Fifty Years of Change in Book Publishing

When we graduated in 1969:

We had spent four years with assigned reading from books available only in printed form.

We probably bought those books at the Yale Co-op, an independent store owned by the University. New Haven had few other bookstores we would frequent and no chain bookstores.

The immense resources of Sterling Library meant that we could do pretty much any research we could imagine on campus. We could not research or access the library collections of other universities except by visiting, so to read Civil War newspapers for a research paper, I traveled to the Library of Congress to view the originals.

Some archival resources were available on microfilm, but some of us will remember that it had limited usefulness. Database resources had yet to be commercially developed.

We could visit groups of main frame computers at the computer center—but the desktop, laptop, tablet, and smart phone with their implications for research and reading were yet to be invented.

Maybe the computer-brightest of us envisioned today’s databases, electronic reading options, and eBooks, but more likely they were foreseen by a few classmates who were reading or writing science fiction.

As we gather in New Haven for our 50th Reunion:

All of us have the choice of reading in print or online or listening to a wide array of choices by audiobook, either through “hard media” or streamed to a device. About one-third of us are more likely to read in digital than print form.

We are as likely as not to buy our print books online—an option that didn’t exist in 1969.

If you Google “book stores New Haven” today, about fifteen businesses will pop up, including two coffeeshop/food “hangout” bookstores near campus, a Hispanic book store, two Christian bookstores, and a large used bookstore. (The two “coffeeshop” bookstores, Atticus and Book Trader, both on Chapel Street, opposite Mellon Art Gallery at High St. and the A&A building at York Street, are commendably serious about their books.)

With the wide choice of online sellers and brick and mortar stores, there is no compelling reason in New Haven to belong to book clubs like Book of the Month or Literary Guild and those businesses have declined dramatically since 1969.

Over the years, New Haven, the Yale community, and our class have lived through one disruption after another in book production, distribution, and marketing

We graduated as the mass market book format soared. The Godfather (published in 1969), The Exorcist (1971) and Jaws (1974) each sold over ten million paperback copies in the US alone. Experts predicted that the mass market format would dominate the book business and that the jacketed hardcover book would die.

By the early 1980s, the mass market book business had stalled. (A “mass market” paperback book fit the tens of thousands of racks in airports, drug stores, supermarkets, and other points of sale outside of bookstores.) By contrast, a “trade paperback” (essentially a hardcover trim sized book with a paper binding) was too big to fit in these racks and needed to be displayed on a shelf.

During our Yale years, the trade paperback book had an important, but commercially limited, largely academic market. Anchor Press, owned by Doubleday, was the oldest such publisher imprint (founded in 1953).

The trade paperback business grew robustly over the decades. Today it is a far larger business than mass market publishing. Nearly all successful nonfiction hardcover books are later published in trade paperback (rather than mass market) editions. Nearly all literary fiction hardcover books are later published in trade paperback (rather than mass market) editions. Particularly successful trade paperback editions can sell millions of units. By comparison, a huge selling mass market is lucky to sell several million copies in the US. The mass market business has been eroding for more than twenty-five years.

The growth of the trade paperback business changed bookselling in fundamental ways. The mass market book could be sold at more than 75,000 points of sale, but only a fraction of those accounts sold trade paperbacks since they wouldn’t fit in a mass market rack. Although a nicer edition, the trade paperback book is at least 50 percent more expensive than the mass market book which can make it less accessible to people with lower incomes. For the author, the trade paperback book usually pays a lower unit royalty than the mass market book. And the trade paperback book has lower bookseller returns than mass market editions. So the publisher benefits most of all.

James Michener was firmly established as the bestselling American author as we graduated. A new Michener novel would sell 500,000 copies in hardcover—while the years that there was no Michener novel published would likely at best see the number one title sell half that number. Fiction titles in those years would sell ten times their hardcover numbers in mass market editions (nonfiction titles would sell much smaller ratios in mass market editions).

Pretty much all books sold were sold at full face price. The book clubs would sell even more units for a main selection than would the retail channels combined.

Then came the chains, discount pricing, and the commoditization of the hardcover book. As one of the last consignment products in the US (unsold books could be returned to the publisher for full credit), the publishers unwittingly financed the growth of Dalton (owned by Dayton Hudson), Walden (owned by Carter Hawley), and later Barnes & Noble and Borders.

