Here are some things you may not have known about the $1 billion business that is romance publishing today: Divorced women read far fewer romance novels than single and married women do. Romance readers buy in volume and velocity, making them optimal digital readers. The stories are not about bodice-ripping anymore, or even just vampires, although those standbys haven't gone away; these days, the action is in shape-shifters (wolves, lions, and bears that take human form) and male-male (written for and usually by straight women). Oh, and about that action: Romance readers tend to want to see it, and it's not always vanilla.
Much of this, with the possible exception of the divorcées, initially eluded major romance publishers. None of it comes as a surprise to Angela James, 35. Eight years ago, she was an occupational therapist who sated her appetite for paranormal romances by reading e-books; now she's the executive editor of Carina Press, the pioneering digital-first novel imprint at Harlequin, the grandmother of romance publishing. Launched in June 2010, Carina is an experiment — not just in e-books, but in business strategies that just might dictate the future of the publishing industry. At a time of rapidly rising digital-book sales and steadily declining print sales — and when romance is the fastest-growing e-book segment — other publishers may want to take note.
WITH A DISCREET NOSE RING and an easy gregariousness, James bridges the gap between fan and savvy executive. She was born in North Dakota and grew up dipping into her mother's romance collection. (When she got her job at Harlequin, she likes to tell audiences, her father recalled, "I remember those smut books your mom used to read.") James's publishing career began when she joined a Listserv for fans of Ellora's Cave, a pioneering digital-first publisher of erotic romance. "There is a tremendous community aspect not just to digital reading but to romance," James says. That community's support helped James catapult from reader to part-time proofreader at Ellora's Cave. She also likes to recall how she failed the editor's test.
In 2005, she was hired as a full-time editor to launch a competitor called Samhain; soon she became its executive editor. Quartet, an ambitious e-publishing startup, recruited her in 2009 but soon folded after an investor abruptly backed out. James was jobless three weeks after starting. When the Quartet news broke on Twitter, Harlequin offered James a job within hours.
"I don't think there are many people more intelligent, more savvy, and more suited to the digital-publishing process," says Sarah Wendell, coauthor of Beyond Heaving Bosoms: The Smart Bitches' Guide to Romance Novels.
Standing before the Nashville chapter of the Romance Writers of America recently, James is brimming with enthusiasm. Her PowerPoint presentation says it all: "We're just plain excited. This is a great time to be in publishing."
Some in the book industry would find that hard to believe. Though the worst of the widespread layoffs and painful reorganizations seem to be over, this year has brought the bankruptcy of a major bookseller, Borders, and a precipitous decline in print-book sales.
Last year, e-book sales grew more than 150%, but that's not the only reason for James's optimism. Carina Press is also pioneering a different business model from most major publishers and from the rest of Harlequin. It offers authors a higher royalty payment (30% of the cover price of direct sales, 15% from third parties) in exchange for forgoing advances and has both a faster speed to market and a heavier publishing schedule than print. Carina plans to publish 190 books this year, releasing 2 to 4 titles a week. (Harlequin's other imprints publish from 4 to 10 titles a month.) And its books get Harlequin-level cover art and editing, as well as extensive social-media and marketing training for authors. Independent publishers such as Ellora's Cave and Samhain have made this their day-to-day business for years, but Carina is the first effort by a major house to embrace the digital-first model.
Though Harlequin doesn't break out revenue data for individual imprints, its director of digital publishing, Malle Vallik, says, "We're doing very nicely, above where we thought we'd be." The first-quarter earnings report for 2011 for Harlequin's parent company, Torstar, noted that the book publisher was "off to a very good start, up almost $2 million — or 10% — versus the previous years. Harlequin's positioning continues to benefit from the shift to digital reading." Like the industry overall, it has seen print sales decline as digital sales grow. Harlequin itself has shown earnings growth for four consecutive years, with 2010 revenue of $468 million.
Other companies are following its lead. In March, HarperCollins announced it would launch the digital-first Avon Impulse. Two months later, Amazon said it would start its own romance imprint, Montlake Romance.
IT'S NOT SURPRISING THAT Harlequin would get there first. After all, the company pioneered mail-order as well as drugstore and supermarket book distribution. "Wherever women are, however women want to read," is how Brent Lewis, executive vice president for digital, puts it. Online and direct-to-consumer sales (to readers on Harlequin's website) weren't major jumps.
