GANYMEDE THEA JAMES capstone spring 2012 GANYMEDE AAP StatShot: - - PowerPoint PPT Presentation

GANYMEDE

THEA JAMES

capstone ▲ spring 2012

GANYMEDE

AAP “StatShot”: January 2012 v. January 2011

• Ebook net revenue $99.5M (+49.4%)
• HC net revenue $68.9M (+21.6%)
• TP net revenue: $105.1M (+6.1%)
• MMP net revenue: $30.4M (-22.5%)

EXECUTIVE SUMMARY

• Speculative Fiction imprint from Penguin Group
• Low-priced ebooks (scale); high-priced hardcovers (quality)
• Services neglected/dropped midlist authors that are leery of

self-publishing

• Provides profitable alternative to mass market paperback and

ebook cannibalization fears

• Leverages unique go-to-market & audience acquisition strategy

via key partnership with The Book Smugglers

THE MARKET

• Dramatic growth of ebooks & importance of print
• Target audience: bloggers, female readers of SFF, young,

educated, reads at least 1 book per month

• International market potential (Brazil, India)

DIRECT COMPETITORS:

CUSTOMER DATA

• Female (95%); young (31),

international, educated, HHI>$50,000

• Read ebooks (81%); 55% purchase at

least 4 books per month

• Ebook price $4.00-$6.99
• Not interested in enhanced content
• Highly likely to purchase collectible

hardcover editions (53%)

Blogger Data (n =182)
 Reader Data (n = 675)

• Female (95%); young (33),

international, educated, HHI>$50,000

• Read ebooks (82%); 47% purchase at

least 4 books per month

• Ebook price $4.00-$6.99
• Not interested in enhanced content
• Likely to purchase collectible

hardcover editions (42%)

AUTHOR DATA

• Importance of editorial direction, product quality and

availability (e- and p-)

• Print still matters – want books available in all formats, in all

markets

• Advances matter – higher royalty rates are preferred, but some

nominal advance needs to be included

• Authors have already self-published or would consider self-

publishing

• DRM protection is not necessarily important to authors

Author Data (n =78)


• $3,000 signing bonus; 40% royalty rate (50% for novellas)
• Joint Venture with Ace to produce & distribute trade paperbacks
• Direct sales via Ganymede website in addition to e-retailer channels

(international distribution)

• Will publish a maximum of 32 books per year (by Y5)

PRODUCT DETAILS

$0.99 $4.00 - $6.99 $50.00 - $150.00 $14.99

SALES & MARKETING

• Agency Pricing Structure (70% to

publisher); DSO 90 days, DPO 30 days

• Direct-to-Consumer Sales (Ganymede’s

website)

• E-Retailer Sales (Amazon, B&N, Apple,

Sony, Kobo, Google, etc)

• Library & Distributor Sales (CoreSource,

OverDrive, Blio, Axis360, etc)

• Future Opportunities

Sales
 Marketing

• Partnership with The Book Smugglers;

spearhead blog and outreach

• In-house Marketing/Publicity Manager (Y2)
• Official Launch March 2014 (SXSW)
• Annual Freelance budget ($20k - $52k)
• Additional Sales, Marketing, Publicity

budget of 5% net sales per product

OPERATIONS

PUBLISHER


PRODUCTION
 MANAGER
 MANAGING
 EDITOR
 SENIOR
 EDITOR
 ASSOCIATE
 EDITOR
 ASSOCIATE
 EDITOR
 SALES
 MANAGER
 DESIGNER
 ASSOCIATE
 EDITOR
 MARKETING/
 PUBLICITY
 MANAGER
 PRODUCTION
 ASSISTANT
 BLOGGERS
 BOOK
 SMUGGLERS
 WEB
 DIRECTOR
 FREELANCE
 MARKETING
 FREELANCE
 DESIGN/
 PRODUCTION
 FREELANCE
 EDITING


