Book Publishers
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Industry Overview
The US book publishing industry consists of about 2,600 companies with combined annual revenue of $30 billion. Large US publishers include McGraw-Hill, Pearson PLC, John Wiley & Sons, and Scholastic. Some of the biggest publishers are units of large media companies, including HarperCollins (NewsCorp); Random House (Bertelsmann AG of Germany); and Simon & Schuster (CBS Corp). The industry is highly concentrated: the top 50 companies hold 80 percent of the market.
Competitive Landscape
Demand for books is driven by demographics and is largely resistant to economic cycles. The profitability of individual companies depends on product development and marketing. Large publishers have an advantage in bidding for new manuscripts or authors. Small and midsized publishers can succeed if they focus on a specific subject or market. Because of the high value of the product, average annual revenue per employee is a high $300,000.
Products, Operations & Technology
Publishers produce books for general reading (adult "trade" books); text, professional, technical, children's, and reference books. Trade books account for 30 percent of the market, textbooks 25 percent, and professional books 15 percent.
About 150,000 new books are published in the US every year; however, most are low-volume products. The number of books produced by major trade publishers and university presses is closer to 40,000.
Operations include acquiring content, managing relationships with authors, editing, designing books, manufacturing, and marketing. Publishers acquire content by contracting with authors to produce new work, buying finished manuscripts offered for sale, or acquiring the rights to existing content through licensing agreements. Publishers often have contracts with authors for multi-book deals. The editorial staff usually specializes in a particular area. A large publisher may own several "imprints" (brand names such as Penguin or Viking) or branded book series such as CliffsNotes, each with its own editorial staff.
Editorial work on a book includes proofing and editing, acquiring illustrations, choosing fonts and paper, and design work such as layout and cover art. Most publishers outsource printing and book binding to commercial printers, with the cost of paper borne by the publisher. Large publishers operate their own warehouses from which they ship books as needed.
Publishers or their parent companies often produce complementary products such as magazines, TV programs, films, DVDs and videos, audiobooks, and toys.
Computer technology is essential in book publishing for creating and editing content and book design, printing, managing inventory and distribution, and creating new electronic or other products. Publishers can use the same digital sources in print, online, and for new products, such as on-demand publishing and customized books made-to-order. For example, a college can select specific chapters for its own version of a textbook.
Electronic availability of the information from traditional books has so far been successful mainly with professional and technical material, such as legal texts and subscriptions. Publishers offer this material both on the Internet and through CDs or DVDs. Industry revenue from such electronic products is about $1 billion annually.