Exchange Rate Volatility Makes for a Challenging Bologna Fair
By Diane Roback -- Publishers Weekly, 4/1/2008 5:58:00 AM
With the euro close to an alltime high against the U.S. dollar, the exchange rate was a key topic of concern at the 45th annual Bologna Children’s Book Fair. Sticker shock was everywhere: hotel rates, the prices of meals, the costs of goods in stores. As FSG editor Wes Adams observed, “I just bought a $4 pack of gum. That’s about a quarter a chew.”
The Bologna Fair opened its doors on Monday, flags flying.
Photo: Graham Marks.
At the fair, from the American point of view, it was great to be selling, not so easy to be buying. "To buy a picture book, it would have to be irresistible," said Holiday House's Julie Amper. "Our stuff is cheap to everyone else," said Orange Avenue publisher Hallie Warshaw. "The Europeans are very happy that our dollar is weak." Handprint Books’ Christopher Franceschelli said, "For selling books, I say ‘Thank you, George Bush’ every day. But I would not want to be a European rights director selling to the U.S. right now.”
Linda Summers, associate publisher (rights) at Random House U.K, reported that the most difficult area is on the novelty end, “where your margins are lower anyway, and prices are higher. If we’re publishing a novelty book at £12.99, that’s $26, but everyone [in the U.S.] wants to keep it at $19.99. It’s very tough.”
Summers said she still can sell a picture book into the U.S., if it’s something truly special. “But everyone’s market is decreasing, so the quantities are lower, the publisher’s price remains the same, and the exchange rate is challenging.”
For U.S. publishers it’s a double whammy these days, with the dollar weak against both the pound and the euro. “It makes us feel like the poor cousins,” said Adams at FSG. It’s especially an issue when it comes time to reprint, he added. “We’re trying to reprint and the numbers aren’t really working. On the fiction side, there’s not much room to maneuver, which makes it more of a risk. But it doesn’t seem fair to penalize the Brits for our troubles.”
Warshaw at Orange Avenue is "very seriously considering" opening an account in euros, to be able to do business in Europe and not be dependent on the exchange rate. "At the moment the euro's a more stable currency," she said.
Jack Jensen, president and publisher of Chronicle Books, said his company sent out an e-mail to its appointments ahead of time, asking them to please not give quotes in euros. “Even currency fluctuation clauses don’t work these days,” he said. “People understand that to do a co-edition they’ll have to go to Asia and get quotes in dollars.”
Costs are rising in Asia, where many picture books are now printed. "Our printing bills have started to go up," said Peachtree's Margaret Quinlin, "as paper costs in Asia are going up. It's especially tough on the paper brokers, because if the costs go up they get hit with it." Franceschelli added, "The Asian printers have completely lost faith in the U.S. dollar. It’s causing huge problems in buying production, though fiction being the flavor of the month helps, because it’s intellectual-property dependent, not production dependent."
The rising costs in China are also affecting the business. In addition to the rising cost of paper, Clair Frederick, president of MerryMakers, cited the increase in the yuan, which no longer has a fixed exchange rate. “The Chinese government had a tight grip on it so it wouldn’t fluctuate," she said, "but now we’re seeing prices going way up. So our prices are going to have to go up. We’ll keep it to a minimum but we’re seeing a shift. That’s the world in the 21st century.”
As Alexandra Devlin of rightspeople in London put it, "Things are tougher but people still need to publish. [The currency situation] isn't stopping them from doing business, but it is stopping them from getting over-enthusiastic."
