Market Focus: Tough Sell for Reference Books
A “slow, but steady decline” is how Rhonda Herman, executive vice president at reference publisher McFarland & Co. Inc., characterizes the market for reference books. “We are cautious about sales and will feel lucky if sales remain flat.”
The reality of an economic downturn is starting to sink in—McFarland’s volume is flat, Herman says, “but actual income is down 2 percent. The reason for this is that we are experiencing higher than normal overstock returns, which is not surprising in this market.” Both direct and indirect costs are hitting the bottom line at the Jefferson, N.C.-based publisher. Higher fuel costs are forcing up the price of paper and shipping.
“Indirect costs like health insurance for employees are a chronic concern, but particularly this year when we have less ability to handle an increase,” Herman says.
In response, McFarland is trimming costs, and no new hires or capital expenditures are planned at this time.
The Long Tail
To weather these difficult economic times, McFarland is focused on selling a large number of unique items in relatively small quantities, an example of Chris Anderson’s “long tail” theory, explained in his book “The Long Tail: Why the Future of Business Is Selling Less of More.”
McFarland has its own printing operation, allowing the publisher short printing runs of its growing backlist of titles, which is increasing around 10 percent each year.
Herman says a broad definition of reference books would place a majority of the publisher’s 3,000 titles in that segment. “Graves’ Disease: A Practical Guide,” by Elaine Moore, is an example of applying the long tail to publishing. The book has been a steady seller since 2001, Herman says, because its author is an active leader of an online community for Graves’ disease—a form of hyperthyroidism affecting 3 million people in the United States. The author’s active participation drives buyers to online retailer Amazon.com and McFarland’s Web site.
Online and E-books
To reach readers directly, McFarland participates in Google Book Search. The company permits the full text of its books to be searched online.
Roughly three pages are viewed during each search of a McFarland book, Herman says. Around 1.5 percent of searches result in a click-through on a link to buy a book. Herman adds that she believes Google Book Search to be more effective than online advertising.
McFarland plans to focus more resources on electronic books in the coming year. “I believe that there is a modest, but definite opportunity with e-books,” Herman says.
Springer Science+Business Media already has a strong presence in the
e-book reference market. The Berlin, Germany-based publisher has more than 12 e-references available for sale, and more than 30 new titles are scheduled for release this year.
“E-reference is used six times more frequently than an average monograph,” says Cynthia Cleto, global manager of e-books, e-product management and innovation at Springer in New York. “Even though Springer references are a very strong e-product, we still offer a print version because there continues to be a strong demand for it.”
Cleto says print revenues at Springer are experiencing “consistent growth,” and electronic usage is increasing due to the widespread adoption of the Springer e-Book Collection, which includes all of Springer’s major reference works.
Springer offers an ownership model to libraries, where they have unlimited and simultaneous-user access to the collection. “The market has embraced this model, and as a result, we have experienced good positive growth,” Cleto says.
Strong areas for reference include biomedicine, engineering and human sciences, Cleto says. Recent best-sellers include the “Encyclopedia of Language and Education” and the two-volume handbook “Drug Discovery and Evaluation.” Cleto says future growth areas in reference include materials science, chemical engineering and clinical medicine.
“We have changed some of our workflows to better service the electronic world,” Cleto says. “Our new workflow allows books to be born digital.” As the content is created, complete chapters are accessible online even before the whole book is finished.
Content is expected to be immediately accessible, Cleto says, which continues to blur the line between print content types. “We are presenting book content at the chapter level now, so we are journalizing book content,” Cleto says.
Springer is also providing semantic linking: bringing end users other documents not originally in their search query, but that might help answer research questions.
“Combining e-reference content with other content types, seamlessly integrating the platform as well as the search, and showing the user documents that might interest them [are] key step[s] to making our content even more useful,” Cleto says.
The use of handheld devices—e-book readers, personal digital assistants, mobile phones—to sift through content has also started to impact the market, Cleto says. “Perhaps we’ll see handheld devices in hospitals or when researchers are traveling,” she says.
