By Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid
The time for children’s digital reading may have finally come.
After years of lagging behind digital growth in the adult-trade book segment, children’s e-books posted 475% growth in January 2012 over January 2011, going from a $3.9 million-a-month business to a $22.6 million-a-month business in just a year.
One of the publishing executives leading the charge is Deborah Forte, president of Scholastic Media, the world’s largest publisher and distributor of children’s books. (Outside of children’s book, publicly traded, New York-based Scholastic is having a pretty good fiscal-year 2012 with the runaway success of The Hunger Games trilogy, which topped most best-seller lists in 2011 and 2012 and is currently showing as a theatrical release to record-breaking audiences in movie theaters around the U.S.)
Forte got her start in publishing at Viking 1976 as an assistant. Within months, Viking, a respected hardcover fiction house, was acquired by Penguin, the world’s largest paperback publisher at the time. In seven years at Viking-Penguin, Forte was able to learn about many facets of the business, including art-book publishing and children’s publishing.
In 1983, she left Penguin as a director of special markets and was recruited by Scholastic. Given a choice between joining the company’s publishing arm or going into its television production business, she chose television, experience she says helped her build Scholastic’s software business in the ‘90s and its app business today. By 2003, Forte had greatly expanded the Scholastic television production business and consolidated all of the company’s media operations under one roof, which was then re-named Scholastic Media.
Along the way, Forte has picked up numerous awards, including an Oscar and several Emmys. She graduated from Hamilton College in Clinton, N.Y. in 1975.
We spoke with Forte about the recent explosive growth in children’s e-books, Scholastic’s new e-book-selling platform Storia, and the publisher’s pricing strategy.
Jeremy Greenfield: Children’s e-books made headlines last week when the latest American Association of Publishers book sales numbers came out. Children’s e-books are trending to over $250 million in revenue this year. Have children’s e-books arrived?
Deborah Forte: We think e-books are being embraced more and more by children although the adoption is slower than the adult market, and the January numbers certainly could have been impacted by the excitement generated in anticipation of The Hunger Games movie.
JG: Despite the explosive e-book growth in January, children’s books is still largely a print game. Where do you see Scholastic’s e-book revenue in 2015?
DF: By 2015, we anticipate that approximately 30% of our book revenue will be digital – across the board, including young adult.
It’s very early days for kids e-books.
On the kids end of the business, when you look at any new technology, it starts with early adopters. They’re adults and they’re largely adopting it for themselves. And then when they’re comfortable with the platform, it tends to extend to the family.
Parents buy the iPad, they use it as a portable computer, and then they say, “what else can we do with this?” Then they allow their kids to have experiences with apps. We are not regarding them as e-books. That’s a very different part of the market. I really think that market is going to open up in the next year to 18 months.
We want to be ready when the market evolves. We hope to ignite the market with our reading platform and our books and our customer relationships. I think it’s very early because the kids end of the market follows the adults.
JG: Scholastic has been digital for a while now.
DF: Scholastic has been producing software for a long time – since the late ‘80s. We were early on the Web, too. And it’s really because we look at ourselves as a relationship brand, not a product brand.
Our book clubs and our book fairs are all about developing a relationship between the teacher, the parent, the child and Scholastic. Digital media is a great way to enhance that relationship. Most publishing companies don’t have those kinds of direct relationships, because they’re selling through retailers.
Because of this, we had the idea that we could use our distribution platforms to sell software. We were the second largest seller of educational CD-ROMs at the height of the CD-ROM business. We developed digital expertise doing that. If you look at some of the apps [we produce], they’re very small-file, watered-down versions of a lot of things that had been done years ago on CD-ROM.
JG: As a company with deep digital roots, how do you hire for digital talent?
DF: You bring in a couple of incredible key people with a deep history and expertise in an area, and then they know other people, and they bring in other people and you develop a team.
It’s very team-centric. Every member of the team is important and has a role in your success. It’s not as top-down as the publishing business historically has been. We have had people who are creating content as well as making electronic versions of content.
I feel like I could not have accomplished all of this as well or as quickly if I was starting from a traditional publishing background.
Scholastic has an advantage, because first of all, we’re building our own platform. Second, we’re doing a lot of the work in-house so that it is right. Third, we have a history of producing media and technology in the company so that the DNA is there.
