Pearson’s Secret Startups: ‘We Can’t Be Right First Time’

When we first showed a video of Penguin Books’ iPad concepts last month, observers got pretty excited about the possibilities. Now, we are told, the first “book” – if you can call it that – Penguin will release from the line-up will be a title about little puppy Spot.

At a group briefing together with Penguin UK’s digital MD Anna Rafferty, parent Pearson’s digital strategy director Genevieve Shore explained that her commercial approach to tablets, like many digital forms, can be deliberately iterative

“The interesting thing about pricing on iPad is,” Shore said, “I’m trying to get everybody over the idea that we’ll be right first time. With static content, we spend a lot of time thinking about the right price, and then have to stick with that price. The beauty of these platforms is, we can change it.

“It allows us to think about extension services – it’s not about trying to jam a service in to a small device.”

Speaking about mobile, Shore said: “It’s sort of a phony war. Once you dig down beneath wallpapers and ringtones, the myth of mobile content revenue has been exposed over the last couple of years. But I really think this is going to be the year we’ll see that change.”

More broadly, she said: “We are very focused on M&A digitally. We’re definitely looking to make investments in external startups.” Pearson (NYSE: PSO) has previously partnered with the LiveMocha language learning startup and formed a Mobiledu JV with Nokia (NYSE: NOK) to deliver e-learning to Chinese mobile phones.

Now Pearson has been forming “internal startups” recently, Shore said. “Traditionally, we’ve been allowed to develop things with longer lead times, over 24 months. We’ve got a number of startups in play which you’ll hear about over the next couple of years, where we take people out of their normal jobs and let them work in a more classic startup environment.”

But Shore wouldn’t detail the “NewCos” further. Pearson recently became a founder sponsor of TechHub, the Silicon Roundabout, London, co-working environment for digital entrepreneurs.

Pearson took £1.7 billion revenue from digital products in 2009 – that’s 31 percent of group income and growing 19 percent a year. It claims 35 million children playing its games daily, while Penguin is turning its Spinebreakers teen bookreaders’ community in to a “full social network”. “It’s about future-proofing our business because we don’t want to stop our readers from reading,” Rafferty said.

We write frequently on how Pearson’s Financial Times is faring in these regards. “Too many people are talking about surviving and we think they should be talking about thriving,” managing director Rob Grimshaw said. “If you are a producer of text content and you have a new channel available, there ought to be an advantage to your business – there should be a very bright future. We can create a bigger, better more profitable FT than we’ve ever had before on the internet. The odd model with somthing to prove is actually the free model.”