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Arts Council England Independent publishing in the north west A report researched and written by Susan Tranter for Arts Council England, North West August 2004 Foreword The North West of England continues to have a vibrant, dynamic and diverse independent publishing sector featuring publishers of national and international status as well as those fast gaining a reputation and profile via media and review coverage for innovation and quality. In recognition of this, we have fully implemented the recommendations in this report in the spirit of best practice development for 21st century organisations and will ensure that this work is counted when making the case for investment for independent publishing in England. Central to the recommendations in this report is Index, the Consortium of North West Independent publishers set up as a pilot initiative in October 2003 with the support of Arts Council England, North West and Creative Industries Development Services (CIDS). As an outcome of the report Arts Council England, North West solicited a strategic Grants for the arts application from Index based on recommendations from the report. This includes the funding of a coordinator post for Index, a professional development and training programme, a comprehensive one-stop-shop website promoting and facilitating book sales, and a comprehensive advice service. Acting on the recommendations from the report, Arts Council England, North West worked with its sister offices, Yorkshire and North East and with Audiences Yorkshire on the direct mail initiative Diverse Thirst. We also solicited an independent magazine subsidy scheme from the Time to Read Initiative, a partnership of public libraries and related organisations, to support and develop activities to promote the north west’s independent literary magazines. We continue to encourage professional, quality initiatives in independent publishing through our Grants for the Arts open access funding scheme. We recognise the opportunities that advances in technology have created for the independent publishing sector, resulting in a new wave of activity on the ground with high production values but with limited knowledge and experience in other areas of the profession. The professional membership package that Index offers ensures that new activities and initiatives are supported at all phases of their development as well as benefiting from developments in strategic and partnership work. Index’s membership is growing as are the number of first time Grants for the Arts applications for publishing and related activities. The report’s recommendations were implemented with the express understanding that they should be in the context of a national research and policy review following the national research work resulting in the 2 Kitchen table to laptop: independent publishing in England publication by John Hampson and Paul Richardson as well as recent Arts Council England initiatives in Diversity in Publishing. Arts Council England, North West extends its thanks to all who took part in this research, for their insight, time and enthusiasm. Avril Heffernan Literature Officer Arts Council England North West 3 Contents Executive summary 1 A profile of independent publishing a The UK b The north west 2 Industry consultations and key issues a b c d e Issues arising from interviews Independent publishing and the creative industries Independent publishing and cultural diversity SWOT analysis Key issues for Arts Council England, North West 20 24 26 27 30 7 11 5 3 Development initiatives in comparative regions a Comparative analysis of publishing support b Independent Northern Publishers (north east) c Thirst (Yorkshire) 4 Conclusions and recommendations a Conclusions b Recommendations 5 Delivery and outcomes a Delivery b Outcomes Abbreviations Bibliography Acknowledgements 46 48 50 50 51 38 40 31 32 35 4 Executive summary This report into the north west’s independent publishing sector was commissioned by Arts Council England, North West in January 2004 to address ways of meeting the following aims:  to ensure the artistic and business development and longer term sustainability of the sector  to raise the profile of the sector  to maximise the opportunities, where appropriate, for collaborative working or sharing of resources Several other regions are also carrying out related research, and a major piece of work has been commissioned nationally by Arts Council England, due to be published around the time of this report. The sector The independent publishing sector in the north west plays a vital role in developing new writing talent, a role which sometimes conflicts with its business needs. It is largely made up of small, unregistered businesses, many operating as sole traders. There is a roughly equal proportion of book to magazine publishers, with the greatest concentration of activity around Greater Manchester. The strong cultural diversity of writers and performers in the region is not reflected in its publishing. Collectively the sector generates around three quarters of a million pounds a year, although it is dominated by two key players that account for 75% of income. Of the 40-50 people working in the sector, 75% work part-time, and almost 50% earn nothing. The issues The issues facing independent publishers are not in the sourcing or production of books, but in the business side of operations and in getting products into the marketplace. Recent changes in the way high street bookselling operates have hit independents hard, and competition for shelf space is a major concern for almost all publishers. The sector as a whole has failed to take best advantage of the opportunities offered by the library and reader development sector, and by the now considerable momentum of creative industry support. Publishers have highlighted a shortfall in their business skills and a need for more targeted, relevant professional development. 