The publishing industry is currently facing a troubling period of disruption.
Publishers poured the champagne and toasted “Summer,” a children’s book which represents the first US release by a long partnership between MacMillan and China’s 21st Century Publishing Group, on the floor of the Jacob Javits Convention Center in New York last week.
It is a parable of co-operation which book publishers hope will also apply to the future of the US-China relationship more generally.
The immediate concern is President Donald Trump’s threatened 25% tariff on some $300 billion worth of Chinese goods, including those from the country’s printing facilities. For years, US publishers have relied on China for low-cost, high-capacity printing of four-color books, coffee table editions, Bibles, and other standards of the trade and education market.
The new tariff would almost surely result in higher prices, with publishers saying a hike of 50 cents or more is possible for a given book. For years, western publishers have relied on China for low-cost and high-capacity printing, but a 25% tariff on books could change that.
No firm deadline has been set for when the proposed tariffs could go into effect. Industries facing tariffs have a chance to ask for exemptions, but Simpson says that publishers may have a hard time standing out.
Threats to an industry
The publishing industry is currently facing a troubling period of disruption. Barnes & Noble, the country’s largest physical book retailer, has been struggling for years and is considering a sale of the company.
One of the largest distributors, Baker & Taylor, is ending its retail business, forcing some stores to find new ways to keep books in stock. And publishers again face a potential shortage of printing capacity that resulted in two future Pulitzer Prize winners, David Blight’s biography “Frederick Douglass” and Richard Powers’ novel “The Overstory,” being among numerous releases unavailable for extended stretches late last year.
Over the past five years, the book publishing industry as a whole has stagnated, with revenue declining marginally. Additionally, industry profit, measured as earnings before interest and taxes, is expected to decline over the five years. Although education and scholarly markets have achieved healthy growth, it has been largely offset by losses in the trade market.
This has been true particularly in the industry’s e-book segment, where sales have faltered in recent years after initially surging as the technology entered the mainstream. Over the five years to 2019, industry revenue is expected to stagnate by $29.2 billion, despite a projected sales growth of 0.4% over 2019 alone.
At the same time, the number of bookselling businesses has declined by -1.3% and the number of employees has declined by -1.5%.
The good news, if any, is that books are a discretionary household expenditure–therefore, a change in total household expenditure can influence spending. When per capita disposable income increases, individuals are more likely to purchase books to read in their leisure time or use them as an informational resource. Per capita disposable income is expected to increase in 2019, representing a potential opportunity for the industry.