E-Cookbooks: An Analysis of Profitability
by
LauraAlexandraDunlop
B.A.,UniversityofWaterloo,2012
ProjectSubmittedinPartialFulfillmentofthe
RequirementsfortheDegreeof
MasterofPublishing
inthe
PublishingProgram
FacultyofCommunications,Art,andTechnology
©LauraAlexandraDunlop2016
SIMONFRASERUNIVERSITY
Spring2016
ThisworkislicensedundertheCreativeCommons
Attribution-NonCommercial-NoDerivatives4.0International
(http://creativecommons.org/licenses/by-nc-nd/4.0/)
Approval
Name:
LauraAlexandraDunlop
Degree:
MasterofPublishing
Title:
E-Cookbooks:AnAnalysisofProfitability
JuanPabloAlperin,PhD
SeniorSupervisor
AssistantProfessor
JohnMaxwell,PhD
Supervisor
DirectorandAssociateProfessor
RobertMcCullough
IndustrySupervisor
Vice-President,RandomHouseofCanada;
Publisher,AppetitebyRandomHouse
DateApproved:
January26,2016
ii
Abstract
AppetitebyRandomHouseisalifestylepublishinghouseimprint,withintheparentcompanyof
PenguinRandomHouse(PRH)Canada,specializinginthepublicationofcookbooks.Undercorporate
policy,Appetiteproducesdigitalversionsofallofitspublishedtitles;however,cursoryanalysisof
Appetite’sdigitalcookbook(e-cookbook)salesrevealslowsalesvolumecallingintoquestionthe
profitabilityofthisuniversalconversionpolicy.Thisreportutilizesdatacollectedandstoredinthe
PRHinternaldatabase,MyHouse,toperformaseriesofquantitativedataanalysesfocusedon
Appetite’se-cookbooksalesandwiththeintentofansweringthecoreresearchquestion:isthereturn
oninvestment(ROI)forconvertingtitlesintodigitalversionspositiveforallcookbooks?Results
indicatethatwhileindividualsalesvolumeandROIsvaryfromtitletotitle,overallnetsales,when
totaledacrossAppetite’spublishede-cookbooks,aresufficienttoyieldapositiveROI.Preliminary
analysesofpossiblevariablesimpactingsalesvolumeandtherebyROIareincluded.Further,
comparativeanalysesareperformedusingdatafromasampleofPRHimprintsthatalsopublish
digitalcookbookswithresultsindicatingthatAppetite’sROIfordigitalcookbookproductionislower
thanthesampledaverage.
iii
Acknowledgments
Withthanksto…
Juan,forchallengingmetoalwaysdothatlittlebitmore.Whoknewabookworm
couldalsobeadataanalysisgeek?
Robert,forbringingmeintotheAppetitefamilyandmakingmytimewithPRHan
unforgettableexperience.
Lindsay,forsharingallyourknowledgeandputtingyourtrustinme—evenifit
meantlookingatonehundredphotosofmeat.
GabiandTaryn,forbeingtherewithmeeverystepoftheway.Wouldn’thave
wantedtodoitwithoutyou.
Myfamily,forhelpingmegettowhereIamtoday,andfor,quitesimply,being
wonderful.
iv
Table of Contents
E-Cookbooks: An Analysis of Profitability ........................................................... i
Approval................................................................................................................ ii
Abstract ............................................................................................................... iii
Acknowledgments ............................................................................................... iv
Table of Contents ................................................................................................. v
List of Tables ....................................................................................................... vi
List of Figures ...................................................................................................... vi
Introduction .......................................................................................................... 1
BackgroundonAppetitebyRandomHouse..................................................................................................1
InternshipRoleandProjectMotivation...........................................................................................................2
Appetite’s E-book Production Practices............................................................. 3
E-bookproductionprocessandcosts...............................................................................................................3
Universalconversionpolicy..................................................................................................................................5
E-cookbook sales and ROI .................................................................................. 6
Salesvolume................................................................................................................................................................6
Listprice.....................................................................................................................................................................11
Netrevenue...............................................................................................................................................................16
ROI.................................................................................................................................................................................23
ComparativeAnalysiswithPRHImprints...................................................................................................24
Discussion .......................................................................................................... 28
IndustryE-cookbookTrends.............................................................................................................................29
TechnologyintheKitchen..................................................................................................................................30
AestheticinDigitalVersions..............................................................................................................................30
FunctionalityinDigitalVersions......................................................................................................................31
ConclusionandRecommendations.................................................................................................................32
Bibliography........................................................................................................ 35
Sources ............................................................................................................... 36
v
List of Tables
Table1–AppetiteLTDsalesforbothprintanddigitalcookbookspublishedintheseasonsofSummer
2012throughSpring2014
Table2–Appetite’sYTD(first12months)netsalesforprintanddigitalcookbooksbyseason
Table3–AppetiteprintanddigitalcookbooklistpricesandLTDnetsales
Table4–AppetiteprintanddigitalcookbookYTDnetrevenueafterroyalties
Table5–AppetiteprintanddigitalcookbookLTDnetrevenueafterroyalties
Table6–AppetiteprintanddigitalcookbookYTDnetrevenueafterroyaltiesandproductioncosts
Table7–AppetiteprintanddigitalcookbookLTDnetrevenueafterroyaltiesandproductioncosts
Table8–Averagenumberofweekstoprofitability/positiveROIforAppetite’sdigitalcookbooks
Table9–AverageYTD(first12months)netsalesofsampledPRHimprints
Table10–AverageandtotalLTDnetsalesofsampledPRHimprints
Table11–ROIfordigitalcookbooksalesofsampledPRHimprints
Table12–Averagenumberofweekstoprofitability/positiveROIfordigitalcookbooksalesof
sampledPRHimprints
Table13–Averagelistpriceandaveragenumberofweekstoprofitability/positiveROIfordigital
cookbooksalesofsampledPRHimprints
List of Figures
Figure1-LTDNetSales:Printvs.Digital
Figure2-DigitalLTDNetSalesasaPercentageofTotalLTDNetSales
Figure3-DigitalLTDNetSalesasaPercentageofTotalLTDNetSales(bySeason)
Figure4-AverageDigitalCookbookYTD(First12Months)NetSalesbySeason
Figure5-AppetiteE-cookbooks:SalesVolumevs.ListPrice
Figure6-AppetitePrintCookbooks:SalesVolumevs.ListPrice
Figure7-AppetiteE-cookbooks:Salesvolumevs.ListPriceDiscount
Figure8–SampledPRHImprints:ListPricevs.NumberofWeekstoaPositiveROI
vi
Introduction
Background on Appetite by Random House
AppetitebyRandomHouseisalifestylepublishinghouseimprint,withintheparentcompanyof
PenguinRandomHouseCanada,specializinginthepublicationofcookbooks.Establishedin2011
andrunundertheleadershipofaward-winningpublisher,RobertMcCullough,theimprintis
extremelysmall,with(asofAugust2015)only2full-timemembersofstaffandanintern,therole
assumedbytheauthorofthisreportfromMay2015throughAugust2015,workingintheir
Vancouver,BritishColumbiaoffice.ThemainofficeandCanadianheadquartersforPenguinRandom
HouseCanada,locatedinToronto,Ontario,providespublishingsupportintheareasofeditorial;
production;design;marketingandpublicity;andlegalandadministrativeservices.
Appetitepublishesbookslargelyinthreeseasons(alsoknownas“spans”):fall,spring,and
summer(withrarebutoccasionaltitlesbeingreleasedinthewinter),averagingsixtitlesperseason
withasteadyincreaseinlistsizesincetheirinauguralseasonofSummer2012.TheseasonofSpring
2015sawarecordreleaseof12titles,andplansforupcomingseasonsindicatecontinuedgrowthin
listsize(toperhapsasmanyas20titles).
Atthetimeofitslaunch,AppetitewashousedentirelyundertheumbrellaofRandomHouseof
Canada,adivisionofBertelsmann—aGermanmultinationalmassmediacorporation.ButonJuly1,
2013,BertelsmannandPearsonPLC—aBritishmultinationalpublishingandeducationcompany—
mergedtheirrespectivetradepublishinghouses:RandomHouseandPenguin.1Theresult,Penguin
RandomHouse(PRH),istheworld’slargestEnglish-languagetradepublisher2andacompanythat
employsmorethan10,000peoplearoundtheworld,ownsnearly250publishingimprints,andis
responsibleforthepublicationofroughly15,000newtitleseveryyear.3
Asamultinationalpublisherwithanextensivelistoftitlespublishedunderitsumbrella,PRH
usesmultipletoolsanddatabasestorecord,track,anddisseminateitstitleandsalesinformation.
ThesetoolsincludeexternallymanagedPointofSale(POS)systems—suchasNielsenBookScan,
1"PenguinandRandomHousetoCombineCreatingtheWorld'sLeadingTradePublisher:Penguin
RandomHouse."PenguinGroup(USA).AccessedAugust23,2015.
http://www.penguin.com/static/pages/aboutus/pressrelease/penguin_random_house_102912.php.
2"OurPublishers."PenguinGroup(USA).AccessedAugust24,2015.
http://www.penguinrandomhouse.biz/ourpublishers/.
3"AboutPenguinRandomHouseCanada."PenguinRandomHouseCanada.September1,2014.
AccessedAugust24,2015.http://penguinrandomhouse.ca/content/about-penguin-random-housecanada.
1
whichtracksbooksalesdataintheUnitedStates,andBooknet,whichtracksbooksalesdatain
Canada—aswellascorporatedatabasesbuiltandmanagedin-housethatcancaptureanexceptional
levelofdetailregardingatitle’ssales.
MembersofPRHstaffcanaccessallofthisinformationinmultipleways,butdosomost
commonlythroughMyHouse—asearchabledatabasethatprovidesoverviewsandsummariesoftitle
details,thepublishingcontract,inventory,andPOSdata—andMyReports—adatabasesimilarto
MyHousebutthatprovidesrawtitledatathatcanbefiltered,sorted,andexported.
Internship Role and Project Motivation
OverthecourseofmyinternshipatAppetitebyRandomHouse,whichspanned14weeks
betweenMayandAugust2015,Iassistedwithnumeroustitleacquisitions,supportingtheprocess
alongitsvariousstagesbycompletingtherelevantadministrativetasks.Oneofthemostcommonof
thesetasks,whichfollowedtheacceptanceofanofferbyanauthor,wasthedraftingandsubmission
ofcontractinformationsheets(CIS)andtitleset-upforms(describedinfurtherdetailbelow),which
wereusedtoenternewlyacquiredtitlesandtheiraccompanyingformatsintothePRHMyHouse
databaseandtorequestthecorrespondingISBNsfromLibraryandArchivesCanada(orBowkerin
theUnitedStates).
Incompletingthetitleset-upforms,Iwastaskedwithrequestingtheadditionofane-book
versiontothePRHdatabaseforalltitles.Itwasthistaskthatsparkedacuriosityaboutthesalesof
digitalversionsofcookbooks(hereafterreferredtoase-cookbooks)andledtomyinitial
investigationintothesalesfiguresforAppetite’sdigitalproducts.
Dataanalysis,inanybusiness,playsacriticalroleinevaluatingsuccessandisanexcellenttoolto
beusedindecision-making.Butinpublishingespecially,whereeachnewtitleisagambleandanupfrontinvestmentonthepartofapublisher,dataanalysisisinvaluable.Withawealthofdata
availablethroughnumerousdatabases,retailers,andorganizations,itiscriticalthatpublishersuse
thisinformationtoassessconsumertrends,informtheirproductacquisitionandproduction,and
guidetheirinternalpolicies.
Throughonlycursoryexaminationofsalesfigures,Iobservedthat,althoughtheexactnumbers
andratiosvariedacrosstitles,thesalesvolumefore-cookbooksappearedtobesignificantlylower
thanthatoftheirprintcounterparts.Theseobservationsledmetothequestionthatisattheheartof
thisreport:isthereturnoninvestment(ROI)forconvertingtitlesintodigitalversionspositiveforall
cookbooks?Inansweringthisquestion,thisreportseekstouncoveranycharacteristicsthatleadtoa
positiveROIsothatfuturedecisionstoinvestinthecreationofe-cookbookscanbebasedonthe
existingdata,ratherthanbyablanketpolicy.
