Review of Business Plan, February 2006
I write to outline our thinking about the financial prospects for The Literary Encyclopedia in 2006 and 2007, and to sketch our plans for development across the same period. Please read the following carefully as it includes two "action points" to which you may wish to respond.
When we began work on the Literary Encyclopedia we thought it would be possible to fund its development and remunerate contributors by advertising scholarly books. Recent years have been difficult for scholarly publishers so we decided in December 2004 to revise the appearance and technical sophistication of the Encyclopedia with the aim of generating revenue from individual subscribers. We added a number of new features, and are about to unveil more, and launched our membership scheme on December 1st 2005, charging a very low rate so as to remain accessible to students. We are now earning over $400 per week from subscriptions and are in a much healthier state than we were last year, although not yet covering current costs and not earning sufficient to fund the scale of development we would like.
Readers now have to subscribe to use our advanced software functions, and this has reduced the number of pages viewed, but not reduced the number of visits which still average 11-12,000 on weekdays. In January over 1000 readers registered with us, but only around 300 paid as members. We have only anecdotal evidence about why so many stop before paying but anecdotal evidence that primarily they are able to get most of what they want for free.
Subscribing to read
We conclude that we must at least experiment with curtailing the number of words which can be read without payment - for example, following the model provided by Encyclopedia Britannica and displaying only the first 500 words of any entry. If such a move leads to a drop in readership without an increase in members, we may wish to revert the current model, but if it does increase our revenue then this would enable us to continue to develop our service to our readers, repay capital invested and pay our writers and editors the dividends they deserve.
We are aware that requiring readers to subscribe constitutes a significant change for the Encyclopedia. We would therefore welcome a "straw poll" on the matter.
Action point 1: Please send me an email with "Approve" or "Disapprove" in the subject line. If you disapprove, and have any suggestions for alternative methods of funding the Encyclopedia, please include your reasons and suggestions in the main body of the email.
We have been exploring models for institutional subscription with librarians and are encouraged by the initial response. However, librarians will not subscribe to The Literary Encyclopedia whilst it can be consulted for nothing, and we must also consider the cost of setting up these relationships. We therefore see institutional subscriptions as potentially part of our medium-term funding, but not as an alternative to requiring individual readers to subscribe.
Action point 2: If you will please send us the name and address of the appropriate librarian, we will invite him/her to take out an institutional subscription.
Targets for Earnings 2006-2007:
We are working with the following aims:
- that the publication should at least cover all current wage costs and development costs during 2006
- )that ideally in 2006 it should be able to fund expansion of staff to at least 2 full time employees and the creation for them of the kind of developmental career possibilities to which they are entitled (i.e. remuneration increasing with their expertise)
- that the publication should aim to pay a dividend of $10 per share to its contributors and editors by the end of 2007 and aim to see this increasing in the following years.
These considerations taken together give us a desired revenue in 2007 in the order of $250,000, ten times current earnings. The task is demanding, but we believe potentially feasible. Such an aspiration is also modest in terms of the global potential of the Encyclopedia.
Improvement of Coverage
We have already established rich coverage of English and American writers and texts, as well as excellent coverage of German and Russian. We are currently focused on filling "gaps", especially in American texts, and developing our coverage of Anglo-American historical topics. We are also developing coverage of major writers in French, Spanish, Chinese and Latin literature.
We are about to announce a number of software innovations that will ensure we remain at the forefront of internet reference sites. I will describe these in a circular when several of these go "live" in the next few weeks.
With best regards,