Book Publishing Industry Outlook 2011 in Trade, Religious, STM, Children

By Jim Sturdivant

Publishers See 2011 as Year of Challenge, Opportunity

Results of Book Business' "2011 Industry Outlook" reader survey (of 123 publishers, conducted in December 2010) reveal cautious optimism fueled by expectations of growth in e-books, a hoped-for upward turn in the economic cycle and a stable book market. Overall, the majority of publishers responding to the survey (from all market segments) said their outlook is "moderately optimistic" both for the industry as a whole, as well as for their own businesses. Still, a fairly high percentage are "unsure" of the future.

CHART 1: Here's how the respondents said they view the year ahead:

View of the Industry: View of Their Own Business:
Very Optimistic 6% 18%
Moderately Optimistic 56% 56%
Pessimistic 3% 7%
Unsure 35% 19%

Publishers are worried about a sputtering economic recovery, as well as competition from free sources, uncertainty about pricing models and changing consumer expectations of pricing. Respondents also remain concerned about shifting distribution models, a decline in interest in reading (especially among younger generations) and difficulties in adapting to change.

"E-books are growing, but not enough to overcome [the] decline of print product. It is a radically different industry than just a few years ago," said one respondent.

E-books are a source of both anxiety and excitement. "E-book markets will continue to expand," one respondent noted. "Google will help this, as well as new [e-readers] from Amazon and more consumers buying the iPad." Others said e-book growth is "good for the industry" and "the road to future profits." Yet another respondent viewed print books as "being widely attacked" by e-books.

Eighty-one percent of publishers surveyed expect to increase the number of e-books they publish in 2011, with nearly half of those expecting the number of e-books they publish to at least double.

Not so surprisingly, almost half of publishers foresee their largest revenue-growth potential for 2011 in e-books and other digital content. Still, almost the same number of publishers expect print to generate their largest revenue growth.

CHART 2: Publishers' largest % revenue increase in 2011 will come from:
Print: 44%
Digital Content (on e-reading devices, tablets, PCs, etc.): 46%
Mobile Apps: 3%
Audio Books: 2%
Chapter Books or Other Serialized Reading: 1%
Other: 4%

By an overwhelming margin (70 percent), publishers expect to see the largest percentage increase in sales to come from online sales channels, reflecting the dominance of online bookstores for both print and digital content. Fifty-six percent expect physical-bookstore sales to shrink in 2011.

Continued shifts in reading platforms and sales channels are only one facet of the uncertainty engendered by a rapidly changing market. The need to restructure staffs, re-allocate resources, and adjust marketing and distribution strategies are of ongoing concern.

One publisher cited "the need to keep up with changing technologies and reader preferences" as a key challenge, while another warned of "a conservatism that would have us avoid change or take it too slowly." Some worry about the pace of adoption of e-book standards. Others are more concerned over internal restructuring.

The increase of online book sales has meant changes to book marketing strategies.

CHART 3: In which channels will you spend more in 2011 to market books?
Online 47%
Social Media 41%
E-mail 29%
Print 19%
In-store Promotions 5%
Events 12%
Trade Shows/Book Fairs 10%

CHART 4: Revenue growth from overall book sales:

In 2011 Will: # of Titles Published in 2011 Will:
Increase 52% 31%
Remain Flat 38% 60%
Decline 11% 9%

Most publishers cite e-books and digital content delivery as the greatest opportunity for the book industry as a whole. Asked about the greatest opportunity for their own companies, however, and the answers are more varied, covering digital platforms, print-on-demand and integrated (multiplatform) publishing options, maintaining author relationships, quality standards and the overall economic climate. BB

Looking ahead into 2011, book publishers seem to be focused more on opportunities than challenges—or perhaps, as the economy continues to rebound and consumers open their wallets a bit wider, it's a case of seeing ways to turn the latter into the former. Certainly, all the free publicity surrounding the exploding e-reading device market has put publishers at the center of a cutting-edge retail trend. The question, as always, is what audiences actually want to spend money on, and in what form. As the options for content delivery continue to expand, many publishers are experiencing success with forays into mobile and e-books, and 2011 looks to be a year when these become more "normalized" as core revenue channels, rather than adjuncts.

Book Business interviewed executives from a number of companies in various segments of the book publishing market to get a clearer picture of where the industry seems to be heading in the new year and decade.

Adam Rothberg, Vice President, Corporate Communications, Simon & Schuster

➜ Simon & Schuster (S&S) has been at the forefront of digital publishing, including the launch of the comprehensive Simon & Schuster Mobile version of its website in July 2010 and recent success with apps for "The Bro Code" and "Choose Your Own Adventure" book series. The company now seeks to position itself for further growth in the e-book and mobile markets.

BB: How do you expect the flurry of new e-book readers to impact your sales and product mix? What sort of growth in that market do you expect in 2011?

Rothberg: We're seeing tremendous growth in our e-book sales, and as new user-friendly devices and new e-book retailers enter the market, that will only continue. For some of our best-selling frontlist titles, the ratio of digital to physical book sales is quite high, and so we are having to adjust our print runs to reflect this new reality. And, we'll have to keep doing that as the e-book market continues to grow. In 2010, we [experienced] triple-digit growth in e-book sales, and there is no reason to think that will change in 2011.

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