SIC 2731
BOOK PUBLISHING



This category includes establishments primarily engaged in publishing, or in publishing and printing, books and pamphlets. Establishments primarily engaged in printing or in printing and binding (but not publishing) books and pamphlets are classified in SIC 2732: Book Printing .

NAICS Code(s)

511130 (Book Publishing)

512230 (Music Publishing)

Industry Snapshot

The book publishing industry experienced extraordinary growth from 1963 to 1993, with annual book sales of $1.68 billion in 1963 rising to $17.17 billion by 1993. In 1998 American consumers spent $23 billion on books, according to the Association of American Publishers. Sales reached $25.0 billion in 2000 and remained virtually unchanged in 2001. The most significant categories accounting for book sales in 2001 were trade (including adult and juvenile titles) with $6.37 billion in sales, down 2.6 percent from 2000; professional and scholarly, with $4.74 billion (down 7.6 percent); elementary-high school (el-hi) texts and materials with $4.18 billion (up 7.8 percent); higher education, with $3.47 billion (up 7.2 percent); mass market paperbacks, with $1.5 billion (down 0.8 percent); book clubs, with $1.33 billion (up 3.3 percent); and religious publications, with $1.31 billion (up 1.3 percent).

Books sales are driven by a number of factors. Favorable demographics have contributed to sales growth in such categories as adult trade, children's books, college texts, and el-hi sales. Publishers have found support in a growing literate population with high disposable personal incomes. Other factors affecting sales of different categories include school enrollments and state funding for school-related books. With a growing number of high school graduates and more targeted marketing programs, college sales have been strong. Children's book sales have benefited from merchandising tie-ins with movies and television shows. Demand for adult trade books reflects strong best-seller lists and other factors.

During the 1990s, two noteworthy developments changed the way consumers purchase books and had a positive impact on book sales. One development was the early 1990s proliferation of large retail bookstore chains. By offering conveniences such as comfortable browsing areas, coffee bars, and special events such as book-signings, author readings, and children's story hours, these chains created "superstores" that provided an enjoyable atmosphere for consumers while expanding the overall market for books. The two biggest players that emerged in this arena were Borders Group Inc. and Barnes & Noble Inc. Another development, which occurred in the late 1990s, was the growth of online bookselling, pioneered by Amazon.com. It was not long before both Barnes & Noble and Borders Books & Music had established Web sites to offer books over the Internet. In 1999 Barnes & Noble raised $25 million by spinning off barnesandnoble.com as a separate, publicly traded company while maintaining a 37 percent interest in it.

Organization and Structure

In some respects, book publishing appeared to be a fragmented industry, with more than 25,000 companies participating in the United States in the early 2000s. In reality, however, the industry has been dominated by a handful of giant publishing houses. At times, these players have controlled as much as 85 percent of the overall U.S. book publishing market. These large publishers consolidated many of their smaller imprints in the 1990s in order to cut costs and reposition themselves for the onset of electronic publishing. According to Malcolm Jones of Publishers Weekly, most of these companies considered themselves to operate within "the publishing aspect of the communications industry." However, this concentration of power among relatively few publishers led to criticism regarding the quality and diversity of materials published. Industry observers saw an increasing role for small presses to publish works of literary quality that did not necessarily have enormous sales potential. Because of the proliferation of smaller publishers, the book publishing industry is not highly concentrated compared to other industries. In many categories there are relatively few barriers to entry.

Products within the book publishing industry could be divided into six major categories: adult trade; juvenile trade; mass market; professional, technical, and reference; university press; and religious books. Trade books, representing the largest share of the book market, encompassed all general-interest publications, such as adult and juvenile fiction, nonfiction, advice, and how-to books. In 2001, the trade category had net dollar sales of more than $6.37 billion according to the Association of American Publishers. In the mass market paperback category, publishers' net dollar sales were $1.6 billion in 2001, compared to $1.5 billion in 1998 and $1.4 billion in 1995; net dollar sales for professional titles reached $4.7 billion in 2001, up from $4.4 billion in 1998 and almost $3.9 billion in 1995. The expansion of large chain bookstores and the population growth among school-age children and high-income adults were among the factors that contributed to the growth of these sales.

