Publishing
and the Economy
Terry Burns
I was asked to speak to
the attendees at the Glorieta Christian Writers Conference on this topic. In
order to do it I had to interview over 50 editors, agents, and industry
professionals. I am continuing to keep these comments updated:
The
newswire reports: (WASHINGTON
12/5/08)– WASHINGTON
– Skittish employers slashed 533,000 jobs in November, the most in 34 years,
catapulting the unemployment
rate to 6.7 percent, dramatic proof the country is careening
deeper into recession.
2/10/09 HarperCollins announced this morning that
it is closing its Collins division and integrating its operations within
different businesses in the General Books Group. As a result, Steve Ross,
president and publisher of Collins, and Lisa Gallagher, senior v-p, and
publisher of William Morrow, are leaving the company. In addition to closing
Collins, CEO Brian Murray issued a memo today saying that despite efforts to
avoid layoffs, a reduction in the workforce will be necessary.
The industry just wasn’t
talking about it much, but place they were
talking about it was at the Frankfort
Book Fair. Yet those who were there also said they were doing a reasonable
amount of business. It was summed up as “If you weren’t prepared to buy then
you simply didn’t come.” Business as usual, but cautious.
Bob Sacks addressed it in Publishing Executive Magazine. He was primarily talking about the
magazine segment of the industry but his comments were pertinent as he said,
“This is bigger than anything we have had to face as an industry or personally
as family members and providers, but the country, the world, and our industry
have gone through this before. Did you know that the first issue of Fortune magazine was published in
February of 1930, four months after the stock market crash of 1929?”
Random House CEO Markus Dohle (12/3/08)
acknowledged the impact the current economic crisis has had on his company,
stating that "our industry is facing some of the most difficult times in
publishing history."
Simon & Schuster President Carolyn Reidy told her fellow publishing execs at ECPA that it's
time we face facts: books are no longer recession-proof. Retail sales are in
steep decline, backlist isn't selling, publishers are getting squeezed by
retailers who demand better terms, and it will all probably get worse before it
gets better. Reidy noted that self publishing has become a realistic option for
many authors, explained how the economics of digital publishing make it look
like publishers will be making less on each book sold, and called into question
the practice of full-credit returns. She reminded everyone that in all her
years in the business, publishing has always been considered
"an industry in trouble." Yet here we are -- threatened, and needing
to change because of new technology, but still educating and entertaining
readers, and ready to adapt to the new business realities as well as the new
technology. (12/22/08) In
digital news, like Random House, Simon & Schuster will "nearly
quadruple eBook sales this year" even with a delay in their initiative
announced at BEA to digitize another 5,000 titles. In January they will
relaunch their website, "offering visitors a multitude of new and exciting
ways to find out about our books, stay connected to their favorite authors,
share their enthusiasm with fellow readers, and remain engaged with our content
before, during, and after reading our books."
Following the
talks in the above paragraph on 12/3/08 Reidy
announced a reduction in staff in which 35 positions across the company were
eliminated, from areas including our publishing divisions and international,
operations and sales. It was the beginning of
what is now being referred to as “Black Wednesday” where a number of houses
laid off employees, (see in red below) restructured, and saw their stock drop. "Yes, Virginia, book publishing is NOT recession
proof," said Patricia Schroeder, president and chief executive
officer of the Association of American Publishers.
"It's sad day."
In
his blog, Michael Hyatt, CEO of Thomas
Nelson said (12/2/08), “Today, was a very
difficult day at Thomas Nelson. We informed fifty-four of our friends and
co-workers (about 10% of our workforce)
that we have eliminated their jobs, effective this Friday. This will affect
nearly every department in our company.” (12/8/08) some good news as Hyatt
mentioned “getting some good reports back from retail accounts”
Harcourt Houghton Mifflin, confirmed
that the publisher has “temporarily stopped acquiring manuscripts”. 12/5/08 Ceo Tony Lucki says that "at least several hundred of the company's 5,300
full-time employees are expected to lose their jobs."
Borders' stock price fell under one dollar- if their
stock price stays under $1 for ninety days, they have to do a consolidation of
stock (the opposite of a stock split).
12/4/08 Publishers
Weekly says John Sargent, chief executive of Macmillan, whose publishing
houses include Farrar, Straus and Giroux and St. Martin's Press, said in a
companywide meeting that he could not guarantee that everyone would have a job
going forward.
