Canadian Publishing Industry - Essay Example

Research Paper: Publishing Industry/ Books Research Paper: Publishing Industry/ Books 0 Explain critical features/ factors for the industry 1 Size Despite the pressures against many industries in the global market, the publishing industry shows signs of continuous growth. Moreover, it has been proved that the enhancement of the sector’s performance is mostly related to the increase of sales of ebooks; by 2017 ‘the sales of ebooks are expected to reach the $8.2 billion’ (Owen 2013, par.1). print electronic ebooks Figure 1 – Book publishing revenues/ ebooks market share from 2008 to 2017 (source: PWC, http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/consumer-and-educational-book-publishing.jhtml) In any case, the growth of ebooks is significantly higher, compared to print books, a trend which is expected to be continued at least up to 2017, as indicated in the graph in Figure 1 above. Another important characteristic of the industry’s size is the following: publishing industry is not equally developed in all countries. USA and China have the leading positions in publishing industry at international level (Figure 2). In USA the value of the publishing industry is estimated at $31,000m, while in China the figure is lower, approximately at $10,602m (Figure 2). In regard to the industry’s performance as per object involved, ‘scientific/ technical books are at top, followed by educational books’ (PW 2013, par.2); trade books are at the third place of the relevant hierarchy (PW 2013). Figure 2 – Publishing industry worldwide (source: Nawotka 2012) In the future the size of the book publishing industry is expected to be influenced by five, important, trends; these trends had been intensive during 2013 and are expected to be highly involved in the industry’s performance in the future: a) consolidation, as a strategy, will be further expanded across the industry’s firms; the consolidation of two of the industry’s key players, ‘Penguin and Random House in October of 2013’ (Lossius 2013, par. 4) is an indication of this trend; b) Amazon will be further improve its position in the global publishing industry, c) applications related to the industry will be based mostly online and not on devices, d) alternative approaches for reaching customers online will be developed as social media seem unable to respond to the industry’s needs and e) checking the potentials of new markets to support the industry’s growth would be absolutely necessary (Lossius 2013). 1.2 Concentration In publishing industry, as also in other industries, concentration is a critical issue. However, in the particular industry the specific phenomenon seems to be controlled. In 2012, the profit of ‘the industry’s top ten firms was just 55%; in 2011, the relevant figure was 57%’ (PW 2013, par.1); in other words, a decline of the power of the industry’s leaders has appeared in 2012, compared to 2011. Figure 3 – The six leading groups in the publishing industry (source: Scholarly Communication 2012) On the other hand, mergers have become quite popular, as a strategy, among the firms of the book publishing industry; from 2005 onwards the continuous mergers in the book publishing industry have led to the formulation of six, quite powerful, groups (Figure 3). In Canada, the book publishing industry seems to face a problem of concentration. This view is based on the following fact: even if there are approximately 1500 book publishing companies across Canada, only 300 companies share the 95% of the industry’s profits (Canadian Heritage 2010). 1.3 Growth In 2012 the global book publishing industry achieved a growth of 7.2%, compared to 2011 (Sporkin 2013). By 2017, the industry’s sales are expected ‘to reach the $348 billion’ (Research & Markets 2012, par.1). Still, the growth of the book publishing industry is not equal in regard to the industry’s various sectors. In fact, ebooks seem to have the highest level of growth while hard cover books are at the second position. The growth of the industry’s sectors is presented in Figure 4 below. Through the relevant graph the superiority of ebooks, as of their rate of growth, compared to all other sectors of the book publishing industry is clear. Figure 4 – Growth of the book publishing industry from 2008 to 2012/ per sector (source: Hughes 2013) The largest growth of ebooks sector was reported in the period between 2008 and 2011, when’ the share of ebooks reached the 17%, compared to 1% of 2008’ (Greenfield 2013, par.3). In 2012 the share of ebooks was estimated to 23%, meaning that a limitation of the sector’s rate of growth appeared (Greenfield 2013). 