PENGUIN


OPERATIONS

• In-house staff of 12 by Y5; Annual freelancer budget
• Key partnerships: Penguin (Corporate Allocation) & The Book

Smugglers

• Upfront Investment in strong website and dynamic CMS that

can ingest and repurpose digital content (XML)

• Internal Dedicated Web Manager; In-house Design, Sales, and

Production Managers

FINANCIALS

F'13 F'13 F'14 F'14 F'15 F'15 F'16 F'16 F'17 F'17

Gross Ebook Novella Sales 231.26 708.05 1,083.46 1,473.12 1,877.04 Gross Ebook Sales

• 1,199.48

2,449.30 3,749.44 5,099.90 Gross HC Sales

• 200.00

400.00 600.00 800.00 Gross Backlist Sales

• 79.20

696.60 1,543.50 2,039.85 Total Sales 231.26 2,186.73 4,629.35 7,366.06 9,816.79 Other Publishing Income

• 345.78

691.56 872.45 1,053.34 Total Revenue 231.26 2,532.51 5,320.91 8,238.51 10,870.13 Cost of Goods Plant or Origination Costs 6.00 52.00 98.00 144.00 190.00 Paper, Print & Binding (PPB)

• 0.04

0.08 0.12 0.16 Manufacturing Costs 6.00 52.04 98.08 144.12 190.16 Royalty Costs 115.63 992.59 2,024.84 3,104.45 4,086.10 Royalty Write-offs

• Total Cost of Goods

121.63 1,044.63 2,122.92 3,248.57 4,276.26 Gross Profit 109.63 1,487.89 3,197.99 4,989.94 6,593.87 Operating Expenses Salaries & Benefits 405.63 504.95 605.10 673.25 693.45 Travel & Entertainment 8.00 8.00 16.00 24.00 32.00 Marketing, Promotion, Sales 11.56 105.38 196.64 291.13 388.85 Office Supplies 1.00 2.00 3.00 3.00 5.00 Professional Fees 150.00 12.00 12.00 12.00 12.00 Corporate Allocation (G&A) 23.13 210.75 393.28 582.26 777.69 Corporate Allocation (Other) 23.13 210.75 393.28 582.26 777.69 Total Operating Expenses 622.44 1,053.83 1,619.29 2,167.89 2,686.68 EBITDA (512.81) 434.05 1,578.71 2,822.05 3,907.19 Depreciation & Amortization 5.02 5.02 5.02 5.02 5.02 EBIT (517.83) 429.04 1,573.69 2,817.03 3,902.17 Interest / Taxes (127.13) 258.01 722.79 1,227.59 1,669.71 Net Income (390.70) 171.02 850.90 1,589.44 2,232.46

INCOME STATEMENT

KEY RATIOS

Gross Margin %:

Y1 Y2 Y3 Y4 Y5 0.47 0.59 0.60 0.61 0.61

EBIT %:

Y1 Y2 Y3 Y4 Y5 (2.24) 0.17 0.30 0.34 0.36

FINANCIALS

FINANCING REQUIRED: $1,000,000

• Assume 8% annual interest on Penguin Issued Note Payable
• Initial $1M investment to be paid in full by December 2017

ROA %:

Y1 Y2 Y3 Y4 Y5 (0.64) 0.19 0.38 0.37 0.37

ROE %:

Y1 Y2 Y3 Y4 Y5 1.00 (0.49) 1.69 0.76 0.52

Projected Net Present Value: $4.7M $4.7M through Y6 (10% discount rate and consistent revenue growth) Future Growth Opportunities:

• Repurposing novellas and monetize blog content (anthologies);

select special market sales for hardcover books

• Possible licensing deals with other Penguin imprints to digitize,

tag, and monetize content (via CMS)

• Creation of Affiliate Program to sell directly with other blogs/

bookstores/sites

• Future digital initiatives: apps & web-apps; subscription models;

all-you-can-eat offerings for backlist content

GROWTH EXPECTATIONS

QUESTIONS?