Thomas Nelson CEO Mark Schoenwald
HarperCollins, Data and Digital Growth
NOVEMBER 30, 2011

AUTHOR’S NOTE: Since publishing this interview, HarperCollins completed the acquisition of Thomas Nelson and integrated it into the company. The operations of Thomas Nelson and Zondervan were combined to form the company’s Christian publishing unit and Mark Schoenwald was put at its head as CEO.

Two years ago, about 2% of Thomas Nelson’s publishing revenue was “digital.” This year, that number has jumped to 12%. By 2015, the company expects 40% of its publishing revenue to be digital.

Meanwhile, in October of this year, NewsCorp-owned HarperCollins acquired the Nashville-based Christian book publisher for $200 million from private-equity firm Kohlberg & Co. Much of the impetus behind the acquisition was reportedly to pick up some of Thomas Nelson’s digital know-how.

A big part of the company’s success in the ebook and app space can be attributed to Mark Schoenwald, Thomas Nelson president and CEO since April 2011, when he took over from Michael Hyatt, who remains chairman of the board.

Schoenwald, 49, has been a senior executive at the company since 2004 when he joined as chief sales officer. Prior to 2004, Schoenwald held several roles in private equity, primarily on the operational side running portfolio companies.

We sat down with Schoenwald to discuss HarperCollins, the importance of data, and growing digital revenues to 40% and beyond.

For those who may not be familiar, can you give me a bird’s-eye view of the company?

Thomas Nelson was founded in 1798. Today, we’re the seventh largest trade publisher and the largest Christian publisher in the world. About 80% of our revenue comes from publishing and about 20% comes from our live-events group in Dallas.

On the publishing side, we’re a little bit North of $200 million in revenues and about 12% of that is digital.

We have three primary groups: trade; Bible, reference and curriculum; and our specialty group, which is kids, gifts and foreign language. About 20% of our trade-publishing revenues are digital.

The company was recently acquired by HarperCollins. If the deal closes, how will ebook operations be affected at both Thomas Nelson and HarperCollins?

I’m limited in what I can say.

Having said that, one of the things that we’ve talked about is that we feel it’s an advantage to have strategic ownership, instead of the private-equity ownership that we came from. They [HarperCollins] understand our business. We believe there are resources and capabilities they can bring to the table, particularly in the digital area. The international area will be an asset to us. That’s one of our initiatives, to expand our business internationally.

Have any synergies been discussed? By that I mean layoffs and management restructurings.

We honestly haven’t discussed it. We’re really just focused on closing the deal itself. We really don’t have any announcements as it relates to where it’s going to head.

AUTHOR’S NOTE: Read more about the new management structure at the HarperCollins Christian publishing unit here.

How is Thomas Nelson addressing the digital opportunities in the industry?

We want to be known not as a book publisher but as a content deliverer and that means being able to deliver our content in any format the reader would like. For us, it’s not just about the ebook, it’s about the digital content.

Our goal is to be just as proficient in e-media as we are in physical books.

How do you intend to do that?

Two years ago we launched something called ‘digi-ready,’ which means to develop our content in a format-neutral manner so we could simultaneously develop the digital format with the print.

We train our team to really embed digital DNA across the organization. Everybody here understands what ‘digi-ready’ means and what it means to their individual role. We have lunch-and-learns where we bring people in and talk about topics related to the digital process. We’ve worked hard over the past two years to educate our company on this process. We have ways to go, but we’ve made good headway.

Bibles are a big part of your business. How is it going with Bibles in digital?

The Bible business is the backbone of our business. Being a Christian publisher, the Bible is foundational to our platform.

Bibles have had a slower migration to a digital format because of non-linear the nature of the reading experience. That’s where apps come in.

We’re cautiously looking at the app market and we’re working in enhanced books, but we’re also looking at short-form publishing that by-nature lends itself to the digital format.

As long as our Bible apps continue to pick up steam, the migration of Bibles to digital will as well.

We now have 38 Bibles that are in digital format.

What are some of the biggest challenges you think you’ll face in going through digital changes?

People. We’re going to have to scale our staff. We’re going to have to continue to add skill-sets that if we don’t have today we have to bring it into the company. We have a staff of about ten on the digital side right now and we plan to add to that.

The other thing we’re going to have to do is continue to look at the marketplace and look at what the consumer wants. I want to make sure we’re producing what people want and not just what we think is a neat idea.

Discoverability is another issue. We are really working hard to understand discoverability. As bricks-and-mortar goes away and the whole browse factor of the store goes away, how do you really engage the consumer to discover your content? We’re looking at social media, vertical communities and leveraging author platforms. Also, we’re looking to identify strategic partners who we call multipliers, who can reach more people than we can: ministries, sometimes non-profit organizations that match our customer profile.

We also vertically integrated our marketing group into each of the vertical units because of the digital discoverability issue.

What can other kinds of publishers outside of Christian publishing learn from your digital successes and failures?

What we learned, and this is not just inherent in Christian publishing, is the importance of getting your data right.

It starts with the data. I’m talking about our content. The meta-data. The quality of the digital conversion. That is really the key.

If you buy enough ebooks, you’ll see poorly formatted and poorly converted books. We wanted to really make sure that we have a clean, accurate database and efficiency in the conversion process.

The other things we’ve learned is that you can be successful in your back-list in digital. We’ve focused hard in selling and driving our back-list.

All of our marketing is driven toward promoting the back-list. We have promoted it from a pricing standpoint. We’ve also looked at the value play: If there’s a back-list title, we may bundle another book or another ancillary product with it.

Even if you’re a publisher who is not quite as vertically developed, try sampling. Give away sample chapters to get people exposed to an author.

The other thing we’ve done, particularly in fiction, is giving away the first book of a series. When we do this, we see a dramatic lift on the back-list in sales, particular in older series.

Some in the industry have said that in just a few years, 50% or even 80% of book publishers’ revenues will come from ebooks. Do you think you’ll ever reach 80%?

There might be publishers that reach those levels.

Our business is a little bit different, I think. There are a couple of factors at play that indicate we will not go that high. For instance, we have a very large gift-book business. The fact that there is a physical side of Bibles—note-taking, highlighting and taking it to church. A huge element of our business is giving a book to someone in need, someone lost, someone mourning. Another big business for us is graduation gifts, gifts for life-stages and ages, and by the very nature of that business, it’s physical.

What are you reading and on what platform?

I actually read on all of them. I still prefer physical, to be honest. And I have a Kindle, a Nook and an iPad. We encourage our people to have all three. We buy them and share them around the company.

For me, I read the Bible and Jesus Calling [by Sarah Young, HarperCollins], it’s a great daily devotional. It’s written in first person. It’s been in the top one or two books in our business for the past two or three years.

I also subscribe to magazines in both physical and digital

I read the Bible on the iPad, too.