Random House CEO on the E-Book Age 'The Printed Book Will Still Dominate for a Long Time to Come'

Part 2: 'It's Far from Clear Which Vendors and Reading Devices Will Prevail'


SPIEGEL: The online retailer Amazon has announced that in June it sold 180 digital titles for every 100 hardcover books in the United States. Analysts estimate that in 10 years' time only a quarter of all books will go to readers in printed form. Do you think that's realistic?

Dohle: I don't agree with that prognosis. I think it's too aggressive, too much hype. The market share for electronic books, even in the United States, will more likely be between 25 and 50 percent by 2015. But this development still represents a huge opportunity for us. It creates new growth. I meet people in America who say: I started reading again because of my e-reader -- and so did my children.

SPIEGEL: Your euphoria must have its limits, though. When Apple introduced its iPad in January, five of the six biggest US publishers were partners in Apple's online iBookstore. But Random House, the biggest one, is still not part of the effort in the US. Why are you hesitating?

Dohle: In the English-language market, unlike Germany, there is no such thing as a fixed book price agreement. The bookseller sets the retail price. In Apple's iBookstore, it's up to the publishers to set prices for the reader. Apple stays out of it and gets a commission. We have to examine this very closely to determine whether we are willing to make this drastic change to our business model.

SPIEGEL: What's so bad about being able to set your own prices?

Dohle: In markets where there are no fixed book price agreements, it means that the publishers are entering into a pricing competition that was previously conducted by the booksellers. The question, however, is whether publishers have the ability to find the right retail price in order to reach as many readers as possible. This wasn't our business until now.

SPIEGEL: In other words, you don't want to release Apple from the business risk that was previously taken by booksellers, and that's also taken by Amazon?

Dohle: That's right, it's also a question of the distribution of risk. Until now, we have sold content, developed and marketed talent and calculated our prices accordingly. In the United States, the book trade has structured retail prices in keeping with individual market conditions. It needs to be determined whether publishers really can, and should, do both things in the future.

SPIEGEL: Do you really believe you can do without Apple?

Dohle: The digital shift is more likely to take five to seven years, so 100 days in the iBookstore are not going to determine whether something is a success or a failure. Of course we want to have a presence in every digital bookstore. And you mustn't forget that our readers in the United States can also read our books on the iPad, using many different apps, even if we're not part of the iBookstore there. I don't think that we'll miss out on too much in the long run. In fact, we believe that we have to proceed in a very thought-out way, in order to find a sensible business model that will hold up in the coming years.

SPIEGEL: In addition to Amazon, Apple and Barnes & Noble, Google is also entering the young market as another vendor of e-books…

Dohle: There's a lot going on, which is why it's far from clear as to which vendors and reading devices will prevail in the market in the long term.

SPIEGEL: So you expect that Apple will in the end decide that it doesn't want to do without major authors like Dan Brown, and give in?

Dohle: Naturally, we have interesting content, which is why we are self-confident and can negotiate as equals. We don't want to destroy our business model, which has to last for the coming years, with a couple of wrong steps. But we essentially have the same interests.

SPIEGEL: The same interests? A few years ago, Steve Jobs said that he didn't believe in the future of the book. Apple makes money in a lot of ways, and Jobs probably couldn't care less whether the book survives. But you do.

Dohle: The digital world of books is undoubtedly more important to us than to Apple. In Germany, however, our books are already in the iBookstore, because there is a fixed book price agreement here, which we expressly support, and because it is easier to reach deals on this basis. In other words, there is no fundamental problem between Apple and us.

SPIEGEL: Until now, the online platform Amazon was the dominant vendor in the e-book business. The company tends to charge only $9.99 (about €7.70) for bestsellers in the United States. Is the book turning into a bargain-basement item?

Dohle: It isn't as if pricing pressure only arose as a result of digital books. It's just as prevalent in the print world. Many countries don't have fixed book prices, and there we, as a publisher, have no influence on retail prices. Whether Barnes & Noble sells our bestseller "The Lost Symbol" by Dan Brown for $18.99 or $14.99 is a decision they've always made themselves. Of course, we don't like to see a retailer in England charge only 5.99 pounds (€7.22 or $9.55), because we don't feel that this reflects the appropriate value of an absolute bestseller.

SPIEGEL: You can't possibly be pleased to see an e-book cost so little that it harms the value of the book.

Dohle: That's true, but it isn't always true that digital books are always cheaper than printed ones. Sometimes printed books are sold for less at Wal-Mart, for example, than the digital version in an e-book store. In other words, there is no reason to claim that the digital business alone is ratcheting up pricing pressure in the book industry.

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