Children's publishers join forces online

Publishers including Hachette, Penguin and Simon & Schuster are putting their children's books into a single online entertainment brand as they search for ways to profit from ebooks.

The Magic Town platform is to be launched on Wednesday by Mindshapes, which was set up by two of the co-founders of Playfish, the UK online games company sold to Electronic Arts in 2009.

The aim is to create a hub where children aged from two to six can find interactive ebooks, from classic fairy tales to stories featuring popular characters such as Elmer the Elepha nt. Magic Town, which will be available online immediately and on Apple's iPad from next month, will operate on a "freemium" model. About 20 titles will be available to read for free. The full catalogue will cost £7.99 for a monthly or £49.99 for an annual subscription fee.

"We are looking to become the primary entertainment brand for young children within the next few years," said Christian Dorffer, chief commercial officer of Mindshapes. About 200 stories will be made available on the platform in the first year.

Sarah Packenham, rights director at Andersen Press, home of the Elmer books, said the publisher was interested in joining Magic Town because the cost of producing its own animated books for many platforms was too high for a small company.

"We are creating our own ebooks, but they are very plain vanilla, with no narration or animation. The cost of adding those things on is very high. We don't have the expertise to do it all or to foretell which part of the market to invest in," she said.

The platform is being introduced at a time when ebook sales are a growing proportion of the overall market. The Association of American Publishers said ebooks' share of the children's and young adult book market hit 16 per cent in February.

According to estimates from PwC, ebook sales in Europe will grow 113 per cent this year but will still end the year as less than 2 per cent of the market.

Online games and social networking sites for children, such as Moshi Monsters and Club Penguin, have proved popular. Magic Town is targeting an age group that is younger than the typical users for these sites and will focus more on reading and literacy.

Magic Town has signed up three of the big six publishing companies, Simon & Schuster, Hachette and Penguin, owned by Pearson, which also owns the Financial Times. It is in talks with Macmillan and Bloomsbury.

The publishers will be paid royalties based on how many times their books are read online. Mr Dorffer said the fees would initially be modest, "not hundreds of thousands of pounds".

Ms Packenham said that while the royalties from the site were important for Andersen Press, she was also interested in the ability to promote the company's less well-known titles. Mr Dorffer said publishers could further benefit from rapid feedback on titles.

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