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 Blogger Data ( n =182) Reader Data ( n = 675) Female (95%); young (31), Female (95%); young (33), international, educated, HHI>$50,000 international, educated, HHI>$50,000 Read ebooks (81%); 55% purchase at Read ebooks (82%); 47% purchase at least 4 books per month least 4 books per month Ebook price $4.00-$6.99 Ebook price $4.00-$6.99 Not interested in enhanced content Not interested in enhanced content Highly likely to purchase collectible Likely to purchase collectible hardcover editions (53%) hardcover editions (42%)
AUTHOR DATA Author Data ( n =78) 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
PRODUCT DETAILS $4.00 - $6.99 $0.99 $50.00 - $150.00 $14.99 $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)
SALES & MARKETING Sales Marketing Agency Pricing Structure (70% to Partnership with The Book Smugglers; publisher); DSO 90 days, DPO 30 days spearhead blog and outreach Direct-to-Consumer Sales (Ganymede’s In-house Marketing/Publicity Manager (Y2) website) Official Launch March 2014 (SXSW) E-Retailer Sales (Amazon, B&N, Apple, Sony, Kobo, Google, etc) Annual Freelance budget ($20k - $52k) Library & Distributor Sales (CoreSource, Additional Sales, Marketing, Publicity OverDrive, Blio, Axis360, etc) budget of 5% net sales per product Future Opportunities
OPERATIONS PUBLISHER BOOK PENGUIN SMUGGLERS WEB DIRECTOR MARKETING/ SALES PRODUCTION MANAGING SENIOR PUBLICITY DESIGNER MANAGER MANAGER EDITOR EDITOR MANAGER ASSOCIATE ASSOCIATE ASSOCIATE EDITOR EDITOR EDITOR PRODUCTION FREELANCE FREELANCE BLOGGERS ASSISTANT EDITING MARKETING FREELANCE DESIGN/ PRODUCTION
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 INCOME STATEMENT 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 KEY RATIOS 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 Gross Margin %: 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 Y1 Y2 Y3 Y4 Y5 Royalty Costs 115.63 992.59 2,024.84 3,104.45 4,086.10 Royalty Write-offs - - - - - 0.47 0.59 0.60 0.61 0.61 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 EBIT %: 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 Y1 Y2 Y3 Y4 Y5 Office Supplies 1.00 2.00 3.00 3.00 5.00 Professional Fees 150.00 12.00 12.00 12.00 12.00 (2.24) 0.17 0.30 0.34 0.36 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
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 %: ROE %: Y1 Y2 Y3 Y4 Y5 Y1 Y2 Y3 Y4 Y5 (0.64) 0.19 0.38 0.37 0.37 1.00 (0.49) 1.69 0.76 0.52
GROWTH EXPECTATIONS 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
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