The business of books 2015

The business
of books 2015
An overview of market trends
in North America, Europe, Asia
and Latin America.
Rüdiger Wischenbart
www.book-fair.com/businessclub
Table of content
Executive summary 1. Market development
Book publishing in the wider context of media industries
Industry snapshots of selected markets
2. Consolidation in publishing
Global, regional and sectorial driving forces
Assessing consolidation in the European book business
3. Conclusion
Imprint
Executive summary
“The Business of Books 2015” looks at the developments and
driving forces shaping the international book business today.
The study provides data, in most cases going back between five
and 10 years, to give the readers a more comprehensive understanding of today’s situation.
In particular, the report highlights book publishing in the
United States of America, the United Kingdom, Germany, Spain
and a number of emerging economies, notably China, Korea,
Russia, Turkey, Mexico and Brazil.
Furthermore, it also places the book sector in the larger context
of the international content and entertainment media.
In a separate chapter, one of the key trends governing the transformation of global publishing, the mounting pressure to consolidate, is quantified and analyzed for selected European markets.
Altogether, the aim of the study is to put the developments of
key markets into context while providing a broad perspective,
based on a wide array of key market data from the best available
sources.
2 / 14
02
03
03
04
11
11
12
14
14
Figures have been drawn from national publishing trade organizations or specialized trade publications, and they have been
checked for plausibility.
There is one caveat however: we must emphasize the fact that,
in the absence of any standard definitions for this industry, comparisons such as those made here always carry a significant risk
of inconsistency. We did not venture any future projections,
because we see the current transformation of the global book
industry as very fluid.
Today, the traditionally conservative book business is governed
by a highly complex and volatile framework of national and
global forces; it faces digital transformation and internationalization, the arrival of new global players who are challenging
the old industry actors, and governments that intervene at various levels, not just to regulate but also to steer market forces and
innovation.
The obvious goal of “The Business of Books 2015” is to provide a
map which helps everyone interested in international publishing
to orient themselves in these interesting, even formative, and
certainly complicated times.
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
1.
Market
developments
Global revenues of selected content media (US$ bn)
400
350
3 / 14
Book Publishing
300
250
The business of books has become a
global industry, with the BRIC countries
(Brazil, Russia, India and China) as well
as other so called “emerging economies”
having entered fascinating trajectories as
their new middle classes increasingly
crave for both state-of-the-art educational
resources and entertainment. Books are
at the core of such ambitions.
In Europe, meanwhile, book markets
have remained flat or even declined in
recent years. Only a few countries, notably the United States, have experienced a
gradual return to confidence, having
already passed through the first stages of
digital transition in their general trade
— or consumer — publishing.
The transformation of the global book
trade, driven by digital and international
expansion, requires heavy investments.
This tends to generate challenges and
risks, as well as opportunities for innovation. As a result, we are seeing increasing momentum in mergers and acquisitions, notably among the leading actors
in the market place.
This report aims to provide a data-based
and fact-driven exploration of how these
developments are impacting on different
markets around the globe. In the first
part, a representative selection of markets in North America and Europe, as
well as in Latin America and Asia, are
mapped and analyzed. In the second, the
recent consolidation of the industry is
portrayed by looking both at the merger
and acquisition of companies, and at
how, in some markets in Europe, the publishing landscape has changed due to the
rise of a few dominant players.
Worldwide TV market
Global Internet
advertisement
322
200
Filmed entertainment
150
Global box office
100
50
148
100
Recorded music
88.3
0
35.9
15
-50
Fig. 1: Global revenue of selected content media (bn US$, 2013 figures). Various sources.
1.1 Book publishing in
the wider context of
media industries
The global book publishing industry, with
an estimated total value of € 114 billion
(general trade plus educational plus professional & STM: estimate by RWCC for
IPA in 2013), is one of the largest cultural
industries, clearly transcending filmed
entertainment, video games or music.
However, the book business is currently
in a fragile state. There are only a few
growth markets in terms of territory,
notably the emerging economies, led by
China. This hardly compensates for the
losses experienced in most of the more
mature markets in Europe, North America
and Japan.
A recent report by McKinsey says “total
global spending on consumer books” for
the five years 2008 to 2013 has achieved
a compound annual growth rate (CAGR) of
only 0%, while “educational publishing”
managed 0.2%.
While book publishing may outperform
newspaper publishing (with -3.1% CAGR)
and consumer magazine publishing
(-3.7%), it nevertheless contrasts starkly
with in-home video entertainment (up
4.2%), video games (up 5%), cinema (up
5.6%), and broadband with a remarkable
14.2% increase. (McKinsey & Company:
Global Media Report 2014).
