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Trends in Children's Books:
The Business Side of the 1990's
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This archived article covers trends and events in children's publishing in the 1990's. Much of the information is still valid, or provides useful background to today's trends, but do keep this in mind. Read on in this introduction for places to go for more recent information.
It can be difficult to keep up with events and trends in the business side of children's books. Once a genteel industry dedicated to providing good books for libraries, children's books are now big business, expected to contribute significantly to the bottom line of media conglomerates. Here I comment on the business in general, gather gleanings from news in Publishers Weekly and my contacts, and add a list of recommended reading in PW and other sources. I cover a variety of topics, so skip down to what interests you.
Related article: Working in Children's Books and the Recession of 2008-2009. This is my latest take on the business.
For current information on the children's book business, the Children's Book Council, Association of American Publishers, and Publishers Weekly are good sources. Also see below in the Recommended Reading notes.
Quick TOC:
Overview
Sales in the '90's: Down and Up Again
The Paperback Boom
Downsizing, Mergers, and Profits
Brand Names
Bookstores
New Media
Mini-Trends, Minor Speculations, Observations, and Editorials
Reading
Overview:
Following the children's publishing industry is difficult. Many publishers, from conglomerates to small presses, produce thousands of books, varying widely in quality and price, for many different markets, from libraries, schools, and bookstores to price clubs, warehouses, and supermarkets. [For a primer on the different markets, read my WWW article Trade vs. Mass Market vs. School 'n Library.] As a result, discerning what is actually changing can be difficult; what appears to be a change may just be turnover in one sector. I try to look at the industry as a whole, but the point of view is my own, and therefore limited. How is the industry doing? What parts are growing? What parts are shrinking? What trends may affect it in the future? How can one best interpret the news? I don't have all, or even many, of the answers. I hope you'll take these comments as a beginning, and move on to learn more.
Sales in the '90's:
Down and Up (?) Again:Publishers must sell books, in one way or the others. So the trends in sales
have a big impact on what happens in the publishing industry in general. Children's
publishers are affected too. Over the last
fifteen years, children's books have boomed, gone bust, and climbed
out of that trough. The late '80's and early '90's were the boom years. Several years of decline,
which influenced much of the consolidation and cutbacks of that time and later,
have been followed by slow recovery.Today, thanks in part of Harry Potter, and increased concern nationally about
the need for better library and school funding, the children's book industry
is doing well. Does it look the same as it did fifteen years ago? No. Paperbacks
take up a larger share of sales, and licensed books are more common. For more
on those and other subjects, read on. If you want more details on the sale
trends, read Sales in the 90's: The Details.
The Paperback Boom:
From 1985-1999, combining actual numbers and projections, a BISG study a few years ago predicted that sales of paperbacks would increase more than seven-fold while sales of hardcovers would "only" triple, meaning that the share of sales going to paperbacks would go up from just over 25% to over 40%. One can quibble with these numbers,but the overall trend is apparent--it's unlikely that hardcovers will ever regain their previous share of the market. After all, even libraries, once a highly reliable market for hardcovers, have started to make some of their purchases in paperback form.
In an important underlying development, nearly every hardcover publisher now has its own paperback imprint, a big change from the situation thirty or even twenty years ago. This should not be seen as entirely a bad thing. Part of the growth in paperback sales comes from quality paperback versions of picture books, now widely available, but almost unknown 20 years ago. Also, since many of these imprints publish reprints of previously published books, a hardcover is published first, so some of these paperback sales support hardcovers, and also make more books available in a format that more families can afford. Paperbacks can do other things to support a hardcover line. Late in 1996, before the Newberys were announced, paperback rights to one of the contenders were sold to Hyperion after a lively auction for $250,000. This sale helped the original publisher's bottom line considerably. Even when a paperback is published by another division of the originating publishers, it will reach a much wider audience than the hardcover did; companies now look at expected hardcover and paperback sales when making an acquisition.
Downsizing, Mergers, and Profits:
Starting in 1993, downsizing hit publishing. Layoffs, mergers, and consolidations were widespread in publishing in general, and in children's books in particular, at just about every major publisher and many of the small ones. These kinds of changes continue today. What's been the effect? They created anxiety among people in the industry, and an over-supply of authors seeking fewer spaces in smaller lists, but publishers themselves have not done badly. No major publishers went bankrupt (though imprints and some smaller publishers closed) or experienced significant losses. Golden Books seems to be the only exception to this rosy picture, and thereby proves the rule: Golden had serious difficulties for reasons other than the situation in the market (see below). These companies did well largely through savings in marketing costs and general and administrative costs, created mostly by laying people off. Publishing companies, like businesses in other areas, did so to hold costs down, not necessarily because they were in extreme financial difficulties, and this may point to a shift in publishing like that seen in other industries--fewer permanent staff, and greater use of consultants, packagers, temps, and computers.
