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Random House jumps on e-book bandwagon

Industry Standard

(IDG) -- Random House announced last Monday that it would make a serious foray into electronic books this winter, when it releases original titles from authors such as Elizabeth Wurtzel, Rob Walker and a dominatrix named Mistress Ruby, among others. The news certainly brought smiles to readers' faces (and perhaps a few others), but the company's push into both a new platform and a new format -- the titles would be longer than magazine articles but shorter than full-length books -- has put publishing startups in an uncertain place.


For years, publishers have shown caution when it comes to e-books, announcing partnerships with Silicon Valley and coming out with concurrent electronic editions, but still shying away from original electronic titles. They wondered whether a market really existed. At the same time, they were concerned that too strong a market could leave them vulnerable to new entrants in the publishing space.

That hesitancy opened the door for firms such as Bookface, iUniverse, and netLibrary. Some of these outfits focused on content aggregation, others on e-marketing, and still others on back-end functions such as security. A select few, including MightyWords CEO Chris MacAskill, have talked about the 10- to 100-page works for which the medium is best suited, the same format Random is now making a go of.

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For digital-publishing startups, survival turned on two things: one, that established companies like Random House would wait for a robust market before fully jumping in, and two, that publishers, when they did go digital, would rely on startups for functions like marketing and distribution. But with a few strokes, Random and iPublish, Time (TWX) Warner's e-book subsidiary that announced its list of e-book originals the day after Random, have moved decisively -- and independently -- into the e-book market.

"In the drive to build this market, a lot of e-publishers are driving to amass content," says iPublish Editorial Director Claire Zion. "But we're better at marketing these titles because we're passionate about them as books." IPublish plans to sell downloadable books off its site, which it would market through relationships with portals. Unlike iPublish, Random House plans to sell the books through e-retailers including (in which Random House parent company Bertelsmann owns a stake).

With all this muscle from traditional companies, what's a startup worth its VC cash to do?

Focus on undiscovered authors, for one thing. "We're going to build a community and take a chance on writers that Random House can't," says John Feldcamp, CEO of self-publisher XLibris, in which Random House owns a 49 percent stake. In this way, the startups could have a similar relationship to the larger houses as small publishers -- a sort of minor-league system.

For her part, Bookface CEO Tammy Deuster says she remains unbowed by Random's decision. "We will help publishers at any point in the value chain that they want us to," she says. Her company, which offers ad-supported book content to readers for free, may be one of the lucky ones, as it is financed by iPublish.

The possibility of bigger-ticket authors jumping to startups isn't out of the question. After all, they know the Net and its audience as well as anyone. And indeed, MightyWords has already landed names such as Doris Kearns Goodwin and Toni Morrison. But at least one author doesn't think that will happen. "Here I have a very new idea with a very established name [in Random House]," says Robin Shamberg, a.k.a. Mistress Ruby. "That's very comforting. What advantage would I have with a startup?"

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Random House homepage
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