Chapter%206%20-%20Lecture%206

Chapter%206%20-%20Lecture%206 - CHAPTER SIX Books Snapshot...

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Unformatted text preview: CHAPTER SIX Books Snapshot of the bookpublishing industry in 2010 Although shortform reading on the Web is digitized, longform reading remains largely an inkandpaper experience for most of us. Of all the mass media, the bookpublishing industry was late to embrace the digital revolution. That's changing . . . Major publishers including HarperCollins and Random House are gradually digitizing their frontlists and backlists (25,000 titles each). Random House already had 8,000 titles in digital format in 2008 when managers announced plans to bring the total number of digital titles to 15,000. More to come . . . General characteristics of books oldest medium of mass communication most durable of the print media of mass communication a media industry characterized by uncertainty due to absence of product continuity Industries that lack product continuity rely on marketing and promotional efforts to produce hits (e.g., bestseller books, hit recordings, blockbuster movies). Books in America 1640 Bay Psalm Book dime novels of the late 1800s Prior to 1900, most publishers were family businesses that specialized in one type of content. International Copyright Law of 1891 Prior to 1891, U.S. publishers could reprint the works of foreign authors without compensating them. The 1891 copyright law required U.S. publishers to pay royalties to all authors, effectively equalizing the cost of publishing foreign and American titles. As a result, U.S. publishers became motivated to seek and promote the talents of nearby American authors. American readers responded positively, and book sales increased. A mass audience for books emerged during the first half of the 20th century. Reasons: Educated public: By 1900, 31 states had passed compulsory education laws. Literary agents: Third parties began to negotiate with publishers for the most popular authors. Expansion from specialized content to massappeal titles (mostly fiction): To compete effectively for a mass (rather than a specialized) audience, publishers adopted the marketing concept, emphasizing titles that would appeal to large numbers of readers. Mergers and acquisitions: As former family businesses became divisions of larger corporations, new owners introduced bigbusiness management practices. Textbook publishing mushroomed after WWII. GI bill postwar baby boom Freespeech controversy The content of books has been controversial since printing began in the mid 1400s. Grove Press tested the government's attempt to limit freedom of expression by publishing Lady Chatterley's Lover in 1959 (1928) and Tropic of Cancer in 1961 (1934). The traditional authoring process Because bookpublishing lacks product continuity, most books do not sell enough copies to become profitable. The usual course of events for a book that is not successful in the marketplace: The publisher pays an advance on future royalties to the author. An advance is usually about $3,000 for a new author. If the author has negotiated a 10percent royalty, and if the book is priced at $20, then the author would receive $2 for each book sold. The publisher would need to sell 1,500 copies of the book to break even on the advance. The book fails to earn out. The book is remaindered. The author keeps the unearned advance, but receives no additional payment. An author who can do this twice with books that show promise might attract the attention of a literary agent. Of course, some books are profitable (otherwise, book publishers would not exist). The usual course of events for a book that is successful in the marketplace: The publisher pays an advance to the author. The book earns out. The author participates in royalties on sales of new copies following earn out. Publishers and authors make no additional money from the sale of used books. Author may attract the attention of a literary agent. Other ways writers make money ghostwriting translations (some popular books are published in 28 languages) Structure of the bookpublishing industry in 2010 Segmentation: 2,600 companies publish 100,000 to 150,000 new titles each year. Most major publishers are headquartered in New York City. Gatekeeping: Most major publishers rely on marketing strategies to produce books that will appeal to buyers. Distribution: Traditional bookselling is dominated by 20,000 bookstores (mostly the big chains) plus the major online retailers. Book publishing in the recession U.S. book sales climbed 3.6% during the first three quarters of 2009. Three major content classifications textbooks, both college and elhi professional books adult and juvenile trade books A trade book is any book intended for general readership. The largest share of trade books sold is the trade romance. More than one of four books sold worldwide is a romance. Toronto's Harlequin Enterprises is the world's largest romance publisher. Revenues book sales (most important) subsidiary rights (reprint permission to book clubs, foreign publishers, paperback publishers) Expenses fixed costs--editorial and marketing functions (e.g., payments of advances to authors, acquisition rights, promotion) variable costs--production functions (e.g., payments of royalties to authors, printing, distribution) Distribution channels Study Figure 61 in your text (p. 139, 10th ed.) Printing on demand Traditional retailers (bookstores) have the most to lose from new distribution technologies that permit disintermediation. Chain book stores may counter disintermediation by offering "books on demand" printed on site from digitized sources. December 25, 2009 "On Christmas Day, for the first time in history, Amazon.com sold more digital books than the old fashioned kind. It was a watershed moment for the book industry -- . . ." BusinessWeek, 1/11/10, p. 50 Ebooks Publishers shortcircuit the booksondemand process by delivering digitized files directly to consumers who have ereaders. Owning an ebook file is not the same as owning a print copy of a book. Ebook readers cannot print passages, email part of the book to a friend, copy the ebook into a document, lend the ebook to somebody else, or sell the ebook after finishing with it. The Amazon Kindle 2 (2009): features a paperlike display holds 1,500 books in memory downloads books, newspapers, and magazines over the Sprint wireless network most book downloads priced at $9.99 Cost: $359 Competitor: Sony Reader $300 For college textbooks? Kindle DX ($498) larger version of Kindle 2 some textbook downloads priced only $5 less than hardback edition Kindle editions can't be sold used. Are ebooks becoming popular? Ebooks accounted for 6% of Harlequin's sales in 2009. About 4 million have purchased ereaders. More than 50 million have bought iPhone or iPod Touch, devices that also permit e reading. Industry reactions to ebook publishing Some publishers plan to delay releasing digital versions of books for several months after the hardcover's release. Perspective: Resistance to digital distribution by the recordedmusic music industry was not an effective strategy. Stay tuned . . . Audiences 47 percent of Americans do not read a single book of fiction during a typical year. Twothirds of trade books are purchased by the 40+ demographic. Reading is positively correlated with affluence (typically measured by income and education). Reading is negatively correlated with time spent watching TV. How do we know? bestseller lists (surveys of various book distribution channels) Nielsen BookScan (actual sales data from about 6,500 U.S. retailers) What about books sold to libraries? Libraries typically receive substantial volume discounts from wholesalers. Publishers also provide "library bound" copies that include comparatively substantial binding (for hard use), plus cataloguing and labeling information. Ads in books? In the past, printed ads in books were not desirable to advertisers due to the unpredictable timing of readership. That could change with ebooks. Stay tuned . . . CAREER OUTLOOK Go to www.bls.gov for current employment data! STOP! 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