Though publishing group Pearson is doing all it can to adapt to the digital age it has become a victim of disruptive technological developments, particularly in its Penguin book division.
In its interim results, announced first thing on Friday morning, the group let slip that this year will be the first in which revenues from digital and services will exceed turnover from traditional publishing businesses in 2012.
"Education digital platform registrations up 30%; FT digital subscriptions up 31% and now exceed print circulation; Penguin ebook revenues up 33% and now almost 20% of Penguin's revenues," the statement boasted, but at the same time Pearson tacitly admitted that its Penguin book division had been caught on the hop by the success of self-publishing phenomena such as the wildly popular chick-lit slice of erotica, "Fifty Shades of Grey".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
True, there were other factors behind the difficult time Penguin books had of it in the first half: first, the publishing house had a lighter release schedule this time round than in the first half of last year; second, best sellers such as The Hunger Games from other publishing houses siphoned sales away from Penguin titles; third, physical books are (warning: hyperbole ahead!) going the way of the cassette player, and with them the much loved but little frequented local book seller.
The self-publishing phenomena, however, threatens to take away control from book publishers in the same way that the Internet has challenged the record company model in the music industry.
Pearson's response to this threat was to pay $116m for Author Solutions, which claims to be the world's leading provider of professional self-publishing services, having given around 150,000 authors a route to market.
The hope for Pearson shareholders must be that the company has a better idea of what to do with Author Solutions than News International did with MySpace when the Rupert Murdoch-led company made one of its first attempts to jump on the digital bandwagon.
Initially, there will be costs to Pearson associated with the integration of Author Solutions but longer-term, assuming that users don't defect to another self-publishing site as quickly as MySpace users hopped it to Facebook, the acquisition should give the publishing giant a foothold in this fast-expanding region of the digital/dead-tree frontier.
‘Inheritance tax insurance’ enquiries are soaring – but is it worth it?
MPs warn over Lifetime ISAs which could leave savers out of pocket