These figures, which reflect actual recent
developments rather than future projections, are consistent with breakout statistics for major markets and segments in
North America and Europe. Viewed
together, the figures reveal an emerging
rift between the expanding content and
media sector, on the one hand, and the
“old” print-based media on the other. The
former is driven by digital channels and
formats that use mobile broadband to target both consumers and professional
users; the latter includes the greater part
of the book industry, based on its production structures and primary audience.
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
1.2 Industry snapshots
of selected markets
The global book business, as with all
other media industries, is far from evenly
distributed around the world. On the
contrary, it is largely defined by the
predominance of just a few countries.
The six largest markets – the United States, China, Germany, Japan, the United
Kingdom and France – account for almost
60 percent of total revenues in the industry. In recent years, however, China alone
has seen continuous growth in its publishing sector. Of the other leading countries, only the US and the UK experience
occasional growth.
Fig. 2: Growth and contraction in publishing, in the six largest publishing markets worldwide.
(2014 figures not available for all markets). Sources: National trade organizations.
1.2.1 United States
The United States’ book market is almost
exceptional for its recovery after the long,
and dramatic decline caused by the combination of the fallout from the 2008 economic slump, and the transition to digital,
which now accounts for over one fifth (21
percent) of the trade segment.
Trade has stabilized in terms of both volume and revenue, with sales of around
$15.5 bn worth from 2.4 bn units shipped
(2.7 bn across all formats, print and digital). With a remarkable increase of 20.9
percent in value, and 13.5 percent in
number of units, children’s and young
adult books were the strongest category,
as they have been for some years.
(All data: AAP, StatsShots 2015).
In 2014 roughly as many copies of
e-books were sold as hardcover editions.
And in 2013, a turnaround occurred in
the importance of sales channels when,
for the first time, online sales topped
bricks-and-mortar. This development
continued in 2014.
4 / 14
Fig. 2: The evolution of the ebook segment in the US, 2010 to 2014. Source: AAP StatShots
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
1.2.2Europe
For several years, all areas of print publishing have been in constant decline in
Europe. The slow uptake of e-books cannot
compensate for the lost sales of physical
books.
Trade book publishers in particular now
face an increasingly diverse array of competitors who, only a decade ago, would
hardly have been seen as competition. It
all started when encyclopaedias went digital. These century-old icons of printed
information were discontinued as readers
migrated to online resources.
Literary fiction, to take one genre, used to
be an entire, well integrated universe for
all readers. Today, it is segmented according to the readers’ preferences as well as
the authors’ and publishers’ approaches,
creating many strands of genres and subgenres, and leaving an ever smaller cake
of true “general fiction” available to traditional, across-the-board readers.
Non-fiction, meanwhile, is dominated by
celebrity authors from various backgrounds. Most of these are nationally popular figures, building on their fame in
other public spheres with what are usually a single-book successes. The publishers must bear the expense of considerable
advance payments, which jeopardises
their chances of making a profit, even on
bestselling titles.
In both fiction and non-fiction, a very
small number of mega-hits now account
for an expanding share of all incomes, and
also attract the most attention among consumers and the media. As such, the role
of the publisher pales next to that of
agents, PR firms and other service providers. All the remaining players along the
food chain – the authors, publishers,
retailers and readers – feed on a shrinking amount of the available cake. In most
countries, children’s and young adult
books have become the only segments of
significant growth.
United Kingdom
The United Kingdom is often portrayed
as a second success story, alongside the
United States, having successfully made
the transition to a post-print book market, with digital sales now amounting to
17 percent of all publishers’ sales, print
and digital. (PA Statistical Handout,
2014).
The British publishers are also clearly
the largest exporters of books worldwide, in both physical and digital forms.
In 2014, UK domestic sales were worth
£ 1,507 million and £ 360 million
respectively, for printed and digital
books. This compares to the remarkable
export values of £ 1,242 million for print
and £ 203 million for digital. This at
least partly helped to compensate for
declining domestic print revenues.
Nevertheless, the UK book market as a
whole has only once seen digital growth
fully compensating for the ongoing loss
of print sales in the year from 2011 to
2012.
Germany
Germany is Europe’s largest book market,
and the third largest worldwide. It is traditionally regarded as an example of stability, in terms of both the overall economy and the book business. For the past
four years, however, book sales here have
experienced a continuous, albeit moderate, decline, falling by four percent, from
a total retail value of € 9,734 billion in
2010 to € 9,322 billion in 2014. (BöV)
So far, no major failures have been
recorded among German publishers.