2
Tounderstandsalesofe-cookbooks,itisnecessarytounderstandAppetite’se-bookproduction
practices,sothatwecangleanagreaterunderstandingoftheassociatedcostsandtheproductthatis
broughttomarket.
Appetite’s E-book Production Practices
WhileAppetitegivesgreatcareandthoughtinselectingtheoriginalformatinwhichatitleis
published—drawingupproductionestimatesandprofitandloss(P&L)statements,performing
break-pointanalyses,andexaminingsalesfiguresforcomparableandcompetingtitlesinthevarious
formatsbeingconsidered—thedecisiontocreateadigitalversionofatitleisseeminglygivenlittleto
noconsideration.
Itisinsteadanautomaticprocess,suchthateverytitlepublishedbyAppetiteisreleasedbothina
printandadigitalformat.Noreviewofthedigitalsalesforcomptitlesisperformed;nobreak-point
analysisiscompleted;andtheproductionanddesignareneverdiscussed.Thetitle’sP&Listheonly
locationwhereanynotesonthedigitalversion’spotentialsalescanbefound,withanestimateof
LTDsalesofroughly300-800copiesmayappear.Noformulaorguidelinesforthisestimateis
providedanddigitalproductioncosts,arealsonotlistedonatitle’sP&L;theyareinstead“covered”
bytheprofitsmadethroughthesaleoftheprintversion.
E-book production process and costs
Thedevelopmentofadigitalversionofatitlebeginsatthesametimeasthedevelopmentofthe
printversion,withthesubmissionofatitleset-upform,whichdirectlyfollowsthereceiptofabook
contractacceptanceandiscompletedinconjunctionwithaCIScontainingthedetailsofthesigned
contract.Thetitleset-upformindicatestheformatsinwhichthetitlewillbepublished,thedate(s)at
whichtheseformatswillbereleased,andtheprices(bothCADandUSDwhenapplicable)atwhich
theywillbesold,alongwithtitledetailsincludingtitleandsubtitle,authornamesandcredits,and
assignedBISACcodes.
Theseforms,afterbeingsubmittedtothetitleadministratorinTorontoandcross-referenced
againsttheCIStoensurewehavethenecessaryrightsfortheformatsbeingrequested,areusedto
generateISBNsforeachoftheformats,andtoaddthetitlesinallofitsvaryingformatstoMyHouse.
Atthispoint,allproductionprocessesrelatedtothedigitalversionareplacedonholdwhiletheprint
versionisdeveloped.
Overthenext6-9monthstheAppetiteteamandtheirproductionanddesigncolleaguesinthe
Torontoofficedevelopthetitle’soriginalprintversion.Itisonlyoncetheoriginalprintversionis
fullyeditedanddesignedandthepagesarereadytobesenttotheprinterthatthee-bookproduction
starts.
3
Atthesametimeasthefinalpagesaresenttotheprinter,theyarealsosenttothePRHdigital
productionteam,whichpreparesthepagestobesenttoane-bookconversioncompany.4This
preparationprocessincludesmakingmodificationstopagelayout,designandcolourschemes;and
theremovalofunnecessarydetails,graphics,oraestheticembellishments.Forcookbooks,pagesare
alsoreorderedsuchthatphotosalwaysfollowthewrittenrecipestheyaccompany.Oncethepages
areupdated,thechangesaresenttothetitle’seditorforapprovalbeforebeingconverted.Theresult
isanextremelypareddown,almoststripped,e-cookbookversionofthetitle,withmanyelements
thatwereincludedintheprintversiontosupplyaestheticinterestandappealhavingbeenremoved.
This“designstripping”processisundertakenforafewreasons,includingthereductionoffile
size,whichprovidesuser(reader)benefitsintermsoffilestorageandloadtimes;consistencyof
appearanceacrossplatformsanddevices,wherebysimplerdesignsposefewerrenderingandreflow
issues;andreadability,whichensuresthecontentiseasytoreadacrossdigitalplatformsanddevices
withoutmakingauser“work”(e.g.,zoominandout)toenjoythetitle.5
AlsofactoringintothereasonthebooksarestrippeddownisPRH’suseofEPUB2fortheirdigital
products,whichcanbereadbymoredevicesthanthenewerEPUB3,andistheonlyfileformattobe
universallyacceptedbye-bookretailers.Unfortunately,theuseofEPUB2filesgreatlylimitsthe
abilitytoaddenhancementstothee-cookbook.6Thereisahopewithinthedigitalproductionteamto
startusingtheEPUB3formatinthenearfuture,asmoreandmoreretailersandplatformsbeginto
acceptandsupportthisfileformat.
Unfortunately,duetoprivacyconcernsandagreementsmadebetweenPRHandtheircontracted
e-bookconversioncompany,exactproductioncostscannotbereleased;however,roughestimates
providedbythePRHdigitalproductionteamplacetheapproximateconversioncostane-cookbook
atanywherefrom$600-$900dependingonthenumberofpages,thelevelofmodificationsrequired
duringtheconversionprocess,andanyadditionalfeaturesorchangesbeingmadetothetitle.
AlthoughthesefiguresareonlyroughestimatesderivedfromthepastexperienceofPRHstaff,
thetop-endcostof$750pertitlewillbeconsideredabaselinefore-cookbookproductioncostsand
willbeusedinallROIorcost-relatedcalculationsthroughoutthisreport.
4Forreasonsrelatedtoconfidentiality,thenameofthiscompanyhasbeenwithheld.
5Costanzo,Peter."TheRealReasonEnhancedEbooksHaven’tTakenOff(Or,EvanSchnittmanWas
Right…FortheMostPart)."DigitalBookWorld.May23,2014.AccessedDecember17,2015.
http://www.digitalbookworld.com/2014/the-real-reason-enhanced-ebooks-havent-taken-off-orevan-schnittman-was-right-for-the-most-part/.
6McCoy,Bill."WhyPublishersAreMakingaPushforEPUB3Now."DigitalBookWorld.July25,2013.
AccessedDecember17,2015.http://www.digitalbookworld.com/2013/why-publishers-aremaking-a-push-for-epub3-now/.
4
Universal conversion policy
InsearchingfortherationalebehindAppetite’sautomatice-cookbookproductionprocess,no
formaldocumentationorpoliciesstipulatingtheneedforadigitalversiontoaccompanyalltitles
publishedcouldbelocated;however,inspeakingwithmembersofthePRHdigitalproductionteam,
itwasrevealedthatthedecisiontoconvertallprinttitles(inactualitythereareexceptions,makingit
roughly98-99%ofprinttitles)intoe-booksisanunwrittenbutconsistentlyappliedoralpolicy
hingedonthreefactors:titleaccessibility;PRH’scompetitionwithinadigitalmarket;andcontent
archiving.Curiously,profitwasnevermentionedasadrivingfactor.Thesethreefactorsare
examinedinmoredetailbelow.
Intermsofaccessibility,PRHstrivestomakeitscontentaccessibletoreadersinwhichever
mediumtheyprefer,beitprintordigital,andasanextensionofthat—forreadersoptingforebooks—onwhicheverdigitalplatformtheyprefer.Thisapproachdoesnottakeintoaccountthe
demandfororfinancialreturnsofpublicationinvariousformats,butratherseekstoappeaseas
manyreadersaspossible.
Thisgoalofoptimizingtitleaccessibilityplaysnicelyintothesecondfactordrivingthedigital
conversionofallPRHtitles:competitionwithinadigitalmarket.WithNorthAmericane-booksales
estimatedat$7.6BUSDin2014.7PRHrecognizesthepresenceofathrivingdigitalbookmarket.By
optingtoreleaseallofitstitlesase-books,PRHisstakingaclaimwithinthismarket.Whilewedonot
knowifothertradepublishersassumesimilarconversionpolicies,asthelargestEnglish-language
tradepublisher,byadoptingauniversalconversion,PRHguaranteesthatitisthecreatorand
benefactorofthelargestportionoftraditionallypublishedEnglish-languagedigitalcontentavailable
toreaderstoday.Ofcourse,itcouldbesaidthathavingsuchanextensivecollectionofdigitalcontent
availableisonlyvaluableifthecontentisdesirablease-books,butregardless,basedsolelyonthe
sizeoftheirlisttheystillholdthelion’sshareofthemarketintermsofproductavailability.8
ThethirdfactordrivingPRH’suniversalconversionpolicyisthebenefitsaffordedtopublishers
throughthedigitalarchivingofcontent.Withheftycostsassociatedwiththestorage,distribution,
andreturnofprinttitles,tradepublishersincludingPRHmustcarefullyselecttheirprintrun
quantitiesandlatermakedecisionsaboutreprintsastheytrytobalancethecarryingcostsofstoring
printbooksinwarehouseswithkeepingthetitlesinprintandtherebyavailabletocustomers.
Withtechnologicaladvancementsmakingthestorageofanearlimitlessnumberoffilesnotonly
possiblebutalsoextremelyaffordable,publishersareabletoforegoreprintsincasesmaybepresent
7"GlobalE-bookRevenuefrom2009to2016,byRegion."Statista.AccessedDecember17,2015.
http://www.statista.com/statistics/280249/global-e-book-revenue-by-region/.
8Greenfield,Jeremy."EbookPublisherPowerRankings:Top10PublishersofQ12014."DigitalBook
World.April22,2014.AccessedAugust30,2015.http://www.digitalbookworld.com/2014/ebookpublisher-power-rankings-top-10-publishers-of-q1-2014/.
5
butnotbesufficienttowarranttheassociatedcosts,keepingtheirtitleseternallyavailabletoreaders
ine-bookformatinstead.Whilethetitlesmaynolongerbe“inprint”,becausetheyarestillavailable
inadigitalformat,theyremaininvendordatabasesandcancontinuetogeneraterevenuewithout
anyexpensivere-printsorcarryingcostsfromwarehousesordistributors.
What’sinterestingtonoteaboutthedigitalarchivingoftitlesisthat,inmostcases,thee-book
versionofatitleisanearexactcopyoftheprintversion.Withmostgenres,veryfewchangesare
madetoatitleduringtheconversionprocess,asthemajorityofbooksrelymostheavilyontext,and
thosethatdoincludeimagesarestructuredsothatthetextandimagesareseparate,ortheimages
areflexibleintheirplacement.(Anexceptiontothiswouldbechildren’sbooks,thoughhowtheyare
handledwillnotbediscussedwithinthescopeofthisreport.)
Asdiscussedabove;however,cookbooksundergoasignificantpre-conversionstrippingprocess
thatresultsinadigitalversionthat,whileitbearsstrongresemblance,differssignificantlyindesign
andlayouttotheprintversion.Therefore,foranycookbooks,thearchiveddigitalversionwouldnot
beasubstitutefortheprintversion,butratheranalternative—achangethatnegatestheabilityofa
digitalversiontokeepatitle“inprint.”
Wecanseethen,fromtheabovediscussion,thatwhilePRHmayhavethreefactorsguidingtheir
decisiontoimplementanautomaticanduniversaldigitalconversionpolicy,thevalueofthispolicy
andtherelevanceofitsguidingprinciplesremainsambiguous.Withoutinvestigatingthesalesfor
eachformatinwhichatitleisavailableitisdifficulttosayifPRHisrespondingtothedesiresofmany
oronlyafew;andifitisthelatter,thebusinesssenseofsuchadeontologicalapproachtoproduct
developmentcouldbecalledintoquestion.Webeginthisinvestigationinthesectionbelowby
examiningAppetite’sdigitalcookbooksalesfortheseasonsofSummer2012throughSpring2014.
E-cookbook sales and ROI
Toanswerthisquestion,thisreportwillanalyzeAppetite’snetsales(afterreturns),giventhat
thisismostreflectiveofhowmanytitleswereactuallypurchasedbyconsumersandtherefore
providesthemostaccurateassessmentofrevenueandprofit.
WewillbeginouranalysisbylookingatthesalesvolumeofAppetite’stitles,comparingthenet
salesofprintcookbooksande-cookbooks.