The book publishing process was fairly similar across these product categories. Most books originated as a concept or idea, which was either submitted by an outside author or generated internally by the publisher. The concept was usually refined using market analysis, and the final decision to proceed resulted from a comparison of the product's expected costs and potential revenues. Such decisions were increasingly made by committee consensus versus the decree of one individual editor. Next came the actual compilation of the book's content, followed by editorial work to ensure its quality and tailor it specifically to a target market. Meanwhile, the marketing and art departments designed the finished product, including type style, page size and layout, presentation of graphics, and appearance of the cover. Then the book was typeset (set in final, camera-ready form for printing), either by an outside vendor or with an in-house desktop publishing system. Finally, the book was transformed into plates, printed, and bound, usually by an outside vendor or affiliated company rather than the publishing house.

Volume, or the size of a book's print run, is an important factor in achieving profitability. Noneducational publishers normally held first hardcover runs to 5,000-50,000 copies while new books by best-selling authors may have merited first runs of over 300,000 copies. Per unit fixed costs were a function directly related to the size of the print run. The American Association of Publishers indicated that the typical manufacturing cost for a mass-market paperback was less than 10 percent of gross sales, while the average for all books was approximately 25 percent.

Returned books represent a substantial cost to publishers. The cost of returns includes "handling, processing, and disposal," and, according to Standard & Poor's, such costs have cut heavily into publishers' pretax profit margins in recent years. In an August 1996 article the New York Times labeled returns "the most significant barometer of the financial success of a book, a measurement more critical than a ranking on a best-seller list because rejects cut directly into profits. Historically, publishers have agreed to take back returns and absorb the loss to entice bookstores to stock their titles."

Book publishers sold their products to the following primary markets: chain and independent retail bookstores; college bookstores; elementary and high schools; and libraries, universities, and other institutions. Among these markets, large chain bookstores proliferated and gained importance in the early 1990s—making book-buying into a form of entertainment and siphoning sales away from mail order and book clubs. In addition, the library market, though small, was considered crucial in that it guaranteed publishers a minimum number of sales and, traditionally, required comparatively little in terms of marketing attention. Online bookselling, the newest and fastest growing retail format, provided consumers with relatively quick access to more than 1 million titles purchasable via the Internet.

Background and Development

The U.S. book publishing industry grew after the Civil War, as the country moved from an agrarian to an industrial society and people increasingly sought information about emerging technology. World War I increased demand for engineering manuals, especially with regard to radio communication, aviation, construction, and aerial photography. During World War II, training manuals gained importance as factories had to hire untrained people to replace soldiers. Publishers who could provide this information quickly received special allocations of paper, which was scarce during wartime.

Beginning in the mid-1800s, publishing houses provided gathering places for literary talent of the time, especially in London and New York City. Most writers formed relationships with particular editors—who often became well-known public figures in their own right—and followed them from one publishing house to another. Several publishing houses became prominent in the fight against censorship in the early twentieth century. One celebrated case occurred in the 1930s when Bennett Cerf, one of the founders of Random House, intentionally notified U.S. Customs about the arrival from Paris of James Joyce's allegedly obscene novel Ulysses . Cerf wanted Customs to confiscate the book so that he could fight the censorship in court. Publishing houses that supported freedom of speech often attracted the top literary and editorial talent.

Paperback books first appeared in the United States in the 1770s, but they did not gain a wide audience until Simon & Schuster introduced its line of Pocket Books in 1939. These early soft-cover editions sold for 25 cents each and met with great success—over 25 million copies were shipped overseas during World War II. Public acceptance of paperbacks increased the overall market for books and made it necessary for publishers to adopt high-volume, low-cost production methods.

In Publishers Weekly, John F. Baker called the 1940s and the 1950s "the golden age of publishing," when the industry was a "comparatively small business producing a comparatively limited number of books for a dozily elite readership whose access to bookstores was limited by geography." As the U.S. population grew and became more educated, however, book publishing boomed. This rapid growth culminated in what Baker described as "the decade of the Great Communications Conglomerate Takeover" in the 1960s. Publishing houses either acquired one another or joined forces with communications conglomerates that held interests in newspapers, magazines, television, and motion pictures. By the early 1970s, the industry was dominated by about 15 giant companies. The consolidation of power continued into the early 1990s, when about seven publishers controlled the industry.