1.4 Maturity As already explained above, today the rate of growth of the book publishing industry has been standardized. The phenomenon is more intense in the ebooks industry where a limitation of the increase in sales has appeared (Shariff 2013). This trend should not lead to concerns. Rather this maturity phase of the book publishing industry could help the industry to stabilize its position in the global market and to seek for effective strategies in order to secure its growth in the future (Shariff 2013). 1.5 Regulation The regulation of the book publishing industry is related to a series of challenges. In the case of Canada the following problem appears: the regulation of the Canadian book publishing industry is based on a particular legislative text: the Copyright Act (Canadian Heritage 2010). This Act covers a high range of issues related to the specific industry, including ‘the author’s rights and the book distributor’s rights’ (Canadian Heritage 2010, Part III, 7th par.). In addition, the Canadian laws do not allow to foreigners to establish a unit in the Canadian market; rather, a foreigner who would be interested in entering the Canadian book publishing industry ‘should buy a Canadian book publishing company’ (Porter 2011, par. 8). 1.6 Technology change Technology change has highly affected the development of the book publishing industry worldwide, including the book publishing industry of Canada. The intervention of technology in the industry’s growth is reflected to the following facts: a) the appearance of the ‘electronic – reading devices’ (PWC 2011, p.5) led many of the industry’s firms to adopt such technology so that they can attract more customers. Amazon has been among the first industry’s firms that introduce an electronic – reading device; this was Kindle (PWC 2011, p.5); b) In addition, additional devices have appeared that offer the potentials of electronic reading: ‘Smartphone, tablets and laptops’ (PWC 2011, p.7) are examples of such devices. It should be noted that the performance of these devices in regard to the various aspects of electronic reading is not standardized: for example, in terms of readability only ‘e-Reader reaches an excellent level of performance’ (PWC 2011, p.7). 1.7 Globalization In the context of globalization the book publishing industry had to face a series of changes: primarily, the extensive use of Internet in various aspects of the particular industry has introduced different criteria on which the promotion of books should be based (Tagholm 2013). Then, the establishment of different priorities in regard to the industry’s marketing: instead of focusing on ebooks or on print books, as in the past, today, emphasis is given to the brand (Tagholm 2013). The interaction between the specific industry and globalization is made clear through the following facts: a) the businesses of the cultural industry tend to be organized in monopolies, b) cultural businesses do not show similar trends of growth, c) ‘all firms of the culture industry, including the book publishing industry, highly support the local economy’ (Che & Wu 2012, p.379). 1.8 Innovation As in most industries, in the book publishing industry also, innovation has a key role in the industry’s growth. However, in the particular industry the promotion of innovation is related to certain challenges, such as: the continuous change of competitors’ strategies, the high risk of the industry, the need for different strategies in order to respond to the needs of authors, the difficulty of the market research involved mostly because of the unwillingness of the industry’s firms to share their experiences in regard to the industry’s competition and the management of conflicts developed across the industry (Rochester 2012). Despite the above challenges, innovation is an indispensable part of the book publishing industry; for example, Amazon has been able to keep its customers loyal by promoting a device of advanced technology, such as ‘the streaming services provided to customers’ (Galaria 2013, par.15). 1.9 Quality In the book publishing industry quality is related both to the content and to the range of means used for presenting the content to the consumers/ readers (Archbold 2012). In Canadian book publishing industry issues of quality have appeared under the influence of powerful publishing firms which tend to promote trade practices that are not aligned with the industry’s principles. Reference can be made, for example, to Chapters/ Indigo, an organization that emphasizes on low prices ignoring the potential effects of this practice on quality (Lockheed 2011). 