Sales volume
AveragingacrosstheLTDnetsalesforall21cookbookspublishedbyAppetiteintheseasonsof
summer2012throughspring2014(Table1;Figure1),weobserveameanLTDnetsalesvolumeof
14,371printcookbookunits,andameanLTDnetsalesvolumeof256e-cookbookunits—a
significantdifferenceinaveragesalesvolumeacrossformats.
6
Anonymized Title
LTD Net
Sales
(Units) PRINT
LTD Net
Sales
(Units) DIGITAL
Total LTD
Net Sales –
PRINT &
DIGITAL
% Total
LTD Net
Sales PRINT
% Total
LTD Net
Sales DIGITAL
Title1
13,017
234
13,251
98.23%
1.77%
Title2
30,224
602
30,826
98.05%
1.95%
Title3
10,894
41
10,935
99.63%
0.37%
Title4
8,261
114
8,375
98.64%
1.36%
Title5
6,275
73
6,348
98.85%
1.15%
Title6
12,116
200
12,316
98.38%
1.62%
Title7
44,061
375
44,436
99.16%
0.84%
Title8
1,149
35
1,184
97.04%
2.96%
Title9
8,999
115
9,114
98.74%
1.26%
Title10
6,301
142
6,443
97.80%
2.20%
Title11
17,818
1260
19,078
93.40%
6.60%
Title12
21,008
250
21,258
98.82%
1.18%
Title13
7,582
267
7,849
96.60%
3.40%
Title14
1,347
12
1,359
99.12%
0.88%
Title15
3,524
111
3,635
96.95%
3.05%
Title16
8,761
172
8,933
98.07%
1.93%
Title17
25,712
276
25,988
98.94%
1.06%
Title18
14,024
145
14,169
98.98%
1.02%
Title19
42,797
631
43,428
98.55%
1.45%
Title20
8,593
161
8,754
98.16%
1.84%
Title21
9,333
164
9,497
98.27%
1.73%
301,796
5,380
307,176
98.25%
1.75%
98.38%
1.62%
1.32%
1.32%
Total
Median
Standard
Deviation
Average
9,333
164
9,497
12,124
282
12,280
14,371
256
14,627
98.11%
1.89%
Table1–Appetitesalesvolumeforbothprintanddigitalcookbookspublishedintheseasonsof
Summer2012throughSpring2014
Onanindividual,title-by-titlebasis,thesalesvolumeforprintcookbooksconsistentlyexceeds
thatofe-cookbooks—anobservationmadeexceptionallyclearinthegraphsbelow(Figures1and2).
Acrossthetitlessample,thereisnoinstanceofdigitalsalesexceedingprintsales,withalltitles
showingprintsalesvolumethatexceedsdigitalsalesbynolessthan93%andanaverageof98%.
7
45,000
42,500
40,000
37,500
35,000
32,500
30,000
27,500
25,000
22,500
20,000
17,500
15,000
12,500
10,000
7,500
5,000
2,500
0
LTDNetSales
(Units)- PRINT
LTDNetSales
(Units)DIGITAL
Title1
Title2
Title3
Title4
Title5
Title6
Title7
Title8
Title9
Title10
Title11
Title12
Title13
Title14
Title15
Title16
Title17
Title18
Title19
Title20
Title21
Units
LTD Net Sales: Print vs. Digital
Appetite Titles
Figure1–LTDNetSales:Printvs.Digital
Lookingatthebigpicture,whennetLTDsalesaretotaledacrossalltitles,weseethatthesaleof
titlesinaprintformataccountsfor98.25%ofallsalesintheseasonsofsummer2012throughspring
2014,withthesaleoftitlesindigitalformatsmakinguponly1.75%ofnetsales.Thistranslatesinto
roughlythesaleof56printcookbooksforevery1e-cookbooksold,andstrongevidencesupportinga
salestrendofconsumerpreferenceforprintcookbooksovere-cookbooks.
Onamoregranularlevel,titles8and14showthesmallestpercentagedifferencebetweenprint
anddigitalsalesvolumes(Figure2),butarealsothetwotitleswiththelowestprintsalesvolumes,
andlowestoverallsalesvolumeacrossbothformats.Eventhen,thesalesvolumesforTitles8and14
inprintstillexceedtheirrespectivedigitalsalesbymorethan95%,withthedigitalsalesvolumesfor
Titles8and14fallingamongthelowestofthe21-titlesample.Therefore,thedecreaseddifference
cannotbeattributedtoabumpindigitalsales,buttoadecreasedoverallpopularityofthetitlesthat
resultedinadropinprintsales—theprevalentformatincookbooksales.
Title11standsoutasthetitleyieldingthehighestdigitalsalesvolumeofthe21titlessampled,
thoughdigitalsalesstillaccountforlessthan7%ofitstotalLTDnetsales.Whenquestioned,
Appetitestaffnotedthatthisspikeinsalesmaybeduetothefactthattheauthorofthistitlewas,
whencomparedtotheirotherauthors,particularlywellconnectedtovariousonlinemarketing
channelsandhadanestablishedonlinepresenceandcommunityofdedicatedfollowers.Specific
analysisofthistitle’ssales,withexaminationofmarketingbudgetsandotherqualitativefactors
wouldbenecessarytofurtherexplainthespikeinsales.
8
Digital LTD Net Sales as a Percentage
of Total LTD Net Sales
8%
7%
6%
5%
4%
3%
2%
1%
0%
Title1
Title2
Title3
Title4
Title5
Title6
Title7
Title8
Title9
Title10
Title11
Title12
Title13
Title14
Title15
Title16
Title17
Title18
Title19
Title20
Title21
Percentage of Total LTD Net Sales
Appetite Titles
Figure2–DigitalLTDNetSalesasaPercentageofTotalLTDNetSales
WithamorecomprehensiveviewofAppetite’se-cookbooksalestrends,andtheapparentlackof
popularityfordigitalcookbooksamongconsumers,itmaybeofbenefittoconsideranytemporal
factorsinthistrend.RememberthatamongtheguidingprinciplesbehindPRH’suniversal
conversionpolicywerearchivingpurposesandaccessibilityconsiderations,suchthatpublishinga
digitalcookbookwasawayofensuringthetitleremainedavailableforpurchaseevenaftergoing
“outofprint.”Itmightbereasonable,then,towonderifdigitalsalesincreaseasthetitle’sprint
availabilitydeclines;however,furtheranalysisusingdatacollectedoveralongerperiodoftime
wouldbenecessaryforanyconclusiveanswers.
Examiningthepercentagesoftotalnetsalesfromthefirst12monthsfollowingatitle’srelease,
brokendownbyformatacrosstheseasonsofsummer2012throughspring2014(Figure3),wesee
thattheSpring2013publishingseasonsawabumpinthesalesofe-cookbooks,thoughprint
cookbooksalesstillaccountedformorethan94%ofallsalesinthatseason.Thisbumpinecookbooksalesislargelyduetothedigitalsuccessoftitle11,discussedabove.
Overall,examiningYTD(First12months)salesvolumebyseason(Table2)showsdigital
formatsconsistentlyaccountingforlessthan6%oftotalnetsales(Figure3).Interestingly,italso
showsaslightincreaseinthepopularityofe-cookbooksovertime(Figure4)withthemostrecent
seasonincludedinthedatasetshowinganall-timehighfore-cookbooksales.Withoutanalyzingan
expandedsetofdatacollectedoveralongerperiodoftime,it’sunclearifthisisthebeginningofa
longertrendofe-cookbookpopularitygrowth,butfornow,evenwiththissmallriseine-cookbooks
salesvolume,thedatapaintsaclearpictureofconsumerpreferenceforprintcookbooks.
9
10
Summer'12
Fall'12
Spring'13
Summer'13
Fall'13
Spring'14
Season/
Span
1
6
3
2
5
3
Number
of Titles
per
Season
409
17479
3682
815
13178
12701
YTD
(First 12)
Net Sales
(Units) PRINT
22
247
209
26
219
377
YTD
(First 12)
Net Sales
(Units) DIGITAL
409.0
2913.2
1227.3
407.5
2635.6
4233.7
Average
YTD
(First 12)
Net Sales
(Units) PRINT
22.0
41.2
69.7
13.0
43.8
125.7
Average
YTD
(First 12)
Net Sales
(Units) DIGITAL
431
17726
3891
841
13397
13078
Total
Combined
YTD
(First 12)
Net Sales
(Units)
0.95
0.99
0.95
0.97
0.98
0.97
% Total
YTD
(First 12)
Net Sales
- PRINT
0.05
0.01
0.05
0.03
0.02
0.03
% Total
YTD
(First 12)
Net Sales
- DIGITAL
Table2–Appetite’sYTD(first12months)netsalesforprintanddigitalcookbooksbyseason
% Total LTD Net Sales
Digital LTD Net Sales as a Percentage
of Total LTD Net Sales (by Season)
6%
5%
4%
3%
2%
1%
0%
Summer'12
Fall'12
Spring'13
Summer'13
Fall'13
Spring'14
Axis Title
Figure3–DigitalLTDNetSalesasaPercentageofTotalLTDNetSales(bySeason)
Average Digital Cookbook YTD (First 12 Months) Net
Sales by Season
Average YTD (first 12)
Net Sales (Units)
140
120
100
80
60
40
20
0
Summer'12
Fall'12
Spring'13
Summer'13
Fall'13
Spring'14
Season
Figure4–AverageDigitalCookbookYTD(First12Months)NetSalesbySeason
List price
Withsomeinsightintothesalesvolumetrendsassociatedwithprintanddigitalcookbooks,we
canexpandontheapparentconsumerpreferenceforprintcookbooksbyexploringpossiblereasons
11
behindit.Oneofthemostobviousplacestobeginisbyexaminingthepricingoftitlespublishedin
eachformat.
Onepossiblehypothesisisthate-cookbooklistpricesaretoohigh,andthatlowerlistprices
wouldleadtoincreasedsalesvolume.Totestthis,wecanbeginbylookingforpossiblerelationships
betweene-cookbooklistpriceandsalesvolume.
Althoughthelistprices(Table3)maynotreflecttheactualprice(orprices)atwhichthetitles
weresoldthroughretailersto100%accuracy(rememberthatevenundertheagencypricingmodel,
retailerscanoffersomelevelofdiscounting),giventheagencypricingmodelatplay,thelistprices
foreachformatprovideasolidbasisforouranalysis.
Anonymized
Title
Title1
List
Price
(CAD) PRINT
$24.95
List
Digital
Price
Price as %
(CAD) of Print
DIGITAL
Price
$14.99
60%
List Price
Difference
(PrintDigital)
$9.96
LTD Net
Sales
(Units) PRINT
13,017
LTD Net
Sales
(Units) DIGITAL
234
Title2
$35.00
$16.99
49%
$18.01
30,224
602
Title3
$19.95
$12.99
65%
$6.96
10,894
41
Title4
$19.95
$9.99
50%
$9.96
8,261
114
Title5
$19.95
$9.99
50%
$9.96
6,275
73
Title6
$29.95
$14.99
50%
$14.96
12,116
200
Title7
$39.95
$16.99
43%
$22.96
44,061
375
Title8
$22.95
$14.99
65%
$7.96
1,149
35
Title9
$35.00
$16.99
49%
$18.01
8,999
115
Title10
$29.95
$14.99
50%
$14.96
6,301
142
Title11
$29.95
$14.99
50%
$14.96
17,818
1260
Title12
$35.00
$16.99
49%
$18.01
21,008
250
Title13
$29.95
$14.99
50%
$14.96
7,582
267
Title14
$34.95
$16.99
49%
$17.96
1,347
12
Title15
$29.95
$14.99
50%
$14.96
3,524
111
Title16
$29.95
$14.99
50%
$14.96
8,761
172
Title17
$35.00
$16.99
49%
$18.01
25,712
276
Title18
$29.95
$14.99
50%
$14.96
14,024
145
Title19
$22.95
$14.99
65%
$7.96
42,797
631
Title20
$24.95
$14.99
60%
$9.96
8,593
161
Title21
$35.00
$16.99
49%
$18.01
9,333
164
Average
$29.30
$15.09
52%
$14.21
14371
256
*ListpricesshowninCAD
Table3–AppetiteprintanddigitalcookbooklistpricesandLTDnetsales
12
Theplotteddataforlistpriceandsalesvolumeofe-cookbooks(Figure5)showsarelationship
wherebyaslistpriceincreasesotoodoesatitle’ssalesvolume.