What about recent financial results? The top six children's publishers, with the exception of Golden Books, averaged better than 10% increases in sales for Fiscal Year 1998, as reported in September 1999 (these are Random House, Penguin Putnam, Golden, Simon and Schuster, HarperCollins (now including William Morrow), Scholastic (and Grolier)). Downsizing and consolidation have been good for them. Where are we going? Will there be more restructuring? The pace of actual downsizing seems to have slowed, if only because every publisher has already done it at least once. Instead, I expect there may be more of the kind of consolidation created by recent buyouts and mergers: the purchase of the William Morrow imprints by HarperCollins; the merger of Putnam and Penguin; or, in two more recent examples, the acquisition of Dorling Kindersey by Penguin/Putnam and of Grolier by Scholastic. These buyouts do lead to cutbacks. The Penguin/Putnam merger led to the closure of Lodestar and Cobblehill, two respected imprints. Management publicly stated that both were too oriented to the "limited" library market. Why do companies buy other companies and then close part of their operations? Buying an established company is not just done for books under contract, scheduled for the future. All established companies have a "backlist" of proven titles with predictable sales. This was a crucial factor in Simon and Schuster's purchase of Macmillan several years ago. S&S's children's division had not been profitable, and Macmillan's deep backlist was one way for them to make it so, even though they closed half of Macmillan's imprints within two years. So, I expect the big companies to get bigger, but I expect small publishers--such as Front Street Books, Winslow Press, and others--to spring up and grow too. Improvements in the technology used to produce books printed in color, in particular, allow small publishers to compete on a more level field than was possible thirty years ago.
Brand Names:
One result or symptom (it's not clear which) of the increased focus on the bottom line is a decrease in exciting, risk-taking publishing. Publishers instead look for the safe bets. And rather than rely on reviews to help sell a book, still the way it works for books aimed at libraries, publishers support books through their marketing. Individual books can be helped by promotional campaigns, but the byword of the 90's is "brand"--a name that is known and respected and therefore likely to help sell a book and its associated merchandise too. Brand names may derive from a book or author, or be brought into the book from the outside. Do not be quick to exclaim in horror at this phenomenon! Licensing of this kind is not an entirely new phenomenon; Lewis Carroll licensed such products as a Through the Looking Glass biscuit tin.
There are a number of ways to create a children's book brand name:
- Dr. Seuss became a brand name because his books were so consistently good and easily recognizable. Arthur has become a brand name after the success of the TV series based on the book. The Little House on the Prairie has recently and quite deliberately been developed into a brand by HarperCollins. Celebrities from Shaquille O'Neal to Mary Chapin Carpenter may write or lend their name to children's books.
- Houghton Mifflin has commissioned writers and illustrators to create new Curious George books, to extend another "classic" brand name.
Publishers may also license a brand from another company. Licensing characters and the right to create books tied in to a movie or TV series has long been a way to associate a book with an already familiar brand name. More recently, companies have looked outside of the traditional media. One early and successful example of this was The M&M's® Counting Book. More recently I've seen Animal Crackers books, Cheerios books, Lionel trains books, and other books tied into popular consumer products and toys. TV or movie brand names fit into a wider strategy for moving into the consumer market, replacing sales in the weaker library sector. As one example, look at changes at Simon and Schuster over the past several years. They have closed library imprints such as Crestwood House, and even some trade imprints. At the same time, they have opened or expanded imprints dedicated to mass-market and brand-name publishing, partly by capitalizing on the "synergy" of Viacom, their corporate parent. Viacom also owns Nickelodeon, and S&S has successfully published a large number of Nickelodeon-derived books. I am not criticizing S&S for doing this; several other publishers follow this strategy, driven by the changing market, high profit expectations by corporate owners, and the desire to reduce risk. Some other examples: Scholastic is publishing a line of "Teletubbies" tie-ins, and is getting a "first look" at Warner Brothers' TV, movie, and Cartoon Network properties; Penguin Putnam has an agreement with DreamWorks to publish tie-ins to upcoming feature-length animated films; HarperCollins created the HarperActive imprint and has plans to publish Fox TV properties (Both Fox and HC are part of Rupert Murdoch's News Corp.). Hardcover publishers continue to seek the award-winning books, but they have great interest in the reliable income that a brand name can bring, even if only for a few years. With popular characters licensed "out" (such as Jesse Bear to a line of sheets) and "in" (such as Nickelodeon characters to a line of books), expect brand names to increase in importance in the market, and to blur further the line between trade and mass market publishing. For more on this subject, see "Little House on the Bottom Line" in the Nov./Dec. 1998 The Horn Book Magazine. Publishers Weekly also covers brand-name publishing in more depth than I can; recent issues with good articles include June 5, May 1, and February 28, 2000; December 6, October 25, May 17, and February 22, 1999.
