Changes in the Publishing Industry

The publishing industry is in the throes of some pretty major changes, and the full effects will take years to play out.  Hardly a week goes by without distressing headlines.  Publishers are downsizing, booksellers are going to the wall, even distributors are feeling the pinch.

The roots of publishers’ woes can be traced back to the Great Depression when booksellers insisted on a returns policy that would allow them to ship back unsold books.  This policy kept booksellers (and some publishers) afloat during some tumultuous economic times.

When the economy rebounded in the run up to WWII, and expanded in its aftermath, this policy remained in place, and still exists today.  This has had a number of important effects.

First, booksellers will always order more copies of a book than they think they will sell, knowing that a customer is unlikely to wait for them to order more copies, when they can just buy it somewhere else or order it online.  They can do this safe in the knowledge that they can return any unsold copies.

An estimated 30% to 40% percent of books are returned to publishers annually, of which, 65% to 95% are pulped.  Indie booksellers, without the space of the larger chains, tend to be a bit more circumspect in their buying habits, only returning around 20%, but for the larger chains, this figure can rise to 50%.

That’s a lot of books being destroyed every year.  In Canada alone, the numbers are estimated at between 50 and 100 million books.  Per year.  That’s around 600,000 trees, or, to put it another way, over 200,000 tons of carbon dioxide emitted to produce books that are going to be pulped anyway.  Per year.  And if you think those numbers are big, remember that the publishing industry in the U.S. is 15 to 20 times bigger.

This business model is unsustainable, but what about the cost to publishers?  Printing, storing, distributing, and pulping all these books costs money.  A lot of money.  So why do publishers do it?  Because they are terrible at predicting what will be a hit.

Predicting the future is always a mug’s game, but there are certain aspects of the publishing industry that make it next to impossible to guess what will sell and what won’t.  Books with multi-million dollar advances (and huge print runs) can tank, and unknown authors, with little marketing behind them can fly off the shelves, leading publishers to rush back to the printers, hoping to get the books on the market before the wave subsides.

The truth is, nobody can be sure.  Marketing helps, reviews help, a “name” on the cover helps, a hot genre or topic helps, but the only thing that has ever really sold books is word of mouth.  Think of your own buying habits.  Think of your favourite books/authors.  How did you discover them?  I bet the majority were friends’ recommendations.

Because publishers can’t predict what is going to be a hit, they need to gamble on a wide range of titles, leading to a situation where only 1 out of every 5 books makes a profit (out of the other four, two will break even and two will lose money).

So we have a situation where publishers are producing nearly twice as much product as they can sell, and out of all the titles they put so much time, energy, and resources into producing, only 20% of them make any money.  Naturally, this is eating into their profit margins, and since the consolidation of the book industry, the eye is on the bottom line more than ever.

The logical move for the industry was to try and sell more books, but the expansion of bookselling to supermarkets and big-box stores has been a double-edged sword.  While these retailers can shift huge numbers of books, this power has led them to demand steep discounts from the publishers, cutting into their margins even further.  If you doubt the power these retailers hold over the publishers, here is something that might change your mind: if the UK supermarket chain Tesco doesn’t like a book cover their logo, it gets changed (at the publisher’s expense).

As the large publishing houses search for the next big hit, the scramble for the top writers leads to some eye-popping advances.  Once the publisher has written the big cheque, they know they have to throw some serious marketing muscle behind the book to stand any chance of recouping their outlay.

What effect has this had on the average writer?  On the surface, it’s not good, all those big cheques leave less money for the rest.  Advances are falling, readership numbers have flattened out (despite rising populations), and yet more and more books are being printed every year.

Bad time to be a writer?  Maybe not.  After all, change brings opportunity, and in recent years, two developments have changed the industry forever.  Next time we will talk about Amazon and e-books.

EDIT: I wanted to post a video as a soundtrack to this post but Vimeo wouldn’t let me embed.  Check it out.

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.

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