Appetite E-cookbooks: Sales Volume vs. List Price
1400
LTD Net Sales (Units)
1200
1000
800
600
400
200
0
$0.00
$5.00
$10.00
$15.00
$20.00
List Price (CAD)
Figure5–AppetiteE-cookbooks:SalesVolumevs.ListPrice
Interestingly,thedata(Figure6)alsoseemstoindicatethathigherlistpricesarenotadeterrent
frompurchasewhenconsideringeachformatindependently.However,thisfindingappearsstrange,
giventhathighe-bookpriceshavebeensubjecttocriticismoflate.
Overthepastfiveyears,therehasbeenasignificantamountofcontroversyaroundthetopicof
e-bookpricing,withnumerousretailersandconsumersarguingthate-bookpricesaretoohigh.9
Fromaconsumerperspective,thegeneralargumentforlowe-bookpricesistheassumedlowcostof
productionandthelackofaphysicalformatrequiringmaterialsandprocesses(paper,ink,binding,
shipping,storage,stocking,etc.)whichwouldneedtobecoveredbytheprice.10Despitehavingthe
samecontent,thedifferenceincontainer,whichmakesane-bookasomewhat“intangible”product,
causesconsumerstobeconfusedbythepricessetbypublishers,whichtheyinterpretasbeingtoo
high.11
9"E-bookPricesSparkBattlebetweenPublishers,Retailers."CBCNews.December16,2011.
AccessedDecember17,2015.http://www.cbc.ca/news/arts/e-book-prices-spark-battle-betweenpublishers-retailers-1.1103529.
10Greenfield,Jeremy."ConsumersUpsetandConfusedOverE-BookPricing."DigitalBookWorld.
April18,2012.AccessedOctober11,2015.http://www.digitalbookworld.com/2012/consumersupset-and-confused-over-e-book-pricing/.
11Ibid.
13
Appetite Print Cookbooks:
Sales Volume vs. List Price
50000
45000
LTD Net Sales (Units)
40000
35000
30000
25000
Print
Cookbooks
Linear(Print
Cookbooks)
20000
15000
10000
5000
0
$0.00
$10.00
$20.00
$30.00
List Price (CAD)
$40.00
$50.00
Figure6–AppetitePrintCookbooks:SalesVolumevs.ListPrice
Ontheothersideofthings,unlikeconsumers,publisherssuchasPenguinRandomHouseare
awarethattherearemanyfeesandcostsassociatedwithe-bookproduction,andtheyare,ofcourse,
lookingtocoverthosecosts,paytheirauthors,andturnaprofit.Strikingabalancebetweenmeeting
thesethreegoalsandalsokeepingconsumershappyandbuyinghasprovendifficult,soitcomesas
nosurprisethate-bookpriceshavevariedgreatlyovertheyearssincetheiroriginalproduct
release.12
Therehasbeenaparticularlyhighlevelofe-bookpricefluctuationoverthelast5yearsasmore
retailersenteredthedigitalbookarenaandbecamemoreinvestedine-bookpricing.Priorto2010,
e-bookswerepricedusingatraditional“wholesale”model—thesamemodelusedwithprintbooks—
whichallowsapublishertosetalistprice,sellthattitletoaretaileratasetdiscount(usually4060%),andthentheretailerisfreetosellthebookatwhateverpricetheychoose.13
Atthistime,Amazonheldaroughly90%shareofthee-bookmarketandwasknownforslashing
e-bookprices—eventobelowcost—todrivesales.14WhenApplereleasedtheiPadin2010,things
12Ibid.
13"WhatIs‘AgencyPricing’?"WallStreetJournal.April10,2012.AccessedOctober11,2015.
http://blogs.wsj.com/digits/2012/04/11/what-is-agency-pricing/.
14Ibid.
14
changed.Attemptingtowinbackashareinthee-bookmarket,Appledevelopedandthenproposed
topublisherswhatisnowknownasthe“agencypricing”model.
Underthismodel,publisherssetthepriceofane-bookandretailersreceiveapre-determined
commission.Thesecommissionsaregenerallyaroundthe30%mark(wellbelowtheaverage
minimumof50%retailersmakeinunderawholesalemodel)whilepublishersscoopupthe
remaining70%.Retailersareallowedtodiscountthelistpricetoacertainextent,butagreements
aremadethatrestrictthelevelofdiscountandhowmanytitlescanbediscountedatanytime.
AllofAppetite’se-cookbooks,andinfactallofPRHCanada’se-books,aresoldtoretailersunder
agencypricing,placingthepublishersincontrolofe-cookbooklistprices—animportantfactto
rememberwhenanalyzingtherelationshipbetweene-bookpricesandsalesvolume.
KnowingthatAppetiteholdsfullpoweroveritse-cookbookprices,andrecognizingthe
commotionsurroundinge-bookpricingingeneral,itseemsprudenttoexplorethecontradiction
foundintheanalysisabovebyconsideringanothervariable:thedifferenceinpricebetweenatitle’s
printanddigitalversions.ExaminingthelistpricesforAppetite’se-cookbooks(Figure5)weseethat
theyfallwithinarangeof43-65%ofthesametitle’sprintversionlistprice,withanaverageprice
differenceof52%.
Whilethedifferenceinlistpricebetweenane-cookbookanditsprintversionmayfluctuate,one
trendisclear:e-cookbooksarestillconsistentlycheapertopurchase.Whenthedifferenceinlist
pricebetweenformatsisplottedasapercentagediscount,weseeanotherinterestingrelationship
appear—thistimebetweensalesvolumeandthepricedifferencebetweenformats(Figure7).
Withoutstatisticallytestingforapositivecorrelation,nothingcanbesaidconclusively;however,
iftherelationshipbeingobservedweretotranslateintoastatisticallysignificantpositivecorrelation,
wewouldbeobservinganapparentcontradictionbetweenconsumeropinionandbehaviour.We
couldhypothesizethen,thatwhenconsumerssaytheywantlowere-bookprices,whattheyreally
seemtobesayingisthattheywantlowere-bookpricesrelativetoatitle’sprintversionlistprice.It
isn’tthelistpriceitselfimpactingsalesvolume,butratherthepricedifference.Furtheranalysiswith
alargerdatasetisnecessarytotestthishypothesis.
15
LTD Net Sales (Units)
E-cookbooks:
Sales volume vs. List Price Discount
1400
1200
1000
800
600
400
200
0
30%
E-cookbooks
Linear(Ecookbooks)
40%
50%
60%
Discount % (Print Cookbook List Price to E-cookbook list price)
Figure7-E-cookbooks:SalesVolumevs.ListPriceDiscount
Toreview,whatwehaveseenfromtheaboveanalysesisthat,despiteaverysmallincreasein
digitalsalesvolumeovertime,e-cookbooksfirstyearsalesaccountforlessthan6%ofeachseason’s
totalnetsales,and,to-date,e-cookbooksalesaccountforlessthan2%ofAppetite’stotalLTDsales
volumefromtheseasonsofsummer2012throughspring2014.ThisNorthAmericanconsumer
preferenceforprintcookbooksovere-cookbooksisconsistentacrossalllistprices;however,a
reducedornarrowerpricegapbetweenthelistpricesofatitle’sprintanddigitalformatsseemsto
showincreasede-cookbooksales.
Net revenue
Inthefaceofsuchevidencethate-cookbooksalesareexceptionallylow,indicatingalackof
productpopularityamongNorthAmericanconsumers,itseemsprudenttoaskifAppetite’sdecision,
andreallyPRH’spolicy,tobringdigitalversionsofallitstitlestomarketisasoundbusinessdecision
andtoinvestigatethereturnoninvestmentfore-cookbookdevelopment.
AsweworktowardcalculatingtheROIfore-cookbookproduction,thefirststepistolookatecookbookrevenue.WebeginbyexaminingtheLTDnetsalesrevenuefrome-cookbooksforthe
seasonsofsummer2012throughspring2014.
Becauseauthorroyaltiesarepaidoneverycopysoldbasedonthetitle’slistpriceforallformats,
theanalysisusesYTD(first12months)netsalesrevenueafterroyalties(Table4).Noothercosts
(e.g.,plantcosts,imprintoverhead,marketing,production,shipping,etc.)havebeenapplied.Without
thisdatafactoredin,weseethatintheirfirstyearofsales,morethan99%ofnetrevenuecamefrom
16
thesaleoftitles’printversionsandonly0.85%ofrevenuecanbeattributedtoe-cookbooksales
(Table4).
YTD (First 12)
Net Revenue
(After Royalties)
- PRINT
YTD (First 12)
Net Revenue
(After
Royalties) DIGITAL
$126,356.16
$1,843.77
$128,199.93
98.56%
1.44%
$185,157.00
$841.01
$185,998.01
99.55%
0.45%
$10,740.08
$136.40
$10,876.48
98.75%
1.25%
$147.63
$22.48
$170.11
86.79%
13.21%
$3,653.84
$67.43
$3,721.28
98.19%
1.81%
$32,912.06
$281.06
$33,193.12
99.15%
0.85%
$319,352.31
$1,312.48
$320,664.79
99.59%
0.41%
$2,674.82
$78.70
$2,753.52
97.14%
2.86%
$52,447.50
$535.19
$52,982.69
98.99%
1.01%
$24,961.08
$179.88
$25,140.96
99.28%
0.72%
$51,556.68
$2,057.38
$53,614.06
96.16%
3.84%
$133,843.50
$981.17
$134,824.67
99.27%
0.73%
$82,584.88
$1,585.19
$84,170.07
98.12%
1.88%
$5,661.90
$0.00
$5,661.90
100.00%
0.00%
$17,591.88
$292.31
$17,884.19
98.37%
1.63%
$11,330.83
$247.34
$11,578.17
97.86%
2.14%
$89,554.50
$484.22
$90,038.72
99.46%
0.54%
$101,478.84
$652.07
$102,130.90
99.36%
0.64%
$98,522.63
$798.22
$99,320.85
99.20%
0.80%
$4,708.07
$179.88
$4,887.95
96.32%
3.68%
$53,392.50
$242.11
$53,634.61
99.55%
0.45%
$1,501,896.37
$12,818.25
$1,514,714.62
99.15%
0.85%
Total
Total (First 12)
YTD Net
Revenue (After
Royalties)
% Total YTD
(First 12) Net
Revenue
(After
Royalties) PRINT
% Total YTD
(First 12) Net
Revenue
(After
Royalties) DIGITAL
*Anonymizedtitleshavebeenremovedanddatalistedinarandomizedordertopreservethe
confidentialityofAppetite’sroyaltyratesandpreventidentificationofthetitlesbeingusedfor
analysis.
Table4-AppetiteprintanddigitalcookbookYTDnetrevenueafterroyalties
ThesameistrueofAppetite’sLTDnetrevenue(Table5)where,again,morethan99%of
revenueintheseasonsofsummer2012throughspring2014camefromthesalesofprintcookbooks.
Inthisextendedtimeframe,theproportionofrevenuegeneratedbye-cookbooksalesonlycontinues
todroptoonly0.69%ofnetrevenue.
