The Publishers and the Public – a psychological drama
There is a great deal of social pressure in the book industry to be smiley and gushingly positive all the time – and we are, when it is appropriate. The many authors whose work we love, and the many small publishers in particular whose work adds so much to what we offer as an independent bookshop, we will support with all our strength. But every now and then someone has to find both the courage and the words to explain that something is not right (even if they are damned for it) and to try to make suggestions as to what needs to change. This takes research and a strong and trusting network in other parts of the industry to offer information from their point of view. This way, what can be presented is a complete picture, rather than just one person’s view, looking in from one angle. This isn’t about assailing you with negativity, or distilling others’ views into words that you find palatable – it is about finding an intelligent and appropriate way to express concern, ask questions and also to allow others to access information and be part of the discussion. The British Book Industry has a monstrous fair-trade and exploitation issue skulking beneath the surface which is slowly suffocating everything – it needs to be dragged in to the light and be seen for what it is.
Discussion about having a fair-trading arrangement for the production and selling of books needs to be moved up a gear; we need a pricing agreement that is coupled with a covenant about the fair treatment of authors. I’ve spoken to authors and illustrators who have been told off and threatened by their publishers for commenting on, or even just for sharing our previous blogs – making all but the bravest less willing to add their experiences to the discussion, except privately. Oddly perhaps, I’ve had the same experience with publishers; half a dozen publishers, both large publishing houses and small independents have contacted me privately with words of encouragement, telling me that the pressure on them to release books to Amazon, WH Smith and the supermarkets at extremely high discounts is embarrassing, crippling to their profit margins and has been the catalyst that has changed the nature of their business and not, they feel, for the better. When your profit margins are crushed because your product is reduced down to the price of a cup of coffee, your business model will become as risk-averse as possible. While the public gets used to being able to buy books at knock down prices, the authors of those books are powerless to change anything directly – and we need to understand why.
Our friends in indie bookshops across the country are heading to Parliament soon to meet and discuss the plans put forward by The Big Green Bookshop for an Alliance of Independent Bookshops. The initial proposal included a plan for indie bookshops also to secure higher discounts from publishers – enabling them to compete in a low-price war. It is important that all booksellers understand what happens when a book is discounted, and who it is who feels the burden of this discount culture the most.
There’s Discounting …and there’s Discounting!
First of all, we need to be clear what we mean by discounting. There is a normal level of trade discounting in any industry; and across most retail sectors this is going to be between 30-40%. If a bookseller chooses (as many bookshops do as part of their ordinary business practice) to split that discount with a school or a reading group for example, then the author is still getting their full royalty. We earn less as a bookshop, but we build a strong relationship with our local schools and with the students who are our current and future customers. It is intelligent business practice. The moment I go to the publisher and request a higher discount, the royalty rates for the author start to creep lower. When the Net Book Agreement was removed we were in a pre-digital world, no one had anticipated the arrival of e-readers (even though the first model of the Kindle in 2007 sold out within just a few hours) or the growth of leviathan that is Amazon – and as a result no one expected that trade discounts, even when ‘liberated’ from the constraint of the Net Book Agreement, would go above 55%. But they rocketed to much higher, and in cases now some retailers are demanding more than 70% discount on books from the publisher – meaning that the royalties back to authors, which are tied closely in to the rate of discount, are also decreasing year on year. The solution to indie bookshops finding it difficult to compete against the larger chains and online retailers, is not to increase the requests for discounts, but to support the authors in trying to secure more fairly traded goods. Otherwise we are all holding hands in a race to the lowest level of pricing and the highest level of risk at which this industry can function. The current situation is financially illogical, inequitable and generally a god-awful way of managing an industry.
How do author’s royalties work – and how much do they earn?
