So much for longstanding predictions that the Internet would crush the book publishing industry with digital readers and online sales of used books.

Penguin publishers said this week that the explosion in online and second-hand retailing has not caused the damage they were expecting and that the Internet has in many ways been a boon for booksellers as a tool for marketing, experimentation and reaching out to the next generation of readers.

The publisher, whose authors include former Federal Reserve Chairman Alan Greenspan, novelist Nick Hornby and celebrity cook Jamie Oliver, was rattled by the threat of fast-growing online auction giants like EBay but has discovered that unlike the music industry people still want to own a physical book.

There is a lot going on in the music publishing industry that is not going on in the book industry. Consumers don't want albums they want tracks and in publishing people want books not chapters, Penguin Chief Executive and Chairman John Makinson told journalists during a briefing earlier this week.

He said that although sales of second-hand books, which appear on online auction sites shortly after release have posed a threat to hardback business as well as subsequent paperback releases, the impact has not been as great as expected.

The used book market doesn't seem to have made the inroads into the new book market we initially feared, he said.

Makinson cited the example of a U.S. woman who bought a Penguin classics collection of 1,375 titles for $8,000 after her house burnt down. The woman was briefly retained by Penguin to help it research how people grow and manage their collections.

New research and experimenting are industry buzzwords.

Bloomsbury said last month electronic media was a critical part of its future business, having already entered rights contracts with groups like Microsoft.

Last week, Penguin's owner Pearson launched, a Web portal with video and audio book reviews aimed at and managed by teenagers.

These are our readers of the future, said Makinson, adding that Spinebreakers also provides valuable strategic insight into how teens create and share publishing information via the Web.


Another Penguin project launched this month was a web-based novel writing competition run with Amazon and Hewlett Packard that attracted a manuscript every minute over its first days in the quest for a publishing deal and $25,000 advance. Amazon users will ultimately pick the winner next year.

Makinson said such experiments in digital publishing would help publishers like Penguin find new talent and learn about new manuscript filtering processes and online author communities.

Makinson said Penguin's sales via Web retailing in Britain and the United States, its main markets, accounted for around 8-9 percent of division revenues and were growing quite fast.

Pearson, which also owns the pink-sheeted Financial Times newspaper and Economist magazine, is primarily an educational publisher with annual sales of around 4 billion pounds ($8.19 billion).

Penguin has invested heavily in mature western markets like the United States and Britain, but these are only generating book industry growth rates in line with national economic growth.

This has underpinned the drive into emerging markets like India where Makinson said 20-25 percent growth rates were achievable, China and South Africa.

Pearson, which publishers Rough Guides and Dorling Kindersley travel books has been digitally coding all its travel-related content so it can be used across mobile and Web applications. Makinson said the jury was still out on whether the enormous amount of travel literature via the Internet was depressing the market for travel publishing.

He said the genre was problematic for some publishers amid growing interest in publishing Chinese-language travel guides.

Makinson said there have been cases of publishers of Chinese travel guides not referring to historical events such as the 1989 Tiananmen Square crackdown in which hundreds, perhaps thousands of peaceful student-led democracy demonstrators were killed by Chinese troops.

Penguin would keep a careful watch on this month's acquisition of travel publisher Lonely Planet by BBC Worldwide, the commercial arm of the British state broadcaster, to see how far it might cross-promote the business in the publicly funded broadcaster and thereby hamper competition, he added.