Publishers begin new chapter, doing textbooks via software
Few people would phone the publisher of a novel to ask why Richard married Jane in the end, instead of his childhood sweetheart. But no one is shy about calling Hayden Software in Lowell, Mass., about a computer game or some business software the company has published. Calls range from people ''who are down in the dungeon, sword in hand, asking for a hint of which door to choose,'' to people responsible for delivering the company paychecks the next day and who can't get the payroll program to work, says Oscar Rodriguez, president of this division of the Hayden Book Company.
Offering support and service is just one of the adjustments a book publisher needs to make when he adds computer software to his line of published works, Mr. Rodriguez says.
But service challenges aren't keeping book publishers away from the newer business of software - publishing the magnetic disks which give computers instructions. In the past two years such heavyweights as Houghton Mifflin, John Wiley & Sons, McGraw-Hill, Prentice-Hall, Random House, and Reader's Digest - to name a few - have started after the booming software market for personal computers.
''The book publishers saw an opportunity to extend and preserve their market - an easy way to enter a new business without putting a lot of money into hiring staff,'' says Janice Antonellis, a senior market analyst at International Data Corporation, who recently completed a study of book publishers entering the software business. She explains that the publishers are mostly going to outside software developers for their products, and only have a small in-house technical staff for evaluation and improvement.
Book publishers are trying for a software market with potential sales of $6.5 billion by 1987, compared with $8.7 million in 1982, Ms. Antonellis says. Right now they have just a tiny piece of this market.
''Since it is the market they know best, book publishers have made their software industry debut in education,'' Ms. Antonellis says. Textbook publishers are concentrating on the school market now, but educational software for the home computer user is a growing market too, she explains.
Now, when schools examine a publisher's textbooks, ''they ask if you have software to go with them,'' says Damaris Ames, a spokeswoman for Houghton Mifflin, whose main business is textbook publishing. The company offers software that takes the place of drills and workbooks, corrects spelling, and also helps determine career goals and opportunities for people.
Textbook publishers hope the software market will fill the gap in book sales due to declining enrollment. ''The significant thing is that there is a huge growth in microcomputer sales, and a static growth of students,'' says Gary Carlson, publisher for sciences and educational software at John Wiley & Sons in New York.
Of the 10 publishers studied by Ms. Antonellis at IDC, six of them publish only educational software. The others publish educational software andm business, engineering, science, and entertainment software. The companies tend to publish the subjects in their areas of expertise. ''A lot of times they are using basic material that has already been developed in-house for textbooks,'' notes John Reidy, a media analyst at Drexel Burnham Lambert, the brokerage firm.
Book publishers and analysts claim that software publishing is a ''natural evolution'' of the book publishing business. Book publishers have editorial expertise, some computer knowledge, plenty of ideas to turn into software, and a distribution system already in place. They view software as a technological extension of their present business.
''We are trying to avoid the problem that the railroads had,'' says Bonnie Lieberman, chief editor in McGraw-Hill's computing and educational software group, college division. ''We are trying to get in line with the new communications aspect of it all.''
But ''I don't see the book publishers enjoying any real advantage,'' says Hayden's Mr. Rodriguez. In the long run, he says, ''you have to become a whole lot more like a software company and a whole lot less like a book company.''
In Rodriguez's opinion, this means running a faster-paced business (game products have a life of four months, he says); making sure you have a large enough technical staff to keep abreast of the latest industry developments; learning how to manage a ''group of young entrepreneurs''; making service part of the business; and thinking more about what kinds of products the market wants rather than what it could take.
And there are other differences in this new business. ''In terms of medium, there are many more parts to deal with - disks, manuals, labels, an outside package, registration card, and license agreement,'' says Dianne Littwin, publisher of professional software at John Wiley. ''Protection is another problem,'' she says, adding that the industry hasn't yet found a way to control copying of programs. Because book publishers are having to grapple with these problems and are still in the development stage of software publishing, ''no one is making any money on software yet,'' figures Mr. Reidy at Drexel. ''The business will yield only incremental revenues at first, with higher profits down the road.''