However, Weltbild, the second largest
retail chain and a challenger to Amazon
in the online business, had to file for
bankruptcy in winter 2013/14. This was
felt as a heavy weight on the entire market. Amazon, meanwhile, is now broadly
seen as the leading sales channel to readers in Germany. (Tolino, an e-book alliance, argues that its members’ combined
e-book sales outperform Amazon’s Kindle.
The Tolino alliance includes Weltbild,
Thalia, the largest bricks-and-mortar book
chain, and Libri, the largest wholesaler).
In a word, the German book trade has
become much more volatile. This is demonstrated by the stiffening competition
over prices for e-books, despite the fact
that digital and printed books alike are
subject to fixed retail prices defined by the
publisher. The paradox of an e-book price
war developing unexpectedly in a regulated environment is mainly due to selfpublished genre fiction – spearheaded by
Amazon – challenging new releases from
traditional publishers, at significantly
lower prices.
Fig. 4: Revenues of UK publishers in selected categories, 2009 to 2014.
Source: PA Statistics Yearbook and handouts.
5 / 14
For a long time, the German book trade
has been characterized by largely stable
price corridors, with publishers typically
charging around € 20 (non-discountable)
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
for a hardcover edition of a new novel, and
around € 10 for a paperback. E-book editions of new fiction are discounted by a
mere 20 percent against the hardcover
price.
However, as self-publishing has become
popular, not only among authors but also
among book buyers looking for a cheap
read, and with Amazon’s Kindle Direct
Publishing leading the way, a third price
corridor has emerged in which books cost
less than five euros, undercutting much of
the established order, and presumably
raising price sensitivity among the consumers. The actual market share of such
self-published titles is unclear, but in view
of Amazon’s retail clout across all formats
and audiences, anxieties and arguments
fly high.
A second striking development, again in
e-books, is the very early flattening out of
the growth rate for digital reading. According to the annual report of the German
Publishers and Booksellers Association,
e-books had a market share of only 4.3
percent of all trade sales in 2014. An alternative assessment was provided by a survey of publishers who already achieve significant e-book sales, which put the digital
share of their total revenues at around 10
percent. Unfortunately, this survey was
discontinued in 2014. This basic pattern of
a declining overall book market coinciding with slowly growing or non-existent
e-book sales recurs across most of
Europe.
9
8
7
6
5
4
3
2
1
0
2010
2011
2012
2013
2014
Ebook market share
of trade in %
0.5
0.8
2.4
3.9
4.3
Ebook revenue share of
surveyed publishers in %
5.4
6.2
9.5
9.4
Of the major European markets, Spain was
the worst hit by the economic crisis of
2008. Many Spanish publishers think the
decline has bottomed out now, after severe
losses over several years. At the same
time, however, after initially showing
promising growth, e-book sales have
stopped climbing, despite the fact that
new e-books are typically discounted to
around half the price of the print edition.
Many professional observers point to
piracy as the main reason for this.
All the largest players state that their relatively solid performance in recent years
was mainly due to the stable export market to Latin America.
Between them, the three markets
described here – United Kingdom, Germany and Spain – illustrate the fundamental patterns and trends found across
most of European publishing. The UK is
boldly embracing digital, while Germany
is showing a certain reluctance, betting in
part at least on the more conservative values and habits of its readers compared to
their peers across the Channel. Spanish
consumers, meanwhile, show a striking
sensitivity to book prices. Spain and the
UK are each struggling to cope with
shrinking print sales – more bitterly in
the case of Spain, but already with greater
confidence in the UK – and in both countries, publishing houses are trying to balance domestic pressure through solid
exports.
10
In %
Spain
Fig. 5: Market share of e-books in all trade revenues, and among publishers who completed the
dedicated survey for the German Publishers and Booksellers Association, Source: BöV
3,500
Fig. 6: Development of domestic sales and exports in the
Spanish market, in m€
3,000
2,500
Market value
in m€
Source: Federacion de
Gremios Editores de Espana
(FGEE).
2,000
Market value in m€
1,500
1,000
500
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
Domestic market value
(at retail prices, in m€)
2,933
3,015
3,123
3,186
3,110
2,891
2,772
2,471
2,182
Exports (publishers‘ net
revenues, in m€
453
557
555
546
442
458
507
527
526
6 / 14
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
1.2.3 Emerging markets
500,000
500.000
450,000
450.000
Publishing is not a homogeneous entity,
across the board. With the need for books
and learning materials intricately linked
to evolving prosperity, it comes as little
surprise that emerging markets also have
growing book markets. However, it is also
unsurprising that such growth has been
difficult to sustain in the face of recent
economic challenges.