Author’s incomes are extremely low; an average income for a full-time writer is £11,000, meaning many are earning much less. Attempting to parallel statistics is always peppered with pitfalls, but something that can trigger comparative thinking can be helpful. The nearest creative industry to which we can compare this, where statistics are surveyed and on public record, is the high street fashion industry. Here, the role of the creator (in this case the designer) is similar in that it is the first point in a chain that extends from a lone worker (often, but not always working for themselves) to both shop-floor and online sales, and also with the elements of production cost and distribution. The average wage of a new designer is £20,000 and a more experienced one, £50,000 with the very top few earning in excess of £50m (Office of National Statistics/Bureau of Labor Statistics US 2016). Many authors however are struggling; writers with thirty years’ experience and many dozens of important and successful books to their name, are living on their over-drafts, taking second jobs to make ends meet, surviving by their partner’s incomes, or realising that they can earn more money by not writing but by doing events based on previous books. I spoke to one prominent, award-winning writer who told me ‘I have produced more than 200 books in 30 languages; many of my titles have sold over 1 million copies, I have a stack of awards – and yet I have not yet earned out the £10,000 advance I was given to cover two years’ work, and struggle to make ends meet‘. I’ve met writers who, just to enable them to continue in their chosen profession, are borrowing money from relatives, who have moved abroad for a lower cost of living and many whose thoughts of giving up are so dominant that I think it is fair to say that there is a prowling mental health risk too.
The royalty arrangements for authors are so complex that the vast majority of authors do not even claim to understand them. If you know an author well enough to ask, please get them to show you their royalty statement – what you’ll see is a standard 10% of the recommended retail price for a new hardback book but then a separate and much lower rate for ‘discounted sales’ and another lower rate for ‘online sales’ (Amazon). When you have a complex contract, a lot can be hidden, intentionally or otherwise. That 10% as a full price royalty is only for hardbacks. On paperbacks it is, as a standard, 7.5% – with variations. And royalties are different again when a book is prepared for export. Royalties can go up according to sales and over time – but only once an author has earned out the advance on a royalty (if there is an advance). We should remember also that all of the above only applies to sole creators. A collaboration between author and an illustrator, or author and translator, means that the royalty is pro-rata, according to their contribution – so for example the author and illustrator of a children’s picture book might each get half of 10% of rrp. On ‘Special Sales’ (of which more later) the terms are, as standard, 10% of publisher’s net receipts, but when that book is so heavily discounted, that equates to about 3% of rrp – so for a £1 book, and author gets between 2p and 3p. It is important too that we start to question the level of transparency when out-dated agreements underpin the entire industry. Clarity and simplicity is needed urgently.
Who takes the risk?
In economic terms the issue is not only one of fair apportionment but also of clarity of who takes the risk. I can already hear publishers and trade magazine writers shouting ‘The publisher! The publisher takes the risk’. Yes, certainly the publisher is taking much of the financial risk, and many of the smaller publishers are making very modest profits indeed as a result. However, they are not taking all the risk. By firing out huge numbers of books, placing marketing behind a few and leaving the others to sink or swim, the culture of large-scale publishing is pushing a huge part of the risk back on to the authors, whose remuneration is already low. On the face of it writers, as a producer of goods, have a low production cost – they work largely alone, at home, with minimal tools. And this is the way that the publishing industry generally views authors now – they are cheap producers. And if one gives up because they can’t make ends meet, there will always be another easily and cheaply obtained. However, if you are the established author who has committed decades to building a career as a writer, your next book represents 18 months of work for something that the publisher then might or might not support. Unlike our fashion designers who can expect their income to go up with experience and as they build a name for themselves, our authors and illustrators often find the opposite. They watch as ‘the next big thing’ is promoted over them even though they never fail to create something of a very high quality. Not only that, but because of those contracts they have also found it impossible to have control over their own work, often being shunted into heavy discounting arrangements with little say in the matter. The desire for a high volume of ‘new’ by the larger publishing houses as a reaction to this billowing market is irrational exuberance – and it indicates that the anxiety about missing out on discovering the next JK Rowling overshadows any concern about a market in which prices are spiralling downwards, and margins are getting ever-slimmer. These publishers are themselves adding to their own risk in moving so far away from a model of publishing in which a few books are chosen and worked on by talented editors, who then commit to and invest in the authors, that risks for both parties: the publishers and the authors, are being stacked up like a wedding cake. Would we call that publishing? Or is it merely book-printing?