17
LTD Net
Revenue After
Royalties PRINT
LTD Net
Revenue
After
Royalties DIGITAL
LTD Total Net
Revenue After
Royalties
% Total LTD
Net Revenue
After
Royalties PRINT
% Total LTD
Net Revenue
After
Royalties DIGITAL
$24,391.83
$393.49
$24,785.32
98.41%
1.59%
$42,369.89
$152.91
$42,522.80
99.64%
0.36%
$97,628.02
$1,247.92
$98,875.94
98.74%
1.26%
$115,797.28
$546.95
$116,344.23
99.53%
0.47%
$152,446.43
$854.15
$153,300.58
99.44%
0.56%
$174,561.33
$1,596.44
$176,157.77
99.09%
0.91%
$198,315.70
$1,810.04
$200,125.74
99.10%
0.90%
$201,035.15
$399.44
$201,434.59
99.80%
0.20%
$210,049.83
$3,001.75
$213,051.58
98.59%
1.41%
$242,712.55
$1,933.71
$244,646.26
99.21%
0.79%
$283,468.50
$1,465.39
$284,933.89
99.49%
0.51%
$293,989.50
$2,089.77
$296,079.27
99.29%
0.71%
$300,416.09
$2,630.75
$303,046.84
99.13%
0.87%
$335,658.64
$2,248.50
$337,907.14
99.33%
0.67%
$388,517.39
$1,630.16
$390,147.55
99.58%
0.42%
$493,625.42
$14,165.55
$507,790.97
97.21%
2.79%
$661,752.00
$3,185.63
$664,937.63
99.52%
0.48%
$809,928.00
$3,516.93
$813,444.93
99.57%
0.43%
$908,526.81
$7,094.02
$915,620.83
99.23%
0.77%
$952,056.00
$7,670.99
$959,726.99
99.20%
0.80%
$1,584,213.26
$4,778.44
$1,588,991.70
99.70%
0.30%
$8,985,657.07
$62,412.90
$9,048,069.97
99.31%
0.69%
Total
*AnonymizedtitleshavebeenremovedtopreservetheconfidentialityofAppetite’sroyaltyratesand
preventidentificationofthetitlesbeingusedforanalysis.
Table5–AppetiteprintanddigitalcookbookLTDnetrevenueafterroyalties
Whenproduction(plant)costsarefactoredin,e-cookbooksfarebetterthantheirprint
counterparts.Oneofthepointscitedearlierasakeyargumentforlowere-bookpricesisthatthecost
ofdigitalproductionismuchlowerthanthatofprintconsistingofafiniteamountpaidup-frontat
thetimeofproduction.Withouttheneedforphysicalmaterials,shipping,andstorage,onecould
arguethat,overtimeifnomarketingordistributioncostsareaccrued,oncetheoriginalproduction
costsarecovered,e-cookbookswouldgeneratepureprofitevenafterpayingoutroyalties.
Meanwhileeveryprintcookbooksoldwill,duetoitsphysicality,haveproductioncoststobecovered
thateatintorevenueandtherebyprofit.Factoringinthesecosts;therefore,wouldlikelyshiftthe
proportionofnetrevenuegeneratedbyeachformat,
18
Thenextstepistoconsiderthecoststhatneedtobefactoredin.Duetotheirvarianceand
unequalapplicationtotheprintanddigitalversionsofatitle,wecanautomaticallyexclude
marketing,imprintoverhead,andadmincostsandstartouranalysisbyfocusingsolelyon
production,withparticularattentiongiventoplantandpaperandbinding(PP+B)costs.
Plantcostsaretheinitialcostsofpreparingforandprintingor,inthecaseofe-cookbooks,
digitizingatitle.Theycanincludethingslikepressset-uporthecreationofplates,negatives,or
print-readyfiles.
Inthecaseofe-cookbooks,thesecostsarefixed,andoncepaidallowforunlimitedreplicationof
theproduct.Withprintcookbooks,thesecostsarealsofixed,buthavethepotentialtoincreaseat
higherprintruns,though,becauseprintrunsarecompletedallatoncethisisseldomthecase.Dueto
therequirementofprintingplatecreationandothertechnicalset-upnecessaryforoffsetprinting—
themethodmostcommonlyusedinAppetite’scookbookproductionandtheoverallcheapesthighquality,commercial-volumeprintingmethod—theplantcostsforprintcookbooksaremuchhigher
thanthoseofe-cookbooks.
PaperandbindingcostsforphysicaltitleformatsarenegotiatedbetweenAppetite(more
specifically,PenguinRandomHouse’sproductionteam)andtheprinter.Thesecostsvaryaccording
tothecomplexityandqualityofthepaperandbindingbeingused,andtheembellishmentsand
detailsbeingapplied.
TopreservetheconfidentialityofagreementsmadebetweenPenguinRandomHouseandits
printersande-bookproducers,theexactproductioncostsforeachofthe21titlesincludedinthe
datasetcannotbedisclosed.However,roughestimatesandaveragecostscanbeappliedtoprovidea
roughlookatthecostsandreturnsofbothformats.Table6showstheYTD(first12)netrevenuefor
all21titlespublishedbetweensummer2012andspring2014afterroyalties,plantcostsandPP+B
costshavebeenapplied.
Notethatthecostoflabour/staffwagesassociatedwiththestrippingprocessthathappensprior
toconversion(mentionedabove)arenotincludedhere.
19
Table6–AppetiteprintanddigitalcookbookYTDnetrevenueafterroyaltiesandproductioncosts
20
$3,653.84
$2,674.82
$10,740.08
$4,708.07
$24,961.08
$53,392.50
$11,330.83
$32,912.06
$17,591.88
$89,554.50
$52,447.50
$101,478.84
$98,522.63
$185,157.00
$133,843.50
$319,352.31
$82,584.88
$126,356.16
$51,556.68
Total
$1,501,896.37
$132,296.59
$147.63
Average
$5,661.90
YTD (First 12)
Net Revenue
After
Royalties PRINT
$12,818.25
$1,165.30
$2,057.38
$1,843.77
$1,585.19
$1,312.48
$981.17
$841.01
$798.22
$652.07
$535.19
$484.22
$292.31
$281.06
$247.34
$242.11
$179.88
$179.88
$136.40
$78.70
$67.43
$22.48
$0.00
YTD (First 12)
Net Revenue
After
Royalties DIGITAL
$115,500.00
$10,500.00
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
Estimated
Plant Costs
– PRINT
$15,750.00
$1,431.82
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
Estimated
Plant
Costs DIGITAL
$144,792.00
$13,162.91
$5,583.00
$16,425.00
$8,943.00
$26,646.00
$12,747.00
$17,634.00
$13,923.00
$10,989.00
$4,995.00
$8,529.00
$1,905.00
$3,564.00
$1,227.00
$5,085.00
$2,703.00
$612.00
$1,746.00
$378.00
$594.00
$24.00
$540.00
Estimated
PP+B Costs PRINT
$1,241,604.37
$108,633.68
$40,473.68
$104,431.16
$68,141.88
$287,206.31
$115,596.50
$162,023.00
$79,099.63
$84,989.84
$41,952.50
$75,525.50
$10,186.88
$23,848.06
$4,603.83
$42,807.50
$16,758.08
($1,403.94)
$3,494.08
($3,203.18)
($2,440.16)
($5,376.37)
($378.10)
YTD (First 12)
Net Revenue
After
Royalties and
Production
Costs - PRINT
($2,931.75)
($266.52)
$1,307.38
$1,093.77
$835.19
$562.48
$231.17
$91.00
$48.22
($97.94)
($214.82)
($265.79)
($457.70)
($468.94)
($502.67)
($507.89)
($570.12)
($570.12)
($613.61)
($671.30)
($682.57)
($727.52)
($750.00)
YTD (First 12)
Net Revenue
After Royalties
and Production
Costs -DIGITAL
Table7–AppetiteprintanddigitalcookbookLTDnetrevenueafterroyaltiesandproductioncosts
21
$335,658.64
$300,416.09
$210,049.83
$661,752.00
$809,928.00
$1,584,213.26
$908,526.81
$952,056.00
$493,625.42
$793,505.30
Average
$8,985,657.07
$293,989.50
Total
$242,712.55
$174,561.33
$198,315.70
$283,468.50
$97,628.02
$388,517.39
$854.15
$152,446.43
$546.95
$115,797.28
$62,412.90
$5,673.90
$14,165.55
$7,670.99
$7,094.02
$4,778.44
$3,516.93
$3,185.63
$3,001.75
$2,630.75
$2,248.50
$2,089.77
$1,933.71
$1,810.04
$1,630.16
$1,596.44
$1,465.39
$1,247.92
$399.44
$201,035.15
$115,500.00
$10,500.00
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$5,500
$24,391.83
$393.49
$42,369.89
$5,500
Estimated
Plant Costs PRINT
$152.91
LTD Net
Revenue After
Royalties DIGITAL
LTD Net Revenue
After Royalties PRINT
$15,750.00
$1,431.82
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
$750
Estimated
Plant Costs DIGITAL
$905,388.00
$82,308.00
$53,454.00
$90,672.00
$128,391.00
$132,183.00
$77,136.00
$63,024.00
$22,746.00
$39,051.00
$36,348.00
$27,999.00
$26,283.00
$25,779.00
$42,072.00
$18,903.00
$26,997.00
$10,572.00
$24,783.00
$18,825.00
$32,682.00
$3,447.00
$4,041.00
Estimated
PP+B Costs PRINT
$7,964,769.07
$700,697.30
$434,671.42
$855,884.00
$774,635.81
$1,446,530.26
$727,292.00
$593,228.00
$181,803.83
$255,865.09
$293,810.64
$260,490.50
$210,929.55
$167,036.70
$340,945.39
$150,158.33
$250,971.50
$81,556.02
$122,163.43
$91,472.28
$162,853.15
$15,444.83
$32,828.89
LTD Net
Revenue After
Royalties and
Production
Costs PRINT
$46,662.90
$4,242.08
$13,415.55
$6,920.99
$6,344.02
$4,028.44
$2,766.93
$2,435.63
$2,251.75
$1,880.75
$1,498.50
$1,339.77
$1,183.71
$1,060.04
$880.16
$846.44
$715.39
$497.92
$104.15
($203.05)
($350.56)
($356.51)
($597.09)
LTD Net
Revenue After
Royalties and
Production
Costs DIGITAL
Itwouldappearthen,thatforthemajorityoftitles,e-cookbooknetrevenueislow,andmayin
factrunadeficit,withinthefirstyearofpublication.Overtime;however,likelyduetothelackof
PP+Bcosts,e-cookbooksstandtonotonlycovertheirproductioncosts,butalsogeneraterevenuefor
Appetite.Rememberalso,thatasadigitalproduct,e-cookbookswillalsonevergo“outofprint”and
thereforehavethepotentialtocontinuegeneratingrevenue—andprofit,intime—inperpetuity.
Howlongthendoesittakebeforeane-cookbookbeginstoturnaprofit?Althoughquarterly
salesdatawouldprovideamoreaccurateanswertothisquestion,PRHCanadareleasesitssalesdata
in12-monthperiods,soforthesecalculations,anaveragenumberofcopiessoldperweekcanbe
calculatedfromtheYTDsales(first12months)andplottedaccordingly.
Table8showsaroughcalculationofthenumberofweeksatmarketeachtitlewouldrequireto
recoverthedigitalproductioncosts($750pertitle,asestimatedabove)andbeginmakingprofit.
Thesefiguresarebasedontheassumptionofasteadyaveragerateofsale,basedonthetitle’sfirst
YTDnetsalesafterroyalties,andaremeanttoprovideonlyaroughprojectionofthenumberof
weekstoapositiveROI.Itisacknowledgedthatasampleofsalesfromalongertimeperiodanda
moresophisticatedcalculationwouldberequiredtoaccuratelyforecastthesefigures.Topreserve
confidentialityofroyaltyrates,theanonymizedtitleshavebeenexcludedfromTable8,ashavethe
listprices.
Fromthis,wecanseethetop-performingtitletoachieveapositiveROIrequires18.69weeksor
justshyof5monthsonthemarketbeforeitcoversproductioncostsandbeginstoturnprofit.
Meanwhile,theworstperformingtitlewouldrequirean1112.10weeks,equivalenttomorethana
staggering23yearsonthemarket.Onaverage,e-cookbooksrequire62.98weeksor16monthsto
earnbackproductioncostsandachieveapositiveROI.