The Bookstores:
In the '80's and '90's, bookstores became an increasingly important market for hardcover children's publishers, as cuts in library funding reduced the size of that formerly traditional and dependable market.
After strong growth in children's and general independent bookstores in the 80's, the weaker economy and the aggressive expansion of the chains caused many of these independent stores to close, making the children's market more like that of adult books, with more competition, more advertising and promotion, and a greater dependence on "names" and established series. This requires quite an adjustment on the part of publishers. There is more immediate money to be made from selling 50,000 copies of a hot picture book than from a book that "backlists well" (in other words, a book that sells a few thousand copies year after year, mainly to libraries). But there are dangers too, as seen in the increasing numbers of unsold books returned to publishers (books are a strange business, as publishers in effect send them out "on consignment"). As a result of this shift in the bookstore market, shelf space in bookstores has doubled recently, while book sales have gone up only slightly, a development that contributes to painfully high rates of returns from bookstores. And publishers see one or two or three titles in a season sell very strongly, while others almost disappear, passed up by buyers for the stores. The importance of bookstores, and chain bookstores in particular, continues to grow, though they in turn face competition from price clubs and other alternative outlets. Bookclubs, notably those of Troll and Scholastic, are also a growing part of the market, accounting for almost 20% of the children's market, larger than the chains and independents combined. In spite of such threats, Barnes & Noble and Borders continue to expand. Sales at the four biggest chains are increasing, and now make up about half of all bookstore sales, in a stagnant market. This growth may have occurred partly because their size gives them the clout to get special deals. Independent booksellers won a consent decree in a recent suit charging preferential terms for the chains, and continue to pursue litigation in this area, both collectively (through the American Booksellers Association) and individually. In 1998, online bookselling firmly established itself as an alternative to traditional bookstores, whether independent or chain. Indeed, Amazon.com's sales quickly made it the third-largest bookseller in the country, behind Borders and Barnes & Noble. However, Amazon grew so fast by spending millions on advertising and by offering heavy discounts, and it continues to lose millions of dollars annually. Look at the larger context: Total online book sales amounted to only 3% of total book sales in 1998. This market will continue to grow, of course, and if online bookselling does become a permanent part of the bookselling landscape, its impact will likely be mixed. Consumers can find information (reviews, reader's comments, etc.) on a much larger number of titles than they could find in the largest superstore, even if they can not examine the actual book. Could this provide opportunities for small and nontraditional publishers? Maybe, but Amazon, like "real" bookstores, charges for prominent placement in its areas of recommended books. If you know what you want, you can find it, but casual browsers are likely to be steered to titles supported by marketing money. Many of the resulting sales will come at the expense of independent booksellers. So after recent reports of troubles for specialty booksellers, who had been able to weather the chains, I'll venture a prediction: online bookselling will put more independent bookstores out of business by 2004 than the chains did from 1994-1999. Meanwhile, independent booksellers and the American Booksellers Association are exploring online alternatives of their own, and now have their BookSense.com service online. Independent booksellers can put their own "front end" on a database and book information like that produced by Amazon.