Markets in emerging economies have
recently become volatile, as have currency
exchange rates. This makes it more difficult to sustain positive overall development, and it also has a direct impact on
the book trade. In a number of countries
like Brazil, China and Mexico, government
actions, such as grant programmes to foster digital innovation, or direct purchases
of textbooks and related educational materials, have been important as the initially
spark to momentum. But as most of these
book markets have also become highly
attractive to the big international players
in recent years, both as lucrative export
markets and as opportunities for investment – either through acquisitions or the
launch of joint ventures with local companies – their evolution has become highly
complex, with both local and foreign interests and perspectives interacting.
400,000
400.000
350,000
350.000
300,000
300.000
250,000
250.000
200,000
200.000
150,000
150.000
100,000
100.000
50,000
50.000
00
2009 2009 2010 2010 2011 2011
20122012
2013
2013
Value (bnRMB)
93.60193,601106.306
Value (bnRMB) 84.804 84,804
106,306 118.337
118,337 128.928
128,928
New titles (tsd)168.296 168,296
189,295207.506
207,506 241.986
241,986
New titles (tsd)
189.295
New
titles & reeditions
369,523 414.005
414,005 444.000
444,000
New titles
& reeditions
301.719 301,719
328.387328,387369.523
Fig. 8: Development of the domestic book business in China, 2009 to 2013 (2014 figures not yet
available). Source: State Administration of Press, Publication, Radio, Film and Television (SAPPRFT).
China
China is the most pervasive example for
an international publishing market where
the book business shows consistent
growth at all levels.
The Chinese publishing sector, as a part of
the overall media industry, is fully controlled by the relevant state administration. (The formerly separate bureaucracies
for books and other media merged in 2013
to form the State Administration of Press,
Publication, Radio, Film and Television –
SAPPRFT.) This move mirrored a broader
strategy which treats the book business as
just one element in a “cross media”
approach, organized in a grand development plan which builds, above all, on
mobile Internet for digital access to content and interactive services. A second
policy-driven initiative identified a number of leading publishing and distribution
companies as key players in the strategy.
These are now set to become holding institutions that will bring other affiliated
companies under a single organizational
structure and increase their professionalism by streamlining their internal processes, raising additional capital for them
on (mostly Chinese) stock exchanges, and
encouraging them to “go out” – as the
official slogan has it – as potent players in
the international arena.
Fig. 7: Overview emerging markets, in % in local currency.
Various sources: Local publishing trade organizations, and local trade media.
7 / 14
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
South Korea
As the world’s eighth largest book market
(ranked between Italy and Spain), Korea is
another of those countries that has shown
sustainable, steady growth in recent
years.
However, the most significant thing about
the country is probably not so much the
annual increases in both market value and
production (the iteration in new title
releases is probably due to new editions of
existing books not always being counted
in the title production data that was available for this report). The real reason for
Korea’s evolution is its wider context.
South Korea is one of the leading countries in terms of mobile phone and mobile
Internet penetration, and Korean domestic
(pop) culture has enjoyed tremendous
popularity, a development branded as the
“Korean Wave” (or Hangul). This encompasses not only traditional media, but also
all the new digital and social media. As
such, it has given Korean creative industries a huge boost and opened up opportunities. (For an overview, see https://en.
wikipedia.org/wiki/Korean_Wave).
In Korea, (book) publishing is subject to
little legislation: publishers can bring content to their readership without government restrictions nor any complicated
licence requirements on the part of the
authorities, yet with strong copyright legislation in place. More important than
entertainment, however, is educational
publishing, which in fact defines the
Korean book industry. Korea is home to
several internationally significant publishing companies, notably Woojing Think Big
and Kyowon. These are not just worldclass educational houses; they are also
organizations deeply rooted in Korea’s
exemplary learning system. They oversee
huge networks of schools, teachers and
students, with whom they interact closely,
providing children and young adults with
attractive and broadly framed educational
materials.
8 / 14
Fig. 9: Market growth, and title production in Korea. Source: Korean Publishers’ Association (KPA21).
Indonesia
With 255 million inhabitants spread over
an archipelago consisting of thousands of
islands, Indonesia is a member of the
G-20 group of major global economies.
In 2013, it had a modest, yet rapidly growing per-capita GDP of US$ 9,561 (up from
$7,884 in 2010, and higher than Ukraine).
It is an aspiring nation looking for its
place in the international context.
Indonesia will be the Guest of Honour at
the 2015 Frankfurt Book Fair. In 2013,
according to the Indonesian Publishers’
Association, IKAPI, the country’s publishers achieved estimated net sales of seven
trillion Indonesian Rupees (IDR) – or EUR
462 million – up from an estimated six
trillion IDR in 2012. The annual production of new titles from the roughly 1,400
publishing companies fell to 19,000 in
2013 (from an estimated 30,000 the
previous year).
Half these books were translated from
foreign languages, notably English,
Arabic, Chinese, Korean and Japanese.