We’ll increase headcount a little [this year], but we will hire as we need to depending on the demands of the business.
DF: That’s a decision that every parent has to make for their child.
We recognize that children are spending more and more time on screens, and what we want to make sure of, when they’re on screens, they’re having an age-appropriate, positive experience. We would prefer that they were engaging with books.
If a parent has never read a book to their child and decide they’re going to use their iPad to read a book, I don’t think that’s such a bad thing. Everything in moderation. Parents need to monitor children’s screen time – it’s just common sense.
JG: I recently blogged about children’s e-reading and the poverty line being a barrier for children adopting of e-books. What is Scholastic’s position on the matter?
DF: We think about it all the time. It’s in our DNA. Our mission is to get books in the hands in as many kids as possible. One of the things that we do, which addresses this issue head on, is we are one of the largest suppliers of free books to teachers and classrooms. One of the ways kids get books is from school.
One of the great things about being able to deliver books digitally is that teachers can have access to these readers as well. We’re hoping that it increases the access that children have to books.
You will notice that our free e-reading application comes with five free books. We want people to be able to sample different kinds of books. We also just want people to have access to these books. Right now, our strategy is to get our software application distributed as broadly as possible.
JG: That seems like a good transition; let’s talk about Storia. You launched it about three weeks ago. As I understand it, it’s an e-bookstore and e-reader dedicated to kids.
DF: Storia is a purpose-driven reading application, meaning we did it for a specific purpose. It isn’t just a generic engine. We did it because our customers want it and need it. When I describe Storia, I say it’s the first reading application that goes across operating systems that is designed for children and that grows with children and that showcases all formats of children’s books the way in which they were intended to be presented.
We tried to do this in a way that the app will grow with the child.
If you’re five-years-old, you’re just a beginning reader. If you don’t know a word, you click the word and the word will be pronounced for you. If you don’t know what a word means, you touch the little balloon above the word and you hear and see a definition pop up that is written just for you – it’s scaled to your vocabulary and for young children.
If you’re nine-years-old and you’re reading a chapter book in Storia, you don’t have the definition read aloud to you, but the definition will pop up and you still have the pronunciation tool. We know kids and reading and we know kids will need some sort of support. Storia has the ability to inform a recommendation engine to better assist parents and teachers in selecting the next right book for their child.
We had a very soft launch. Our marketing hasn’t really kicked in. Right now, the application is available largely for us to be doing our end-to-end testing, getting the kinks out, building our e-book library and testing it. We will know a lot more when we are ready to launch in the Fall.
JG: Transmedia is a hot topic in publishing right now. Scholastic has had a few successful transmedia projects, including the 39 Clues series.
DF: Transmedia is used very loosely in the publishing business, as you know. To me, it’s not about what is transmedia or not transmedia – it’s about new and engaging reading experiences for kids. There are a lot of ways to offer that. There are e-books with enhancements in them. There are videos games, like 39 Clues, which has a game on the Web.
But it’s really about innovating so that kids are attracted to new kinds of reading experiences. 39 Clues was successful because the transmedia really got the kids to read the books.
The other thing that I would say is that scholastic has the ability to feed its properties through its clubs and networks and book fairs so there is more awareness and receptivity to them.
As a marketing tool, those distribution networks have been helpful in supporting some of those transmedia commercial successes.
JG: Since it’s been the top publishing news story for the past few months, I thought I’d save the best for last. I’ll leave this as open-ended as possible, so answer how you’d like. What do you think about e-book pricing?
DF: Scholastic has always offered a very broad array of prices and book formats to customers. If you go to the fairs, you’ll see prices from $1 to $15.99. Most of our books sell for $4 to $6. And we’ll be doing the same with e-books.
The pricing we will use will be the same as what we use in our club and fair distribution network.
Our trade division sells their books any competing publisher sells their books: Scholastic is on the wholesale model.
The only model we have is that we sell our books wholesale and it’s up to those selling them to determine the price. Discounting is the retailer’s decision.
JG: What are you reading and on what platform?
DF: I am reading most of my books electronically. I just finished Case Histories by Kate Atkinson [Back Bay Books, 2005] and I read it on a Kindle.
Write to Jeremy Greenfield