Michael Allen - A Writer's Guide To Everything Important - The Omnibus Edition Of Seven Essential Guides For Fiction Writers

If we ignore academic/professional books and school textbooks, and just think about trade publishing, the consumer in 2000 was putting about £2 billion a year into the high-street tills.

That income from the consumer is, of course, divided. A largish chunk goes to the bookseller; he gets perhaps 35% of the retail price for a hardback, and more for a paperback. Another chunk, possibly 15%, may go to the wholesaler who supplied the bookseller. As a result, a publishing firm would be doing well if it managed to lay its hands on 50% of the money spent by the high-street book-buyer. In many companies they would be pleased to get 45%.

We may therefore assume that UK trade publishers were re earning about £1 billion a year.

At first sight this looks to be a huge sum. But, if you compare this figure with the income of companies in other industries, you will immediately see that, in commercial and industrial terms, publishing is a small business.

For example: the income of all the firms of solicitors (lawyers) in the UK is £11 billion a year; the Shell oil company has an income of about £100 billion, i.e. one hundred times as large as all UK trade publishers put together; and, in its 2000 published report, Barclays Bank recorded a profit of nearly £4 billion. And Barclays wasn’t even the biggest UK bank – it was the fourth biggest.

In addition to being a relatively small earner, publishing is also a small employer. Faber, one of the most famous names in the book world, at that time employed only 125 people. Even Hodder Headline, one of the top half-dozen firms, employed less than 800.

Compare these figures with almost any other industry and you will see that the numbers are tiny. In Wiltshire, where I was living in 2000, there is a small town called Trowbridge. The biggest employer in Trowbridge is a manufacturer of beds, called Airsprung. This firm employs 1,000 people, and you will certainly never have heard of it; in fact you probably haven’t even heard of Trowbridge.

In financial terms, trade publishing is not a rewarding business to work in. A Bookseller survey in 2001 established that the average salary paid to those aged between 19 and 23, who had been in their publishing jobs for less than a year, was £14,416. (Nearly all these firms are based in London, remember.)

In one medium-sized trade publisher, the overall average salary was just under £20,000, with the highest-paid director taking home some £45,000. By way of comparison, a train driver on the London underground was then earning about £31,000 a year. There are some publishing bosses who earn over £100,000 a year, but not many.

Because of its low earning power, and pathetic profit margins, publishing is of little interest to the City of London. Generally speaking, the industry provides a poor return on capital. A report published in 1999 stated that only 32% of publishers made an ‘acceptable’ return of 10% on their investment, and that about one third of publishers were ‘grossly inefficient’ in their use of capital.

In short, when we consider the financial data, coupled with employment statistics, we discover that publishing is a piddling little business of very little consequence to anyone. When compared with the oil industry, banking, or insurance, it is minuscule.

Publishing is, however, a business which is plays an absolutely vital part in what might be called the nation’s culture, and it has a central role in education. It also attracts a disproportionate amount of newspaper space; this misleads almost everyone into thinking that a well publicised book makes its author rich. Ah, if only!

2.6.2 A quick overview of how the new big firms were doing in the year 2000. These new big boys were going to make much bigger profits, you remember, than the multitude of smaller companies whom they had gobbled up. At least, that was the theory. (Excuse me while I have a quiet snigger.)

We noted above that, by the late 1990s, the process of amalgamation among publishing companies was well advanced, both in the UK and in the US.

In London, there were seven or eight companies which could each claim about 3 per cent or more of the general retail market. The biggest of these were Random House, Penguin, and HarperCollins. Companies which had once been owned by their eponymous founders (Gollancz, Deutsch, Weidenfeld), were now controlled by a curious mixture of ‘hard-headed’ businessmen. Of the largest companies, two were traded directly or indirectly on the London stock exchange, two were German-owned, one US-owned, one Australian, and one was the subsidiary of a French arms manufacturer.

In the US, the situation was perhaps even more obviously centralised. While there were many small publishers remaining – some of them started up because of the reduced costs associated with new printing methods (see below) – six big companies dominated the scene. For a decade or so these companies were referred to, with dazzling originality, as the Big Six.

The situation changes rapidly, and in 2013 the Big Six became the Big Five, through the merger of Penguin and Random House. So in order to avoid confusion I am going to describe the US Big Five/Six as they are at the time of writing (early 2014).

The firms concerned are Random House plus Penguin (now combined), Simon and Schuster, HarperCollins, Macmillan, and Hachette. Only two of the Big Six are US companies: Simon and Schuster, and HarperCollins. The others are foreign: two are German, one is British and the other is French.

Some of these companies are quoted on the stock exchange, but it is an indication of the poor profit records of big-time publishers that most stock-market observers feel that the share prices of the parent companies of these firms would rise nicely if the parents dumped their children.

Simon & Schuster, a name to inspire ecstasy in the book world, is actually a drag on the share price of CBS. And Wall Street would like News Corp a whole lot better if it just sold HarperCollins.

Random House, once a proudly American company, is now owned by Bertelsmann, a firm which was once the largest publisher of Nazi propaganda; and, furthermore, the firm’s profits benefited from the slave labour provided to them by the Nazi party. But that was all a long time age, and in another country, so we won’t make a fuss about it now, will we? Wouldn’t quite be fair, would it?

From the point of view of would-be writers, none of this is good news. Once, well within my adult lifetime, a writer could reasonably send off her manuscript to as many as 30 publishers; and only if she was rejected by all of them would she need to question her faith that her wonderful book would definitely find a home soon. Today, you need an agent to get any of the powerful firms to look at your stuff at all. And perhaps it would only take three or four rejection letters to settle the matter in your agent’s mind.

Within the Big Five, well educated and well read men and women no longer make decisions about the value of novels and biographies. Calculations are instead made by TV-watching bean counters, possessing about as much culture as a hot dog and a can of beer.

In 1990, Random House was now run not by a literary chap, but by a former banker named Alberto Vitale. He was a man who boasted to all and sundry that he was far too busy ever to read a book. In that year, Vitale decided that he wanted to get rid of Andre Schiffrin, a long-standing and much admired head of a Random House literary division. To achieve this, Vitale simply ‘rearranged’ some Random House costs, charging Schiffrin’s division for expenses which had actually been incurred elsewhere. Schiffrin’s backlist of books, potentially a great asset, was written off at zero value. Result: Schiffrin was identified as a hopeless loser of the firm’s money. He was kicked out.