It can be difficult to keep up with what is going on 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, and include gleanings from news in Publishers Weekly and my contacts, along with a list of relevant issues of PW to request at your local library. Read The Horn Book, and Booklist, and all the other good review sources, but for industry news, look to PW.
Trends in Children's Books:
The Business Side (Archived Version)
The Big Sales Swoon
The Paperback Boom
Downsizing and Profits
What does the future hold? A few years ago, a major study done by the Book Industry Study Group (BISG) predicted that after the sales declines and downsizing of the early 90's, U.S. sales of children’s hardcover books would recover, and almost reach the level they were at in 1992 ($871.9 million) by 1999 ($856.4). This projection is encouraging, and may turn out to be accurate, but doesn't mean that the hardcover market will actually be as strong as it was in 1992. After all, inflation will be one reason why sales will increase. Also, the relative share taken up by paperback sales will continue to grow (see below). It's interesting to put together those projections with historical sales figures from The Bowker Annual and make this table, with figures for 1995 and beyond being projections:
In 1998, events are overtaking these projections. Sales for 1997 seem to indicate hardcovers up slightly from 1996, but paperbacks down substantially. Actual Association of American Publishers figures for 1996 showed sales of children's hardcover books were up 10.4% over 1995; paperbacks were up 20.1%. (I haven't inserted the actual figures into the table because the AAP and BISG use different methodologies and so the raw numbers don't compare.) So we see swings from year to year, rather than the predicted steady growth.
Just how accurate are these numbers, anyway? We don't really know. But the AAP numbers don't include sales from non-AAP members, and not all the members bother to report, so they could be missing out on growth among the smaller publishers, which is where growth seems to be happening. Perhaps the situation is not as grim as it seems.
The Paperback Boom:
Figures from 1997 show that the growth in paperback sales has weakened. The widely-reported Goosebumps decline is a part of that, but certainly not a disaster. Scholastic has sold over 125 million copies to date, and intends to stick with and revamp the series. So if Scholastic is not doing as well as they had expected with this line, this is only by comparison with its own spectacular sales history. In spite of softer paperback sales, I see little sign that publishers are pulling back from this area. Just about every hardcover publisher now has its own paperback line. This should not be seen as entirely a bad thing. Many of these lines publish reprints of previously published books, and to do a reprint you must first publish a hardcover, 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 will help the original publisher's bottom line considerably, and more sales like it can be expected. With several major publishers jockeying for position in the paperback market, high-status titles will be much in demand not only to enhance a publisher's prestige but to help get its line into the stores.
Downsizing and Profits:
Coming out of the trough, Fiscal Year 1995 (which for most companies ended in mid-1996) showed healthy growth at several companies. Scholastic, Disney, Candlewick, and Dorling Kindersley were the fastest growing; it is probably not a coincidence that these are all companies that are aggressively pursuing the consumer market. Other companies with more of a reliance on backlist and sales to libraries, such as Houghton Mifflin, BDD, and HarperCollins, saw no sales growth, but at least did not see a decline.
Even Fiscal 1996, reported on in a November 3, 1997 report in PW on sales by the largest children's publishers, may not have been as bad as it seemed. Sales for the largest 15 publishers were down 7.9% for 1996. But wait. If you exclude Golden, in the middle of a restructuring that involves mulit-million dollar write-offs, and Scholastic, seeing a drop-off in Goosebumps sales, sales were up for the year.
Where is all this heading? Will there be more restructuring? The re-christened Golden Books Family Entertainment is getting investments from companies like Hallmark Cards and expects to be profitable again soon. Meanwhile, Landoll, another mass market company, has expanded into the void created by the shrinkage at Golden. The pace of downsizing seems to have slowed, if only because every publisher has already done it at least once. Expect instead the kind of consolidation created by the recent merger of Putnam and Penguin, which led to the closure of Lodestar and Cobblehill, two respected imprints--but as management publicly stated, too oriented to the "limited" library market. Expect the big companies to get bigger, but expect small publishers to spring up and grow too.
As Richard Snyder said about Golden Books Family Entertainment, as quoted in the May 13, 1996 PW:
"Our challenge in the years ahead will be to grow the company by unlocking the extraordinary value of this unique brand."This is a somewhat unusual use of the term, for he sees his brand name as the name of the company. More usually, the name of a successful series or author is seen as a brand name; Dr. Seuss could be seen as an early brand name in children's books, and today Goosebumps is a particularly powerful brand. So powerful, in fact, that it has been used to cross-promote other brand names outside the children's book field. Goosebumps toys were given away at Taco Bell, and three mini-books were packaged in 32 million bags of Frito-Lay products. There's even a Goosebumps Horrorland at the Disney-MGM Studios in Orlando, and about 100 other Goosebumps licences. Licensed characters can also be used as a brand, as when Disney characters appear in mass market books. And though hardcover publishers still seek the award-winning books, they have great interest in the reliable income that a brand name can bring, at least for a few years. The characters Stellaluna and Jesse Bear, which first appeared in hardcover books, have become brand names of this type. Further blurring of the boundary between mass market and hardcover trade books seems likely.
The importance of bookstores, and chain bookstores in particular, seems likely to grow, though they in turn face competition from price clubs and other alternative outlets. In spite of such threats, Barnes and Noble and Borders have aggressive expansion plans; recently, a Borders executive predicted that 1000 to 1500 superstores could be opened nationally before the market becomes saturated (and so they plan to open more). Sales at the four biggest chains are increasing, and now make up half of all bookstore sales, in a stagnant market. In other words, the chains are not creating the new market they claim that they are, but are competing for business with existing stores. Those independents who respond aggressively and creatively to new chain stores near them seem to be able to survive, but market pressures still seem likely to push booksellers towards "safe" books, and they in turn will push publishers.
For a good overview of the situation in publishing today, with much that 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 has a firm grasp of the big picture.
These issues of Publishers Weekly have particularly interesting articles.