Perception and value – how publishers see authors, and how the public sees them
The largest retailers seem to be in control of pricing and the perception of value, while the large publishers place themselves in importance far above the authors and illustrators on whose work they rely. This permeates even the language we use to talk about the industry. A response I had to a letter recently told me that ‘We will not shy away from sales success being a key driver (for an award) as without that publishers will close, retailers close and authors and illustrators have no living’ – well, firstly: it is also the case that without our authors and illustrators none of us, neither the publishers, nor the booksellers or indeed the readers, would have anything at all; and secondly, from the point of view of understanding the industry: you can have a high volume of sales and still go bust if margin isn’t there. Likewise, you can have low sales and be very successful if revenue is high because the price isn’t crushed, and costs are kept under control. High volume of sales is not necessarily an indication of quality, but an indication only of high turnover. All that sentence therefore tells me is that the award in question will be dominated by companies with a high turnover- ie the biggest publishing companies. Aside from the business aspect; in cultural terms, we can have as many trend-driven celebrity titles as we like to drive high volumes of sales in large publishing houses, but that is like only eating junk food: you’d probably survive, but you’d be far from healthy. The way that sentence was phrased implies that the publishers are the most needed partner in this relationship, and that the book industry has come to think of writers and illustrators as ‘low cost producers’, largely expendable and I more than half suspect that they think they simply do it out of love. I’m sure they do, but it is also their job, and it is they who are the foundation stones of this industry.
To say that we need to treat authors and illustrators fairly probably seems an odd comment if you are reading this and you aren’t deeply involved in the British book industry. Authors are highly respected individuals within our culture: schools look to authors to inspire children, we talk about them in the highest regard, and we have festivals that revolve around the interest generated by having an author talk about their work – so why do we treat them so badly? Of course, there is a handful of well-known authors who are the exceptions. However, most authors are struggling to earn anything like a living wage from writing. We stand to lose out culturally if we do not address this.
‘Publishing a book is not the same as printing a book’ – Seth Godin
Large retailers are demanding higher and higher discounts from the publishers and the publishers are protecting profits by using the antediluvian complexity of authors’ contracts and royalty arrangements as a cushion. Royalties are not protected in any way against either a publisher’s decision to discount, or a retailer’s demand for a discount. I hear from publishers that presence on Amazon is now prerequisite for sales success – a lack of presence there now seems to mean that other retailers won’t take it and reviewers won’t cover it; so publishers would say that they have little choice but to fall in with the demands made for 53-70% discounts. If the net revenue by the publisher then is only 30% of cover price, the author will get 30p of a £10 book, not the 60p they would have got had it been sold at a standard 40% trade discount. Creeping risk aversity within the publishing industry also means that the number of books printed has grown exponentially; volume is needed to make a publishing project financially viable in the first place. From a bookseller’s point of view, there are now far too many books published and they are being released into an already saturated market. New books -even those by established authors are ‘allowed’ very little time within which to sell the thousands of copies required to be financially viable. This further decreases an author’s ability to build up any sort of reasonable income. Not surprisingly the largest companies have started to add in to the mix high numbers of sure-sale ghost-written celebrity titles, while simultaneously putting less support behind even the most experienced authors working today. The difference between this and the practice in smaller publishing houses is marked: a smaller publisher makes an editorial decision about whether a book is right for them, and then commits to it. Independent booksellers love the smaller publishing companies because they are genuinely producing some of the most interesting material. There is a real sense of commitment from smaller publishers with many of the books representing significant investment in an author or illustrator, and also in an idea. In short, they are actually publishing with thought and care, rather than just flinging and endless volley of books at us from London. But the small publishers too are now caught up in this desperate need to discount everything. Even the books that are highly anticipated and would most certainly sell at their published price are caught up in this plummeting whirlpool. We are all being dragged into a culture which confuses value with price. Books are already cheap for the value that they add, but by lowering the expectations on price, we are also devaluing our own industry’s product.
Control of Distribution – the right to be in control of your own product.