22
YTD (First 12) Net
Sales (Units) DIGITAL
Average Number
of Units Sold Per
Week - DIGITAL
Average Number of Weeks
to Profitability/Positive
ROI
3
0.06
1112.10
42
0.81
72.68
66
1.27
60.63
77
1.48
67.66
103
1.98
50.57
141
2.70
24.71
164
3.15
18.69
183
3.51
19.01
52.38
1.00
58.87
9
0.17
392.51
7
0.13
513.28
14
0.27
218.04
16
0.31
215.25
16
0.31
189.90
19
0.36
185.35
22
0.42
158.87
25
0.48
122.65
26
0.50
133.45
38
0.73
91.41
58
1.11
60.11
71
1.36
43.29
Average
54.88
1.05
62.98
Total
1,100
21
65.81
Table8–Averagenumberofweekstoprofitability/positiveROIforAppetite’sdigitalcookbooks
ROI
Wecanseethenthat,givenenoughtimeonthemarket,ane-cookbookhasthepotentialtoearn
outitsproductioncostsandbegintogeneratepureprofit,butasitstands,thequestionremainsasto
whetherornotAppetite’se-cookbookproductionhasalreadyachievedapositiveROI,oriftheywill
continuetooperateintheredfordigitalsalesforsometimetocome.
Therefore,whilethemathmayalreadybeobvious,thefinalpieceinthisinvestigationofthe
returnoninvestmentforAppetite’sautomaticconversionofitstitlesintoe-cookbooksistoactually
calculatethelifetimeROIforAppetite’se-cookbookLTDnetsales.Thisisdonebydividingthereturn
ofaninvestment—inthiscasetheLTDnetrevenue(afterproductioncostshavebeencovered)—by
theinvestmentorproductioncosts(numberspulledfromTable7).
23
($46,662.90-$15,750.00)/$15,750.00=196%
Inspiteofwhatappearstobeextremelylowdigitalsalesvolume,especiallyascomparedto
Appetite’sprintsales,andasignificantnumberofAppetite’se-cookbooksrunningadeficitintheir
firstyearonthemarketwithanaveragewaitingperiodforprofitsof16months,Appetite’sautomatic
conversionoftitlesintodigitalformatsappearstohave,overtheimprint’slifetime,anoutstanding
ROI,yieldingfullreturnsandanadditional96%profit.BarringanysharpdropsinAppetite’sdigital
salesandassumingasteadyrateofsalesequaltothemonthlysalesaverage,thislifetimeROIwill
onlycontinuetoincreasethelongertitlesstayonthemarket.
Noteoncemorethatalloftheabovecalculationshaveamarginoferrorandusedaverages
and/orestimatessoastopreserveconfidentialityandlimitthereleaseofcorporateinformation.
AnanalysisthatwouldallowustobettergaugeAppetite’sperformancewouldbetoexamine
Appetite’se-cookbooksalesperformanceincomparisontothatofotherimprintswithinthePRH
umbrella.
Comparative Analysis with PRH Imprints
ToassessAppetite’se-cookbooksalesperformanceandROIrelativetothatofotherpublishers,
weareabletoperformanalysis,asabove,usingsalesdatafrom317e-cookbookspublishedinthe
seasonsofsummer2012throughtospring2014byfiveothere-cookbookproducingimprintswithin
thePenguinRandomHouseumbrella.Althoughthereareatleast24imprintswithinthePRH
umbrellathatpublishcookbooks,thefiveincludedinthesamplewereselectedonthesimilaritiesin
theirmandatesandliststothatofAppetite.Further,alloftheseimprintsregardlessoftheir
headquarterlocations,likeAppetite,publishanddistributetheirtitlesacrossNorthAmerica.As
above,alldatausedintheanalysisbelowreflectsNorthAmericansalesinCAD.
Ifwebeginourcomparativeanalysesbylookingattheaveragefirstyearsalesforallfive
imprintsweseethatAppetite’sYTD(first12months)salesfarexceedthesalesofallfiveoftheother
imprintssampled(Table9).
Imprint
Average YTD (First
12) Net Sales (Units)
Rank
Appetite
1,100
PRHAnonymousImprint1
476
PRHAnonymousImprint2
38
PRHAnonymousImprint3
641
PRHAnonymousImprint4
87
PRHAnonymousImprint5
290
Table9–AverageYTD(first12months)netsalesofsampledPRHimprints
24
1
3
6
2
5
4
WhenwescalethiscomparisonupandlookatLTD(lifetimetodate)netsalesinstead,Appetite’s
performanceslipsfromthetopposition,showingthatwhileAppetiteoutperformsitscounterpartsin
thefirstyearofsalesitdoesnothavethestayingpowertosupportthissalesrate,anditssales
performanceissoonovertakenbythatoftheotherfiveimprints(Table10).
Imprint
Average LTD Net
Sales (Units)
Appetite
Total LTD Net
Sales (Units)
Rank
256
5,380
6
PRHAnonymousImprint1
2,030
42,639
3
PRHAnonymousImprint2
197
5,705
5
PRHAnonymousImprint3
1,839
200,443
1
PRHAnonymousImprint4
414
8,283
4
PRHAnonymousImprint5
937
131,124
2
Average
946
65,596
N/A
Table10–AverageandtotalLTDnetsalesofsampledPRHimprints
ItisimportanttonotethatthefiveselectedimprintsareallbasedintheUnitedStates,and,
despitethefactthatthemajorityofAppetitestitlesareexportedtotheU.S.theremaybe
discrepanciesinthemarketingofnativeandimportedtitlesthatcouldimpacttheirsales.Further
qualitativeinvestigationintopossiblecausesforthedifferencesinsalesvolumebetweenthe
imprintsisnotpossibleatthisjuncture;however,thefactremainsthatAppetite’sLTDnetecookbooksalesfallslightlyifnotsignificantlybelowthesalesoftheotherPRHimprintssampled.
Throughourunderstandingofthecostsassociatedwithe-cookbookproductioncosts,weknow
that,givenadequatetimetoachieveanetrevenuegreaterthanthefixedplantcostsassociatedwith
producingane-cookbook,barringacompletelackofinterestfromconsumers,imprintsstandto
achieveapositiveROIonalltheirdigitaltitles.WeknowthatasofAugust2015,Appetitehas
achievedalifetimeROIof196%fore-cookbookproduction.
BycalculatingthelifetimeROIforeachoftheotherfiveimprintssampledandtheaverage
lifetimeROIacrosstheseimprints,wearebetterabletomeasureAppetite’se-cookbooksales
performancerelativetoitspublishingcounterparts.
ObservingthelifetimeROIsforeachrespectiveimprintsampled(Table11)revealsAppetite’s
rankashavingthesecondworstlifetimeROI.Wealsoseethatallimprintssampled,likeAppetite,
have(asofAugust2015)achievedpositivelifetimeROIsandhavesincebegunaccumulatingpure
profitontheirtotale-cookbooksales.TobetterunderstandthefactorsleadingtotheROIsobserved,
furtherinvestigationisnecessary,andAppetitewoulddowelltoexplorethissotheymightdiscover
howtoincreasetheirROIone-cookbookproduction.Onepossiblefactortoconsiderinitsimpacton
ROIislistsize.
25
Imprint
Appetite
Number
of Titles
21
LTD Net Revenue
After Royalties
$46,662.90
Plant Costs
$15,750.00
ROI
196%
PRHAnonymous
20
$506,492.69
$15,000.00
3277%
Imprint1
PRHAnonymous
29
$53,426.21
$21,750.00
146%
Imprint2
PRHAnonymous
109
$2,612,858.01
$81,750.00
3096%
Imprint3
PRHAnonymous
20
$115,538.38
$15,000.00
670%
Imprint4
PRHAnonymous
140
$1,431,557.46
$105,000.00
1263%
Imprint5
Average(not
63
$943,974.55
$47,700.00
1879%
includingAppetite)
Average(including 57
$794,422.61
$42,375.00
1775%
Appetite)
Table11–ROIfordigitalcookbooksalesofsampledPRHimprints
Rank
5
1
6
2
4
3
N/A
N/A
Knowingthatallsampledimprints,despiteconsumerpreferencesforprintcookbooks,wereable
toachieveapositiveROIone-cookbookproduction,wecandigabitdeeperandexaminetheamount
oftimeeachimprintrequiredtoreachitspositivelifetimeROI.Giventhehighersalesvolumes
demonstratedbythefiveimprintsselected,itstandstoreasonthatiftheroyaltiesandproduction
costsareconsistentwiththoseofAppetiteatanestimated$750pertitle(which,forthese
calculationsandanalysesissupposed),theseimprintsstandtorecouptheirinvestmentfasterand
earnmoreprofitinashorterperiodoftime.
ByassumingasteadyweeklyrateofsalebasedontheYTD(first12)netsalesafterroyaltiesfor
eachimprint,weareableestimatethenumberofweeksatmarketeachimprintwouldrequireto
achieveapositiveROIandbeginmakingpureprofitontheirtotale-cookbooksales(Table12).
Interestingly,despitewhatlookedlikeafairlynegativesalesperformanceforAppetitewhen
observedonitsown,ourcomparativeanalysisshowsthatinevaluatingthetimerequiredtoachieve
apositiveROIontotale-cookbooksales,Appetitesignificantlyoutperformsallfiveotherimprints
sampled,recoupingitse-cookbookproductioncostsinlessthanhalfthetimeofthesecond-leading
imprint.Thisapparentcontradictorypairingofweakoverallsalesvolumeandanaccelerated
timelinetoapositiveROIisonethatrequiresfurtherinvestigationusingmoredetailedanalysesand
expandeddata;however,oneobviousquestionthatcanbeexploredusingourcurrentdatasetis
whetherornottheacceleratedtimelineforrecoupinge-cookbookproductioncostsandachievinga
positiveROIforthesampledimprintscanbeattributedtohigherlistprices.
Observingtheaveragelistpricesforeachimprint’se-cookbooksandtheaveragenumberof
weekseachimprintrequirestoreachapositiveROIontheirtotalLTDnetsales(Table13;Figure8)
weseeaninteractionindicatingthatlistpricemaybeasignificantfactoraffectinganimprint’s
26
positiveROItimeline;however,furtheranalysisisrequiredtofullyexplorethevariablesatplayin
thetimerequiredtoachieveapositiveROI.
Number
of Titles
Appetite
21
Total Plant
Costs
$15,750.00
Sales
Volume
Necessary
to Cover
Production
Costs
1392.09
YTD (First
12) Net
Sales
(Units)
1,100
Estimated
Average
Digital
Units Sold
Per Week
21
Average
Number of
Weeks to
Profitability
/Positive
ROI
65.81
PRH
20
$15,000.00
1291.16
476
9
141.01
Anonymous
Imprint1
PRH
29
$21,750.00
3479.38
38
1
4761.25
Anonymous
Imprint2
PRH
109
$81,750.00
6153.94
641
12
499.39
Anonymous
Imprint3
PRH
20
$15,000.00
922.08
87
2
552.72
Anonymous
Imprint4
PRH
140
$105,000.00
8453.34
290
6
1515.88
Anonymous
Imprint5
Table12–Averagenumberofweekstoprofitability/positiveROIfordigitalcookbooksales
ofsampledPRHimprints
Imprint
Average Price
Average Number of Weeks
(CAD)
to Profitability/Positive ROI
Appetite
$15.09
65.81
PRHAnonymous
$15.49
141.01
Imprint1
PRHAnonymous
$8.33
4761.25
Imprint2
PRHAnonymous
$17.71
499.39
Imprint3
PRHAnonymous
$21.69
552.72
Imprint4
PRHAnonymous
$16.56
1515.88
Imprint5
Average
$15.81
1256.01
Table13–Averagelistpriceandaveragenumberofweekstoprofitability/positiveROIfordigital
cookbooksalesofsampledPRHimprints
27
Sampled PRH Imprints: List Price vs.
Number of Weeks to a Positive ROI
List Price (CAD $)
25
20
15
10
5
0
0
1000
2000
3000
4000
5000
Weeks
Figure8–SampledPRHImprints:ListPricevs.NumberofWeekstoaPositiveROI
FromtheaboveanalysesweseethatAppetite’se-cookbooksalesperformanceintermsof
volumefallstowardthelowerendofthespectrumwhencomparedtothatofotherdigitalcookbookproducingimprintsunderthePRHumbrellafortheseasonsofSummer2012throughSpring2014.