Many of the challenges facing the book publishing industry were reflected in the children's literature boom of the late 1980s. Children's books traditionally represented a quiet, consistent segment of the market and were virtually ignored by most large houses except for the revenue generated by the classics year after year. However, sales of children's books exploded during the "baby boomlet"—a result of the financially secure baby-boom generation reaching child-bearing age—from $336 million in 1985 to $1.1 billion in 1992. As more publishers jumped on the bandwagon and expanded their children's divisions, annual output grew from 3,800 titles in 1985 to over 5,000 in 1991 and the number of children's-only bookstores doubled. However, such rapid expansion led to an oversaturation of the market with books of mediocre quality, which was compounded by the recession and decreases in library budgets. As a result, sales growth suddenly dropped by half, retailers returned unprecedented numbers of unsold books, and many publishers were forced to reevaluate their approaches in the face of fierce competition. According to M. P. Dunleavy in Publishers Weekly, "the publishing of children's books has not only grown up but completed an odyssey," and the industry learned in the process that it must adopt a longer-term outlook in order to survive.

The book publishing industry faced a transformation entering the mid-1990s. Many observers noted that the industry, which once could be characterized as gentlemanly and literary, had quickly become more cutthroat and businesslike. National Review cited as evidence the trend for large publishing houses to replace long-time chief executives, best known for their "literary sensibilities," with industry outsiders steeped in "modern management techniques." As a result, many employees within the publishing industry shifted their focus from building relationships with authors and carefully tailoring manuscripts to cutting costs and analyzing profit and loss statements. Former Pantheon managing director Andre Schiffrin noted in The Nation an increasing trend among modern day publishing houses to set higher and higher profit targets, which often ranged from 12 to 15 percent in 1996; this figure contrasted starkly with the typical 1920s publishing company's average profit of 4 percent. Rising overheads also contributed to the financial strain placed on publishers in the mid-1990s, making many companies even more vulnerable.

Some analysts felt that this shift toward modernization was overdue, since book publishing faced challenges on a number of fronts yet lagged behind other industries in seeking efficiencies in production, distribution, and marketing. One problem addressed by many large houses was their overproduction of titles, which resulted in an average of 30 percent of trade books (and up to 48 percent of paperbacks) being returned unsold for credit. Retailers tended to over-order some titles to attain volume discounts and hopefully predict the next bestseller. In response, some publishing houses used new technology to make shorter production runs more profitable, and their average first-runs dropped significantly in the late 1980s. In addition, several publishers began experimenting with "no-return" policies with the goal of encouraging booksellers to make more realistic orders.

Another factor affecting the book publishing industry was the proliferation of large, influential retail bookstore chains. While these chains expanded the over-all market for books, they also had the power to limit pricing and affect the selection of books that publishers could offer profitably. Some critics argued that by catering to a mass market, chains caused publishers to create books of broad appeal, but low quality. For example, the early 1990s saw many publishers adopt genre publishing—focusing on books with similar themes in order to limit their risk. One highly criticized result of this trend was the battle to attain publishing rights for headline-grabbing, "true-life" stories of questionable literary value, such as celebrity scandals and lurid crimes. Some analysts also worried that chains would disrupt the business of independent booksellers, who were often closely linked to tastes within their communities and provided a market for more eclectic books. The Nation noted in 1996 that, "In a series of lawsuits brought by the American booksellers Association, the independents have charged that the large publishers favor the chains through unfair practices." The argument was that the big publishers allegedly paid generously to have their bestsellers prominently displayed and advertised within the stores while the smaller publishers did not have the means to compete in such a system.