1.10 Economies of scale/ scope The performance of the Canadian book publishing industry could be highly affected by economies of scale. Indeed, as also analyzed in next sections, the specific industry of Canada is characterized by the dominance of foreign owned publishing firms. Local firms that wish to secure their competitiveness need to focus on strategies that would lead to the limitation of costs. For example, the Canadian book publishing firm Nelson Education tries to keep its market position by attracting investment so that it is able to develop digital schemes, such as the availability of its books through e-reader (Government of Canada 2010). In this way, the firm will be able to increase its efficiency, as related to costs of production/ units, i.e. to the economies of scale (Canadian Heritage 2010). 2.0 Publishing industry and new entrants 2.1 Possible new entrants The Canadian book publishing industry is already well developed. This means that the number of the industry’s existing firms can be considered as adequate – compared to the industry’s profits. Still, the perspectives of the particular industry continue to be at high level (Archbold 2012). This means that new entrants are possible to appear even not through the traditional strategies: firms that offer self-publishing instead of traditional publishing could enter the Canadian market without being exposed to the market’s risks (Archbold 2012). 2.2 Barriers to enter and exit The entry of new firms in the Canadian publishing industry is rather difficult under the influence of a series of facts: a) the Canadian publishing industry has certain firms which are quite powerful globally. These firms have started to proceed to mergers so that they make the potential entry of new firms in the industry more difficult. The example of the merger between Penguin and Random House in October of 2013 could be mentioned here as an indication of this practice (Lossius 2013); b) Canadian legislation does not allow the operation in the country of units of foreign publishing firms; this means that a foreign publisher who is interested in entering the Canadian publishing industry ‘has to buy a local publishing company’ (Porter 2011, par.8); c) Canadian publishing firms invest highly on research and technology (R&T) for keeping their customers. The barriers related to the Canadian book publishing industry can be understood if referring to the case of Canada’s educational books sector. The specific sector has been traditionally based on the funds provided by the state and for this reason it was considered as one of the most powerful sectors of Canada’s book publishing industry. This phenomenon was particularly intense up to 1960s, a period in which most of the country’s big publishing firms were involved in the publishing of educational books (Rollans & de la Cheneliere 2010). The termination of’ state funding of educational books in 1969’ (Rollans & de la Cheneliere 2010, Ch 1, 2nd section, 4th par.) led the sector to a crisis during which most of sector’s firms changed their target market, leaving the educational sector and being involved in trade books (Rollans & de la Cheneliere 2010). Despite the strict regulations in regard to the prohibition of foreign firms to enter the Canadian book publishing industry, foreign firms are able to enter the specific industry without necessarily to establish a unit in Canada. In any case, the Canadian law requires the existence of a relevant authorization from the Canadian government in order for a foreign firm to be involved in the specific sector (Geist 2010). The case of Amazon is a critical example. The above firm entered the Canadian book publishing industry in 2002 without having a unit in Canada; shortly the firm managed to take permission from the Canadian government (Geist 2010). 2.3 Threat of entry Canadian publishing industry is in a phase of recovery (McBride 2013). The industry had to face severe turbulences, mostly as a result of the global economic crisis. Still, the industry’s popularity seems to remain at high levels. Currently, ‘the number of people who buy/ borrow a book on a week basis is estimated to 3.4 million’ (McBride 2013, par.3). In addition, the Canadian publishing industry is characterized by the following trend: the industry is divided into two, major, parts: the first part represents local publishing firms, the high majority of which are of small/ medium size, such as ‘Atwood and Munro’ (McBride 2013, par.6); the second part incorporates the large