Charkin's half century in publishing

27 December 2018 Charkin's

Richard Charkin considers how publishing has changed since he started work in 1972.

I stepped down from the Board of Bloomsbury Publishing plc at the end of May this year after more than ten hugely enjoyable years. This change in my professional circumstances has had the not necessarily desirable effect of inducing a period of reflection on publishing, on my career, and on our industry’s relationship with its key (arguably its only) asset, the copyright licences granted by authors to publishers.

An aside. I have often marvelled at the financial resilience of publishing companies where the margins are relatively thin, the risk:reward ratio is horrible to analyse, and the complexity would baffle any NASA scientist. Hardly any publishing companies go bust, however. What happens, of course, is that they are acquired before disaster strikes and frequently for prices which would astound any seasoned hedge fund manager. The acquirers are not always fools. The reason is that the value of a publishing company is not measured by its profit and loss account but by something harder to measure but far more important – the value of the copyrights it trades.

And that takes us back to the importance of the author and the author-publisher relationship and some of the changes which have occurred while I was a bit involved, starting in 1972 as science editor at George G. Harrap, 182–4 High Holborn.

Booksellers 

The amazing thing is that there is still a viable, albeit quite small, independent sector. Bookshops have been hit by wave after wave of challenges. Here are a few and I am certain one could add many more:

School book supply moved to local authorities and then to publishers direct. Business publications for local professional practices (legal, medical, veterinary etc) transitioned to publishers, in print and through the internet. Local shops suffered the loss of public library sales to specialist library suppliers. Supermarkets moved into the mass-market arena creaming off paperback sales. The creation of mega-chains by the mergers of Waterstones, Dillons, and Ottakars (and now Foyles) created huge competition for the independents. The demise of retail price maintenance, while probably inevitable as a result of the globalisation of the English language and the absence of retail price maintenance in other English-language markets, further weakened independent bookstores.

And then, of course, the development of ebooks and the game-changing Amazon for new books, secondhand books, student textbooks and audio drew book buyers away from the high street. The biggest direct financial impact on authors has been the ability of the largest retailers to demand and receive higher discounts, which depresses authors’ incomes and has resulted in tension between authors, authors’ agents and publishers, not to mention the chronic tension between publishers and retailers.

"The biggest direct financial impact on authors has been the ability
of the largest retailers to demand and receive higher discounts"

Public libraries

The UK public library system has diminished remarkably despite the best efforts of authors and publishers trying to convince government and local authorities of its importance. One consequence has been the erosion of financially viable ‘midlist’ books. There was a time when the library market for hardbacks was large enough to support a reasonable print-run and thus a fair income for authors even if they were not bestsellers. It allowed publishers to invest in an author’s career.

Of course, Public Lending Right has helped authors but, understandably, not publishers and not enough to compensate from the shocking reduction in funding for this vital social service.

Literary agents

I suspect but cannot prove that the number of literary agents has increased dramatically. Not only that but their influence has grown, usurping in many cases the publisher’s creative role – working with authors, developing rights sales, and generating marketing ideas in addition to their core functions of ensuring proper contractual terms and conditions. An aspect of this is that the more rights are withheld from a publisher the less responsibility remains and the publisher has become, in my view anyway, more a financer and marketer than an editorial and publishing partner.

Alongside this, my impression is that literary agents have increased their commission generally from 10 to 15% of the author’s income. That is a 50% uplift, which is pretty significant, particularly when compared to other parts of the literary value chain (printers, distributors etc), whose share of the value chain has typically declined.

Royalties

In trade book publishing advances have grown for the mega-selling authors or bright young things with no Nielsen Booktrack statistics to dampen enthusiasm. Advances for the solidly professional writers of fiction and non-fiction are diminishing, meanwhile, forcing them to rely on other income streams if they can find them. In spite of this, most general publishers’ balance sheets are loaded with advances which will probably never be earned as royalties.

Higher discounts to retailers lead to reduced royalty rates for authors. For instance, many contracts specify that 4/5ths of the prevailing royalty is paid on sales made at discounts over 50%, and 3/5ths on sales made at discounts over 55%. These reduced royalty rates have helped publishers to continue trading with some large chains and internet booksellers, whose market dominance encourages them to make frequent and unreasonable demands for better terms. They have not, of course, enhanced the author’s overall royalty rate.

"Higher discounts to retailers lead to reduced royalty rates for authors."

One thing that has changed in academic publishing is the abandonment of published price royalties altogether in favour of royalties calculated as a percentage of the publisher’s net receipts.