The two biggest retail bookselling chains, Borders Books and Music and Barnes & Noble Inc., expanded aggressively throughout the United States, opening outlets reaching from New York's World Trade Center to the West Coast. In 1995, Borders boasted sales of $1.75 billion while Barnes & Noble posted a total revenue figure of $1.97 billion. By 1998, Barnes & Noble had $2.5 billion in store sales revenue, and Borders had $1.56 billion, not counting online sales. However, with only 203 stores compared to Barnes & Noble's 493 stores, Borders had higher average sales per store, $7.7 million per unit. In 1999 Barnes & Noble more than doubled its store count to 1,009 units, while Borders added another 47 stores through August. Newcomer chain, Books-A-Million, based in Birmingham, Alabama, had 165 stores in 1998 and sales of $348 million.

Book publishers also faced a challenge to their continued profitability due to the 1980s legacy of offering huge cash advances to prominent authors. Examples of this included HarperCollins' highly publicized 1994 offer to pay Congressional House Speaker Newt Gingrich an advance of $4.5 million for future writings, and—in 1996—an offer by Random House of $2.5 million to former Clinton administration political strategist Dick Morris. Some industry executives likened the impact of this trend to mass suicide by publishers, since it meant that only one in five products were successful enough to turn a profit. In addition, large advances were criticized within the industry for preventing publishers from nurturing talented, yet less well-known authors. However, other industry observers argued that the proceeds from one bestseller could often support a number of "more literary" releases. Overall, many publishers expressed their intention to limit future advances.

Book publishers competed for the leisure time of their traditional customers with cable television, VCRs, video games, multimedia products, and the Internet. On a positive note Publishers Weekly cited a study in 1996 that indicated "spending on reading material by households with computers is at least as high as spending on such material by those without." In addition, the recession of the early 1990s led to cutbacks in education and library funding, with subsequent reductions in book purchases by these markets. These trends reinforced industry concerns about declining literacy rates in the United States, and led several publishing houses to participate in programs to encourage a more book-oriented culture. Many publishers also faced shrinking profit margins in key areas. For example, author royalties generally accounted for 10 to 15 percent of the cover price of trade books, which left publishers with an average margin of 9.5 percent. For textbooks and professional books, however—which were less expensive to produce and usually sold in larger quantities—houses obtained an average margin of 20 percent. Many book publishers responded to these challenges by cutting costs, streamlining operations, adopting new technologies, and investigating the marketing potential of electronic products such as CD-ROMs and online information delivery.

As John F. Baker explained in Publishers Weekly, "Publishingis changing quite markedly, to the extent that there's more caution, a much greater sense of the potentials, up and down, of the market, and a determination to focus more sharply, among the big houses; new skills, better distribution, and a real sense of a significant role to play, among the smaller ones." As the U.S. economy began to recover in the mid-1990s, the outlook for the book publishing industry also began to improve. Shifting demographics pointed toward higher enrollment levels in schools and colleges, while the Clinton administration appeared likely to increase funding for libraries and the arts. Many publishers expected growth among medical and health care-related titles to correspond with concerns of the aging U.S. population, as well as growth in professional and technical titles to support rapid changes in office technology. In 1995, the latter expectation was born out and evidenced in part by an 82 percent increase in revenues from the sale of computer books for that year alone.

Book sales in all categories remained strong in 1998, showing increases over 1997, according to the Association of American Publishers. Two developments most likely to have the greatest effect on the book publishing industry are industry consolidation and changing patterns of book distribution. Mergers and acquisitions seemed to reach a peak of activity in 1998 as consumers were making book purchases from a variety of sources.

Adult trade publishing became more concentrated in 1998 with the acquisition of the largest U.S. trade publisher, Random House, Inc., by German conglomerate Bertelsmann AG and subsequent merger with Bantam Doubleday Dell (BDD), which Bertelsmann already owned. The two publishers together accounted for 66 new bestsellers in 1998 and held 43 percent of Publishers Weekly 's available weekly bestseller positions. Counting Random House and Bantam Doubleday Dell as separate entities, the top seven adult trade publishers accounted for more than 88 percent of Publishers Weekly 's bestseller lists in 1998. The other top five adult trade publishers were Simon & Schuster, Penguin Putnam Inc., HarperCollins, Time Warner, and Hearst.

