این فصل را با ذکر تمام تیترهایش (تاکید میکنم تمام تیترهایش) به انگلیسی ساده و روان خلاصه کن   Business Models and Value Creation in the Book Market

	








The book as a medium has a special position in the media industry. It is the eldest mass medium and considered to be the medium with the highest cultural value. Despite this exceptional position, the book industry is simultaneously confronted with economic constraints. Therefore, the book industry management is facing a considerable contradiction between cultural value and economic activities.
This chapter offers an overview of the economic environment of book publishers. It presents the unique characteristics of book publishing houses’value creation chain, core assets and competencies, as well as the relevant business models.1



6.1	Range of Services

The service range offered by book publishers is complex. Book publications can be divided into different subject areas (Greco 2000). Moreover, they can be differentiated according to presentation types (formats). In this context, the standard formats are hardcover, paperback, audio book, and new media (e-book, CD-ROM, digital book available on the Internet).
For briey illustrating the service range, this section will use the following categories: general literature, reference books, and others (see Fig. 6.1). This cate-
gorization facilitates a distinction that captures the most important content-related and usage-related characteristics of the individual market segments.
Fiction belongs to the category of general literature and constitutes the functional group with the highest number of titles. It is comprised of both narrative and entertaining literature. Further genres include non-ction books, youth and
children’s books, as well as story books. 
Regarding reference books, all literature that addresses scientic topics related to the disciplines of technology, nature, the humanities, and social sciences are included in this category. The distinction between reference books and non-ction books, which to a small extent deal with scientic topics as well, is based on the reference books’presentation of popular science. Textbooks and educational books also belong to the category of reference books.
The category of other products includes all further publishing products that barely feature coherent text. These publications represent a considerable portion of the annual book production as they frequently need to be updated.


	Interactions of Market Participants

In contrast to other media sectors, the players and the interaction structures in the book market can be easily classied. This is mainly due to the fact that advertising does not play an important role in the book market. Therefore, this branch can be analyzed based on a traditional unidirectional sales market. An overview of interactions in the book market is given in Fig. 6.2.
Publishing houses being essential players regarding the business model of the book industry acquire content to produce books or ebooks and exploit the various distribution levels to offer thenished product to the recipients. Basically, content procurement can be subdivided into direct contact with authors and acquisition of
licenses. Regarding the former, new content is developed whereby the selection and retention management is a decisive factor. Regarding the latter, inputs that already exist in other media or countries are adapted to the target market. Moreover, content from domestic authors can also be offered on the licensing market to generate additional returns. 
The commercial structure in the book market is much differentiated. Some important online stores, for example, Amazon, obtain their assortment directly from the publishers and share the intermediary trade margin as thenal consumer price is legally standardized. In contrast, smaller online stores are supplied by wholesale. Due to signicant market power of retail, direct distribution is only
marginally relevant within the book market.


	Value Creation Structures
The value creation for book publisher signicantly differs from that for newspaper and magazine publishers. Book publishing houses have a considerably lower pro- portion of content production than other print companies. The value creation chain of book publishers can be illustrated based onve value-added steps (see Fig. 6.3).
Within a book publishing company, the editorial ofce is responsible for the
procurement and processing of manuscripts. Thereby, program and title planning is
the starting point. Within the framework of a determinate program structure, content procurement, i.e., the acquisition of authors and manuscripts, as well as procurement of licenses for successful books occurs. Literary agents play an important role as intermediaries on the procurement market. They contract authors and offer the manuscripts to publishers.
However, in addition to the acquisition of new authors, editorial activities are primarily characterized by reviewing manuscripts. In this context, content