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
Russia
The Russian economy has seen turbulent
times in the past decade, with the economic crisis of 2008 having a strong
impact on its course. It also suffers from
high volatility in the exchange rate, with
sharp falls and increases occurring in the
past year, which reflected economic as
well as political factors. These complexities have left their mark on the Russian
book market, which, after growing steadily
until 2008, has since also seen some challenging developments. It is worth highlighting the significant gap that exists
between the retail value of books sold
through bookshops (e.g. 50.7 billion roubles in 2014), and the combined sales of
retail and public institutions (75.5 billion
roubles in 2014), with the public sector
compensating many of the sustained
losses from sales to private consumers.
Meanwhile, the production of new titles
and re-editions shows little real correlation with the market developments. In
recent years, the Russian book business
has seen increasing consolidation, with
the two leading trade publishers, EKSMO
and AST, merging in 2013 to form the single group, EKSMO. At the same tine, a
large share of all educational publishing
has been consolidated around the assets
of the leading educational publisher, Prosveshcheniye (for some time branded as
OLMA group). As well as the publishing
industry, book retailing has also been subject to a significant shake up.
Fig. 11: Key parameter of the Turkish book business, 2008 to 2013.
Source: Turkish Publishers’ Association, Türkiye Yayincilar Birligi.
Turkey
Turkey has long been overlooked as a
book market, despite having a population
of almost 78 million. There are also significant communities of Turkish expatriates
across Europe and, to a lesser extent,
North America. The country has a strong
economy, with a per capita GDP of 18,783
in 2013 (up from 16,193 in 2010). Publishing here has seen solid and continuous
expansion along all key indicators for
many years. With 1,732 registered pub-
lishing houses, as well as some 6,000
bookstores and 150 distributors, it is
home to an increasingly professional
trade. The strong educational sector,
which accounts for 55 percent of the market, thrives on a government policy of distributing textbooks to students free of
charge. By international standards, the
share of imports is modest at just 5.2 percent.
Fig. 10: Key parameters of the Russian book business, in million Rubles, 2006 to 2014. Sources: Federal Agency for Press and Mass Communication, and Russian Book Industry Magazine.
9 / 14
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
Mexico
Mexico is a populous country with almost
122 million inhabitants. It is home to the
premier Spanish-language book fair and
has a strongly developing economy. It is
also a neighbour to Spanish speaking
Latin America in the South, as well as the
roughly 45 million Spanish speakers
across its northern border in the USA.
Paradoxically, Mexico has so far found it
difficult to position its book sector appropriately to take advantage of all these circumstances. Nevertheless, in its more
modest domestic market, Mexico has
developed a rich and diverse publishing
sector. This is characterized by a division
into the private sector (the “open market”,
as it is officially known), and a government-supported segment which is organized by a public body called “Conaliteg”.
In 2013, some 30 percent of the
145,756,604 books produced were published by the governmental programmes,
Programas de Gobierno de Texto de
Secundaria Gratuito, Programa Nacional
de Inglés en Educación Básica (PNIEB)
and Biblitoecas de Aula y Escolares.
Brazil
In the same year, 11 percent (1,209 million pesos) of the book publishers’ combined net revenues of 10,889 million
pesos were derived from Conaliteg’s activities. A sustained increase in both production and revenue largely reflects the country’s overall economy, which grew from a
per capita GDP of US$ 14,690 in 2010, to
US$ 16,370 in 2013. Education publishing
(45.9 percent), and English language
teaching, ELT (12.8 percent), are the largest categories in the industry’s overall
sales.
For the past decade, Brazil has arguably
been the country inspiring the highest
hopes among leading players in the global
book industry. International pioneers, like
Hachette or Penguin Random House, have
acquired stakes in local companies, while
all the larger global book platforms – be it
Amazon or Apple, Google or Kobo – have
ventured into Rio de Janeiro and Sao
Paulo, keen not to miss out on what they
see as a dynamic and forcefully expanding
market, and the new frontier. However,
recently readjusted data suggests a differ-
Fig. 13: Evolution of the publishing market I Brazil, at real growth. Million R$ de 2014
(Pesquisa Fipe/CBL/SNEL). Cortesy Carl Carrenho, PublishNews Brazil, 2015.
Fig. 12: Key indicators of book publishing in Mexico, 2008 to 2013.
Source: Mexican Publishers’ Association, CANIEM.
10 / 14
ent picture, as the Brazilian book market
has remained largely flat, in terms of real
growth, for the past decade. Its expansion
of just 5.8 percent is clearly at odds with
overall GDP growth of 39 percent in the
same period.