Another major deal involved Simon & Schuster and the United Kingdom-based Pearson P.L.C. Simon & Schuster sold off its Education, Reference, and International Group as well as its Business and Professional Group to Pearson for $4.6 billion. Following the acquisition Pearson divested several of its newly acquired reference, business, and professional operations that did not fit with its core educational publishing program. Pearson was also required by the U.S. Department of Justice to sell off some 55 college textbooks before it would approve the acquisition. Also in 1998 The Times Mirror Co., deciding to focus on its newspaper publishing operations, sold several book publishing operations to Reed Elsevier P.L.C., including legal publisher Matthew Bender.

Further consolidation of adult trade book publishing occurred in mid-1999, when News Corp. acquired William Morrow and Avon Books from Hearst Corporation. The acquisition of the Hearst Book Group was estimated at $180 million. News Corp. already owned HarperCollins and religious publisher Zondervan Publishing, among other properties.

In 1998, consumers were buying books through a variety of distribution channels. According to the NPD Group, large chain bookstores accounted for 25.3 percent of adult book purchases, followed by book clubs (18.0 percent), and independent and small chain bookstores (16.6 percent). Other channels each accounting for less than 10 percent of adult book purchases included warehouse clubs, mass merchandisers, mail order, food and drug stores, discount stores, used books, the Internet, and multi-media.

Current Conditions

By 2003 the book industry was in relatively good health in comparison to U.S. industries like technology, which had fared much worse in the weak economic climate of the early 2000s. However, for a number of different reasons, some industry players were concerned about the industry's future.

One concern was the retail sector's increasing preoccupation with the sale of best-selling titles. This focus made it difficult for publishing companies to rely on the strength of their backlists, as they had done in past years. In the October 14, 2002 issue of Publishers Weekly, one industry player commented that the so-called superstores had "devolved into being what the mall stores were, just more so." This point was especially worrisome to smaller, independent presses, and made the evolution of innovative, alternative distribution methods more pressing.

In fact, new distribution methods were increasing in popularity in the early 2000s. By 2003, a growing number of books were available to consumers in electronic formats. In addition to the largest online booksellers like Amazon.com and barnesandnoble.com, retailers like eBook Mall offered more than 25,000 titles as "ebooks," which consumers could download electronically. Even publishers like Penguin marketed a number of titles in this manner. These ranged from time-honored classics to newer releases from best-selling authors.

The increasing popularity and availability of electronic books were being driven largely by the proliferation of portable devices and software—including "e-book readers" from companies like Gemstar, Personal Digital Assistants (PDAs), and e-book applications for desktop and laptop computers—that made it possible for one to conveniently download and read content via the Internet.

Another concern in the early 2000s centered on the possible future demise of books. In its January 6, 2003 issue, Publishers Weekly reported that unit book sales declined 16 percent between 1996 and 2001, even though consumers spent more money on books overall. In addition, the publication cited research from Veronis Suhler Stevenson that indicated Americans were spending less time reading books. In 1996 Americans devoted 123 hours each year to reading books. However, by 2001 this number had decreased to 109 hours. The article also revealed that as a group, book buyers were getting older. Younger people (those between the ages of 25 and 39) were buying fewer books than in past years, a statistic which suggests that reading may be falling in popularity as a form of entertainment with successive generations. These concerns were causing some publishers to develop creative marketing strategies to reach new readers. For example, HarperCollins developed a promotion with a leading cookie seller to market a series of books targeted at children, while Simon & Schuster partnered with packaged goods heavyweight General Mills to distribute miniature books in boxes of cereal.

Industry Leaders

Following mergers and acquisitions throughout the 1990s, a handful of publishers led the industry in the early 2000s, including Random House, HarperCollins, Penguin Putnam USA Inc., and Simon & Schuster.

Random House was already the largest general trade book publisher in the English-speaking world when it was acquired by German entertainment and publishing conglomerate Bertelsmann AG in 1998 and merged with Bantam Doubleday Dell (BDD), which Bertelsmann already owned. The new publishing entity continued with the name of its senior partner, Random House Inc., and had worldwide sales of $961 million in 2001. Random House's publishing operations included The Ballantine Publishing Group, Bantam Books, Broadway Books, The Crown Publishing Group, Dell, Doubleday, The Knopf Publishing Group, Random House Audio Publishing Group, and Fodor's Travel Publications, among others.