I am completely baffled as to why trade publishing hasn’t followed the same route. Is it because general book publishing embraces complexity for its own sake? Because agents feel they can justify their 15% by making everything as complicated as possible? One argument put forward is that it dissuades publishers from granting too much discount to retailers. But the fallacy of that notion is that on a royalty of 15% net receipts any pound extra granted to a retailer costs the publisher 85 pence, five times more than it costs the author. 

Linking an author’s remuneration to a hypothetical published price which hardly anyone pays is, frankly, bonkers. It is complex (have a look at your royalty statements), almost impossible to audit, and costly to administer. A major US trade publisher analysed its whole output and discovered that the actual royalty payable was 17% of net receipts and that very few titles deviated from that unless there was a large unearned advance or a very high proportion of book club sales. It would so simplify things, improve transparency, and reinforce the concept of partnership between author and publisher.

Publishers

Back in 1972 most publishing was undertaken by smallish independent family-owned or controlled companies. Each had a speciality, but nearly all published across a spectrum from school books through academic treatises, children’s titles, fiction and non-fiction. Most handled their own distribution from their publishing offices. There were no computers, and manuscripts were still typeset in metal with corrections to proofs costing a small fortune.

In most cases, the owner, Head of House, would be in touch with most of the company’s authors. In nearly all cases authors would have access to the great man (I don’t think there were any female heads of houses then). Contracts were a couple of pages long. Publishers handled most of the rights on behalf of the author and authors tended to remain with a publisher if all was going well. Indeed, editors remained with a particular publisher rather longer than today.

"Indeed, editors remained with a particular publisher rather longer than today."

How things have changed. Publishers began to specialise and, in order to build critical mass in any area (schoolbooks, literary fiction, commercial fiction, law and tax, scientific, medical etc), a storm of mergers and acquisitions led to the creation of mega-publishers in each sector. The size and complexity of these organisations required stronger management structures and financial controls and technology was the enabler.

Alongside this was the fashion for outsourcing. First printing and distribution where size conferred huge cost benefits. By the way, when I started at OUP in 1975 we were not only typesetters, printers, publishers, distributors, and booksellers but we also manufactured our own paper. And now much copy-editing, design work and other functions are handled by third parties, frequently in India or other lower-cost territories.

The home market has shrunk as international sales have gathered pace (and the number of independent booksellers has shrivelled despite a welcome but small recent upturn). All this has led to upheavals for the traditional publisher’s sales rep, and a new focus on marketing aimed at the end-purchaser rather than relying on retail exposure alone. The days of pile ’em high as a magnet for buyers have all but disappeared except in airports. For publishers, this means more in-house marketing costs in addition to the higher discounts being granted to retailers.

For authors

What does this mean for authors? Publishers have become more efficient. They have greater market knowledge than ever. The larger organisations have access to money for investment in their chosen authors and in marketing campaigns. Technology allows authors opportunities to enhance their work and reach out to their readers more effectively than ever. Successful authors have more choice of publisher. Even though the very large companies dominate various sectors there is an ever-growing and vibrant independent publishing industry, not to mention the vast self-publishing explosion, which is a further game-changer, where author becomes publisher. This has resulted in title hyperinflation and an overall reduction in quality and the need for ever more marketing to lift the best titles and make them stand out from the mediocre herd.

Even if it appears that royalty earnings are falling and publishers becoming ever more distant, I cannot imagine a more interesting and hopeful period for authors.

In thinking about this article I tried to consider the many major changes over the past few decades. I have not mentioned quite a few – the emergence of reliable bestseller lists, the impact of Nielsen Bookscan, the evolution of the trade press, the reduction of newspaper review coverage, the negative aspects of corporate ownership, the imbalance in power and experience between literary agents and publishers’ editors, the loss of the Educational Low Priced Book Scheme, the ebook, the erosion of territorial rights, the impact of print-on-demand technology on reversion clauses, and many others I have simply missed. 

I concluded, however, that the biggest changes might be characterised by a striking photo of influential British publishers taken in 1978. (Which I would have printed alongside this article if the photo agency fee had not been outrageously high! You can, however, view it on the internet by searching Google Images for the first two mentioned here.) It shows five people – AndrĂ© Deutsch, Paul Hamlyn, Charles Pick, Lord Longford and George Weidenfeld. They are all white. They are all men. Two are smoking cigars. Three were born outside the UK. Four owned their company. One was a Roman Catholic. The other four were Jewish.

A group photo today would look very different. Draw your own conclusions.


This article was originally published in The Author, Winter 2018

About Richard Charkin

Richard Charkin has worked in publishing since 1972. He has held senior jobs in many publishing businesses including Oxford University Press, Reed Elsevier, Macmillan and Bloomsbury. He has been President of the Publishers Association and the International Publishers Association, and is now the founder and sole employee of Mensch Publishing.

Comments

Blog post currently doesn't have any comments.
 Security code