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'The pricing of e-books is not sustainable'

Q&A: Nigel Portwood, Chief Executive, Oxford University Press

Nigel Portwood
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often talk about the role of youth and new ideas. Nigel Portwood, who left Penguin to take charge as the chief executive of five months ago, may be a case study in the making. Not because a 44-year-old is running a 522-year-old organisation, but because of the way he is embracing the and trying to “outrun the change”. Suveen K Sinha caught up with Portwood on his first visit to India in the new job and is still out of breath. Edited excerpts:

Are you the youngest to head OUP?
I don’t know. I doubt it. We have a 500-year history. I may be the youngest for a little while.

So we have a businessman running a university press.
I studied engineering at Cambridge, specialising in manufacturing. Then I became a consultant in London for a few years. Then I did an MBA in France. I have worked for most of my career in the media industry, so I have always had this experience of balancing the creative and the commercial. I am not an editor, but I think I have a good understanding of the roles and processes, and I love publishing.

Would you say that a businessman is better equipped to head a publishing company than an editor?
You need different types of skills. It’s not down to one person. I rely on the team underneath me. Marketing is very important, finance is very important. It’s about how I bring these skills together and complement them with my own. I don’t necessarily paint myself as a businessperson. I do have an understanding of the editorial process, but I’m not as creative as the best editor. My background is engineering, which is about problem-solving, which is what you do in business — solve problems all the time.

At this point, digitisation would be staring any publishing company in the face, with Kindle, etc.
We are in a period of transformation in publishing. In five years, this industry will be completely different. Digitisation has affected all our lives — some happily, like the journals industry, some unhappily, like the music industry.

You could say it is just another format. When you view an e-book, it looks exactly like a book. But if you do something more to it, you create a completely different experience. Take our scholarly monographs, we put them online and we tagged them to give cross references. They are cross-searchable as well. We put tools that allow you to do semantic research.

Print is still at the heart of the product, and the content is created the same way, but it is packaged with digital add-ons. We see this as an opportunity. The challenge is to get our processes right, work out the pricing of these products, and the distribution and delivery of the product.

How are you placed?
We are slightly ahead of where the market is. In some areas we have been pioneering. The Oxford English Dictionary was put online in 2000. It has been tremendously successful, even though print sales have gone down a lot in the last few years.

How much?
Significantly, but we still sell more dictionaries because of the online transformation.

Dictionaries have been your flag-bearers, haven’t they?
Yes, the dictionary is one of our key products.

How does this affect your branding?
The Oxford name is very important. The branding is very strong online. More people can see it online. Dissemination of our research and knowledge is one of our missions.

Can you cut costs if you embrace digitisation?
Most publishers find that their costs go up with digitisation. We know for some time we will be doing both side by side. The cost of producing one digital product is very low because it is just electrons, but the cost to get to that point is much higher. There is the conversion cost, the tagging, the storage, the hosting, and then you have, alongside, the print.

How critical are the deals you strike with the eventual service provider, like Amazon, etc? Apple squeezed music companies for iTunes.
Yes. It is important for the publishing industry to make sure that the consumers continue to understand the value of books. Amazon, of course, has other objectives. It is trying to sell the reading device and is using the pricing of e-books as a loss leader to sell these devices. We have to be very careful that we do not destroy the value of the product in the consumers’ mind. For authors to get good returns and publishers to be able to invest, we need to keep the price at a sustainable level. The current pricing of e-books is not sustainable.

You said you will do both for some time. How much time before you go completely digital?
Some parts of the business are completely digital. Journals, which are an important part of our business… it is so much better to receive it online. You can search, you don’t have to store, you can access them from anywhere and multiple people can look at the same copy. If you think about the school text book… the book format is very functional. You can drop a book, you can throw a book, you can flip through it. I don’t think the book is going to go away. Certainly in the next 50 years we are still going to have printed books. What we will be offering in our educational publishing is a hybrid model. We print, plus we put digital components around it. Reference products and dictionaries, I suspect, will go completely online.

Will you stop publishing the Oxford English Dictionary like we know them?
It is certainly more conceivable in that area. Online dictionary is so much easy to use. My office gets 20 volumes of OED, and I have the OED on my desktop, and I have never turned around to pull out one of the OED volumes in six months. Every time I need to look up a word, I just do it in the online dictionary.

Personally, I think it will be a sad day when you stop publishing the dictionary.
I don’t think it will be any time soon. I don’t expect to do it in my career.

So what is the business model for the next generation?
Content plus application. It’s going to have more features. We can go over the traditional boundaries and offer so much more. We can train the teachers to use our material, help in assessment of pupils, offer help to academics to structure their research. Change is ahead of us, but we are going to outrun that change. That’s why I am here, to get us ready for the next 500 years.

How do you look at your India operations?
Very, very fondly. We have been in India for almost 100 years. India is very important for OUP, and for the University of Oxford. A sixth of all students at the university come from India. Our business in India is like a mini-OUP. It does everything that we do around the world. We have enjoyed double-digit sales growth here. It is also a source of products we sell elsewhere, particularly our academic books. It is an important part of our history, and it is going to be a very important part of our future.

What makes India critical?
Education is a growth industry. Education systems are converging. People see what their neighbours are doing and they copy. India has a high level of education, and there is the technical skill of its workforce. The education system here will be copied elsewhere.

I’m told a lot of editing and publishing is happening in India.
We publish 400 new books a year in India, which are for India, though some of these go to other markets as well. We publish 6,000 around the world. We have outsourced a part of the editorial process to India, like copy-editing. We have been slower than some other publishers in this, and that is something we are going to look at.

Is more money flowing into publishing in India? I’m told Manzar Khan (OUP India managing director) drives a BMW, while his predecessor drove a run-down Fiat.
(laughs) Really? That is the indicator! (chuckles) Maybe Manzar chooses to spend his money in different ways. But you could say the industry is growing.

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