From The Bookseller:
Book pricing has stagnated over the past two decades, leading to severe real-term declines in price per book, according to analysis by Enders.
The report, which uses Nielsen BookScan data as well analysis by a team of Enders researchers, says “nominal prices are now on the rise, but they are still swamped by inflation, and there is no prospect of them catching up to where they were”. It continues: “The cost to produce books has been hit by many of the same inflationary conditions affecting companies (and people) across the board, leading to tough conditions at publishers, particularly small ones.”
However, in brighter news, “books offer many ways for publishers to price discriminate, charging more to price-insensitive, motivated readers”, it said.
Enders described a “cost crisis” for many publishers due to two decades of “eroding real prices” for trade books. When seen in the context of an increasingly competitive market for people’s attention, with free or low-priced entertainment and information options, books are also limited by how much prices can go up.
But prices need to rise, according to Enders. There is little slack in the cost structure of publishers as staff and author pay is already generally low, but it proposes price discrimination based on sales channel, format and special editions as a way forward. “This would enable publishers to get a better average price, while still leaving squeezed and price-sensitive readers with low-cost options,” Enders said.
Nominal average selling prices have risen from £7.81 in 2001 to £8.97 up to October 2023, but this represents a sizeable fall in real terms as that £7.81 is equivalent (in October 2023) to £13.80.
Noting the power of BookTok and subscription book boxes as “powerful new tastemakers”, Enders suggests special editions are another way of price discriminating to “capture higher spend from more motivated readers within certain genres”.
It said: “At the highest end, book subscription boxes like FairyLoot and Illumicrate work with publishers to create special editions with all the trimmings: custom covers, foils, sprayed edges, limited signed/numbered/lettered editions. Some contain exclusive extra content, and the boxes come with themed merchandise. These are designed for genre superfans who will post images or video on Instagram and TikTok. The books themselves retail to non-subscribers for upwards of £20, with some super special editions on offer for up to £75, and they do not get discounted. Many (though by no means all) of the books also retain or increase their value on secondary markets.”
Enders noted how Waterstones and independent bookshops offer retailer exclusive editions with higher specs or additional content, which are usually not such collectors’ items, but support higher prices and avoid the trap of discounting.
Enders said “diversification of online physical retail should be a priority for the industry, as it prevents one buyer (Amazon) from having too much power to dictate terms over suppliers, and shape the market in its own interests”.
It continued: “For publishers, diversification of sales channels is also an opportunity to dissolve some of the pricing issues, as they can price-discriminate by selectively discounting based on where readers are buying. A buyer on a TikTok shop may be coming directly from a video about the title they’re buying, making them less price-sensitive.
Link to the rest at The Bookseller
We have been hearing how dumb the publishers are for about the last twelve years. Stupid managers, stupid editors, shortsighted, fail to capitalize on ebooks, English majors who deny ever taking the LSAT, hardbacks, returns, Manhattan offices…
So, how come the firms are still around after doing the opposite of what their critics demanded?
Seems Kindle authors who didn’t go wide are also still around, along with Amazon’s subscription program. Both were declared hopelessly doomed.
God Bless the free market, for it just doesn’t listen.
They’re coasting.
You ever hear of COMPUTER ASSOCIATES?
https://en.m.wikipedia.org/wiki/CA_Technologies
“The main key to Computer Associates’ fast growth was the acquisition of many lesser-sized software companies in the IBM mainframe industry segment. CA was known for large-scale dismissals of employees in the acquired firms, and for sometimes extracting cash flow from acquired products rather than enhancing them.”
They lasted 40 years buying roadkill second and third tier software and milking their fading users bases while waiting for them to migrate to newer products. Made good money as bottom feeders and outlasted many companies that actually created tools and helped people. Often buying them out and firing the staff to milk the corpse.
Survival is no proof of success or value.
Now substitute mergers, buyouts, and aging legacy authors for software titles and you get the BPHs as they stand today, living off backlist, dreamers, and above all the legacy authors.
Try breaking down their revenues by imprint and compare each unit’s production today to its production back in, say 2003. Now adjust for inflation over those 20 years: 67%. Hint: nowhere near what it used to be. Or, look at staffing levels, number of authors under contract, new authors establishing themselves for the long haul versus the one-and-dones, the big bandwagon sellers…
Are they surviving? Sure. Sort of.
They’re zombies.
They’ll hang around indefinitely…or until the legacies retire and their hoard of copyrights expire.
So what? Survival doesn’t mean control or relevance.
CA survived 40 years peddling mainframe and minicomputer software long after PCs and the Cloud made their wares irrelevant to the world at large. And then one day, almost overnight, they were gone and hardly anybody outside their circle noticed.
Trade publshing is a niche. A decent sized niche but it’s not growing and its relevance to the world outside is fading day by day.
It has been stagnant all century, with diminishing relevance.
It wasn’t that long ago that the manhattan mafia looked at the “Peak TV” wave of content and expected producers to storm their halls to license content… But it never happened. Oh, Hollywood and the streamers *are* licensing content left and right, but they’re licensing from the estates of older, dead authors; from video game companies. If you have MAX check out THE LAST OF US. So-so game, great series. HALO is in its second season. FALLOUT is coming in April. ARCANE is getting a second season. GEARS OF WAR is in production.
They’re mining the PD: If you have PRIME, check out ZORRO (from Spain, featuring the next young action star headed to Hollywood. A young Antonio Banderas.) Really, really good reinterpretation of the 100-year old pulp classic. Great cast, production values, interresting direction and cinematography, and above all very good writing.
Instead of bending the knee to the manhattan mafia, the video folks are going to Korea, Spain, Denmark, Sweden, and of course, the UK and Australia.