With many contracts being fundamentally unsuited to their task in any fair remuneration arrangement, authors are also losing what economics would call control of distribution – ie the right to be in control of your own work and to whom it is distributed and at what price. Distribution is an unhelpful word to throw in as in our industry we have ‘distributors’ who manage the movement of books around the country – and I’m not talking about them or logistics. Control of distribution as a concept is about who has the right to decide what happens to a product within a value chain. We have a culture in which the majority of producers seem to lose the right to have any control over who gets their work and at what price, when they sign a contract. Many authors struggle to make any claim to their back catalogue of work, even when the publisher has no intention either of supporting the development of that author, or of ever re-publishing older books. Authors are having their perceived value, along with their incomes, reduced year on year. Few rights, dubious contracts, low income. It is perfectly possible to make profits for shareholders, and also to give fair remuneration to those on whom this industry depends.
‘Special Sales’ – into the shadows..
In addition to this there are several murky areas of publishing about which we should all be concerned – ‘Special Sales’ is one that leaps to mind. This is when a publisher can sell on an author’s backlist (the author having little choice because of, again, contractual arrangements) to a company that will then produce the book to sell at very low price at discount stores, through catalogues or at book fairs. In this case, the author’s royalties are even lower: just 2-3%, while the publisher will take 60-70% of the profit with the books being printed at extremely low cost.
These companies (The Book People is an example of this sort of printing arrangement) claim that this enables people who could not otherwise afford books to buy them. In theory that sounds wonderful – a truly altruistic publisher. But that isn’t what is happening any more; you don’t see these companies obviously targeting deprived areas. They do however, take their catalogues into City companies, while we hear reports from schools in disadvantaged areas that requests for a book fair have been turned down. These companies appear to be claiming non-existent philanthropy as a reason for extreme discounting, and also using it to excuse the exploitation of authors through their contracts. The inclusion of The Book People in the 2018 British Book Awards as ‘Children’s Bookseller of the Year’ was greeted with disbelief and anger by authors and many others – resulting in social media threads more extensive than the announcement of the shortlist itself; the general feeling was one of disappointment that either the concern about Special Sales practice is not understood by those managing the awards, or that it is understood, and has been ignored. From the conversations I’ve had with the Society of Authors members recently, one of the suggestions for a solution is to tolerate the extreme low pay to authors through Special Sales, but on the condition that the books are genuinely targeted at replenishing or establishing school libraries, getting books to disadvantaged families, into homeless shelters, or to refugee families for example. This doesn’t solve the problems of the publishers exploiting the authors’ patchwork contracts, but it does at least make it more palatable. This then ties in to the discussion about the proper funding of libraries. All people should have access to books, that is not being questioned. It is now becoming apparent that the biggest barrier to steadying prices and supporting authors is the public’s perception of what is going on. When authors have commented publicly about the extent of damage done by deeply discounted books, the reaction is either surprise that the discount is not just taken from the profits of the retailer, or outrage that what they perceive now as their ‘right’ to be able to buy cheap new books, is under question. We need to recognise that the public’s expectation has changed since the Net Book Agreement was dissolved; at the risk of sounding like a caricature of a middle-aged person, when I was a kid, being bought a book was for birthdays and Christmas; the rest of the year we went to the library. Books were valued. They were worth saving up for. With libraries now facing both political and financial threats, and people well-used to being able easily to buy books far below their cover price, any comment that condemns the buying of new books cheaply would seem to be implying that only those who can afford to pay more should have access to books at all. This is a difficult message to convey back to a public which is now bargain-crazed. When authors have commented on social media about the damage done by Amazon many have been trolled aggressively by people demanding to know what right they have to deny books to people who can’t afford them full price. There is now a general expectation of entitlement by all, to very cheap books. Do we all have a right to cheap books? If we claim this right then we claim it at the expense of the people who are already pushed to the bottom of the pile. To have the right to buy cheap books, and to have the right to access books, are not the same things.
The Society of Authors has been campaigning for seven simple steps that will give authors the right of approval over special sales or ultra-high discounted sales of their work, for such sales to have separate ISBNs and be recorded on Nielsen Bookscan, and for publishers to monitor more closely how discounted books are distributed. Read more here.
