Number of closures is 42% up on last year, as digital books and huge pressure on margins push companies over the brink.
by: Liz Bury
Ninety-eight UK publishers went out of business during the past year, 42% more than the year before, figures which reflect an ongoing squeeze on publishers' profit margins driven by deep retail discounts and new digital business models.
They include Enid Blyton's publisher from the 1930s to the 1960s, Evans Brothers, and Panos London, a publisher of international health titles, which closed in April after 26 years.
The majority of the publisher insolvencies related to book businesses, but the figure, compiled by accountancy firm Wilkins Kennedy from Companies House reports for the 12 months ending August 31 2013, also comprises publishers of newspapers, journals, periodicals and directories.
Wilkins Kennedy partner Anthony Cork pointed to a clutch of reasons why publishers' traditional business models were so fragile: discounting, the growth of the ebook market, digital piracy, the growth of the secondhand book market, and the scrapping of the Net Book Agreement in 1997.
"The growth of the internet has accelerated a dynamic that started with the end of the Net Book Agreement," he said. "The rise of Amazon and other discount sellers with massive buying power means the pressure on publishers' margins is now immense. While publishers might be able to sustain relatively small margins on a bestseller, it is much harder for niche publishers."
Niche academic and educational publishers are particularly vulnerable, because their model is being undermined by digital piracy and online secondhand book sales on sites such as Amazon Marketplace. Cork said: "The arrival of Amazon has transformed the secondhand book trade from a fairly minor nuisance to a serious threat. Where once you had to trawl the secondhand bookshops if you wanted to get hold of a cheap hardback or academic book, you can now be fairly certain of getting hold of what you want at the click of a button, and the publisher will not make a penny."
Growth in sales of ebooks, whose average price is £3 or less, compared with £5.50 for a paperback, has also undermined publishers' margins. UK consumer ebook sales rose by 134% to £216m in 2012, while print sales fell by 1% to £2.9bn, meaning that consumer ebook sales now represent 7.4% of book publishers' total sales, according to the UK Publishers Association. Amazon has 79% of the ebook market in the UK, according to Ofcom.
In September, bestselling novelist Jonathan Franzen issued a broadside against Amazon, criticising aggressive business tactics and what he sees as an attack on literary culture.
"In my own little corner of the world, which is to say American fiction, Jeff Bezos of Amazon may not be the antichrist, but he surely looks like one of the four horsemen. Amazon wants a world in which books are either self-published or published by Amazon itself, with readers dependent on Amazon reviews in choosing books, and with authors responsible for their own promotion," he wrote in Guardian Review.
Among the UK publishers that have suffered cashflow problems during the past year was Reel Art Press, a publisher of glossy, pop culture photography books, including Audrey Hepburn in Hats. However, it was able to sound a note of optimism. Publisher Alison Elan said that the company's financial woes were more to do with the vicissitudes of being a new small publisher than the vagaries of the publishing market in general. "We launched in 2010 and have had ups and downs with cashflow, but we found a private equity buyer who liked what we were doing and thought that we could make an impact in the market. So we managed to get through the difficult times. We survived," she said.
from: Guardian
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