(Wanna hear a funny one? Because of the strikes, CBS turned to Australia to create a new NCIS spinoff. Aussie actors, writers, and directors. Hallmark recycled their standard scripts and filmed their annual christmas movies all over Europe. Norway, Scotland, even eastern Europe. It’s no longer just Canada eating LA’s lunch. Now it’s all over. Thank the strikes.)
While the “literary” establishment frets about Amazon, about ebooks, about Indie Inc, about LLMs, the best writers are working elsewhere. While the book industry waits on Martin’s WINDS OF WINTER, he is working on *three* GAME OF THRONES fantasies and on the side, writing the “bible” for one of the most acclaimed video games of 2022-23, THE ELDEN RING. (Well over $1.5B in sales and counting. Wanna bet how much he’s earned from that? Where is priorities lie?)
Hollywood will survive. So will the BPHs.
But the overall market for *story* is exploding…
…and the print book market isn’t.
Survival is the lowest of bars to clear, not something to brag about.
Good comparison with Computer Associates, F.
I’d suggest the publishers are managing decline. There’s lots of money to be made in it.
I agree publishing is not growing, and it’s relevance is indeed fading. That is the environment in which they operate. The forces at work are too powerful to overcome by moving to cheaper offices, reducing ebook prices, eliminating paper, or paying more money to authors.
Critics set up one set of objectives for publishers while publishers actually have another. If publishers don’t meet the objectives critics set, the critics tell us how stupid they are. It’s more likely publishers don’t care what objectives critics set for publishers.
In managing decline, survival is the most important objective.
That assumes they’re too lazy (like CA) or too incompetent to see their way past the sea change to maintain relevance. By contrast, IBM has lasted well over a 100 years and many such changes by adapting to the time and never settling for “managing decline”. They’ve reinvented their business for each era and are still a player, even in the era of “AI”. Not always successfully, but never surrendering to ” the unavoidable”. CA “managed decline” to the end; IBM has a foot in the cloud era and another in “AI” (remember WATSON?) and is back on a growth path:
https://finance.yahoo.com/news/ibm-midst-cloud-renaissance-unlocking-190141516.html
“Managing decline” is no virtue, just lack of imagination, laziness, or incompetence. Or all the above.
IBM is in an industry that may have had the fastest growth of any in history. And it keeps on growing. Their challenge was managing growth in a growing industry.
Publishing is in an industry that is seeing decline relative to IBM’s. And that decline comes directly from the growth of IBM’s industry. The challenge is managing decline.
Managing decline means preserving the balance sheet for as long as possible while squeezing as much cash as possible out of the declining market. It’s not a task for the lazy.
As opposed to evolving the business? Say into *publishing services*? Legit ones , not vanity publishing, which they are slowly slipping into.
If you read the linked piece, IBM used to be all about “big iron” glass house computers and have evolved over 40 years into system *management* services, consulting, and software. They leveraged their corporate knowledge to pivot to other revenue streams.
What the BPHs are doing is cutting what should be their profit centers to support their biggest cost center and a dying distribution channel.
Publishing doesn’t *have* to be a declining business and it *will* continue indefinitely. Just without the BPHs.
Managing decline is a self-fulfilling prophesy.
Publishing services? To whom?
Publishers have provided those services for a few hundred years. That’s their competitive advantage. Now the need for such services is declining.
IBM’s remake was in a growing industry, doing what they were very good at.
Publishers would be trying to leverage their skills in a declining market that has less and less need for them.
Publishing is declining because demand for its services is declining.
I’ve been to Cabot Cove. It takes up about a half a tennis court on the Universal lot. It’s gone no matter how hard authors wish it wasn’t.
Publishing is declining because demand for its services is declining, and demand for it’s product is being siphoned off by other digital products.
One might wonder how a publisher would handle royalty accounting on books whose price changed during a royalty period due to supply/demand and/or other factors (which might include “needed to go back to press but there was a paper shortage”).
<sarcasm> Oh, wait, there’s no need to wonder — commercial publishers will play data games and credit the author with the lowest price received on a given ISBN during the royalty period. See? All uncertainty removed! And as a bonus, it would be virtually impossible to audit! </sarcasm>
It’s really a shame when the real world intrudes on grand microeconomic theories, isn’t it?
C. Are you expecting English majors, some with Masters degrees, to deal with mathematics?
So long as the numbers turn out “right,” who cares how they were generated?
The members of the Board judging whether their division is underperforming?
The authors suing them for fraudulent accounting?
Oh, you mean who inside the publishers who has gotten promoted to management, I suspect. Umm, these days almost none of them are English majors.† And their masters’ degrees are likely to be MBAs. And they expect to be ultimately promoted/fired by hedge-fund managers who know how to manipulate functions in spreadsheets while having no concept whatsoever of “boundary condition,” “real-world constraint,” or “concept of penny-wise and pound-foolish” (since that aphorism refers to 1/240, which is not readily represented in the decimal notation of a spreadsheet).
But each of those hedge-fund managers who have forced their way onto the board: I expect them to deal with mathematics at least in the form of allocating outside counsel’s hourly rates as part of the black-box “title overhead costs” on cost-sales spreadsheets.
† This shark was an English major once upon a time. He was also a biochemistry major who was three courses short of a minor in math (so far once-upon-a-time ago that he learned to use a slide rule before there were any “scientific calculators”). So he expects himself to deal with mathematics, and everyone else (rightly) expects him to be a weirdo.
Enders said “diversification of online physical retail should be a priority for the industry, as it prevents one buyer (Amazon) from having too much power to dictate terms over suppliers, and shape the market in its own interests”.
If it’s an industry priority, Amazon is toast. Bring back Douglas Preston and his Authors United to smite the beast.
One might reasonably assume that if making money selling printed books online was a business that would generate a profit, Amazon would have a boatload of online competitors selling dead tree books.