With ninety days (or longer) to pay the publishers as Barnes & Noble grew to a $4 billion revenue business at any given time the publishing community had extended $1 billion of unsecured interest free financing. When Borders collapsed, the problems with this structure came into painful focus. With Barnes & Noble now circled by corporate sharks and trading for a public market capitalization less than one-tenth its revenue, you can see more problems to come.

Then there’s Amazon. It is hard to remember that as we gathered for our twenty-fifth reunion in 1994, Jeff Bezos was getting ready to launch Amazon for its first Christmas bookselling season. In 1998, the movie You’ve Got Mail—the (in)famous AOL signal that heralded big changes in how we communicate and read—could successfully paint Barnes & Noble as the big bad beast of publishing. It may be time for a remake.

Amazon was initially dedicated to the print book business in the United States. Its well documented expansion worldwide in print, eBook (Kindle), and audiobook (Audible and Brilliance Audio) has transformed the publishing business and with it I suspect the consumer behavior of nearly our entire class and our families.

Over the decades, the publishing business consolidated for a wide range of reasons. When I started as a literary agent in the early 1970s there were more than twenty hardcover focused publishers capable of publishing a bestseller, most independently owned and run, and more than a dozen mass market focused publishers capable of bidding an advance over $1 million to secure rights to a (hopefully) attractive book. Today there are the “Big Five”—Penguin Random House (owned by Bertlesmann, a German media combine), HarperCollins (owned by NewsCorp from the UK), Macmillan (owned by Holtzbrinck, a German based media conglomerate), Hachette (owned by Lagardère, a French-based media conglomerate), and Simon & Schuster (owned by CBS, the only American-owned publisher among the Big Five).

The Big Five:

• Publish 95 percent of bestsellers in the US.
• Publish 8,000+ new titles annually.
• Have hundreds of “imprints” to differentiate their publishing lines.
• In aggregate, have close to $5 billion in revenue but modest profit margins—a small percentage of the revenue base of their parent companies.
• Are corporate “cousins” to publishers throughout the world in a wide range of languages.

Meanwhile, the Big Five are no business match for Amazon—nor is Barnes & Noble.

Since 2001, my publishing focus has been eBooks. While eBooks were declared the “wave of the future” as early as 1995, until the launch of Kindle by Amazon in 2007, the eBook future was largely a mirage.

With Kindle as the driving force, the last ten years have seen the worldwide emergence of digital reading as a basic format of publishing—producing 25 percent+ of revenue for the Big Five at far better margins than print ever could (or will) contribute. Audiobook publishing has settled in to contribute around 10 percent of overall US publishing revenue.

Are we as a society reading more or less since our graduation? I don’t know of any evidence that we are reading more on an annualized per capita basis. As Americans, we read significantly less per capita than residents of the EU, the UK, or Japan. We also have a cultural arrogance that exports our American authors (the bestseller lists of most countries any given week will have an American author in the host language) while offering little or no market here for authors from around the world.

And yet the so-called “trade” (books sold in bookstores) publishing business has grown to something in the US close $10 billion in sales—making it larger than the movie business or the music business combined.

Just one illustration—a single Harry Potter volume sells ten million+ copies in the US its opening weekend—over $150,000,000 in revenue for Scholastic (50 percent of its $30 hardcover retail price). Those are bigger numbers than the opening weekend grosses of the film.

Is it easier or harder over the years to get published commercially? Probably harder. The Big Five put their energies into the top 5 percent most commercially predictable titles of their lists. At the same time, self-publication has never been easier. Kindle generates more than 20 percent of its revenue from self-published authors although the odds for a good result for any particular author are long.

What about the future? The only safe bet is that there will continue to be disruption and that most predictions will turn out to be wrong. It is also a safe bet that our Yale classmates of all generations will source lots of writers. Whatever disruption, you will still need a writer to get a publishable manuscript. The publishing business is the (important) mechanism which brings writing to readers. Thousands of people work for the Big Five on that task. The business of writing is the same business it has always been and always will be.

And as for us readers who aren’t writers, continuing disruption in the book business means the broadest possible choice of titles both in print and out of print in the widest range of formats at the most competitive price. Fifty years ago, we could barely locate and buy 20,000 titles, all in English, with none discounted. Now we can locate and buy over 5 million titles in dozens of languages, with nearly all popular titles discounted. Whatever we may think of Amazon, we can thank Jeff Bezos (Princeton, 1987).