 
	Core Assets and Core Competencies	121
production is limited to the revision of manuscripts (content and formal editing) and organizational management of the publications. Furthermore, the editorial ofce is also responsible for the assistance and support of authors acquired by the publishing house.
In this view the content production of specialized publishers is disregarded. Nonetheless, it should be noted that their production capacity is signicantly more comprehensive since raw version content is procured and rened intonal products by the publisher’s own editorial department. For example, the content production of cartographic publishing houses also includes the purpose-oriented preparation of geographical material based on satellite photographs or ofcial topographic maps. Publishers of schoolbooks and encyclopedia are other examples for book publishers
with comprehensive editorial operations.
Another value-added step is the utilization of rights for the manuscript being published, held by the author, agent, or publisher. For instance, licensing and rights trading includes the business unit of imprinting. In this context, a book publisher uses the name and logo of the editing publisher to achieve a higher amount of book sales. Here, cooperation between press and book publishers can be especially
observed in this case. The trade of licensing for merchandising products, which by now achieve high prots, must also be mentioned.
After the last editing phase, the editorial ofce approves printing: the imprimatur.
The printing and binding comprise the physical production of the book medium.
While book printing is comparable to newspaper and magazine printing, books are bound differently than magazines.
Distribution largely includes the delivery of intermediary and wholesale trade. However, retail trade is also directly delivered in part. To a lesser extent, direct distribution tonal customers is also carried out by publishers or authors, i.e., self- publishers. Some publishers limited themselves to this form of distribution and distribute their books exclusively directly, especially small publishers.
Though online bookstores offer publishers new opportunities for direct distribu- tion, these can only be useful within limits due to the market power of retail bookstores. Another type of direct distribution is book clubs; in the United States,
the“Book of the Month Club”by NajaCompanies is the most renowned. The book club business is, however, declining in the United States, while in China signicant growth potential can be seen.



	Core Assets and Core Competencies

Core assets and core competencies comprise the essential material, conceptual, and procedural resources of the business model. The core assets of book publishers include the staff, networks, brands, and customer base. Though a large portion of book publishers generate input applying external authors, the editorial ofces of specialized publishers employ staff with very specialized skills, which improve the
production of goods primarily through teamwork.
 

Networks are a core asset as the contact with potential authors and agents is important in the procurement market to have competitive advantage by obtaining access to lucrative manuscripts. Furthermore, small publishers often use networks of specialized providers for services such as editing or layout in production and can
achieve competitive advantages throughexible network design.
Reference, scientic, and specialized publishers indicate a high standard of publication quality to potential buyers through their brand names and thus reduce
the purchasing risk. Similar to brands, customer base is one of the core assets especially for reference, scientic, and specialized publishers since buyers not only take the author into account but also the publisher when making purchase decision. The core competencies of book publishers required to utilize core assets are content-sourcing competence, editorial ofce, and promotion competence. In the
framework of content-sourcing competence, the goal of the publisher is to acquire
lucrative manuscripts that are largely produced by external authors.
The content creation competence of publishers is also called the editorial ofce competence and consists of two subcompetencies. On the one hand, it is the ability to edit manuscripts, which are appropriate for release (editing competence), that is a signicant competence.
On the other hand, the ability to get authors to give their long-term commitment to
a publisher through comprehensive and individual assistance (support competence) is a crucial competence. The promotion competence of book publishers refers to the ability to generate public attention for a book through promotional activities (e.g., reading tours). In this way, the publishers shall make readers aware about an author and his/her book to convince him/her to a book purchase.

	Business Models

Business models being integrated management tools exhibit great importance within the book sector as well. The following section offers a general characterization of the revenue and service creation models used by book publishers. Furthermore, a simplied business model will be developed and presented.