New York-based H.W. Wilson Co. also has created digital reference products. “Art Museum Image Gallery,” for example, offers a library of 155,000 digital images that are rights-cleared for educational purposes. The gallery includes images of paintings, sculptors and other works of art from museums around the world.
In addition to providing still images, Frank Daly, director of marketing, says in the future, reference publishing might include streaming video and audio. “I can see enhancing our products with audio, where you not only get a biography of an author, but get the author reading a clip of the work or talking about the work,” Daly says.
Foreign vs. Domestic
Most of the current growth in reference publishing is international, Daly says, citing the United Kingdom, parts of Europe and key Asian countries like Japan and Taiwan, specifically.
“Don’t forget [that] our products overseas are still priced in dollars,” Daly says, noting that the dollar has been declining against most major foreign currencies. “Overseas purchasers are buying at a discount. That is where growth has been in the last year.”
The strongest areas of growth internationally are humanities, general science and business, Daly says.
E-reference products also often do well internationally, he says. “We are seeing more and more demand to provide e-book versions of our products,” he says.
Domestically, there is pressure on book budgets, Daly says, as states like New Jersey, Florida and California put pressure on state-supported academic institutions and libraries. “I think we’re going to see slowness in the U.S.,” Daly says.
Other weak areas across the country in the reference book market are in primary schools and public libraries. “They are not purchasing core collections as often,” Daly says, noting that many small college libraries are also facing funding constraints.
“Short-term, the biggest issue is the funding issue,” Daly says.
Publishers continue to watch the reference book market shrink, says Michael Norris, senior analyst at Simba Information in Stamford, Conn.
The reference book market performs quite differently than the other trade categories that Norris covers for the market research firm. He says reading a novel or nonfiction book requires a lot of engagement and time from readers.
“A reference book has fewer demands on readers,” Norris says. In the past, most people kept dictionaries, an atlas and a set of encyclopedias in the home to look up bits of information a couple of times a year. “Now, you can go onto the Internet and pull a little piece of information that you need without having to fork over money,” he says.
Instead of dictionaries, atlases and encyclopedias, the market favors reference books like “Guinness World Records 2008” by Guinness and “The Old Farmer’s Almanac” by Yankee Publishing Inc.
Simba tracks best-sellers from The New York Times, USA Today and Publishers Weekly to create a composite of the best-selling reference books. Norris notes that among the 2,100 books to hit the three lists in 2007, just 17 were reference books. “It is an indication of where reference books are in cultural consciousness,” he says.
The 17 reference titles on the lists in 2007 represent a 32-percent decline from the 25 titles listed in 2006, and a 39-percent drop from the five-year high of 28 in 2003.
“We’re holding steady from last year. We haven’t lost any ground,” says Sherin Pierce, publisher of “The Old Farmer’s Almanac” by the Dublin, N.H.-based Yankee.
Pierce attributes this to diverse distribution strategies. “The Old Farmer’s Almanac” can be found almost anywhere books and magazines are sold—chain and independent bookstores, club stores, online, discount chains and even home-and-garden outlets.
“When one area lags, another always picks up the sales slack,” Pierce says, adding that initial orders for the 2009 almanac are strong. “While there have been cutbacks from retailers, we’re seeing some significant order increases from others, offsetting any losses.”
But she admits that less access overall to bookstores is impacting the industry. With fewer and fewer independent stores and more chains consolidating, shelf space is becoming more limited, and a lot of retailers are pushing more of their business online.
Therefore, most growth in the reference market is on the Internet and via digital mediums. She says these avenues have helped Yankee reach new audiences.
“Every year there are wide-sweeping proclamations that print is dead, but I don’t think that will ever come to pass,” Pierce says. “Publishers will always find ways to evolve with trends and market conditions to survive. The trick to staying strong, even in tough economic times, is to welcome change and recognize the opportunities.”
Brian R. Hook is a freelance journalist in St. Louis. He has written for dozens of publishers, including the Financial Times, Dow Jones, and U.S. News & World Report. Contact him by e-mail at firstname.lastname@example.org.