HarperCollins, a subsidiary of Rupert Murdoch's News Corporation Ltd., became the second largest trade publisher in 1999 when it acquired Hearst Corp.'s trade book publishing imprints William Morrow & Co. and Avon Books. In 2001, the company had revenues of $1.1 billion. News Corp. also owned Amistad Press, ReganBooks and Zondervan Publishing.

With 2001 sales of $1.2 billion, the Penguin Group is home to Penguin Putnam USA. Penguin is a subsidiary of London-based holding company Pearson P.L.C., which also owns controlling interests in numerous publishers in England and the United States. The Pearson conglomerate originated with holdings in construction and oil, began acquiring banks and newspapers in the 1920s, and expanded into book publishing throughout the 1980s. Falling under the Pearson umbrella are such notable publishing imprints as Addison Wesley Longman, Prentice Hall, and Viking.

Simon & Schuster Inc. was founded in New York City in 1924 by Richard L. Simon and M. Lincoln Schuster. The company went public in 1966 and was acquired by Gulf + Western in 1975. Simon & Schuster expanded aggressively during the 1980s by launching a dozen new imprints and acquiring interests in textbooks and software. In 1993, Simon & Schuster acquired the 150-year-old Macmillan, Inc. from the estate of British media mogul Robert Maxwell. In 1998, Simon & Schuster sold off its Education, Reference, and International Group, as well as its Business and Professional Group, to Pearson P.L.C. of the United Kingdom for $4.6 billion. In 2001, Simon & Schuster's worldwide sales were $649 million.

Media behemoth AOL Time Warner also has a stake in the book publishing industry. The company's Time, Inc. subsidiary is home to the AOL Time Warner Book Group, Inc.

Outside general trade publishing, The McGraw-Hill Companies encompasses educational, financial, business, governmental, and professional publishing and information services. It is among the world's largest educational publishers, with overall revenues of more than $4 billion annually. Other large media companies with interests in book publishing include Walt Disney Co. and Viacom Inc.

Workforce

In an assessment for Black Enterprise, Lolis Eric Elie called book publishing "an industry that rewards creativity, treasures personal taste, and provides opportunities to combine work with a socially responsible endeavor." In addition to editorial work, publishing offered career potential for individuals with backgrounds in business, marketing, sales, graphic design, and computer applications. Traditionally, however, "low entry-level salaries, long hours, and slow advancement have deterred those who tried their hand in the field," Elie continued.

Publishers Weekly conducts an annual survey of salaries in the book publishing industry. The 2001 survey, based on 550 respondents, indicated that publishing company presidents and CEOs earned the highest average annual salaries in the industry, ranging from an average of $131,850 at smaller publishing firms with revenues between $1 million and $9.9 million, to an average of $557,500 at the largest houses (with revenues greater than $500 million). Those at mid-sized firms with sales between $10 million and $99.9 million earned an average of $224,571 according to the survey. Executive and senior vice presidents earned an average of $90,080 at smaller houses, $153,859 at mid-sized firms, and $260,000 at the largest publishing companies.

Editorial positions covered in the survey included editorial assistants (earning between $28,000 to $30,250 depending on the employer's size), production development and acquisitions editors ($62,500 to $68,300), editors ($58,250 to $56,580), senior and executive editors ($86,000 to $96,897), and editorial directors and editorsin-chief ($90,280 to $138,700). The magazine cautioned that the results of the survey should not be interpreted as definitive because of the small number of respondents for some job categories.

Research and Technology

The traditional printed book might never disappear completely, but new technology has revolutionized production, distribution, and nearly every other aspect of operations in the publishing industry in the 1990s. As Publishers Weekly predicted, "The definition of 'publisher' will change. It will not just refer to a person who makes books, but a person who holds information or intellectual property and disseminates that information in any way he or she can benefit from it." Most publishers began to store information in digital form on computer systems so that it could be readily translated into a variety of electronic product formats. While the conversion to the new technology was often difficult and costly for publishers, most electronic products essentially repackaged information the publishers already owned and thus offered higher margins than print products.