Government spending on published books
was the only factor to show modest
growth over the past decade, while the
publishers’ overall revenues remained
largely unchanged. In general trade sales,
the figures for the years following the
2008 economic crisis even show a significant decline. Nevertheless, due to its very
size, with a population of over 200 million
and per capita GDP still growing (US$
15,038 in 2013), and in light of the government’s wish to encourage innovation
by issuing grants to support digital learning materials, Brazil will continue to be a
territory in which many want to participate. However, high expectations come at
a price, as the pressure on domestic organizations is mounting. This was illustrated
forcefully by the acquisition, announced
in June 2015, of one of Brazil’s three largest book companies, Saraiva, by its most
ardent rival, the publishing group and
retail chain Abril Educação.
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
2.
Consolidation in
publishing
2.1 Global, regional
and sectoral driving
forces
Most publishing markets are either flat or
in decline, and they face mounting competitive pressure from neighbouring sectors
(access to video games and music via mobile
broadband; new digital and open-access
content for education and professional
information). At the same time, larger publishing ventures need to make significant
investments to cope successfully with the
transition to a more digital, more complex
and much more international future. In the
light of this, the recent wave of mergers
and acquisitions hardly came as a surprise,
and more consolidation must be expected.
Some groundbreaking mergers and
acquisitions over the past decade have
already re-defined the professional, STM
and educational publishing sectors. This
process is far from over, as the 2015
acquisition of Springer Science Media by
Holtzbrinck’s Science and Education arm
spectacularly demonstrated.
lisher, acquired the Canadian publisher
Harlequin, a specialist in the booming
genre of romance fiction. Harlequin is
also involved in a venture pioneering
new digital models, and is an innovative
organizer of book sales to dedicated
reader communities across markets as
varied as Germany, Russia or Japan.
More recently, similar forces have also
begun to reshape general trade publishing. To great fanfare, the largest merger
so far, between Bertelsmann’s Random
House and Pearson’s Penguin, set the
tone in 2013. This move alone was not
enough, but was followed by further
expansion, including the acquisition of
the consumer division of Spanish Santillana, as well as the purchase of the
remaining stake in the former joint-venture, Mondadori Random House. The goal
was clearly to form a trade publishing
house as a major force in all the major
markets, from the English and Spanish
language countries, to China, India and
much of Europe (notable exceptions
being France and Italy, as well as Germany which, at least formally, was not
being integrated into the new venture).
In turn, HarperCollins, hitherto an
almost exclusively English language pub-
Before that, in the early 2000s, Hachette
of France entered both the US and the
UK markets, building the Hachette Book
Group USA and its British equivalent
respectively, together with Black Dog &
Leventhal, a publisher of illustrated
books in the US, and with Quercus and
Constable & Robinson in the UK – its
most recent additions. In Russia,
Hachette Livre France has increased its
stake in Azbooka-Atticus, Russia's thirdlargest publisher, to 49%.
Penguin
Random
House
Hachette
Livre
Harper
Collins
Macmillan
(Holtzbrinck)
Simon&
Schuster
2014
2014
2014
2014
2014
Group revenues from
publishing
(million)
€ 3.324
€ 2.004
$1434
$778
Revenues
from e-books
(in %)
20%
10.3%
22%
26%
2013
2013
2013
2013
2013
Group revenues from
publishing
(million)
€ 2.655
€ 2.066
$1369
€ 721
$809
Revenues
from e-books
(in %)
20%
10.4%
23%
27%
27%
Fig. 1: Total corporate revenue from publishing, and the share of e-books in the revenue.
Source: Company information, consolidated for the Global e-book Report 2015.
11 / 14
The even more ambitious plan of
Hachette to acquire the publishing core
of Perseus Book Group fell apart before
its completion. The deal, under which the
wholesaler Ingram had been expected to
take over the affiliated distribution business, Constellation, proved all too complicated. Nevertheless, the move demonstrated Hachette’s wish to transcend its
position of being only the second largest
trade book group on the global scene.
It should be noted that several of these
publishing groups, which are often characterized as the Big Five because of their
prominent positions in international English language trade publishing, are also
leading forces in e-books, with a digital
share of their revenues that only very
few, specialized smaller houses can
match.
Consolidation in trade publishing is by
no means reserved for just the largest
players. Earlier, in Scandinavia, Bonnier
of Sweden and Sonoma of Finland orchestrated a unique swap, when Bonnier took
over the consumer publishing section of
its Finnish competitor, which in return
assimilated Bonnier’s educational division.
