Mondadori, How to Survive in the E-Book Era
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Mondadori, How to survive in the E-book era Riccardo Schena Dissertation submitted in partial fulfilment of requirements for the degree of MSc in Business Administration, at the Universidade Católica Portuguesa, May 2014. ABSTRACT Title: Mondadori, how to survive in the e-book era. Author: Riccardo Schena Mondadori is the Italian market leader in the publishing industry, with a history of more than 100 years of experience in the field. The company headquartered in Milan, is the biggest book and magazine publisher in Italy and the third largest in the consumer magazine category in France. The book category currently accounts for almost 25% of the annual revenues and since the year 2010, the company started focusing also on the digital contents for books. The case study offers an overview of the market from both a global and a local perspective, with the focus on the Italian situation, where the main topics addressed are the competitive landscape, the digital growth and the digital piracy. This industry analysis is needed to show the environment where the company is working and to make understand possible threats and opportunities, like for example the new regulations on e-books arising through the new Italian government. The following chapters deal with an overview of the company, with a specific analysis on the strategic choices in the e-book market in the past, present and future. The purpose of the case is to provide the reader sufficient information to evaluate the three strategic alternatives offered and therefore he or she should be able to formulate a complete reasoning behind each of the three options. The first one is focused on reducing the price on e-book as a way to engage further the readers and the reader should be able to understand if such an option could be profitable for Mondadori or not; after that the suggestion is to think about an innovative way to exploit social media to reach out to new readers and to forecast future trends, especially in terms of authors. The last option presented, deals with the new trend of subscription models and the question is whether such a model, which worked successfully for the music ad film industries, can be valuable for publishing companies. Key words: E-book, Publishing industry, Innovation. 2 RESUMO Titulo: Mondadori, como sobreviver na era e-book. Autor: Riccardo Schena A Mondadori é líder do mercado italiano na indústria editorial, com uma história de mais de 100 anos de experiência no ramo. A empresa, com sede em Milão, é a maior editora de livros e revistas em Itália e a terceira maior no segmento de revistas para o grande público em França. A categoria de livros é atualmente responsável por quase 25% das receitas anuais da empresa e desde o ano 2010, a Mondadori começou a concentrar-se também em conteúdos digitais para livros. O estudo de caso permite uma visão geral do mercado tanto do ponto de vista global como local, com um foco na situação italiana, onde os principais temas abordados são o cenário competitivo, o crescimento digital e a pirataria digital. Esta análise da indústria é necessária para mostrar o ambiente em que a empresa está envolvida e para entender possíveis ameaças e oportunidades, como por exemplo a nova regulamentação sobre e-books que surge através do novo governo italiano. Os capítulos seguintes contêm uma visão geral da empresa, com uma análise específica das escolhas estratégicas no mercado de e-books no passado, presente e futuro. O objectivo do caso é fornecer ao leitor informações suficientes para avaliar as três alternativas estratégicas apresentadas e, portanto, ele ou ela devem ser capazes de formular um raciocínio completo aquando a justificação de cada uma das três opções. A primeira é focada em reduzir o preço dos e-books como forma de envolver ainda mais os leitores e o leitor deve ser capaz de entender se tal opção poderá ser rentável para a Mondadori ou não; posteriormente, a sugestão é que o leitor pense numa forma inovadora de explorar as redes sociais de forma a chegar a novos leitores e prever tendências futuras, especialmente em termos de autores. A última opção apresentada trata da nova tendência de modelos de subscrição e a questão é se tal modelo, que foi bem sucedido nas indústrias de cinema e música, pode representar uma mais valia para editoras. 3 ACKNOWLEDGMENTS “A reader lives a thousand lives before he dies. The man who never reads lives only one.” George R.R. Martin Even though only my name appears on the cover of this dissertation, it would have not been possible to complete it without the help and the careful support of the kind people around me, unfortunately it is possible to give particular mention here to only some of them. Foremost, I would like to express my most sincere gratitude to my advisor Prof. João Simão Pires, for the continuous support and guidance provided me throughout the last semester of my master of science and for all the time spent in revising and improving my work. A special acknowledgment goes to my family, who always supported my decisions and who helped me a lot during this last two years that I spent away from them; despite of aching me, they have been incredibly positive and their advice was and will always be immeasurable to me. Now to my second family, composed of the closest people who followed me in this university path and with whom I shared some of the best years of my life. To Matteo and Charly, they are my dearest friends and without them my experience in Portugal would have been much tougher and with whom I became so soon so important in my life and with whom I spent the most time, since I started the first year of university. To Francesco and Stefano, as they are the only ones from my childhood with whom I still have a great bond and who I wasn’t able to let go away when I left for my master in Portugal. To my mentors Marco, Arturo and Andrea, whose steps and the examples I followed to become the man that I am now. To my girlfriend Chiara, who managed to bear the difficulties of a long distance relationship and who is always able to cheer me up even when we are 2300 km. away from each other. To all of you, who witnessed my growth and followed my path. You have all my gratitude and I hope that our paths will be going in the same directions for as long as possible. 4 TABLE OF CONTENTS ABSTRACT ................................................................................................................................ 2 RESUMO .................................................................................................................................. 3 ACKNOWLEDGMENTS ....................................................................................................... 4 TABLE OF CONTENTS ........................................................................................................ 5 LIST OF FIGURES ................................................................................................................. 7 LIST OF TABLES ................................................................................................................... 7 MONDADORI: HOW TO SURVIVE THE E-BOOK ERA ............................................... 8 1) INTRODUCTION ............................................................................................................ 8 2) THE COMPETITIVE ENVIRONMENT ......................................................................... 9 2.1) Global Statistics and Trends .................................................................................................... 9 2.1.1) Industry definition ................................................................................................................ 9 2.1.2) Market analysis .................................................................................................................. 10 2.1.3) Leading companies ............................................................................................................ 11 2.1.4) Digital Growth ................................................................................................................... 12 2.1.5) Digital Piracy ..................................................................................................................... 13 2.2) The Italian Market .................................................................................................................. 15 2.2.1) Market analysis .................................................................................................................. 15 2.2.3) Competition ........................................................................................................................ 15 2.2.4) Digital Growth ................................................................................................................... 17 2.2.5) Digital Piracy ..................................................................................................................... 17 2.2.5) Technological Gap ............................................................................................................. 17 2.2.6) New Regulations ................................................................................................................ 19 3) THE COMPANY ............................................................................................................... 20 3.1) Arnoldo Mondadori Editore (Mondadori) ........................................................................... 20 3.1.1) Overview ...........................................................................................................................