What’s Driving UK Publishers Out of Business?

In Discussion by Dennis Abrams

Discounting, the growth of the ebook market, digital piracy, the growth of the secondhand book market, and the scrapping of the Net Book Agreement in 1997 are all likely to blame.

By Dennis Abrams

uk flagThe Guardian reported that 98 UK publishers went out of business over the past year, an increase of 42% over the year before, a figure which reflects “an ongoing squeeze on publisher’s profit margins driven by deep retail discounts and new digital business models.”

The casualties included Evan Brothers, Enid Blyton’s publisher from the 1930s to the 1960s, and publisher of international health titles Panos London, which closed its doors in April after 26 years in business.

The list, compiled by accountancy firm Wilkins Kennedy from Companies House, reports for the 12 months ending August 31, 2013, includes publishers of newspapers, journals, periodicals and directories, but the majority of insolvencies are book business related.

Anthony Cork, a partner at Wilkins Kennedy, named a number of factors that go into the seeming fragility of traditional models: “discounting, the growth of the ebook market, digital piracy, the growth of the secondhand book market, and the scrapping of the Net Book Agreement in 1997.”

“The growth of the internet has accelerated a dynamic that started with the end of the Net Book Agreement,” he told The Guardian. “The rise of Amazon and other discount sellers with massive buying power means the pressure on publishers’ margins is now immense. While publishers might be able to sustain relatively small margins on a bestseller, it is much harder for niche publishers.”

Indeed, as the paper points out, it is “niche academic and educational publishers” that are “particularly vulnerable,” because their business model is under attack by digital piracy as well as secondhand book sales on sites like Amazon Marketplace. Cork said, “The arrival of Amazon has transformed the secondhand book trade from a fairly minor nuisance to a serious threat. Where once you had to trawl the secondhand bookshops if you wanted to get hold of a cheap hardback or academic book, you can now be fairly certain of getting hold of what you want at the click of a button, and the publisher will not make a penny.”

Another factor, of course, is the explosive growth in sales of ebooks, whose lower price has also helped to undermine publisher’s margins. In the UK, consumer eBook sales rose by 134% in 2012, while print sales fell by 1%; meaning that while consumer eBook sales no account for 7.4% of book publisher’s total sales, Amazon now controls 79% of the ebook market in the UK.

Of course, what didn’t go examined is just how many publishers were empowered by the new digital age to actually launch publishing houses — whether digital or a combination of digital and print. My suspicion is that number might well exceed the 98 failures from last year.

Agree? Disagree? Let us know what you think in the comments. 

About the Author

Dennis Abrams

Dennis Abrams is a contributing editor for Publishing Perspectives, responsible for news, children's publishing and media. He's also a restaurant critic, literary blogger, and the author of "The Play's The Thing," a complete YA guide to the plays of William Shakespeare published by Pentian, as well as more than 30 YA biographies and histories for Chelsea House publishers.