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Analysing the Global Ranking of Publishers

By Rüdiger Wischenbart

Editor’s Note: For the past three years publishing consultant Rüdiger Wischenbart has released a “Global Ranking of the Publishing Industry,” which looks at companies with revenues over $US250 million. Here is his analysis of the latest ranking, focusing on how the changing dynamics between the professional/science, education and trade sectors have have affected this year’s ranking.

Global Publishers Rankings

It is a strange world we live, read and publish in. Among the top ten global publishing groups, just five have a significant presence in trade books: UK’s Pearson (with its Penguin group), Germany’s Bertelsmann, of course (with Random House and the ever ailing “Club” business), France’s Hachette Livres (which is also a strong player in education), Spain’s Planeta (the new kid on the block, having gobbled up France’s #2, Editis), and Italy’s De Agostini. Oh, and by the way, they are all headquartered in Europe.

This being said, many companies in the rankings are doing much better, both economically and in terms of re-inventing themselves. While the Pearson group performs remarkably well in comparison to most of its peers, the real powerhouse seems to currently be Thomson (now Thomson Reuters), last year’s #1, and currently #3. It slipped to this position due to last year’s internal reorganization following its merger with Reuters, the result of moving a major stake of its old information business into the new, news driven Reuters division and of selling off “Thomson Learning”, which is performing well under the newly established brand of “Cengage” (#13 on the list). Thomson’s traditional publishing arm, in this perspective, is still good enough to rank it #3 on the global scale.

The story also demonstrates a much more fundamental lesson about how “the book industry” has completely reoriented itself within just a few years when it comes to handing “professional information” (which includes STM, science, journals, and a lot of other pragmatically useful content). Today, this wealth of information is born digital, distributed digitally, and is not available in any bookstore near you.

This “professional information” has become the primary load bearing column in what amounts to a new global temple of knowledge.

Accordingly these “knowledge groups” prefer generating four out of five dollars (or euros) from an integrated digital value chain. Digital subscriptions, they explain to their stockholders, because they’re often sold to institutions, bring in a consistent flow of revenue, and are a much better financial bet than struggling to sell a single book at a time to an individual reader.

This new era of digital integration is a bit more difficult to cope with if you’re an education publisher. Pearson Education has taught everyone the lesson of how to sell content plus branding plus distribution plus services (i.e. testing and scoring materials) on a global scale.  Recently, the dream of selling education has been the catalyst for other mergers and acquisitions in the sector. But this has merely resulted in companies faced with huge debts and few sound and sustainable business models. This is why, at least for the moment, education is an unstable column in our new global temple.

That said, there is a new and interesting publishing terrain out there. It reminds one of the famous Chinese curse: “May you live in interesting times,” which of course translates to unrest, uncertainty, famines, floods, and the like. It is important to note that in the field of education, the first major Asian global players have stomped into our temple of knowledge and proclaimed, “Here we are. We represent major markets with the potential for substantial growth, and, after having bought your content for quite a while now, we now want to play the game on a more level playing field!”

Companies like Korea’s Kyowon or China’s Higher Education Press have pretty strong arguments and opinions when it comes to “localizing” content (i.e. cultural adaptation) but also to the economics of it all. “We want to take our rightful place among you,” they are saying.

Only the third pillar of the temple — if we want to think of our industry in such classical patterns — is traditional “trade” publishing, or just plain books. Looking at the numbers among the global top 10 as well as further down the list, we see a steady decline in the revenues in trade. There has been no real drama as of yet; just a few percentage points falling off each year.

What’s interesting to point out is that a few ambitious winners can still be found in this otherwise flat environment. Penguin is pursuing a strong strategy, both at home and internationally, and has become the leading brand for global literature. There are also a few, new regional players vying for a larger role, including Planeta (as noted above), Denmark’s Egmont — which had a significant boost from Harry Potter, and has a significant presence in emerging genres like Manga and graphic novels — and Sweden’s Bonnier, which has substantial holdings in Germany. In this, Bonnier is like Holtzbrinck, Germany’s second largest group. They are less about bold growth and innovation than sustaining a relatively boring, if solid presence in the market.

So what is next? One thing is probably quite easy to predict: The combined forces of digital and economical change, together with globalization, will be hitting trade publishing sooner rather than later,that’s for sure. Couple this with the fact that people are now reading differently, for different purposes, in different contexts, and based on different economic rationales than was the case ten or even five years ago and we know something is about to occur.

What this means in detail is certainly more difficult to foresee. Take the example of professional (science) publishing. Wouldn’t consumers prefer to subscribe to a vast amount of (digital) reading that can be delivered online or via cable TV subscription for five dollars (or Euros) per month, rather than buying individual titles for a much higher price?

But what will happen if Internet or phone or cable TV providers consider reading as too small a niche to cater to? Or what if publishers balk at the idea of feeding their books into such pipelines? The likely outcome of that scenario is that trade publishing may be in for some serious trouble sooner than we think.

Some wise person once said that “making predictions is always a headache, particularly when it is about the future.”  Which is why, for the moment, I can only offer a picture of the status quo, backed up by a few numbers, and with a history of a few years, at least, to illustrate a few trends. Digitization and globalization does not spell the end of publishing, or of books for that matter. But one thing is for certain: things won’t stay the same for long.

The “Global Ranking of the Publishing Industry” is an initiative of Livres Hebdo, Paris, researched by Ruediger Wischenbart Content and Consulting, and co-published with buchreport (Germany), The Bookseller (UK) and Publishers Weekly (US), with yearly updates since 2007.

Rüdiger Wischenbart is a publishing industry consultant specialized on international markets. With more at his blog www.booklab.info

A panel debate with the editors of Livres Hebdo, Buchreport, The Bookseller and Publishers Weekly, moderated by Ruediger Wischenbart will take place at the Frankfurt Book Fair, on Wednesday, 14 October 2009, 11:00 to 11:45 at the Client’s Lounge I Hal 8.0 L993.

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2 Comments

  1. Posted October 9, 2009 at 9:11 pm | Permalink

    I do not see how you can state that “Thomson Learning”, which is performing well under the newly established brand of “Cengage” (#13 on the list)…”

    Cengage’s annual report to June 30, 2009 shows the company had a loss of $986.5 million on revenues of less than twice that amount, that the 13%+ annual sales growth was attributable almost solely to acquisitions, and had long-term debt of $5.7 billion, which it offsets in the assets columns with some $6.5 billion worth of “Identifiable intangible assets” and “Goodwill” (also an intangible asset).

    If this is a good performance, what do you consider a bad one?

  2. Posted October 27, 2009 at 8:19 pm | Permalink

    Does anyone know where to find these data going back 20 years? I’d like to compare this list to the top 20 publishers in 1989 (pre-Web and pre-private equity madness) to see what impact the Web and the rise of investment banking has had on the publishing industry.

5 Trackbacks

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