The advent of new technology raised a number of interesting issues within the publishing industry. Publishers faced unprecedented competition from software and communications companies entering the electronic publishing market. These industries began to converge—through partnerships and acquisitions—into something analysts called "the new media." Authors and publishers disagreed about who owned electronic publication rights, and significantly more complex contract negotiations became the norm. Additionally, some confusion arose about which channels of distribution would be most appropriate for electronic products, since bookstores, software stores, online subscriptions, and direct mail all formed possible outlets. Many publishers were concerned about what would emerge as the dominant technological platform for electronic publishing. Libraries initiated the movement toward electronic publishing by purchasing reference products in online and CD-ROM formats. However, millions of American homes were equipped with personal computers in the mid-1990s and thus presented a formidable market for entertainment and educational products on CD-ROM or diskette. In addition, by 2003 devices like PDAs, e-book readers, and computer laptops were helping to bolster the market for electronic books available via the Internet. All of these issues had strong implications for the current organization and future staffing of book publishers. They had to become more flexible and technologically adept in order to compete.

By 1996, many publishing companies had to decide whether to abandon their fledgling efforts in the CD-ROM market. According to Multimedia Business Report, "One of the biggest problems for many book publishers is that the CD ROM publishing model is moving away from the book model. Three or four years ago, a CD ROM title could be published for not much more than it cost to publish a book, and marketing costs were minimal. Today, CD ROM budgets are headed in the direction of movie budgets. Text is the forgotten medium, compared to video, audio, and animation."

Accessing information electronically offered a number of advantages for consumers. For example, CD-ROM products allowed easy sorting of information from a wide variety of databases, as well as made it possible to combine text, graphics, sound, and animation. Some examples of innovative CD-ROM products are a dictionary that could pronounce words, an encyclopedia that could show video clips about entries, and a book that could help a child learn to read. Another common format for electronic information was online through computer sub-scription services and via the Internet. Online materials were less expensive for publishers to distribute than paper, easier—in some cases—for users to search, and also provided quick publication for time-sensitive information such as medical advances.

With the growth of the Internet, textbook publishers were establishing Web sites that provided online learning resources tied in to their print products. Scott Foresman, a subsidiary of Pearson P.L.C., created the Know Zone, an interactive, online environment that linked classroom work for elementary and middle school students with home study. After the National Science Teachers Association developed sciLINKS, which links textbook topics to relevant Web sites, science textbook publishers Holt, Rinehart & Winston and Harcourt Brace incorporated sciLINKS into their textbooks.

Computers also had a significant impact on book production technology. Desktop publishing systems—which featured sophisticated yet simple graphic design software to manipulate digitized text and images into publishable form—made many operations quicker and less expensive for publishers. For example, desktop publishing made it possible for houses to reprint fewer copies of books more often and thus avoid inventory costs. In addition, the technology allowed publishers to save up to 70 percent in typesetting and other production costs. However, since publishers performed more operations themselves, desktop publishing led to significant changes in the roles of suppliers. In response, many typesetters and printers offered creative services—such as 24-hour turnaround, consulting, and training in the use of electronic systems, and management of huge amounts of data—in order to continue to add value.

On-demand printing is a technology that has been available for most of the 1990s, but publishers have been slow to embrace its possibilities. Book distributor Ingram initiated its "Lightning Print" program, which enables publishers as well as authors to bring an out-of-print title back into print with a minimal investment. Once such an "on-demand" book is back in stock at Ingram, it also becomes immediately available through every Internet retailer, including Amazon.com, Borders, and Barnes & Noble. On-demand printing has the capability to make economical the bringing back into print of many out-of-print titles that would otherwise remain unavailable.

Technology also began to impact distribution and marketing within the book publishing industry. In the early 1990s, one such system was PUBNET, an electronic book-ordering system that linked 65 publishers with 2,400 bookstores. PUBNET had the capacity to provide publishers with timely, in-depth sales information, which they hoped to better incorporate into upstream decisions.