	Revenue Models

Comparing revenue models of book publishers and newspaper/magazine publishers, certain clear differences are revealed. The generation of revenues in the book sector is mostly performed through the sale of books in the recipient markets. Services creation is essentially limited to information and entertainment services and barley includes advertising space. However, one exception is the book club business, which partly has subscription character.
In contrast, other types of revenue are often of subordinate importance. Among these other types of revenues is revenue generated in the rights and licensing markets. This often involves the sale of fractional share for geographically limited
 
6.5   Business Models	123
book distribution as well as the granting of licensing in specic formats, e.g., paperbacks.
Furthermore, utilization rights can also generate revenue outside of the printing sector. This primarily involves the utilization of successful manuscripts through movie, television, magazines, and merchandising. For example, for the movie rights of the bestseller“The Passage”by Justin Cronin, Ridley Scott paid US$1.75 million in 2010. Merchandising has also become an important revenue source for media
companies. Warner Bros. purchased all merchandising rights for Harry Potter in 1998. In November 2001, Warner Bros. has already sold over 300 sublicenses and thus earned more than US$100 million. In this way, revenue can be achieved through the sale of rights or royalties for the use of rights.
However, differences can be identied between the book genres when it comes to revenue earned in the rights and licensing market. Approximately 2% of revenue is
generated by ancillary rights. Religious books and art books earn about twice as much. This difference is even more obvious when considering advertising revenue. For most book genres, this type of revenue does not exist. However, in the case of non-ction books, advertising revenue accounts for approximately 17% of total revenue.



	Service Creation Model

For book publishers, production and distribution are the focal points of the business activity. Especially important for publishing managements is the cost structure of service creation. Figure 6.4 offers an overview of cost and revenue structures in the US-American book sector.
In the book market, revenues are mainly generated through book sales. Therefore, advertising revenues rarely occur (Wirtz et al. 2011). The cost structure is strongly marked by the fact that books’carrier medium is paper and that the production and
distribution are associated with signicant costs. In the United States, books are
distributed to customers according to a two-stage system, which has an average trade
margin of 29%. Production and distribution, i.e., the printing and delivery to stores, account for 23% of total revenue.
The amount ofrst copy costs in relation to total revenue is approximately 39%. The cost of content production especially includes the costs for manuscripts and
utilization rights. Marketing costs are approximately 12% and administrative costs 10% in average. The prot margin of book publishers is about 9%. This cost structure shows that the essential starting points for cost reduction lie in production, marketing, and distribution. Direct distribution on the Internet is especially attractive for publishers as they can internalize the trade margin. Business Model of Book Publishing House

Book publishers are companies that are prot-oriented but also see themselves as part of the cultural industry. When making decisions, the management of book
publishers has to take into consideration both the cultural mandate and market demand. Accordingly, book publishers can be differentiated according to cultural and economic dimension, which means that in some cases the release of a book is not only dependent on economic principles.“A book is published because an editor believes a title has a great literary merit, makes a convincing argument, has com- mercial potential, or needs to be published”(Greco 2005, p. 8). The cultural
dimension of books is reected in the special legal framework for books.
A book publisher usually publishes titles that are produced by external authors and, to a lesser extent, editorial ofces. Following the production, thenal product is delivered via present distribution channels. In this process, new distribution channels 
other than bookstores have been developed due to the Internet. This enables, among other things, direct delivery to book consumers. The business model of a book publisher is illustrated in Fig. 6.5.
The range of goods of the illustrated business model includes books in different genres and editions. First editions are usually published in hardcover, while the less expensive paperback editions supersede these after a certain period of time. Digital and electronic products make up another element of the service range including especially CD-ROMs, audio books, and e-books.
In the licensing and rights markets, the range of products is comprised of rights and licenses, for example, for the publication of paperbacks or the translation of manuscripts as well as merchandising. The range of licensing and rights products is coordinated for the entire group in a central department. Through international presence, it is possible for the publisher to assign intergroup licenses for various international subsidiaries.

Knowledge Review Questions
1.	What are the effects of changed consumer behavior on the development prospects of the book industry?
2.	What different types of products exist in the book industry?
3.	What are the core assets and core competencies that book publishers must have in order to secure long-term success? Put the value chain of book publishers into order!
4.	What factors are crucial in the cost and revenue structure of the book industry? How are therst copy costs and distribution costs comprised?