Also reported: HarperCollins "plans to delay pay
increases until after July 1, 2009...a response to the U.S.
recession, according to spokesperson Erin Crum, Bloomberg reports. "HarperCollins
hasn't decided whether to eliminate jobs, she said."
Pearson has a companywide freeze
on nearly all raises, which includes Penguin.
Bowker announced internally a
restructuring in "a couple of our operating units, including the
transition of key responsibilities to our development team in the
Netherlands." As a result, according to ceo Annie Callanan, "this has resulted
in the elimination of 13 positions in the US." Callanan
emphasizes that the company overall is expanding, not contracting: "Bowker
is closing out another strong year of growth in 2008 and our payroll is actually increasing into 2009."
12/10/08 Publishing’s
layoffs have spread across the country with Chronicle Books laying off under 5% of its staff on Monday.
Layoffs at Macmillan; Farley to Head Single Children's Division - A restructuring
throughout Macmillan in the US announced yesterday internally eliminates 64
positions from throughout the company's imprints and divisions
(including cuts at their college business, central services for the whole
company, and Scientific American magazine), representing about four percent of
staff in all. Pay freezes in effect for staff.
The International Christian Retail Show is cutting back from
five days to four, with three days extended hour exhibit time to allow
exhibitors to shave a day of costs to help control expenses.
One of my most detailed
responses came from
Ken Peterson at Random House’s
Multnomah/Waterbrook imprints:
1.
For publishers in general, the larger concern predated the current economic
crisis--that is, the declining health of retail book publishing. People are not
buying or reading books as fervently as they used to, and this is not economic
per se, but more about the competition of other forms of media for people's
time.
2.
Consequently, long before this crisis, many houses have been cutting back on
their new acquisitions and trying to focus their strategies on fewer titles
that hopefully will sell better.
3.
The economic crisis is likely to cause publishers to reduce staff before end of
year. Some of this will be in editorial, but much more will be in publishing
services and marketing. 12/3/08 Random
House axed some of its top people and announced it is restructuring -- and will
disband the Doubleday Publishing Group.
4.
Fortunately, at Waterbook Multnomah, we are not cutting titles drastically, but
all year we have been more careful and more focused in what we acquire. It
doesn't seem like we will be cutting staff, but all year we have been shifting
a few people from a bookstore focus into Internet and church development
channels.
5.
I can't stress enough the importance of writers being smart about writing what
might sell. The wise writer needs to address the potential market of the idea
first, before writing it.
6.
Anything that was marginal before--poetry, children's books, etc--is even more
marginal now.
7.
A writer does not need to write a best-seller but should think about bigger,
broader subjects an avoid writing on
subjects that are niche ideas or well-worn categories.
8.
It's also more critical now than ever before that writers develop their own
promotional opportunities. They need to be proactive online, in blogging,
facebook, etc. They need to think about establishing an email newsletter,
building a list of fans. They need to think about speaking ops, media ops.
Publishers more than ever are looking for authors with self-promotion built-in.
Mark Tavani, Random House Sr Editor: “I would be outright
lying if I told you that these changes—massive and unsettling as they are—come
as a surprise to anyone who’s been paying attention over the last few years. In
fact, I think the changes that have left the industry in its current condition
began to take shape a number of years back, when large media corporations began
acquiring publishing houses. Yes, perhaps the industry will contract. I feel
that the book industry got big with corporate backing and it’s only normal for
it to take a step back, especially in the face of so much competition for
people’s time and attention, not to mention tough economic times. Maybe, in the
end, books won’t qualify precisely as mass entertainment, but entertainment for
a sizable if select audience.”
Dan Bensen writes: NavPress is being proactive
rather than just hanging on and hoping. As a self-sustaining, not-for-profit
ministry we have become more selective in the types and quantity of products we
publish as well as the number and amounts of advances we offer authors.
Dan Penwell at AMG writes: We are cutting back some on titles and
moving certain spring 2009 books to the summer or fall/winter. The slow economy and buying from the internet
(rather than retail stores) have made things tough.
Paul Franklyn, Executive Director at
Abingdon writes: We are cutting travel and other
expenses. However, fiction is our seed
corn at Abingdon, and we anticipate no cuts in our fiction launch plans for mid
2009. We don't eat our seed corn.
Another
house says, “The key thing I want writers to know is that they need to be
realistic about their advances.