5 Meeting the challenges to the sector Collaborative initiatives in two regions comparative to the north west were examined to assess whether they provide models for working together to support publishing here. The recommendations in this report suggest ways in which Arts Council England, North West can support the sector and help ensure its sustainability and competitiveness, and are summarised below. Arts Council England, North West should: 1 Continue to assess funding applications from individual publishers, and encourage applications that focus on longer term programmes, and on professionalising administrative or business operations 2 Continue to support Index, the consortium of north west independent publishers, and encourage the group to form an executive committee to better support its coordinator 3 Seek opportunities to advocate more proactively to the Northwest Regional Development Agency and other regional bodies the significant contributions of literary publishing as a creative industry 4 Recognise the value of the regional literature listings currently provided through the Index website by funding the creation of a separate Literature North West site 5 Encourage Index to apply for funding for a new part-time coordinator’s post that can support the member publishers in researching new markets, working more closely with the library sector, applying for further funding, maintaining the Index website and raising the profile of the group 6 Take up the opportunity offered by Audiences Yorkshire’s Thirst book club and recommend three or four north west publishers for inclusion in the scheme 7 Work with Time to Read to set up an annual scheme which subsidises the purchase of literary magazine subscriptions by all 22 north west library authorities 8 Take the lead on developing links with the distribution agency Inpress 9 Invite tenders for the provision of a centralised warehousing and distribution facility in the north west, on a two year pilot basis 10 Help Index to create an e-commerce facility on its website that allows orders to be made online and which directly links to the central distribution service 11 Work with Index to develop a menu of specialised professional development for publishers, which might include training in specialist areas, individual surgeries and mentorships 6 1 A profile of independent publishing 1a The UK 1a i) A snapshot of the UK publishing sector According to Whitaker’s Red Book: Directory of Publishers, there are over 50,000 publishers in the UK and Ireland. However, only 2,345 were registered for VAT with turnovers of £1,000 or more. The total revenue from book publishing in 2002 was £3.24 billion, including income from exports. (Source: Office for National Statistics) The number of titles being published is increasing every year. There were 125,390 new titles or editions published in 2002, a 5.4% increase on 2001. Fiction and children’s books are by far the largest segments of the market. However, a smaller number of titles are accounting for a greater proportion of revenue. A 1998 KPMG report suggested that just 3% of titles accounted for 50% of sales. The phenomenally successful Harry Potter series is a good example of this. (Source: Whitaker Information Services) In 2002, UK publishers’ exports were worth £1.2 billion, up 1.8% on 2001, making the UK a more significant exporter of books than the US, whose export market is declining. The most significant international markets for UK publishers are the US (sales of £214 million), Ireland (£91.9 million), Germany (£81.7 million), the Netherlands (£68.4 million) and Australia (£60.9 million). (Source: Department of Trade and Industry Strategy Unit) UK consumers aged 12-74 spent an average of £2,014 million on books in 2002, up 2% on 2001, although volume sales fell by 1%. This decrease reflects an 11% decline in the number of children’s books sold; adult purchases actually increased during this period by 3% in volume and 4% in value. (Source: Books and the Consumer Survey, Book Marketing Ltd) The large chain stores such as Waterstone’s and WH Smith represent 43% of bookselling, with book clubs and mail order at 21% and the internet at 6%. Smaller and independent bookshops, along with supermarkets and other outlets, make up the remaining 30%. (Source: Book Marketing Ltd/Taylor Nelson Sofres) National libraries, public libraries, Higher Education and college libraries and secondary school libraries between them spent £185 million on books during 2001-02. However, all have reduced their book purchasing 7 budgets (they spent a total of £191 million in 2000-01). (Source: Library and Information Statistics Unit, Loughborough University) According to research carried out in 2002, nearly half of all adults read at least five books a year. However, a further quarter of adults claim not to read any books. (Source: National Reading Campaign; Office for National Statistics survey) There are 36,500 people employed in publishing in the UK (excluding freelance agents). 64% of these are concentrated in London and the South East. Along with calls for structured career paths for those entering publishing, the industry is under increasing pressure to offer salaries comparable to other graduate attracting sectors. (Source: Publishers Association, quoted in the Scottish Arts Council’s Review of Publishing, 2003) In the UK, the publishing sector may be broken down into three constituent parts: 1 Multinationals: large groups of companies, often owned by huge media parent organisations with branches in several countries, publishing a very wide variety of material (for example HarperCollins is owned by News Corporation, The Penguin Group (UK) is owned by Pearson Publishing Group) Established independents: companies still independently owned but which have made a significant impact in the marketplace and compete on a level with the multinationals in their specialised fields (for example Faber and Faber, Canongate) Independent presses and magazines: outfits (many sole traders) that may cater for specialised or niche markets, and often require public subsidy (for example Tindal Street Press, Flambard Press). 2 3 For the purposes of this report, independent publishing refers to the publication of literary work (fiction, poetry, and literary biography) by independent companies or not-for-profit organisations, some of which will fall into the second category, but most of which will fall into the third. 