New Media:
Throughout children's publishing, people get excited about the "new media"--the new electronic ways to publish or present material, from CD-ROMs to e-books. Publishers see amazing opportunities or terrifying threats. Authors and illustrators fear exploitation. The pundits have a field day, and no week goes by without the announcement of a new alliance, format, or e-commerce web site. To date, none of the wilder predictions have come close to coming true. Several years ago, CD-ROMs seemed to be a real threat to traditional books, even to illustrated books. At first, many companies invested in CD-ROM publishing, only to discover how difficult it is to make money in this area. Today, reference is the only area of publishing that has been significantly affected. This shouldn't be a surprise. A CD-ROM is for many people an improvement over a multi-volume encyclopedia set; but the liveliest CD-ROM story "book" doesn't have the cuddle factor of a picture book shared at bedtime. Toy companies like Mattel are now the big investors in the CD-ROM area, which seems likely to become more of an entertainment medium. Electronic books come in two flavors. Some can be read only online. Others are in electronic formats suitable for personal computers or special viewers. Though a few name-brand authors have been published in this way, it will likely take several years before significant numbers of books are sold in this way. In 2000, everyone rushed into this area. Big companies have made announcements of big plans, and larger numbers of current books could be online by the end of the year. E-book viewers may have an impact fairly soon--in the textbook market. I've heard about four different models, ranging in price from $200 to $1500. Readers then pay for books either by subscription or on a per-title basis. Though more convenient than a personal computer, few people are likely to buy these instead of a computer. Their market will instead be limited to people who can buy both an e-book reader and a PC--or to school districts interested in them as replacements for textbooks. And once a good number are in use, can the YA novels for them be far behind? On-demand publishing, in which single titles of books are printed when needed, also seems to me to have a natural niche. Academic and specialty publishers can use it to sell copies of their books in bookstores that can't otherwise carry them. This technology could also enable publishers to keep a novel or B&W nonfiction title technically "in print" indefinitely, even if not widely available. This development is sparking negotiations over out-of-print clauses between publishers and authors/illustrators/agents--a good article in the June 14, 1999 Publishers Weekly provides more information. See also "Brave E World?" in the December 20, 1999 PW. Developments will come thick and fast in the coming years. Children's books will be seen in all these formats, but not as soon as adult books are, and picture books will be unaffected for even longer.
Here are some sites that are active participants in this area:
Mini-Trends, Minor Speculations, Observations, and Editorials:
- Golden Books Family Entertainment emerged from Chapter 11 bankruptcy in early 2000, a considerably smaller and less powerful company than it had been five years earlier. Golden was brought down by what now looks like an overly ambitious attempt to change direction: Dick Snyder brought in a whole new management cadre, and tried to change it from a children's mass market publisher to a much more diverse publishing company, with books for adults, multimedia, and a children's trade division headed by Margery Cuyler. But after massive reorganizing, Golden lost $49 million in 1998, more than it had in 1997, and key staff began to depart. The bankruptcy led to further cutbacks and the sale of their adult division. Meanwhile, Landoll's, another mass market company, has expanded into the void created by the shrinkage at Golden. Gender issues: Nine out of the ten illustrators selected for the New York Times "Best Illustrated Children's Books of the Year" in 1998 were male. Coincidence? Perhaps not. While the majority of authors and illustrators of children's books are women, male illustrators win the majority of the illustration awards. The British Are Coming! And So Are the Canadians: Until recently, many British and Canadian publishers sold American rights to individual books to American publishers. In the past few years an increasing number of them have started American subsidiaries or have signed agreements for the distribution of their entire publishing program. Candlewick (the US branch of UK's Walker Books) and DK (subsidiary of Dorling Kindersley, originally a packager, then a multinational corporation, now a part of Penguin/Putnam) led this trend several years ago. Now Barefoot Books, Zero to Ten, Kingfisher, Somerville Press, Kids Can Press, and others are heading south or across the Atlantic. Why? Downsizing, which has reduced the amount of buying by American publishers, is an important reason.
- Board books: An increasing number of board books are no longer originals, aimed at the very young, but republications of picture books in a different format. Publishers get good name recognition and parents get more durable editions. "True" board books, however, are being squeezed off the shelves. See "Board Book Editions Approach Saturation" in the May 11, 1998, PW.
Recommended Reading:
Leonard Marcus' Minders of Make-Believe, a comprehensive and engrossing history of American children's publishing.
For a good overview of the situation in publishing in the late '90's, though not all of it applies to children's books, see The Nation's special issue, "The Crushing Power of Big Publishing" (March 17, 1997.) Or read "The Impossible Business" in the New Yorker of October 7, 1997, an article that gets some of the numbers wrong but gives the reader a firm grasp of the big picture. At the Yahoo: Publishing/Information Services Company News page you can find a daily list of press releases.
When I updated this article, I "froze" the previous version, which was last updated in April 1998, and am making it available for those who might want to read about what is now history....
Publishers Weekly has many articles about children's publishing online at the PW WWW site. In the print version, just about every weekly issue has information of interest. These print issues of Publishers Weekly are particularly worth tracking down:
- The spring and fall Children's Book Announcement Issues, usually available in February and July. Complete lists of new books from many publishers. Looking ahead: "Eleven for the Millennium" in the January 3, 2000 issue, and "The Next Chapter" in the February 14 issue. "Outlook '99": Several interesting articles on the publishing business in this special section published January 4, 1999. The "Red and the Black," an annual report on sales trends and the past year's bestsellers, usually in the late spring.
- July 1997: The Special Anniversary Issue includes a history of children's book publishing by noted critic Leonard Marcus.
Comments and suggestions very much appreciated.
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