Harlequin and other romance publishers had already embraced digital as a means to re-release thousands of titles no longer in print. This has earned accolades — and sales — from ravenous readers. (Because of their heavy publishing schedule, romance books also tend to have a short shelf life.)
And Harlequin boasted one fewer barrier on the e-book road than many of its large-scale peers: It had long since leveraged its global presence to exact expansive rights in author contracts (digital rights were included in contracts as early as 1990). Also, its books were already relatively inexpensive — 85% of Harlequin books are direct-to-paperback — so Harlequin not only weathered the recession with greater ease but also was less threatened by the lower prices consumers expected in digital. (Carina's books are priced from $2.99 to $5.99, lower than the typical Harlequin print book. James says the company found that at $6.99, the books no longer sell.)
In September 2009, Harlequin executives started plotting an e-book imprint. Digital-first romance novels, as opposed to online versions of print titles, were still a small part of the market but were seeing explosive growth — AllRomance.com, the biggest dedicated romance e-tailer, saw 215% growth in its business in 2010, and the number of publishers it lists swelled to 4,700.
James came on board that fall as the only full-time employee. Her editing team is freelance and works remotely via email, making it a low-risk operation for Harlequin. Launching on the heels of a publishing meltdown, James had her pick of editors.
Writers, too, were easy enough to recruit, even ones previously published in print. "Contracts aren't being renewed as often, advances are being cut, bookshelves aren't stocking as many books, print runs are lower," James says. "So authors are searching for different avenues. And digital publishing is a legitimate one."
Carina's biggest departure from other major publishers — including its owner — is that its books are sold without digital rights management, the technology embedded in many electronic media to thwart pirates. Spooked by what happened to the music industry, most book publishers have embraced this set of access controls, but readers chafe at it. On AllRomance.com, DRM titles comprise half of inventory but only 4% of sales in 2010, says chief operating officer Lori James. (All books purchased on the Nook have DRM, no matter the publisher's policy.)
"Our theory is that it doesn't prevent piracy because any pirate can strip DRM in about 30 seconds," says James. "DRM instead inhibits casual sharing, an important part of the reading process — and the purchasing process."
Though Harlequin's other books still have DRM, such thinking prevailed for Carina. "Harlequin brought me on because I don't have the attitude of, 'Well, we've always done it this way,' " says Angela James. Adds Harlequin CEO Donna Hayes: "We think she's a total star, and when you bring in someone like that, you have to step back and let them run their business."
OVER LUNCH IN NASHVILLE, during the Romance Writers of America meeting, aspiring author Wendy Qualls is patiently explaining heat level. Least "hot" is the inspirational category, "not always Christian but usually Christian," she says. "The relationship is a long-term commitment between husband and wife. They may kiss on the last page."
She continues: " 'Sweet' is where they kiss and then close the door. In erotic romance, the focus is on the relationship and there may be a lot of sex within that relationship, but every time there's a sex scene, it changes the relationship in some way. There's no going back.
"In erotica," she finishes, "there's usually a plot in the same way there's plot in porno movies. It's there, but it's not really why you're reading it. In erotica, they jump in and out of the sack."
James had joked earlier that with so many e-publishers specializing in hotter plotlines, "People think the e stands for erotica." Though Carina publishes a range of heat levels, there's no denying that digital-first is still leading the way when it comes to more-erotic plotlines and less-mainstream subgenres. Last year, erotic romance was the top-selling category on AllRomance.com, followed by male-male.
While major publishers might worry about the size of the market for such books, especially the gay-themed ones, or of the potential backlash involved in getting them into brick-and-mortar bookstores, "there's a lot of opportunity for experimentation in digital," says James, making it a testing ground for which genres publishers want to expand upon.
It's a new world, and the women who read, write, and edit romances are blazing the trail into it. Authors' careers may increasingly look like that of Trish Milburn, a writer who came out to see James in Nashville and has what she calls a "three-pronged attack": She has published four books in print with Harlequin and is contracted to do three more. She has written young-adult paranormal books for a small Southern press, and last spring, she self-published a women's-fiction novel about a mother-daughter relationship. Would she be interested in writing for Carina? "I don't say no to any possibility," she says. "It's all part of a bigger business plan. I don't like to have all my eggs in one basket."
A version of this article appeared in the July/August 2011 issue of Fast Company magazine.