1a ii) The independent publishing sector Characteristics of the independent publishing sector:    Driven by editorial quality rather than potential profit and therefore better able to take risks on new, less marketable writers Knowledgeable and passionate about their field, and creative in finding and supplying niche markets Small, dedicated workforce with staff often required to multiskill, and 8 who are frequently underpaid or not paid at all The importance of independent publishing:  Without the commercial pressures of the larger companies, independent publishers can take risks in publishing challenging material, work by unknown writers or those who are difficult to market. This provides an invaluable arena in which emerging talent can find an audience, and is where many acclaimed writers are first published Independent publishing can provide an alternative product to the mass market outputs of the larger companies, offering a platform for the voices of minority groups, who might otherwise go unheard. This is becoming increasingly important as publishers’ lists are shrinking and fewer titles are pushed harder to generate more revenue Independent publishing, which is less tied to the traditional London base of the commercial players, also provides work for editors and publishers in the regions, helping to keep talented individuals in other areas   Public subsidy Many independent publishers receive public subsidy, and the bulk of this has come from Arts Council England (and from other national arts councils). Over the last 10 years or so, this support has been accessed through a variety of channels:  A national Arts Council England funded distribution/repping agency which promotes and distributes books from a selected group of independent publishers who individually wouldn’t have the means to operate at this level Regular funding for publisher clients - Regularly Funded Organisation status (RFO) Individual grants to publishers to allow them to publish one-off titles, or a programme of titles An Arts Council England grant fund supporting magazine development Arts Council England support for publishers’ websites.     The streamlining of Arts Council England grants which took place in 2003 has condensed several of these funding channels. The main route now for publishers is to apply for funding through the Grants for the arts programme, or to qualify for RFO status. The Arts Council England funded distribution agency, which has gone through several 9 manifestations and various problems, is now called Inpress, and works with around 25 publishers. Some publishers have been able to access funding from other sources, such as private trusts or business sponsorship (where there is a relevant link or common interest), but overall this has been minimal. Issues facing the independent publishing sector Competition and distribution Getting books to where readers can buy them is a major concern for almost all publishers, of whatever size. The diversification of the retail market, with a host of sellers now including supermarkets and internet outlets, has put more pressure on the traditional book stores. Increased competition from these operators, coupled with the abolition of the Net Book Agreement in 1995, has seen the price of books fall dramatically, with the reductions in revenue being passed on to publishers. The larger chain book stores are demanding increasingly large discounts from publishers in order to stock their material, and this has proved prohibitive for many smaller companies. Retailers also expect generous rewards for displaying books in popular promotions such as 3 for 2 deals (such promotions now account for an estimated 35% of sales). The smaller independent publishers simply cannot compete with the enormous marketing budgets that the multinationals have at their disposal, and as a result, their shelf presence in traditional bricks and mortar retail outlets has diminished. Furthermore, the increase in the power and influence of the chain book stores has taken place at the expense of the smaller independent bookshops, many of which have been forced to close, with the effect of further reducing alternative outlets for independent publishers. Traditionally, publishers have contracted specialist agencies to store printed stock, promote titles to retailers, handle orders and distribute them to customers. This allows publishers to concentrate on what they do best: finding new talent, nurturing good writers, and producing high quality publications. However, these services come at a cost, and for smaller independents it is often prohibitive. The particular needs of the independent sector are also sometimes not best served by distribution agencies who find it easier to promote potential bestsellers from the commercial publishers than they do, for instance, collections of poetry by unknown writers. It was with these problems in mind that Arts Council England set up Password, which later became Signature and has now been reborn as Inpress, a subsidised distribution and repping agency which specialises in working with clients from the independent sector. Even this, however, is a step too far for some of the smaller outfits, especially the literary magazines. 