Publishing and social change
Historically, publishing has been one of our great industries; and at the heart of its success is a close interplay of technical innovation and social change. For our Victorian ancestors that meant the evolution of the printing press coinciding with a rapid increase in literacy. And in the decades that followed, British publishers used their driving force in society to print books that drove social change. They published Charles Dickens’ Nicholas Nickleby, with its exposure of the brutal treatment of boys in the Yorkshire boarding school industry, the work of Oscar Wilde at a time when they risked both reputation and freedom for doing so and, later on, The Satanic Verses and kept it in print while a storm raged across several countries and many faiths. The spirit of that publishing industry that drove social change seems to have been lost to one that merely bows to the discounting demands required by the platform-selling business model of Amazon.
Readers of all ages need to have access to a diverse range of voices; I want to be able to stock books by working class writers, I want to hear from black and Asian writers, mixed race writers of all kinds, I want to read what refugees have to say… and these are people who are already under-represented in the book industry. We are not talking about ‘minority interests’ here; I don’t think anyone could call the working class ‘a minority’. With so much of book sales being trend and celebrity drive, we are in danger of creating a homogenised literary culture, in what is already one of the least socially diverse creative industries in the UK. Although some publishers are trying to change their practice, publishing is largely a white, upper middle-class profession. Unless authors and illustrators can expect to earn a reasonable salary from writing, we will lose the already limited diversity of voices, and hear only from the few who have supportive working partners, or inherited wealth. We are already repressing many of our best and most established writers by poverty – and we are unlikely to encourage interesting new voices either. Along with the gender pay-gaps now being revealed all over our own industry too, this needs to be part of a wider discussion about what we would like our industry to become.
Some publishers may be small, but they are fierce!
Having watched this industry change over the last ten years, I’m going to put my hand up and say that we are no longer in a world where the big publishing houses are the driving force of the publishing industry – certainly not from a bookseller’s point of view. It is the smaller publishers who are the future. There are many new models emerging, so I’d urge any writer to really have a good browse around, but here are a couple of examples: Red Door Books works makes an interesting study; the group is not a traditional publisher, their website acknowledges that the UK’s traditional publishing model enables publishers to take few risks commercially or artistically. And yet Red Door publishing is not wholly working on the self-publishing model either but is a hybrid of the two in which the author has much more involvement in the process of publication, but has the advantage of working with a full professional team of editors and designers. Red Door Books’ wouldn’t take on a book for which they didn’t believe there was a market, so that huge weakness of ‘vanity’ self-publishing in which anyone can call themselves a ‘published author’ is eliminated. In this model a book becomes more of a joint venture in which the author and the publisher invest in a book’s publication as a project – and with the author taking around 60% of the profit – the author, not the publisher, is taking the lion’s share of commercial returns. You don’t have to chat for long within the bookselling industry to hear comments along the lines of ‘The way Red Door works is the future of publishing.’ Another and very different model of publishing is a group called Unbound, it has a crowdfunding model that again shifts the balance of power from the publisher to those who are creating the books – and the success of their model can be seen in the list of literary awards and nominations; it is a list of which most traditional publishers would be very jealous. This model, by its nature, ensures that there is a market for a book before any production takes place; this lowers the risk both for the publisher and for the author. It could be argued that this model puts even more power into the hands of the consumer, and also creates more giveaways and offers in order to fuel the crowdfunding expectations – but it feels much more in control of its offer than the spiralling economics of traditional publishing.
Many authors and illustrators are now very media savvy, and have their own strong network of readers, booksellers, librarians and teachers, journalists, bloggers, reviewers and indeed other writers and illustrators. They can easily build better marketing networks than most traditional publishers could manage even with a huge budget. This level of social communication also means that authors can talk directly to booksellers about how discounting affects them, where previously the author and the bookseller were at opposite ends of the process and only came in to contact for promotional tours or signings. It also means that publishers can talk directly to booksellers as they develop products – and again it is the smaller publishers who are making great use of this new relationship by proactively contacting booksellers to ask about design, pricing, and associated merchandise. The irony is that the huge platform capitalist retailing models that have pushed the book industry towards heavy discounting, are part of the same technological and social revolution that is now enabling many established writers and illustrators to turn their back on it. Increasing numbers of established authors are (where their contracts will allow them) taking back the rights to back-catalogues and unpublished work and turning to smaller publishing companies. I’m baffled about why so many big publishers have come to regard their role as so much more important than that of the author. In ten years as a bookseller not one person has come in to the shop and said: ‘Have you got that latest thriller published by Arrow, the imprint of Penguin Random House UK?’ They ask for the latest Robert Harris. Occasionally someone will ask for Michelin Map because they like the layout, or if a small specialist publisher has new titles. But apart from that the name of the publisher really does not feature significantly in the public life of a book.
