This article titled “Penguin boss has no problem with ebooks” was written by David Teather, for The Guardian on Thursday 29th July 2010 20.59 UTC

Penguin this week celebrates its 75th year and is marking the anniversary by repackaging a series of seminal books from the 1960s to the 1980s. Although the company might afford itself a brief look backwards, it feels as though there is little room for nostalgia in book publishing now, as the industry turns its face firmly – and apprehensively – to the future.

Amazon last week announced sales of ebooks on its US site had outnumbered hardbacks for the first time, stunning casual observers, even if it had not been entirely unexpected in the trade.

The launch of the iPad has added a sense of urgency. Where music went first, books are set to follow, although Penguin and other publishers would hope without the same devastating effects. Amazon this week launched a cheaper, more lightweight version of its Kindle ebook reader and a digital store on its UK site, while others, including Google, are muscling in. Digital book sales are still less than 1% of Penguin, but the direction of the market is clear. In the US, digital books already account for 6% of consumer sales.

Penguin chief executive John Makinson says he is a convert. The day after we meet he is on his way to India, as part of David Cameron’s delegation, and had loaded titles on to his iPad, including a manuscript by John le Carré and some Portuguese classics (in English) ahead of Penguin launching a range in Brazil. He is also reading Lord Mandelson’s diary. It simply makes sense, he says, instead of carting an armful of books in your carry-on luggage.

Innovation

“It does redefine what we do as publishers and I feel, compared with most of my counterparts, more optimistic about what this means for us,” he says. “Of course there are issues around copyright protection and there are worries around pricing and around piracy, royalty rates and so on, but there is also this huge opportunity to do more as publishers.”

Publishing, he says, must embrace innovation: “I am keen on the idea that every book that we put on to an iPad has an author interview, a video interview, at the beginning. I have no idea whether this is a good idea or not. There has to be a culture of experimentation, which doesn’t come naturally to book publishers. We publish a lot of historians, for example. They love the idea of using documentary footage to illustrate whatever it is they’re writing about.”

The very definition of a book is up for grabs he says, although the company has just published a version of Ken Follett’s The Pillars of the Earth for the iPad in the US that might provide clues – and horrify traditionalists. It includes scenes from a TV adaptation embedded in the text, as well as extras including the show’s music soundtrack and Follett’s video diary during the making of the series.

For now, Makinson says, digital books are expanding the market; hardback sales in the US are up this year, despite the march of ebooks. Piracy is not yet a significant issue and lessons have been learned from the music business.

“You have to give the consumer what the consumer wants – you can’t tell the consumer to go away. So we didn’t participate in this experiment where a number of publishers deferred publication of the ebook until a certain number of months after the hardcover publication. I thought that was a very bad idea. If the consumer wants to buy a book in an electronic format now, you should let the consumer have it.”

He has added confidence, because with tablets such as the iPad, consumers are used to paying a subscription to the wireless operator and for “apps”, creating a more benign environment than the wild west of the PC, where users are used to getting everything for free.

Penguin’s profits more than doubled to £44m in the first half of the year. The company gained market share, but one reason for the dramatic improvement was the outsourcing of some design and production to India last year; the company now has around 100 designers in Delhi making books for Dorling Kindersley, belying the idea that Britain can at least live off its creative industries. Makinson defends the decision and says DK is now back in profit, which means it can reinvest in Britain: “We can’t pretend we can do everything here. In order to be internationally competitive, some work needs to be done in other places.”

About 8% of the publisher’s sales are from its classics, including Jane Austen and Charles Dickens, and revenues are still growing, despite much of the copyright being in the public domain. It is launching the range in Mandarin, Korean and Portuguese. But it is not all highbrow. What would Penguin’s founder, Sir Allen Lane, whose aim was to publish quality paperbacks for the masses, have made of Penguin putting out books “by” Peter Andre or Ant & Dec?

“Allen Lane’s view was that we should publish good writing of all kinds for all audiences at affordable prices,” Makinson says. “I’m not saying he would necessarily have approved every single publishing decision we take, but would he have approved of Penguin being a very democratic publishing company, publishing for lots of different tastes? I think he would definitely have approved.”

Makinson has long been mentioned as a successor to Dame Marjorie Scardino, who runs Pearson, Penguin’s parent company. Her departure has been a perennial question, though she has defied the investment community’s chattering classes by staying in her post for well over a decade. She has also confounded expectations by keeping Penguin and the Financial Times in a group dominated by educational publishing. Makinson says it now makes more sense than ever for Penguin to remain part of the group, as the digital era draws each division closer.

He says there will still be the need for publishers in the digital world: “I used to have this discussion with [Hitchhiker's Guide to the Galaxy author] Douglas Adams. He created this thing called the digital village, an online publishing platform. Douglas’s argument was, ‘all of my friends will come along and publish on digital village and you the publishers will be disintermediated, you will be irrelevant’. Well, it hasn’t happened. I am not aware of any successful direct to consumer publishing model that exists.

“The reason it doesn’t work is that the publishers do actually perform quite a useful service: they edit the book, then they publicise it.” In the physical world, they make sure it is stocked in bookshops, he adds.

Clubbable

Makinson, 55, perhaps feels more adaptable than some of his counterparts because he arrived at Penguin as an outsider. A clubbable character, he has taken an unusual career path, from a journalist on the Financial Times, to working for the Saatchis, setting up his own investment consultancy, running the Financial Times and then becoming Pearson finance director, despite having no training as an accountant.

But his passion for books is evident. Five years ago, he and his brother bought a bookshop in the small Norfolk town of Holt. For an out-of-the-way independent, the Holt Bookshop attracts a starry line-up of authors for events, including Stephen Fry, due to talk about his new autobiography, which, perhaps not surprisingly, is published by Penguin.

“We are all terribly se
ntimental about books,” Makinson insists. “It is terribly important to me that we sell lots of wonderful books in my little independent in Norfolk, and when I talk about digital I do sometimes worry that it looks as though I am neglecting all this,” he points to the books on the shelves behind him, “which I am not.”

CV

Born: 1954, Derby.

Education: Graduated from Cambridge with honours in English and History.

Career: 1976-1979, journalist, Reuters; 1979-1986, journalist, Financial Times; 1986-1989, vice-chairman, Saatchi & Saatchi; 1989-1994, co-founder of capital markets advisory firm Makinson Cowell; 1994-1996, managing director, Financial Times; 1996-2002, finance director, Pearson; 2002-present, chairman and chief executive Penguin Books.

Other interests: chairman of the Institute for Public Policy Research, a director of the National Theatre and of the International Rescue Committee, a humanitarian organisation.

Family: Married with two daughters.

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