10 Staffing Many independent publishers are run by no more than a handful of people, and some by just one or two committed individuals. In these situations, staff are forced to take on the roles of editor, designer, production controller, marketeer, PR, distributor, administrator and financial controller. Given that most individuals enter publishing because of a passion for good writing and a love of books as physical objects, it is often the administrative and marketing side of things, the latter stages of the production cycle, which suffer from a lack of specialist knowledge or expertise. Smaller independent publishers simply cannot afford to contract this kind of work out to freelance agencies, or to train themselves to acquire these additional skills. Cultural diversity It has long been recognised that employees in the UK publishing industry are drawn from a relatively small pool of people, largely those with white, middle-class backgrounds. Full Colour: cultural diversity in book publishing today, a report published in March 2004 by The Bookseller in conjunction with Arts Council England’s decibel project, found that only 13% of publishing employees were from minority ethnic groups (a figure itself judged overly generous due to the likelihood of more ethnically diverse people completing a cultural diversity survey), and that the management level was almost exclusively white. Furthermore, there were no minority ethnic authors in the top 100 books of 2003. However, it has been shown that the proportion of black people reading for pleasure is 72%, and among the Asian population, 61%, with a higher proportion of ethnic groups using public libraries than the national average. This indicates that the industry is failing to capitalise on a substantial market for literature if it doesn’t employ staff who have the vital inside knowledge of those markets. 1b The north west Methodology of data capture At the time this research was carried out there were around 15 book publishers in the north west region, and 15 different magazines produced. However, it is a characteristic of the independent sector that new imprints appear, while others go into abeyance or disappear, all the time. At present the geographical spread favours the metropolitan area of Greater Manchester and to a lesser extent, Merseyside. (One publisher 11 in Cheshire is responsible for six magazine titles, and one publisher in Cumbria is currently in abeyance and so has not been included). Fig. 1 Geographical spread of book publishers and magazine titles in the North West region Cumbria Cheshire Lancashire Merseyside Greater Manchester 0 Magazines Books 2 4 6 8 10 The information in this section of the report was compiled following interviews with nine of the book publishers, and 14 of the magazines – although, as several organisations are responsible for publishing both books and a magazine, or indeed several magazine titles, this in practice meant consultations with 16 publishers. 14 interviews were carried out in person, and two via email. The information collected relates to the financial year 2003-04. Volume Over 75 book titles and 59 issues of magazines were published in the north west during 2003-04. Over 72,000 copies of books were produced, with print runs ranging from 100 to over 2,000, with an average of between 500 and 1,000. Nearly 24,000 magazines were printed, with an average print run of 200-250. Income The total income from publishing during the period was £740,869. The income generated by individual publishers ranged hugely however, and it is significant that one publisher is responsible for over 50% of the income generated in the whole region, with two publishers between 12 them accounting for over 75%. The remaining 25% or less therefore, is made up of very small sums from many smaller publishers. The different sources of income break down as follows: Fig.2 Income sources for North West publishers 11 % 9.5 % 0.8 % 0.7 % Sales Other self-generated income Subsidy Other sources Sponsorship 78 % Other self-generated income includes revenue received from rights, advertising, competition entries and events. Sales of books and magazines clearly constitutes the most significant form of income, with subsidy from Arts Council England and other grants only accounting for 9.5%. Publishers show enterprise in generating income through other channels, including the sale of advertising, and associated services such as surgeries for writers, but are struggling to generate other forms of sponsorship to any significant degree. Expenditure The total expenditure of the publishers surveyed was £765,598 – which, set against the income for the same period represents an overall loss of £24,729. Some publishers did make a profit, while some broke even, and some made a loss (which in several significant cases was due to one-off expenses due to be offset in the next financial period). Figure 3 shows how publishers are spending their budgets: 13 Fig. 3 Breakdown of publishing expenditure 18.5% Production Distribution 13% Staffing Administration 5% 2.5% 61% Marketing As would be expected, by far the largest share of expenditure goes on production costs: printing, design and binding. Distribution – whether straightforward postage costs in the case of smaller presses and magazines, or a commission paid to a distribution agency – is the next biggest portion. Staffing and administrative costs are kept relatively low. The tiny share spent on marketing would be surprising in any other industry except independent publishing, where promotional budgets are a luxury, and marketing activity tends to be carried out in-house by staff, often alongside other duties. Marketing The marketing activity that does go on, however, shows both a breadth of approach, and a variance between magazine and book publishers. Most have been willing to try different approaches at various times, and seem to have a good awareness of what works well for them and what has failed in the past. Some publishers are much better informed and engaged when it comes to marketing than others, and have been innovative in attracting more readers and a higher profile. Figures 4 and 5 show the range of marketing methods used by north west independent publishers, and their perception of which methods work best for them in terms of generating sales. 14 Fig.4 Marketing methods used Directories Posters Generic print Print per title Events Reciprocal flyer exchanges Direct mail Website Printed catalogue Press Advertising Magazines Books 0 2 4 6 8 The most popular methods for publishers collectively are use of websites, events and launches, and the press and media. Book publishers use more printed material – in the form of printed catalogues, promotional print specific to individual titles, and posters – whereas magazines swap flyers with other magazines in reciprocal deals to attract new readers, and ensure they are listed in directories like The Writer’s Handbook. 15