Harlequin launches digital-only imprint. Will other big houses feel the romance?

For a publisher celebrating its 60th anniversary this year, Harlequin has been thinking ahead. Much of the voluminous catalog from the romance publisher is available for digital download in multiple formats, so fans of steamy novels can access all they want on their Kindles, iPhones, and netbooks at the ready, without worrying that particular titles will disappear from bookstores when the next month's titles arrive.

Harlequin's longstanding policy of acquiring worldwide rights in all formats means it has the means to reach a global audience with whatever reading format they choose: print, digital, audio, or something that doesn't exist yet. So it seems like a no-brainer that Harlequin, a division of Toronto-based Torstar Corp. (TORSF), would launch an imprint devoted exclusively to digital books. But Carina Press, which will operate independently of Harlequin, might pave the way for major publishers to put their money where their e-book mouth is.
The landscape for digital-only publishing has been spotty. A much-hyped startup, Quartet Press, disbanded in September before ever publishing a title. Jane Friedman, former CEO at News Corp.'s (NWS) HarperCollins, has moved into digital-only publishing with her new company, Open Road Integrated Media, but won't bring out any e-books until next year.

But niche markets like erotica have fared well for digital-only publishers like Ellora's Cave, and Macmillan's science-fiction-and-fantasy portal, Tor.com, has dipped its toe in the digital-only waters. (Tor.com's bookstore offers titles published by competitors.) But the last time a major house tried the digital-only route, TimeWarner's (TWX) iPublish, an imprint of WarnerBooks (now Grand Central Publishing, sold to Lagardere for its Hachette Book Group USA in 2006), only lasted from mid-2000 to late 2001. Random House's digital imprint AtRandom was even more short-lived -- it was around only between January and November 2001.

But interest in all things digital seems off the charts in book publishing, considering the glut of e-book readers hitting the market, book apps for iPhone and Android, and booming e-book sales all year. Laurence J. Kirshbaum, a literary agent and former CEO of Time Warner Books, calls Harlequin's Carina Press venture "a very smart idea," because digital books now have a significant distribution capacity -- which they didn't 10 years ago, when iPublish came and went.

Harlequin's existing infrastructure and wide distribution channels could help it dominate the market for commercial fiction. "The key is that Harlequin has been doing direct-to-consumer for so long," says Richard Nash, an industry observer and the proprietor of publishing startup Cursor. "Which means they've been learning from their customers. They get it, because they have a system in place that allows them to be told by their customers what they want, how they want it."

And that makes digital publishing's business model entirely different from the paradim of traditional publishing. The business model for digital publishing, in other words, is entirely different from print publishing's paradigm. Where traditional models hinge on business-to-business transactions between publishers and booksellers as brokered by large distribution warehouses, Carina will sell e-books directly on its website and through distribution channels offered by huge retailers like Amazon (AMZN) and smaller sites like Fictionwise.

Carina Press will also follow the lead of most smaller digital houses in offering higher e-book royalties, but no advances; traditional houses still settle on an "optimal" e-book royalty rate in the 20% to 25% range. "I think it helps having someone who's used to thinking in terms of digital and digital-only," says Angela James, Carina's new executive editor and a digital-publishing veteran. "It's a different mindset, and I believe it's difficult to see all of the options, difficulties, challenges and benefits of it right off the bat."

Kirshbaum concurs. "Books can be much more instantaneous," he says, "and [Harlequin] can build an audience without going through the expense and time involved for a publisher to navigate the print mechanism. And the early adopters of digital books will spread the word for distribution of the physical counterparts later."

Correction: this article corrects an earlier misstatement about Tor.com's bookstore platform. They currently only sell print books by competitors; plans to sell e-books are still in the works.
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