Publishers are focused on making sure that every book earns out within
the first year. The days of
progressively larger advances with each new contract are over--unless the
author's sales can be proven to have increased.
Sales and Marketing are definitely looking at past performance as they
sell today's new book.”
Bethany
says: We are not cutting our list as
other houses have. We are always looking for strong stories and the economy
won't end that. That said, the performance of your first book is more crucial
than ever. Folks with poor sales track records are having books cancelled and
are having a difficult time finding new publishers. We're leery of taking on
cancelled contracts. You need to make sure your first book gets a strong
launch.
Andy McGuire at Moody writes: We
do seem to be getting more conservative with our sales projections on various
projects as the economy struggles. With that, we end up lowering the advances
offered. I would advise authors to think about sharing the risk with the
publishers a bit more. If the author really believes in his/her work and thinks
they can help the publisher reach the market.
Nancy Lohr at BJU Press
says they are working to improve internal efficiencies, also warning that
advances would go down. She went on to say: “But, as my pastor reminded us yesterday, no matter
what happens to our 401K plan, we still have a 419P plan - "my God shall
supply all your need according to his riches in glory by Christ Jesus."
Dennis Hillman at Kregel writes:
--Everyone
wants to cut cost. Less room for a marginal book.
--There
are too many books chasing too few customers. Something has to give in next
year, publishers have to scale back or go under.
--Authors
need to educate themselves about the business of bookselling. Know something
about the market conditions that pertain to their particular project. Who
really is the reader--it's not all Christian women from 15 to 75 years of age.
--Understand
culture; there are generational shifts in readers as well.
I only found a couple of
agents talking on the subject. Chip
MacGreagor was asked, "Would you suggest writers
with a ready book proposal hold off a bit -- perhaps submit later? Is there
anything we should do differently in light of the economy?"
His answer: “No way. I'm
with one of the commenters who noted that publisher and bookseller stocks are
down because the overall market is down. There's a mad rush to sell, and that's
artificially driving down stock prices. But Amazon is a well-run company that
makes good money. Barnes & Noble, Borders, and Books-a-Million may be
facing a squeeze, but they're still the three largest bookstore chains in
America. And all those publishers are still in the business of creating and
selling books. Things may slow down in terms of acquisitions while everyone
gets their bearings, but eventually the publishers will still need to be
acquiring new titles, since selling books is the way they remain in business.
The one thing I'd say is that, in a weak economy, the core truths of book
publishing become even more pronounced: have a big idea, express it through
great writing, and support it with a strong platform. If an author walks in
with a small idea, or a book that's only 80% done, he or she is going to find a
very tough time getting a book published. “
Wildfire Marketing http://www.startawildfire.com/ has an interesting
comparison of the sales of the top 15 CBA publishers on Amazon. Zondervan came
in at the top with an average sales ranking of 1,807 for their top 20 books,
with the best selling title making it all the way to 45. They were followed
closely by Thomas Nelson with an average of 1,954 and a top ranking of 142, and
by Tyndale with an average of 2,341 and a top title at 469.
Multnomah/Waterbrook came in next at 3,666 and Baker at 3,763. Faithwords came
in at 8,725, Harvest House 9,558, B & H 12,066, Navpress 12966, Moody
15,589 and Regal 18,646. Rounding
out the list are Howard at 21,242, Barbour at 21,616, IVPress at 22,756 and
Kregel at 47,738. It’s important to note while Amazon is a good indicator, it’s
not a substitute for overall sales numbers but those are a little harder to
come by. Much more detail on this at the website.
That’s a sampling of
industry pros. What does it mean? I was doing deals right
up to the Thanksgiving-Christmas break, but of course the industry goes dead
then anyway as committee meetings become almost impossible to schedule.
I
think it says is that we’re going to see a more cautious approach to
acquisitions over the next months and see it taking longer to get decisions.
Will we see things rebound back to what they were? Maybe not entirely. I don’t
see books going away, but I do see the industry reinventing itself some. This
is not all about the current economy as several editors said. I see houses
making some changes to recognize some of the new trends, changes we need to
stay on top of. This is nothing new, publishing has changed the way it
delivered product before just as the music industry has moved from records to
tape to 8-track to CD. Will the book disappear? Of course not. Will the mix
change? I think so. I do know these days it is changing on a daily basis and I
for one am watching things closely. But one thing is sure, there will always be
a place for a really good story, told well.