‘The Booksellers’ Association was accordingly dissolved..’ Frederick Macmillan 1852
As our friends head off to discuss ideas for an Alliance of Independent Bookshops, there is one more, enormous question in my mind. We have a trade association already. In theory at least, The Booksellers’ Association should be raising the questions that The Big Green Bookshop raised in their proposal for an Alliance of Independent Bookshops and hosting the kind of discussions (about exclusive editions for independent bookshops for example) that The Big Green Bookshop will shortly be hosting in the House of Lords. From when I wrote that very first blog about the deep discounting of The Book of Dust, and the subject of a book pricing agreement rose up again, I have wondered whether or not the structure of our existing trade association is fit for purpose. The fact that The Big Green Bookshop has raised the idea of a new alliance and received huge support for it, does imply that the current arrangements are wanting. If a group of authors, booksellers and publishers decided in May to launch a campaign to have a new fair-pricing arrangement for books, would the Booksellers Association support independent shops and Waterstones? Or would they support WH Smiths and the non-traditional retailers such as Sainsbury’s and Asda? And they also represent those Special Sales retailers who would have a different view on the matter again. In my mind there are huge conflicts of interest within our existing trade association which mean that the body cannot represent all of our interests equally or effectively – our business interests are absolutely opposed to those of others in cases such as pricing agreements. This question has arisen before in the history of our industry. It arose during the 1852-1900 debate about the NBA, and the result was that the Booksellers Association was dissolved in the very earliest stages of the discussion (Frederick Macmillan: The Net Book Agreement 1889, published 1924). A question arose again in 1996, and The Booksellers Association chose to take no part in the discussion (Office of Fair Trading).
We have a fair trade and exploitation issue in our industry
In a world where the idea of community support and the value of arts is being ground to nothing, we need our writers and illustrators more than ever. The solution to the problems of a heavy discounting culture, is not to ask for yet more discounting. Even asking for special editions exclusively for sale in independent bookshops would involve high levels of discounting: one publisher explained to me that for an exclusive edition, the publisher needs to have a quantity agreed upfront by the bookseller; and in return the bookseller requests a high discount to alleviate the financial risk to them if the sales don’t go as hoped. So here too, the authors get a royalty which is affected by the high discounting involved in the deal. I would suggest that a new alliance therefore also needs to be between booksellers and the authors and illustrators, and the initial aim needs to be to ensure that there is a better awareness both in the industry and by the public about what happens to an authors’ income, and to publishers’ ability to take artistic risks, when a book is discounted. All of us who work in the British book industry need to recognise that we have a massive fair-trade problem, and that there are significant issues of exploitation latent in very out-dated contract arrangements. Although price regulation runs counter to accepted notions in our society of free and open competition, it would, like copyright, help provide a firm structure within which fair prices can be calculated.
Few booksellers, whether they are working in independent shops, for Waterstones or managing the book shelves at WH Smiths, understand exactly what happens when a book is discounted. And the book-buying public have very little awareness at all about why they are now able to buy a newly-published book with a cover-price of £20 for less than half of that. An author will tell you that it is the publishers responsibility to ensure that authors are fairly treated; a publisher will tell you that it is the agent’s job to deal with contracts; a customer would be grateful for a discount, but horrified and embarrassed if they knew the exploitation behind it. We all have some responsibility in this – and the first step is for all booksellers, those who organise festivals, teachers agreeing to school book-sales, parents supporting a child’s reading – and indeed all keen readers – to have access to information about how discounting works, and how authors are paid. If we know the devil, we can deal with it.
We must create a new and fairer system, or have our future dictated by the system that our history has chosen for us. We have some of the most beautiful and agile thinkers in the world as part of our industry; it is perfectly possible to change this. I’m not claiming that it will be easy, but I will not be told that it is impossible.