I was sorry to see today that Houghton Mifflin Harcourt Publishing – one of the oldest names in US publishing – has filed for bankruptcy along with twenty affiliated companies, including Broderbund and Classroom Connect.
Houghton-Mifflin’s poor financial performance has been blamed on the global financial crisis (hasn’t everything?) and falling funding for school text books, the company’s core market. A big reason, of course, is growing competition from all things digital. According to AAP (Association of American Publishers), sales of traditional adult books fell 18 percent from 2010 to 2011.
From its website, Houghton-Mifflin claims to provide educational products and services to about 60 million students in 120 countries, has an ongoing relationship with TESOL, a number of well-loved imprints and some excellent digital products – but just having digital materials is not enough by itself. Interestingly, I understand Houghton also prints and distributes e-books owned by one of Amazon’s publishing divisions, allowing Amazon to market books to those few people who don’t visit its site. The aim was to provide Houghton with a new source of revenue as sales decline at brick-and-mortar bookstores – a kind of reverse-engineering of the e-tailer model.
Against the collapse of real bookshops (remember Borders last year?) and the expiry of long-established traditional media publishers like Houghton, we have Pearson, whose sales of digital products increased by 18%, making up a third of the group’s total sales. Now we know where that missing 18% of US adult sales went. Yet Houghton, like Pearson, appeared to have a clear-headed digital strategy. After all, back in 2006 it was acquired by Riverdeep Interactive Learning, with the stated aim of capitalizing on the “convergence of print and digital education platforms”. And in 2007 the company bought Harcourt from Reed Elsevier. So what happened? It looks like a combination of financial mis-management and some unsound business decisions regarding their trade publishing operations a few years back. Whatever, the publisher of Mark Twain now faces a very uncertain future. I believe one of the problems publishers are facing is not just having “a digital strategy”, or a range of digital products – but being able to move swiftly to change that strategy and those products in tune with changes in demand that are increasingly rapid. Apps, for example. At the same time you’re investing in digital, if your roots are in traditional publishing you can’t afford to let that part of the business go either. Talk about rocks and hard places…
So farewell Houghton-Mifflin. If you’re in publishing – and you want to stay there – keep on top of your digital publishing strategy, and invest in those people – sales and marketing teams, editors, publishing directors, technical whizzes – who really know what they’re doing in the digital arena.