Appetite’sLTDnete-cookbooksalesvolumeisthelowestofallimprintssampled,andtheCanadian
imprintalsoyieldsthelowestnetrevenueone-cookbooksales.Inspiteofthispoorsales
performance,analysisshowsthat(basedonassumedplant/productioncosts)Appetiteachieveda
positiveROIfore-cookbooksalesproductionintheshortestnumberofweeksofanyofthesampled
PRHimprints,inspiteofanaveragee-cookbookprice5%belowthesampledimprints’average.This
canlikelybeattributedtoAppetite’sstrongYTD(first12months)sales,inwhichtheimprint
outperformsallothersampledPRHimprints,exceedingtheaverageYTDsalesvolumeby150%.
Furtherqualitativeanalysiswouldberequiredtoproperlyassessthevariablesatplay,andis
recommendedtoAppetite.
Discussion
Havingconcludedaqualitativeanalysisofe-cookbooksalesdatamadeavailablethroughPRH’s
MyHousedatabase,weareleftwithabetterunderstandingofthereturnoninvestmentforAppetite’s
lineofdigitalcookbooks,andhowthisROIcomparestothoseofotherPRHimprints.Whatwelack;
however,isanunderstandingofthefindingsastheyrelatetotheindustryatlarge.Byaddingthis
expandedcomparativelenstoouranalysis,weareabletoassesswhetherornotAppetite’ssalesand
ROIisreflectiveofindustrytrendsandconsumerpreferences,andprovidestronger
recommendationsforAppetite’sfuturepublicationofe-cookbooks.
28
Industry E-cookbook Trends
Unfortunately,littleconcretedataisavailableonthesubjectofe-cookbooksalestrends,witha
specificdeficiencyininvestigativeoranalyticalresearchfocusedonconsumerpreferencesonand
attitudestowarddigitalcookbooks;however,fromwhatlittleliteraturedoesexist,wecanglean
insightsthatarerelevanttoourdiscussionofAppetite’sdigitalcookbookproductionandour
quantitativeanalysisabove.
AccordingtotheBookIndustryStudyGroup(BISG),in2013(whichconvenientlyfallsinthe
middleofthepublishingseasonsofSummer2012throughSpring2014,thetimeforwhichthesales
datausedinanalysesabovewascollected)theoveralltradepublishingmarketshowedsalesof70%
printand30%digitalacrossallgenresandbookcategories.15Duringthistime,BISGaskedreadersto
notetheirpreferencesforprintordigitalbookformatsacross14categories.Ofthesecategories,
cookbooksshowedthestrongestreaderpreferenceforprint(approximately60%)andthelowest
readerpreferencefordigital(lessthan20%).Thisconsumerpreferenceforprintcookbooksover
theirdigitalcounterpartsalignswithwhatwasobservedinourearlierexaminationofAppetite’s
printversusdigitalsalesvolume,where98%ofsalesweretitlesinaprintformat.
WiththeAppleiPadreleaseinJanuary2010andasubsequentstreamoftabletsandhandheldebookcompatibledevicesenteringthetechnologymarketplace,onemightthinkthatdigital
cookbookswouldmakefortheperfectkitchencompanion,allowingareadertobringalltheir
favouritecookbooksfilledwithhundredsofrecipestotheircountertop.By2012,itwasestimated
thatawhopping47.5milliontabletsownedintheUnitedStatesalone,speakingtothepopularityof
portableinformation.Atthesametime,thetradepublishingindustrysawanincreaseincookbook
sales.16In2010,5%growthincookbooksaleswasobservedinthetrademarket17,2011through
2013werenotedas“superstrong”yearsforsalesbyAaronWehner,publisherofTenSpeedPress
(animprintunderthePRHumbrella)and,beyondthePRHumbrella,SanFranciscobasedpublisher
Chroniclebooksmarked2013as“oneofitsbestyearseverforcookbooksales”.18Itseemsprudent
15Perry,JackW."BISGReport–AFewMoreEbookStats."DigitalBookWorld.November14,2013.
AccessedOctober15,2015.http://www.digitalbookworld.com/2013/bisg-report-a-few-moreebook-stats/.
16Evans,Benedict."HowManyTabletsAreInTheUSA?AndDoesItMatter?"Forbes.October2,
2012.AccessedNovember22,2015.
http://www.forbes.com/sites/benedictevans/2012/10/02/how-many-tablets-are-in-the-usa-anddoes-it-matter/.
17Albanese,Andrew."DigitalTrends,StrategiesontheMenuat'PW'CookbookPanel."Publishers
Weekly.November12,2010.AccessedNovember22,2015.
http://www.publishersweekly.com/pw/by-topic/industry-news/cooking/article/45150-digitaltrends-strategies-on-the-menu-at-pw-cookbook-panel.html.
18Brown,Corie."PublishingTrendfor2014:ANewDemandforEye-CatchingCookbooks."
Entrepreneur.November19,2013.AccessedNovember23,2015.
http://www.entrepreneur.com/article/229842.
29
thentoquestionwhy,inspiteofthistandemspikeinthepopularityofportabletechnologyandthe
overallsalesofcookbooks,wearestillseeingsuchastrongconsumerpreferenceforthetraditional
ink-on-paperformatoverdigital.
Technology in the Kitchen
Onefrequentlycitedpossibilityisthatthecombinationofcooking,whichmakesformessy
handsandmessykitchens,andhigh-pricetechnologysimplydoesn’tmixwell,particularlysince
“mostofusdonothavetheneatnessofprofessionalcooksandtendtomakeabitofmessinthe
kitchen.”19AsEdwardNawotka,editor-in-chiefofpublishingnewsblogPublishingPerspectives,
pointsout,thethreatofdamagetoyourdeviceinthekitchenisveryreal.“Ifyouspillsomethingon,
oraccidentallysteam,orcarelesslydroponeofthosepriceydevicesyouusetoaccessdigital
cookbooks,it’sgameoverforthefancymealyouplannedthatnight.Youmightaswellordercarry
out.”20AndNawotkaisnotaloneinhisconcern.Manyreadersfindthatpriceytechnologysimplyisn’t
conducivetotheirneedsinthekitchen.Ifareaderneedstozoominonanimageoringredientlist,
theyneedtotouchthescreen,oriftheyforgottochangetheirpower-savingsettingstokeepthe
screenliveandhalfwaythroughtherecipethescreengoesdark,oncemoretheyneedtotouchthe
screen—achallengeandunappealingoptionifyourhandsarecoveredinfood.Asonereaderputsit,
“I’mforeverjabbingatthescreenwithsquash-coveredfingers”and"havingtowashmyhandsevery
fewminutestoscrolltothenextstage.”21Buttheremaybemoreatplaythanjustareader’sfearof
damagingtheirdeviceinakitchenmishap.
Aesthetic in Digital Versions
Asecondpossibilityisthate-cookbooksarenotaestheticallyappealingenough.Aaron
Wehner,publisherofTenSpeedPress—aUS-basedcookbook-publishingimprintunderthePRH
umbrella—attributesthepopularityofprintcookbookstotheirpositioningas“objectsofdesire”—a
labelgarneredthroughtheirrichaestheticsandart-likequality.22Wehnersaysthattheimprint’s
approachisto“lavishattentiononthevisual,"notingthatin2013theywere”investingmoreinthe
19Jasilek,Nina."WhyAreCookbooksStillsoPopular?"LondonSchoolofPublishingBlog.December
2,2013.AccessedDecember9,2015.http://blog.publishing-school.co.uk/publishing/why-are-printcookbooks-still-so-popular/.
20Nawotka,Edward."WillDigitalEditionsEverReplacethePrintedCookbook?"Publishing
Perspectives.February26,2012.AccessedDecember9,2015.
http://publishingperspectives.com/2012/02/will-digital-editions-ever-replace-the-printedcookbook/#.Vm0yzMrk0Xk.
21Barnett,Laura."IstheIPadtheNewCookbook?"TheGuardian.February20,2012.Accessed
December11,2015.http://www.theguardian.com/lifeandstyle/2012/feb/01/is-ipad-the-newcookbook.
22Brown,Corie."PublishingTrendfor2014:ANewDemandforEye-CatchingCookbooks."
Entrepreneur.November19,2013.AccessedNovember23,2015.
http://www.entrepreneur.com/article/229842.
30
photography,designandfinishof[their]books."23Thisapproachpairseffectivelywiththerisein
popularityoverthelastthreeyearsofimage-basedsocialmediachannelssuchasInstagramand
Pinterest,knownasthetopchannelsforcookeryandindicativeofthepublic’sdesireforaesthetically
richfoodcontent.24
Andyet,weknowfromourabovediscussionofAppetite’se-cookbookproductionprocess,
thatAppetite’se-cookbooksarestripped-downversionsoftheirprintcounterpartswithmuchofthe
designalteredandpareddownforreasonsrelatedtoaccessibilityandreadability.Thisprocess
wouldthenappeartobecounterintuitivetoconsumerdesireswhenpurchasingcookbooksandcould
beharmingthesalesofe-cookbooks.
Functionality in Digital Versions
Athirdpossiblereasonforaconsumerpreferenceforprintoverdigitalcookbooksisthelack
offunctionalityattributedtoe-cookbooks.Manyreaderscomplainthatdigitalcookbooksare“little
morethanPDFversionsoftheprintbooktheyrepresent”and,whilesomeofferfeaturessuchas
searchorgrocerylistcreation,theyarestilllackinginthefeaturesnecessarytomimictheexperience
ofusingaphysicalcookbooksuchasmakingnotesandannotationsontherecipes.25
Thesefeaturesmayseemextraneous,mere“nicetohaves”inamediumthatismeanttobe
largelytextandimagebased,buttheirimportancemaybegreatenoughtoimpactsalesandmay
stemfromtheuniquewayinwhichreadersinteractwithcookbooks.Usingtheexampleof
annotationsasanecessaryfeature,it’sinterestingtonotethatcookbooksarebyandlargethemost
commonlyannotatedtypeofbooks.“Peoplewhowouldn’tdreamofwritinginotherbooksdon’t
hesitatetoedit(“add½t.cayenne”),writereviews(“neveragain”)andevennotespecialoccasions
(“anniversaryparty’84”)nexttorecipes”andweseethistraditioncarriedoninthedigitalrealm
throughthehundredsofcommentsthataccompanyonlinerecipes,whetherpinned,posted,or
shared.26Yet,e-cookbooksstilldon’tconsistentlyofferthetoolsneededforreaderstointeractwith
thecontentinthesameway.
Thesedeficienciesarenotunnoticedbythosewithinthepublishingindustryeither.In
December2014,ScottShannon,seniorvicepresidentandpublisherofdigitalcontentforPRHnoted
that“It’sdifficulttoreproducethereadingexperienceofacookbookonaniPad”andthatPRH
23Ibid.
24Mangalindan,JP."InstagramandPinterestBothDoubledUsersovertheLast3Years."Mashable.
August20,2015.AccessedDecember13,2015.http://mashable.com/2015/08/20/instagrampinterest-doubled/#Qlcbm8F5cgqn.
25Kayal,Michele."InaConnectedWorld,CookbooksRemainSteadfastlyOldSchool."GlobalNews.
November20,2014.AccessedDecember14,2015.http://globalnews.ca/news/1682825/in-aconnected-world-cookbooks-remain-steadfastly-old-school/).
26Murphy,Kate."BetweentheRecipes,ScribblesSpeakVolumes."TheNewYorkTimes.January29,
2013.AccessedDecember13,2015.http://www.nytimes.com/2013/01/30/dining/cookbooksecho-with-the-wisdom-of-chefs-past.html?pagewanted=all&_r=0.
31
“[spends]atonoftimemakingsureit’sthebestexperienceoneverydevicethatitcanbe.ButtheebookproductionprocessiswheretheWebwasadecadeago.It’sdefinitelyimproving.Ouraccounts
arespendingatremendousamountoftimeonit.Butwe’renotthereyet.”27
Throughtheaboveinsightsintoindustry-widetrendsandconsumerwants,weunderstandthat
whatweobservedinthee-cookbooksalesdataofAppetiteisareflectionofwhatishappeninginthe
industryat-large.Astheycurrentlystand,e-cookbooksareunabletodeliveronthewantsand
needs—andconcerns—ofconsumers,andthisiscontributingtolowsalesvolume.