Meanwhile, by acquiring the Editis
group, the Spanish company Planeta
became the second largest publisher in
France, dwarfing nearly all the rest,
including the prestigious Editions Gallimard. Perceiving this expansion as a
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
clear threat, and taking advantage of the
Italian RCS group’s need for cash, the
holding company of Gallimard, Madrigal,
brought Editions Flammarion back into
French ownership. Since last winter,
rumours have been rife in Italy that
much of RCS’s remaining consumer publishing business might be gobbled up by
the country’s number one, Mondadori.
In Germany, on a smaller scale, Bastei
Luebbe has made a few acquisitions,
including the faltering Eichborn Verlag.
Hamburg-based Ganske group bought the
art-book specialists Hatja Cantz in 2011,
and also made an unsuccessful offer to
acquire struggling Suhrkamp. Meanwhile, Aufbau has also started to add
weight in a series of more complex
moves. Furthermore, in a surprise move,
Beltz has taken full ownership of Campus, the publisher of business books, in
which it previously held only 50 percent.
The service sector has also seen consolidation, with leading distributors merging
in France, as have the distributors Brockhaus/Commission and Umbreit in Germany. On a much more global scale, following its acquisition of the Canadian
e-book platform Kobo, Japan’s Rakuten
has acquired US-based Overdrive, the
leading distributor of e-books to international libraries. This summary is far from
a complete list.
2.1 Assessing
consolidation in
the European book
business
In view of all these changes to the core
fabric of consumer or general trade publishing, it would be highly desirable to
have a solid benchmark against which to
measure the consolidation of the industry
– both by segment and by market. However, any attempt to develop even a rough
estimate for such a matrix faces a number
of serious challenges.
First of all, no standards – not even the
most basic parameters and definitions –
exist for mapping publishing markets.
Annual market reports are usually provided by professional trade organizations,
and draw on national concepts for mea-
12 / 14
suring the market. In the best cases, they
only provide general figures for the total
(trade) market value at retail prices, and/
or publishers’ net revenues (roughly what
publishers invoice to distributors or
wholesalers). Only for some markets are
separate breakout data produced regarding digital revenues in specific segments.
The contribution of digital to export sales
is rarely identified (as it is in the UK).
Moreover, with many publishing groups
– even the largest – being in private
hands and usually family-owned, often
the only financial information shared by
companies that have business activities
across many fields is their total annual
revenue.
Therefore, as desirable as it would be to
establish a matrix representing a consolidation co-efficient across markets, this is
simply not a reasonable option. However,
a tentative country-by-country overview
can be set out, showing the elements and
relationships affecting a few markets,
comparing (estimated) figures for either
the trade market or publishers’ net revenues, and the revenue figures of the leading publishing groups in the given market.
Germany
In Germany, with its book market worth a
total of € 9.3 billion, publishers’ net revenues can be estimated at around € 4.4 billion, across the board. The three largest
publishing groups report a combined revenue of € 875 million: Random House
with € 340 million, Holtzbrinck with
€ 239 m and Bonnier with € 179 m.
We have chosen not to include the Ganske
Group, which has revenues worth another
€ 117 million. In all, the three largest
groups control between 16 and 20 percent
of the market, with the lower figure also
including exports into Austria and German-speaking Switzerland in the equation. The three largest educational
groups, with a combined revenue of
€ 1,044 million, account for another 21 to
25 percent of all German publishers’
sales. These are Klett (€ 460 million),
Westermann (€ 299 million) and Cornelsen (€ 285 million).
France
French publishing earned net revenues of
€ 2,687 million in 2013, and accounted
for € 650 million worth of exports. The
three largest groups are Hachette Livres
France, Planeta’s Editis and Madrigal
(with Gallimard and Flammarion), each of
which controls a wide number of imprints
and sub-divisions. Together, these three
earn revenues of € 1,833 million, although
this includes significant income from
distribution services.
As a rough estimate, and without breaking out separately income from distribution services, the three leading groups
account for well over half of the revenues
(55%) of all French publishers.
Italy
From a market value of € 2,972 million in
2013 (which fell by 2.7% in 2014, according to GfK), an estimate of publishers’ net
revenues in 2014 can be calculated at
€ 1,760 million.
The three largest publishing groups
earned combined revenues of € 952 million in 2014, which again includes significant revenues from distribution services.
Messagerie alone is the distributor for
some 300 other publishers, generating
around € 294 million through this activity. Its two main competitors, Mondadori
(with book revenues of € 336 million,
including distribution) and RCS (€ 223
million, including distribution and part
works) also have mixed portfolios. Feltrinelli does not disclose financial data. As
in France, the three market leaders
together control well over half the market
(55%).
The rumoured acquisition of RCS’ trade
publishing by Mondadori would obviously
heighten the impact of the consolidation
process, depending on what such a deal
actually included.