By the mid-1990s, the Internet was being used by hundreds of publishing companies and distributors alike not only as a vehicle for advertising their goods and displaying product catalogs online, but also as a means for sidestepping the middleman in sales transactions. By 1996, the leading online book provider was Amazon.com, a company founded only two years earlier in a garage. Owned by Jeff Bezos, the firm employed 85 people, had estimated sales of $5 million, boasted a stock list of over 1 million titles, and was experiencing extraordinary sales growth. As of 2001, the company employed 7,800 people. In 2002 it posted sales of $3.9 billion but recorded a net loss of $149 million. According to Steve Potash, as quoted in Publishers Weekly, "After software, books are the most popular type of product sold on the Internet." Sales of books over the Internet have been projected to account for as much as 25 percent of all book sales by 2005. One effect of Internet book sales has been to give new life to backlist titles, as consumers spread their book-buying dollars over a broader range of titles through online purchases.

Several industry analysts predicted that environmental issues would gain importance within the publishing industry. For example, some consumer groups demanded that books, especially paperbacks, be made recyclable. Publishers cooperated with printing and binding companies to make book-binding processes and cover materials more environmentally sound, and some products were developed that could be unbound easily. In 1995, the Environmental Protection Agency announced, as part of its 1994 Common Sense Initiative, an air toxins rule for the printing and publishing industry that would cut dangerous air emissions resulting from printing and package production processes. The proposal was expected to affect 127 existing printing and publishing facilities in the United States and all future facilities to be built.

Further Reading

Association of American Publishers. "Book Sales Total $25 Billion in 2000," 28 February 2001. Available from http://www.publishers.org .

——. "Book Sales Total $25 Billion in 2001," 1 March 2002. Available from http://www.publishers.org .

Book Industry Trends 1999. New York: Book Industry Study Group, Inc., 1999.

"EBOOKS: World Wide Read." FT Expat, 1 December 2002.

Jones, Margaret. "Mergers-and-Acquisitions Aftershocks." Publishers Weekly, 20 September 1999.

Manes, Stephen. "Gutenberg Need Not Worry—Yet." Forbes, 8 February 1999.

Maryles, Daisy. "They're the Tops!" Publishers Weekly, 4 January 1999.

Milliot, Jim. "Good Times Returning for Children's Publishing?" Publishers Weekly, 22 February 1999.

——. "News Corp. to Acquire Morrow, Avon from Hearst." Publishers Weekly, 21 June 1999.

——. "Salary Survey." Publishers Weekly, 5 July 1999.

——. "Salary Survey: Amid Tight Job Market, Average Raise Fell in 2001." Publishers Weekly, 8 July 2002.

Milliot, Jim, and John F. Baker. "IDG Books Buys Macmillan General Reference," Publishers Weekly, 5 July 1999.

Mutter, John. "The Inevitable Future." Publishers Weekly, 15 November 1999.

Roback, Diane. "Licensed Tie-ins Make Registers Ring." Publishers Weekly, 29 March 1999.

Shatzkin, Mike. "Fasten Your High-Tech Seatbelts." Publishers Weekly, 24 May 1999.

Standard & Poor's Industry Surveys: Publishing. New York: Standard & Poor's Corporation, 14 October 1999.

"The 60-Second Book: A New High-Tech Publishing Technique Is Creating a Literary Big Bang for America's Would-Be Authors." Time, 2 August 1999.

"Store Count, E-Commerce Top Priorities," Discount Store News, 9 August 1999.

"What's New with… Textbooks and Technology." Technology & Learning, May 1999.

"Wiley Buys Pearson College Titles." Publishers Weekly, 24 May 1999.

"YTD College Textbook Sales Remain High." Educational Marketer, 14 October 2002.

Zeitchik, Steve. "Mission Possible: Expand the Market; with Unit Sales Slipping, Industry Members Try New Ways to Find New Readers—and Book Buyers (Outlook 2003: The Hunt for New Readers)." Publishers Weekly, 6 January 2003.



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Vijay Sharma, PhD
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Jul 14, 2014 @ 7:19 pm
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