Duetotheirrelianceonexpensivetechnologythatdoesn’tmixwellwiththemessinessof
cooking,thediminishedaestheticappealofadigitalversion,andthelackoffunctionalitynecessary
toallowreaderstoconnectnaturallywiththecontent,e-cookbooksmaysimplybemissingtheir
markwithconsumers,andifwethinkbacktotheguidingprinciplesbehindthePRHuniversal
conversionpolicy,thismightnotbesurprisingatall.RememberthatPRH’sdecisiontoproduce
digitalversionsofalltitles,includingcookbooks,isfoundedonthegoalsofaccessibility,competition
withinadigitalmarket,andtitlearchiving,butconsumerpreferencesordemandarenotdirectly
considered.Giventhediscussionabove,itmaybeworthwhileforAppetite(andPRHasawhole)to
updatetheirconversionpolicytoincludeconsiderationofthewantsandneedstoreaders.
Conclusion and Recommendations
Althoughtheaboveanalysesarenotcomprehensivebyanystandard,throughexaminationof
Appetite’se-cookbooksalesdataonitsown,incomparisontosimilarimprints,andwithintheframe
ofthee-cookbookindustryatlarge,wearebetterabletoassessAppetite’sdigitalcookbook
productionpoliciesandpracticesand,byextension,theirlevelofsuccess.Indoingso,weachieve
threethings,thefirstofwhichistoanswertothequestionposedattheoutsetofthisreport:Isthe
returnoninvestment(ROI)forconvertingtitlesintodigitalversionspositiveforallcookbooks?
Whilenoteveryindividualcookbookwillachieveasalesvolumegreaterthantheirproduction
costsandtherebyyieldapositiveROI,to-date,eveninthefaceoflowtotale-cookbooksalesvolume,
AppetitehasbeenabletoachieveapositiveROIwhencalculatedusingthecombinedsalesofall
digitalcookbooks.OuranalysisrevealsthatthispositiveROI,evenwithfluctuationsinthesales
volumeofindividualtitles,ismadepossible,atleastinpart,bythelowproductioncostsofecookbooks(particularlyascomparedtotheirprintcounterparts)compoundedwiththeextended
marketlifespansofdigitalformats(which,asweremember,cannotgo“outofprint”)allowingfor
protractedperiodsofconsumeraccessibilityandtherebysalesinwhichtheproductioncostscanbe
recoveredandpureprofitcanbemade.
27Kayal,Michele."InaConnectedWorld,CookbooksRemainSteadfastlyOldSchool."GlobalNews.
November20,2014.AccessedDecember14,2015.http://globalnews.ca/news/1682825/in-aconnected-world-cookbooks-remain-steadfastly-old-school/.
32
ThesecondthingachievedthroughtheaboveanalysesistheabilitytoprovideAppetitewith
specific,data-driven,andactionableinsights,whichcanbeparlayedintorecommendationsforthe
imprint’sfuturee-cookbookproduction.Amongtheserecommendationsis,firstandforemosta
suggestionthatAppetiteundertakeregularanalysisoftheire-cookbooksalesdata.Asnotedinthe
introductionofthisreport,dataanalysisisaninvaluabletoolforeffectivedecision-makingandthe
evaluationofsuccess.Demonstratedbytheamountofdatausedinthisreport,whichrepresentsonly
asmallfractionofwhatisavailabletoPRHstaffthroughtheMyHousedatabase,Appetitehasa
wealthofdataattheirfingertips.Byexpandinguponthemethodsandanalysesusedabove,Appetite
canbetteridentifythevariablesaffectingthesalesofeachoftheirtitlesandapplytheirfindingsto
thepublicationoffuturee-cookbookswiththegoalofimprovingtheirsalesandtherebyincreasing
theirrevenueandROI.
AsecondrecommendationofferedtoAppetite,istocontinueapplyingbutmakeamendmentsto
theiruniversalconversionpolicy(viaPRHasawhole)byaddingafourthguidingprincipleof
meetingtheexperientialneedsandwantsofreaders.GiventhepositiveROIAppetiteisabletoachieve
ondigitalcookbookproduction,thereisnostrongreasontorecommendtheblanketdisuseofthe
automaticconversionpolicy;however,theadditionofthisconsumer-focusedguidingprinciple
wouldensurethatAppetite’spublishingpoliciesandpracticesarebetterattunedtothewantsand
needstoreadersandmayhelpresolvesomeoftheconsumerconcernsleadingtolowsalesvolume.
InitsapplicationtodigitalcookbookpublishingthisnewguidingprinciplewouldencourageAppetite
(anditsimprintcolleagues)toexploredifferentoptionsine-cookbookproductionanddesign,
possiblyclosingtheaestheticgapbetweenprintanddigitalcookbooksandinspiringforaysintoecookbookenhancementsforincreasedfunctionalityandreaderexperience.Thisaddedprinciplehas
thepotentialtorepositione-cookbookswithinthemarketas“objectsofdesire”liketheirprint
counterparts,ratherthancheaper,pared-downversionsofatitle.
BothoftheserecommendationsaremadeinthehopesthatAppetitemightbecomealeaderin
thepublicationofe-cookbooks.AlthoughAppetiteisasmallandstillrelativelynewimprint,asa
divisionoftheworld’slargestEnglish-languagetradepublisher,theimprintisideallyplacedtohave
accesstothenecessaryinformationandresourcestoredefinethesalestrendsofdigitalcookbooks
—theweakestareaofdigitalsalesinthetrademarkettoday.
Third,andfinally,theanalysescompletedandtheinsightsyieldedservetomakethisreporta
valuableresourceforthepublishingindustryasawhole—expandingourunderstandingoftheniche
productofe-cookbooksandtheirpositionwithinthetrademarketanddemonstratingthevalueof
dataanalysisinunderstandingindustrytrendsandconsumerpreferences.Althoughitispresented
asacasestudy,thisreportappliesaholisticapproachtotheanalysesincludedandfocusesits
attentionmoreonthegeneralformatofe-cookbooksandthedatainitsrawformthanonthe
publishingimprintbeingsampledorotherqualitativeelements.Indoingso,thereportfindingsare
33
highlytransferrableandrelevanttomorepublishersthanjustAppetiteoritsfellowimprintswithin
thePRHumbrella.Further,byrelyingonquantitativedataanalysis,thisreportdemonstratesthe
valueofdatainunderstandingindustrytrendsandconsumerpreferences—alessonthatall
publishersshouldtaketoheartastheymoveforwardintheirpublishingendeavours.
34
Bibliography
"AboutPenguinRandomHouseCanada."PenguinRandomHouseCanada.September1,2014.
AccessedDecember17,2015.http://penguinrandomhouse.ca/content/about-penguin-randomhouse-canada.
"E-bookPricesSparkBattlebetweenPublishers,Retailers."CBCNews.December16,2011.Accessed
December17,2015.http://www.cbc.ca/news/arts/e-book-prices-spark-battle-betweenpublishers-retailers-1.1103529.
"GlobalE-bookRevenuefrom2009to2016,byRegion."Statista.AccessedDecember17,2015.
http://www.statista.com/statistics/280249/global-e-book-revenue-by-region/.
"OurPublishers."PenguinGroup(USA).AccessedAugust24,2015.
http://www.penguinrandomhouse.biz/ourpublishers/.
"PenguinandRandomHousetoCombineCreatingtheWorld'sLeadingTradePublisher:Penguin
RandomHouse."PenguinGroup(USA).AccessedAugust23,2015.
http://www.penguin.com/static/pages/aboutus/pressrelease/penguin_random_house_102912
.php.
"WhatIs‘AgencyPricing’?"WallStreetJournal.April10,2012.AccessedOctober11,2015.
http://blogs.wsj.com/digits/2012/04/11/what-is-agency-pricing/.
Albanese,Andrew."DigitalTrends,StrategiesontheMenuat'PW'CookbookPanel."Publishers
Weekly.November12,2010.AccessedNovember22,2015.
http://www.publishersweekly.com/pw/by-topic/industry-news/cooking/article/45150digital-trends-strategies-on-the-menu-at-pw-cookbook-panel.html.
Barnett,Laura."IstheIPadtheNewCookbook?"TheGuardian.February20,2012.Accessed
December17,2015.http://www.theguardian.com/lifeandstyle/2012/feb/01/is-ipad-the-newcookbook.
Brown,Corie."PublishingTrendfor2014:ANewDemandforEye-CatchingCookbooks."
Entrepreneur.November19,2013.AccessedNovember23,2015.
http://www.entrepreneur.com/article/229842.
Costanzo,Peter."TheRealReasonEnhancedEbooksHaven’tTakenOff(Or,EvanSchnittmanWas
Right…FortheMostPart)."DigitalBookWorld.May23,2014.AccessedDecember17,2015.
http://www.digitalbookworld.com/2014/the-real-reason-enhanced-ebooks-havent-taken-offor-evan-schnittman-was-right-for-the-most-part/.
Evans,Benedict."HowManyTabletsAreInTheUSA?AndDoesItMatter?"Forbes.October2,2012.
AccessedNovember22,2015.http://www.forbes.com/sites/benedictevans/2012/10/02/howmany-tablets-are-in-the-usa-and-does-it-matter/.
Greenfield,Jeremy."ConsumersUpsetandConfusedOverE-BookPricing."DigitalBookWorld.April
18,2012.AccessedOctober11,2015.http://www.digitalbookworld.com/2012/consumersupset-and-confused-over-e-book-pricing/.
Greenfield,Jeremy."EbookPublisherPowerRankings:Top10PublishersofQ12014."DigitalBook
World.April22,2014.AccessedAugust30,2015.
http://www.digitalbookworld.com/2014/ebook-publisher-power-rankings-top-10-publishersof-q1-2014/).
35
Jasilek,Nina."WhyAreCookbooksStillsoPopular?"LondonSchoolofPublishingBlog.December2,
2013.AccessedDecember9,2015.http://blog.publishing-school.co.uk/publishing/why-areprint-cookbooks-still-so-popular/.
Kayal,Michele."InaConnectedWorld,CookbooksRemainSteadfastlyOldSchool."GlobalNews.
November20,2014.AccessedDecember14,2015.http://globalnews.ca/news/1682825/in-aconnected-world-cookbooks-remain-steadfastly-old-school/).
Mangalindan,JP."InstagramandPinterestBothDoubledUsersovertheLast3Years."Mashable.
August20,2015.AccessedDecember13,2015.http://mashable.com/2015/08/20/instagrampinterest-doubled/#Qlcbm8F5cgqn.
McCoy,Bill."WhyPublishersAreMakingaPushforEPUB3Now."DigitalBookWorld.July25,2013.
AccessedDecember17,2015.http://www.digitalbookworld.com/2013/why-publishers-aremaking-a-push-for-epub3-now/.
Murphy,Kate."BetweentheRecipes,ScribblesSpeakVolumes."TheNewYorkTimes.January29,
2013.AccessedDecember13,2015.http://www.nytimes.com/2013/01/30/dining/cookbooksecho-with-the-wisdom-of-chefs-past.html?pagewanted=all&_r=0.
Nawotka,Edward."WillDigitalEditionsEverReplacethePrintedCookbook?"Publishing
Perspectives.February26,2012.AccessedDecember9,2015.
http://publishingperspectives.com/2012/02/will-digital-editions-ever-replace-the-printedcookbook/#.Vm0yzMrk0Xk.
Perry,JackW."BISGReport–AFewMoreEbookStats."DigitalBookWorld.November14,2013.
AccessedOctober15,2015.http://www.digitalbookworld.com/2013/bisg-report-a-few-moreebook-stats/.
Sources
AppetiteStaff
MyHouse,PenguinRandomHouseInternalDatabase
PenguinRandomHouseAuthorPortal
PenguinRandomHouseDataTools(MyReports)
PenguinRandomHouseStaff
36