Economics of publishing

'Publishing is a paradoxical business', remarked the author of the New Zealand Institute of Economic Research's report on the printing and publishing industry, H.M. Oliver, in 1976. Publishers saw themselves as a profession rather than merely a business enterprise, she noted, and the principal criterion of success might not necessarily be profitability. However there is no doubt that at a time of skyrocketing paper prices and other costs Stanley Unwin's apophthegm—that a publisher's first duty is to remain solvent—was foremost in their minds. The average salary of someone working in publishing was something like $3,000, Oliver remarked; the desirable print run for general books was probably close to 5,000 copies. The average output of established publishing houses was between 10 and 50 titles per annum, but four publishers of the 18 surveyed produced 600 titles between them, Reeds accounting for about half of these. Publishers expected to make a profit on the sale of the final 25% of an edition—an optimistic estimate compared with Ray Richards's in 1973, when he said that only the last 15% of the run would provide any return on the publisher's investment.

Ten years later, according to the New Zealand Official Yearbook, the average print run of a general book was much the same, having peaked somewhere in the early 1980s, and was declining. Three hundred publishers were now thought to be active, but only about 100 were specialist book importers or publishers. By 1995 the average print run was down to 3,000 copies and by 1996 it was thought to be approaching 2,000. The Yearbook repeated the same statistics for the number of active publishers, although First Edition in 1995 noted a Statistics Department return of 165 (but was able to identify only 64 by name).

These snapshots of some of the data relating to economic factors in publishing are notable for how much remains outside the frame. The Yearbook noted in 1990 that 'no thorough studies have been conducted of the book industry' and collected most of its information from the BPANZ. Official statistics on book production are buried in the Census of Manufacturing in conflated returns for Printing and Publishing. Apart from figures collected by the BPANZ and its predecessors and other professional bodies and published in trade newsletters, there is a lack of available data. BPANZ representations to the Statistics Department over a period of years for more meaningful categorisation of returns appear to have been unavailing. The book trade itself has generally been too busy to spend much time computing or compiling the figures of interest to the student of the economics of New Zealand publishing. Nevertheless publishers in unguarded moments have occasionally let slip useful and revealing details.

Ray Richards's frank analysis of the New Zealand publishing situation in 1973 ('The man in the middle', 1974) identifies many of the issues central to a study of the New Zealand publishing industry in the era before the advent of the multinational enterprises had really made itself felt. He identifies a number of causes of publishing failure, not neglecting the crucial luck factor, sometimes called Publisher's Flair (or Nose). In the 'small-market, restricted-interest situation' that is the New Zealand book world, he stresses the importance of a strong backlist, and notes the inflation of the economic edition of a book from 1,000 copies in the 1930s to 4,000 in the 1970s. Summaries of statistics from 13 BPANZ members are appended. Any similar picture for later years must be pieced together from fragmentary sources.

Publishing in New Zealand has sprung from a variety of structures. In earlier years family firms predominated, although they might go elsewhere for additional capital to facilitate expansion. Reeds, for instance, expanded by offering shares to a limited number of directors, staff, booksellers and authors in 1961. Sources of capital for firms may be private investors, a parent institution, a parent company or business group. In recent years the ownership of companies may have changed several times, through takeovers and mergers. The desire of a business conglomerate to divest itself of units not considered to be part of its 'core business' is a current trend which has already had some repercussions in New Zealand. Company structure will depend largely on its funding base and type.

Information on book sales analysis, the relative turnover of titles from a publisher's backlist and frontlist, comparative sales of overseas and New Zealand titles, overseas sales of books and rights, trade and specialist sales, and analyses of market segments are to be found in publishers' files. Overall statistics for the trade appear intermittently in a variety of sources. Some of these are identified in the section on book buying in Chapter 4 of this guide. W.B. Sutch contributed 'An economic survey' to R.A. McKay's History of Printing in New Zealand (1940), and Alan Mulgan expressed his opinions in his 1946 survey. The only comprehensive census of book publishers, distributors and sellers was conducted in 1987. Some of its results are summarised in the Official Yearbook for 1990.

A Unesco survey from 1982, An International Survey of Book Production During the Last Decades, records New Zealand book production statistics from 1949 to 1978, during which period New Zealand's annual book production rose from 277 to 2,079 titles. It appears to be unique as a comparative study. Oliver (1976) includes BPANZ statistics for 1970-74. Average edition size in 1973-74 was 7,430 copies, but no analysis enables this to be broken down into educational and other titles, backlist or new publications. Publishers' cost structures are, however, discussed, a rarer event. Trends in the demand for skilled labour were examined by the Labour Department in a brief survey, Printing and Publishing Industry, in 1984. Examination of Journalists' Union and Editors' Union awards and activities would make an interesting study. First Edition (1995) contains a section on book trade statistics which includes a publisher's cost breakdown (sourced to the Book Trade Conference), and a book costing—the formula by which a publisher checks the economic feasibility of issuing a title at a planned retail price (the example given would not see publication).

The economic history of individual firms may be found in their records. Studies of individual companies (see the section following) provide some financial data but are unlikely to include balance sheets. In the case of active businesses, information on costing, discount structures, profit margins and financial management remains commercially sensitive and is likely to be kept confidential.