Publishing - Publishing As A Business

Publishing As A Business

Derided in the 1911 Encyclopædia Britannica as "a purely commercial affair" that cared more about profits than about literary quality, publishing is fundamentally a business, with a need for the expenses of creating, producing, and distributing a book or other publication not to exceed the income derived from its sale. Publishing is now a major industry with the largest companies Reed Elsevier and Pearson PLC having global publishing operations.

The publisher usually controls the advertising and other marketing tasks, but may subcontract various aspects of the process to specialist publisher marketing agencies. In many companies, editing, proofreading, layout, design and other aspects of the production process are done by freelancers.

Dedicated in-house salespeople are sometimes replaced by companies who specialize in sales to bookshops, wholesalers and chain stores for a fee. This trend is accelerating as retail book chains and supermarkets have centralized their buying.

If the entire process up to the stage of printing is handled by an outside company or individuals, and then sold to the publishing company, it is known as book packaging. This is a common strategy between smaller publishers in different territorial markets where the company that first buys the intellectual property rights then sells a package to other publishers and gains an immediate return on capital invested. Indeed, the first publisher will often print sufficient copies for all markets and thereby get the maximum quantity efficiency on the print run for all.

Some businesses maximize their profit margins through vertical integration; book publishing is not one of them. Although newspaper and magazine companies still often own printing presses and binderies, book publishers rarely do. Similarly, the trade usually sells the finished products through a distributor who stores and distributes the publisher's wares for a percentage fee or sells on a sale or return basis.

The advent of the Internet has provided the electronic way of book distribution without the need of physical printing, physical delivery and storage of books. This therefore poses an interesting question that challenges publishers, distributors and retailers. The question pertains to the role and importance the publishing houses have in the overall publishing process. It is a common practice that the author, the original creator of the work, signs the contract awarding him or her only around 10% of the proceeds of the book. Such contract leaves 90% of the book proceeds to the publishing houses and distribution companies. However, within the electronic book path the publishing house role is reduced to the proofreading. This raises the question of how reasonable is the practice that leaves them much higher percentage of proceeds then to the authors.

In 2005, Amazon.com announced its purchase of Booksurge and selfsanepublishing, a major print on demand operation. This is probably intended as a preliminary move towards establishing an Amazon imprint. One of the largest bookseller chains, Barnes & Noble, already runs its own successful imprint with both new titles and classics — hardback editions of out-of-print former best sellers. Similarly, Ingram Industries, parent company of Ingram Book Group (a leading US book wholesaler), now includes its own print-on-demand division called Lightning Source. Among publishers, Simon & Schuster recently announced that it will start selling its backlist titles directly to consumers through its website.

Book clubs are almost entirely direct-to-retail, and niche publishers pursue a mixed strategy to sell through all available outlets — their output is insignificant to the major booksellers, so lost revenue poses no threat to the traditional symbiotic relationships between the four activities of printing, publishing, distribution and retail.