Autumn is arriving as we speak, and it’s a good time to look at how the publishing industry is doing.
Let’s have a look at how the Big 5 Publishers of literature did last year. You will note that the top players have changed since my last Big 5 article. Some of the big fish have been absorbed by the even bigger fish since we last looked at them.
#1 on the list is Penguin-Random House. They’re headquartered in Germany and are still the big kid in the schoolyard. Last year they reported earnings of 3.3 billion US dollars.
#2 is Hatchett Book Group. They are headquartered in France. Their reported earnings were 2.7 billion US dollars.
#3 of our top 5 is a corporation called Springer Nature. They publish periodicals and magazines like Nature and Scientific American. They’re headquartered in both the UK and Germany. Their reported earnings were 1.9 billion US dollars.
#4 is Wiley (John Wiley and Sons), a US company publishing academic and instructional materials. They reported revenue of 1.7 billion US dollars.
#5 is McGraw-Hill Education, with reported earnings of 1.7 billion US dollars.
So, did you notice the trend? Only two of the top five traditional publishers are focused on publishing fiction.
And what is affecting the profits for these companies? According to Publishers’ Weekly, supply chain issues combined with inflation and dropped earnings in the first quarter of 2022. However, strong backlist sales propped things up at Penguin-Random House, titles like Where the Crawdads Sing by Delia Owens and Atomic Habits by James Clear. They also report that the late Dr. Seuss’s titles sold more than 5.7 million copies in that period.
As always, audiobooks also performed well. Penguin-Random House’s global CEO Markus Dohle said the ever-expanding international audio business has become a strong growth pillar of their publishing efforts. He also noted a technology- and data-driven transformation of their sales, marketing, and publicity strategies.
This side note about the backlists propping up the Big 5 reminds us to be careful when we’re offered a contract. Legacy book contracts are a terrible danger zone for the author. A hastily signed contract means you might never receive back the rights to your intellectual property (your books), even if the publisher is no longer publishing it.
Quote from the Authors Guild post of July 28, 2015:
Diamonds may be forever, but book contracts should not be. There’s no good reason why a book should be held hostage by a publisher for the lifetime of the copyright, the life of the author plus seventy years—essentially forever. Yet that’s precisely what happens today. A publisher may go bankrupt or be bought by a conglomerate, the editors who championed the author may go on to other companies, the sales force may fail to establish the title in the marketplace and ignore it thereafter, but no matter how badly the publisher mishandles the book, the author’s agreement with the original publisher is likely to remain in effect for many decades.
Most of us are not attorneys. If we go the traditional route, we should consider hiring a lawyer specializing in literary contracts.
This is good advice, even if you are represented by an agent. The complexity of negotiating a literary contract is both confusing and intimidating. By not having the advice of a professional, you risk unwittingly signing away secondary and subsidiary rights to your own work forever.
Many well-known authors were smart or had good lawyers. They either weren’t offered or didn’t accept a legacy contract. These authors regained the rights to their work when the contract terms were fulfilled. They’re now self-publishing their backlists and earning more royalties even though they sell fewer books.
On the indie side of things, we’re in the same boat financially as the Big 5, but we’re better positioned in some ways. We’ve always relied more on digital sales, which have no upfront cost outlay. Many indies are moving to audiobooks too. However, we do need paper books.
Significant cost increases for paper and production (and for distribution and freight) will affect our costs and profit for the foreseeable future. Per an email I received from Draft2Digital, due to supply chain issues and the rise in material costs, their print partner will be increasing D2D’s costs. This means that effective October 1, 2022, the cost of author copies via D2D Print will increase.
For indies, our most reliable royalties have always come from digital sales, although we do sell some print books. But the best route to gaining loyal readers has been book fairs, conventions, and signings at bookstores.
We pay upfront for our stock of books and have to keep an eye on our inventory to ensure we have enough on hand for each event. So, with printing costs going up, we will either raise prices or see a drop in our already-slim profit.
So, that is the industry’s current state as of this week. The Big Traditional Publishers are still consuming each other as fast as possible. At some point, there will only be one Big Traditional Publisher owning thousands of popular imprints worldwide, and they will be based in Europe.
The publishing industry is currently in a downturn because of inflation and production costs, but little has changed for indies. We’ve always been at a disadvantage, so in some ways, we’re better equipped to deal with change. We adjust and go with the flow whenever the market goes up or down or moves in a new direction.
Credits and Attributions:
Wikimedia Commons contributors, “File:Nature volume 536 number 7617 cover displaying an artist’s impression of Proxima Centauri b.jpg,” Wikimedia Commons, the free media repository, https://commons.wikimedia.org/w/index.php?title=File:Nature_volume_536_number_7617_cover_displaying_an_artist%E2%80%99s_impression_of_Proxima_Centauri_b.jpg&oldid=675402098 (accessed September 20, 2022). ESO/M. Kornmesser (photo displayed on the magazine cover), CC BY 4.0 <https://creativecommons.org/licenses/by/4.0>, via Wikimedia Commons.
Cover of Scientific American, the September 1848 issue Wikimedia Commons contributors, “File:SciAmer.gif,” Wikimedia Commons, the free media repository, https://commons.wikimedia.org/w/index.php?title=File:SciAmer.gif&oldid=655833071 (accessed September 20, 2022).