to
occur, such as: virtual communities; online moderators; providing services
not just content-based products, etc.;
• Ensure the digital publishing strategy moves offensively into industry
markets rather than defensively or by diffusion from current offerings for
scientists/researchers.

25. General Conclusions and Workshops
Key factors to create a Strategy and Business Models in Book Industry:
• Conciliate the global with local. Someone in the world want yours books.
• Today the publishers are a knowledge's producers; the book is one part.
• Create and sell contents; the business isn t sell paper
• Use all print and digital supports to produce and sell contents
• Use your competences/know how to diversity the business – ex: courses
• Try to find a segments or niches that aren t important to big publishers
• Create and invest in your company brand to be perceived with positively

26. Conclusions and Workshops I
Business models contributes to
▪ What does the company do and to whom are its products or services destined?
▪ What are its products and services and how do they differentiate themselves?
▪ How are revenues generated and from whom do they come?
▪ Where do managers need to focus their attention?
And
- Help managers identify the most important aspects of their activities
- Help managers understand dependencies and vulnerabilities
- Help other professionals to analyze these elements

27. Conclusions and Workshop I
Some key issues that should be formulated:
1. Is the Business Model specific to a particular market or can it be applied in
other markets?
2. Is the Business Model specific to a given product or service, or might it be
able to work for brand extensions and diversification?
3. Can the Business Model be expanded nationwide, internationally or
globally?
4. Are there other possible Business Models to de explored? What will have
to change in the company?

28. Conclusions and Workshops I
Pilar Building block Description
Value proposition Explains what the product does and how it serves
Product
the needs of the consumer
and consumer Consumer segment it serves
Target-audience
Distribution channel The way in which the product is taken to the
consumer
Interface with the Relationships Connections established with the consumer
consumer
Value setting Activities and resources needed to create value
Skills Skills necessary to execute the plan
Infrastructure Partners network Necessary measures to cooperate with other
companies to offer and market value
Cost structure Economical consequences of the means used
Finantial aspects
Revenue model The way in which a company makes money
through the revenue flow

29. WORKSHOP 1 - APPLY THE CANVAS MODEL
Associated Key Key Value Relationship Distribuition Customer
Networks Activities Resources Proposition with the Channels Segments
customer
-Tecnological -Content -Web platform -Electronic - Communication -Physical - Readers
partners generation -Content books - Interaction bookshops -Teachers
-Development writers - Physical - Digital - Professors
of a web books bookshops -
platform - Training - Print on Entrepeurneuria
demand ls
- Sponsors
COST STRUCTURE SOURCES OF REVENUE
- Costs of content creation - Sales in physical and digital formats
- Costs of production and design - Sponsorships and other types of support
- Costs of marketing and sales - Virtual and physical training activities

30. Conclusions and Workshop
Market Penetration
▪ Increase purchase use by existing customers
▪ Win customers from competition
▪ Convert non-users
Market Develop Strategy
▪ New Market Segments
▪ New Distribution Channels
▪ New Geographic Markets

31. Conclusions and Workshop
Product Development Strategy
▪ New Features
▪ Different Quality Levels
▪ New Products
Diversification Strategy
▪Through Organic Growth
▪ Trough Acquisition
▪ Trough Joint Venture

32. WORKSHOP 2 - APPLY THE ANSOFF MATRIX
Markets Present New
Products
Market penetration Market development
Present
Product development Diversification
New

33. Thank you for your time