Making Information Pay Conference Charts Changes Brought by Recession

By Jim Milliot -- Publishers Weekly, 5/8/2009 7:52:00 AM

The publishing industry, along with the rest of the economy, is being dramatically transformed by the recession, speakers at BISG’s Making Information Pay conference agreed. Trends that were already occurring--moving from a mass market marketplace to a long tail market and going from an industrial-based economy to knowledge-based are accelerating because of the recession, said Leigh Watson Healy, chief analyst at Outsell. While “flat is the new up,” has become a cliché, it is today’s headline, Healy said. Most industry members interviewed by Healy have modest goals for 2009, she said. Having their company perform at par, or better than industry averages, was one objective, while earning a 10% margin is another. Publishers would like to generate revenue of $215,000 per employee and see 13% of revenue come from new products. Price increases are expected be 5% of less over the next two years.

To cope with the uncertainty brought by recession, CEOs are using three budgets to guide their companies and are trying to remain “headcount neutral,” while at the same time dismissing poor performing employees, Healy said. Executives see growth returning in the second quarter of 2010. 

The realities and changes brought on by the recession were also reflected in a survey of 250 industry members conducted by BISG and consultant Mike Shatzkin. Among the trends identified by the survey was the decline of brick-and-mortar store’s share of the market (later in the program, Bowker’s Kelly Gallagher would say 2008 was the first time the online channel surpassed bookstore chains as the largest single sales channel). The BISG survey also found advance orders down and slipping hardcover sales. Due to the bad economy, library budget cuts are coming, which could mean a decline in sales to those institutions, the survey found.

Areas of growth include the children’s market, e-books, custom publishing, direct-to-consumer sales (mostly Web-based) and attempts by publishers to sell their content to Web sites.

 Changes on the horizon include the phasing out of print catalogues, a de-emphasis on in-person sales conferences in favor of video and web conferences, more focused lists, reduced travel and attendance at trade shows, more use of social networks and a reduction in print advertising. Sales reps will also extend their territory into non-bookstore accounts.

Top threats include free content available on the Internet as well as the proliferation of free of really cheap books sold online. The decline of review mediums, especially for libraries, is also a major concern as is the continued assault on operating margins.

 Despite all the doom and gloom, unit sales are down only 1.2% in 2009, Random House’s David Thompson said, based on BookScan data. Nielsen BookScan senior v-p Jim King noted that in the first quarter, adult nonfiction sales were down, fiction was flat and children’s up.

King, Gallagher and Thompson all gave presentations loaded with useful statistics and they will be available shortly from the BISG site.