Book Publishing’s Month of the Long Knives

grim-reaperOUCH!!  The retrenchment of consumer spending which has led to declining book sales is now beginning to ripple through book publishing.   Book sales have fallen dramatically in both the US and UK during the final four months of the year and is leading many publishers to cut staff to control costs and attempt to maintain profitability or stem losses. 

In the past several weeks, a number of major book publishers have announcd layoffs and restructurings, including:  Houghton-Mifflin, Simon & Schuster, Random House and MacMillan

 Book publishers face many uphill battles to preserve or restore profitability in this economy:

  • Consumers on strike  – Willingly or not, consumers are being “de-leveraged”and the trifecta of foreclosure mess, rising unemployment and credit strangulation are likely to mean flat or declining book sales across the board for some time to come.
  • Still high commodity prices– Though oil prices have fallen dramatically, many of the commodity prices that most affect publishers are still at high levels.  The Fed’s latest attempts to “reflate” the economy may actually exacerbate this situation.
  • Dependence on expensive sales channels– Most large publishers are still heavily dependent on the large chains for the bulk of their sales.  This is probably the most expensive book sales channel there is when you factor in the costs of discounting, returns and paying for in-store positioning / promotion.
  • Business model– The large publishing houses are now suffering the downside of having morphed from being primarily backlist and midlist tenders to being a “hits” driven business.
  • Scourge of the returns policy– Book publishers are still bearing the burden of returns from booksellers – an antiquated practice developed during the last depression.

Interview with Sara Nelson, Editor-in-Chief, Publishers Weekly

bookstore-out-of-business

Perhaps in all of this doom and gloom there is a silver lining.  Layoffs at book publishers are at least partly the result of a business that is not able to withstand the rigors of its current environment.  The pain can, however, force a rethinking of outdated business models and industry practices.  There are new publishing technologies and marketing tools that can help publishers survive – and (gasp!) prosper – even in a period of extended austerity. 

 


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