Other European markets
Even such rough approximations are difficult to achieve for other European markets, based on the real data we could
gather for this study. In Spain, where the
domestic retail market is worth € 2,182
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
million, the two leading groups, Planeta
and the newly consolidated Penguin Random House Grupo Editorial (PRF-GE) have
a very significant combined market share.
Planeta only reports its total Spanish language net revenues, which amount to €
902 million (excluding Editis, but including exports to Latin America, which may
contribute up to half of all sales). For
PRH-GE, no specific figures are available
for combined Spanish-language revenues,
nor for domestic sales within Spain. But
as a broad estimate, the market consolidation between the two leading groups
could be comparable to that of the top
three in France or Italy.
Weltbild and (more recently) Libri, have
formed the Tolino alliance, as a means of
scaling up their e-book sales.
In short, the book business in Europe is
currently being entirely re-defined. However, we do not have any instruments
with which to observe these developments, still less to anticipate the path
they will take in the future.
Perspectives on vertical integration
This rough overview, with all its shortcomings, is still missing another important factor, one which is certainly gaining
in importance: vertical integration.
In Italy, Spain and Sweden, leading publishing groups also own significant stakes
in the retail market for books. In the case
of Mondadori in Italy, the € 337 million it
earns from publishing and wholesale distribution are supplemented by book retail
revenues worth € 211 million.
In Spain, Grupo Planeta owns the leading
retail chain, Casa del Libro, as well as the
book club Circulo de Lectores. It also
holds a stake in the subscription platform
Nubico. As in Italy and France, e-book
distribution services in Spain are coowned by major publishers. Similarly in
Scandinavia, the market leader Bonnier
controls the largest book chain, AdLibris,
and the e-book distributor Elib. More
recently, in several Eastern European
markets major publishers have taken over
large retailers, and vice versa.
In examining vertical integration, we
must also switch perspective by looking
at Amazon. In addition to its online printing and digital retail businesses, Amazon
has also become a publisher both for
curated publications and for self-published works, and has gained significant
market share and influence in each segment.
In response to the threat they see from
Amazon, the three largest domestic retail
and wholesale players in Germany, Thalia,
13 / 14
Sources and reports quoted
AAP: American Association of Publishers, www.publishers.org
BöV: Börsenverein des Deutschen Buchhandels, www.boersenverein.de
FGEE: Federación de Gremios de Editores de España: FGEE, www.federacioneditores.org
Global eBook report: www.global-ebook.com
PA: The Publishers Association (UK), www.publishers.org.uk
PWC: PriceWaterhouseCooper Global entertainment and media outlook.
www.pwc.com/gx/en/global-entertainment-media-outlook/global-data-insights.jhtml
TYB: Türkiye Yayincilar Birligi (Turkish Publishers Association). www.turkyaybir.org.tr
The business of books 2015 - presented by the Frankfurt Book Fair Business Club
3.
Conclusions
As anticipated, the challenges to producing a data-based overview of the current
driving forces behind the changing business of books in Europe – and globally
– include the limited, poor and often
inconsistent nature of the available statistics. This is compounded by the hugely
complex set of variables, both from
within the traditional book business and
from other content and media industries,
which influence the context in which
book publishing is evolving.
We have intentionally omitted all the
political debates surrounding these
Imprint
The white paper “The business of books 2015”
is presented by the Frankfurt Book Fair Business
Club.
© Frankfurt Book Fair/
Ausstellungs- und Messe GmbH
Braubachstraße 16
60311 Frankfurt am Main
www.book-fair.com
market developments. That includes not
only the calls for greater regulation, but
also the critical attitudes to existing
restrictions to trade, such as fixed book
price policies.
This study is meant to provide insights
and non-partisan guidance on the major
trends. With this at hand, it will be up to
the professional users to according to
their individual requirements and aspirations developing the suitable strategies
in the certainly continuing challenges
ahead.
Rüdiger Wischenbart is a consultant based in Vienna, Austria. He specializes in mapping
and analyzing trends and
developments in the international markets for books and
culture. He curates professional events, such as
the BookExpo America’s Global Market Forum in
the USA, and the Publishers’ Forum in Berlin,
Germany. Recent reports include the Global
Ranking of the Publishing Industry and the
Global e-book report. Jennifer Krenn has
contributed to the research of this report.
For more information: www.wischenbart.com
Copy editor: Alastair Penny
Design: textgrafik.com
Adaptation: www.weirauch-mediadesign.de
All rights reserved. No part of this publication
may be reproduced, stored in any retrieval
system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior
written permission of Frankfurt Book Fair.
June 2015
www.book-fair.com/businessclub
E-mail: [email protected]
14 / 14
The business of books 2015 - presented by the Frankfurt Book Fair Business Club