Why I made the leap from print to digital publishing

By Holly Schmidt, President, Literary Partners Group

Welcome to our latest contributor, Holly Schmidt, one of the founders of Ravenous Romance! We’re eager to hear from other publishers about the pros and cons of E, as well as other topics, DRM included—whether or not they agree with us. – D.R.

I have spent 15 years in print publishing as an editor and publisher for various non-fiction imprints at large and medium-sized publishing houses.

Two and a half years ago, I started a book packaging company with Allan Penn, an award-winning photographer. We launched with an exclusive contract with Sterling Publishing, which is owned by Barnes and Noble.

About a year ago, our colleague Lori Perkins, who is a New York literary agent with whom we had done some nonfiction business, called me and said, “We need to have lunch next time you’re in New York. I want to start an erotica and romance publishing company.”

It was serendipitous, because Allan and I had been talking for several months about expanding in to the romance genre, which is the largest and most profitable segment of publishing. I said, “Okay, but I have no interest in owning inventory.” I started two imprints for the Quayside Publishing Group before I started my own company, and I knew that without a backlist to provide a secure revenue stream, investing in traditional print publishing was too risky without a large corporate parent.

Birth of Ravenous Romance

We met Lori for lunch in New York, and she explained that she had a stable of talented authors and she wanted to keep them busy as working writers. She was frustrated that her authors could write six books per year, but publishers would only take two. With print publishing in decline, she knew there was an opportunity to fill the gap between the public’s need for good storytelling and the limitations imposed by the market. Over the next few hours, we hatched the idea for Ravenous Romance, which would be an online publisher of e-books and digital audiobooks.

I went back to Boston and spent the next two months researching and developing a business plan. I was absolutely fascinated by the dynamics of this business: instant gratification for reader, publisher, and author; the ability to price aggressively; no inventory, shipping, warehousing, or waste; no artificial limitations imposed by shelf space and chain bookstore buyers; much shorter development cycle (2 months instead of 12) for books; and direct interaction with customers. Not to mention, it was kind of cool to think we would be on the cutting edge of new technology (when most of us in publishing usually feel like the uncool Luddites in the media business).

100 brought aboard from the start

Lori was able to bring us over 100 authors right away, some of them New York Times best-sellers and award-winners who were willing to help us launch our new venture (as an agent, she gets 30,000 queries a year). We hired a website development team and learned everything we could about internet marketing and ecommerce. We met with the IDPF, Fictionwise, Audible, and other experts in the field. We hired Laura Dawson, a digital publishing consultant, to vet our financial projections. We had many, many glitches and setbacks along the way, but we launched our website on time on December 1, 2008. Since then, we’ve learned a tremendous amount about not only digital publishing, but also the many opportunities to connect with readers in the online space.

E-book publishing bears little resemblance to print publishing, in almost every substantive way. The customers are different: they’re more vocal, they’re more brand-loyal, and they expect more for free. That might be the biggest surprise, at least to me: You would never walk into a Barnes and Noble and expect to walk out with a free book. But e-book customers expect free books on a regular basis. So it’s been quite a shift in terms of the way we plan our marketing and promotion. I worked in direct marketing for a few years at Rodale . I just spoke with my former boss, who left Rodale many years ago to run Oxmoor House, and who is probably one of the most successful direct marketers in the industry. I was explaining our business to him, and he said, “You always want to control the customer relationship.” That’s the difference between print publishing and e-publishing—we don’t have a middleman dictating what books our customers see and how they’re presented. And that is very powerful in terms of giving readers what they want.

Easier to create books, harder to market them

The process is different: whereas we package our nonfiction books in an artisanal way, with careful attention to every labor-intensive detail, the e-books are much simpler to produce. We are fortunate to have a skilled editor who is also a romance author (she has written two books for Harlequin), and a wonderful cover designer who is able to take Allan’s photographs and turn them into prize-winning covers. Creatively, the work is simpler, but from a marketing standpoint it is much, much more challenging than print publishing, because the traffic (i.e., bookstore traffic) is not a given. We have to work very hard for it. The upside is that we can communicate directly with our customers, and we know right away when something works. Or doesn’t.

And, of course, the numbers are different. The profit margins are potentially much, much wider with e-books, because there is no expense for PP&B, warehousing, shipping, and returns (that bane of the print publisher’s existence!). The cash flow is much better—there is no waiting around to be paid in 90 or 120 days from a retailer or wholesaler. The royalties can be much higher, so the authors really become more like business partners and truly have a significant interest in promoting their books. But the sheer numbers are so much smaller that they are almost shocking to a publisher who is used to selling anywhere from 10,000 to 200,000 copies of a book. I am thoroughly optimistic, however, that e-books will see those kinds of sales figures in the not-so-distant future as people adopt the technology and the technology itself improves (which is a subject for another post!).

Elegant efficiency

We’re still packaging nonfiction books (in fact, in an ironic twist of fate, we have developed quite a nice relationship with Harlequin’s nonfiction division, where they have a talented young editor who is building a great program). I do not think print publishing is going away. I think it is undergoing a painful and necessary transition that will weed out a lot of the very, very bad parts of the business. First and foremost, the desperate urge to produce more and more books every season to cover the revenue gaps caused by higher and higher returns from the previous season’s books—this house of cards was always bound to collapse, and the time is here. We count ourselves lucky to have discovered the elegant efficiency of digital publishing before it’s too late.

Holly’s bio: Holly Schmidt is an editor and publisher who spends her (increasingly infrequent) spare time reading novels, memoir, and anything food-related on her Kindle. Her favorite books are Gone with the Wind, The World According to Garp, The Scarlet Letter, and A Thousand Acres.  She is raising two sons who are finally old enough to read by the pool, and let their mom do the same.