publishing firms under foreign control: ‘HarperCollins Canada, Simon and Schuster Canada’ (McBride 2013, par.6). Local publishing firms are already under pressures since the power of foreign-owned firms is difficult to be controlled: new entrants would make this problem more intense leading to the limitation of profits of local book publishing firms. References Archbold, R. (2012) “All is not Vanity - The rise of literary self-publishing.” Sep 2012. Literature Review of Canada. Retrieved from http://reviewcanada.ca/magazine/2012/09/all-is-not-vanity/ Canadian Heritage (2010) Investing in the Future of Canadian Books: Review of the Revised Foreign Investment Policy in Book Publishing and Distribution. July 2010. Discussion Paper. Retrieved from http://www.pch.gc.ca/eng/1276620365197 Che, R. & Wu, S. (2012) “The Influence of Globalization on the World Cultural Industry.” 2012 2nd International Conference on Future Computers in Education. Lecture Notes in Information Technology, Vol 23-24, pp.379-384. Retrieved from http://www.ier-institute.org/2070-1918/lnit23/v23/379.pdf Galaria, F. (2013) “Publishing crisis? Time to create a Spotify for books.” Nov 13, 2013. The Guardian. Retrieved from http://www.theguardian.com/media-network/media-network-blog/2013/nov/13/publishing-crisis-spotify-books-music Geist, M. (2010) “Amazon, Friend to Canadian Authors?” Mar. 16, 2010. The Tyee. Retrieved from http://thetyee.ca/Mediacheck/2010/03/16/AmazonCanadianAuthors/ Government of Canada (2010) “Supporting Canadas Educational Publishing Sector In A Digital Economy.” Jul 26, 2010. Retrieved from http://www.ic.gc.ca/eic/site/028.nsf/eng/00213.html Greenfield, J. (2013) “Ebook Growth Slows in 2012 to Only 41%; What Does It Mean for the Publishing Industry?” Nov 4, 2013. Retrieved from http://www.forbes.com/sites/jeremygreenfield/2013/04/11/ebook-growth-slows-in-2012-to-only-41-what-does-it-mean-for-the-publishing-industry/ Hughes, E. (2013) “How publishing escaped the cruel fate of other culture industries.” Oct 8, 2013. New Republic. Retrieved from http://www.newrepublic.com/article/115010/publishing-industry-thriving Lockheed, G. (2012) “What’s Threatening Book Publishing in Canada?” May 12, 2011. Dooneys Café. Retrieved from http://www.dooneyscafe.com/archives/2503 Lossius, G. (2013) “Top five trade publishing trends for 2013.” Jan 10, 2013. Publishing Technology. Retrieved from http://www.publishingtechnology.com/2013/01/top-5-trade-publishing-trends-for-2013-2/ McBride, J. (2013) “It’s alive! Canadian book publishing stirs.” Aug 30, 2013. Canadian Business. Retrieved from http://www.canadianbusiness.com/companies-and-industries/its-alive-canadian-book-publishing-stirs/ Nawotka, E. (2012) “IPA’s Global Ranking of Publishing Markets—US, China on Top.” Oct 9, 2012. Publishing Perspectives. Retrieved from http://publishingperspectives.com/2012/10/ipas-global-ranking-of-publishing-markets-us-china-on-top/ Owen, L. (2013) “PwC: the U.S. consumer ebook market will be bigger than the print book market by 2017.” Jun 4, 2013. Paid Content. Retrieved from http://paidcontent.org/2013/06/04/pwc-the-u-s-consumer-ebook-market-will-be-bigger-than-the-print-book-market-by-2017/http://paidcontent.org/2013/06/04/pwc-the-u-s-consumer-ebook-market-will-be-bigger-than-the-print-book-market-by-2017/ Porter, A. (2011). “Time to Lead: The shaky state of Canadian book publishing.” Mar. 15, 2011. The Globe and Mail. Retrieved from http://www.theglobeandmail.com/globe-debate/time-to-lead-the-shaky-state-of-canadian-book-publishing/article572334/ PW (2013) “The world’s largest book publishers, 2013.” Jul 19, 2013. Retrieved from http://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/article/58211-the-global-60-the-world-s-largest-book-publishers-2013.html PWC (2011) “Turning the page: the future of e-books.” Retrieved from http://www.pwc.com/en_GX/gx/entertainment-media/pdf/eBooks-Trends-Developments.pdf Research and Markets (2012) “Global Publishing Industry 2012-2017: Trend, Profit and Forecast Analysis.” March 2012. Retrieved from http://www.researchandmarkets.com/reports/2171571/global_publishing_industry_20122017_trend Rochester, S. (2012) “Ten challenges to innovation in publishing.” July 2, 2012. The Literary Platform. Retrieved from http://www.theliteraryplatform.com/2012/07/ten-challenges-to-innovation-in-publishing/ Rollans, G. & de la Cheneliere, M. (2010) “Study of the Canadian K to 12 Educational Book Publishing Sector.” Canadian Heritage. Retrieved from http://www.pch.gc.ca/eng/1280508345588/1280508523803 Scholarly Communication (2012) “Hot topics: Publisher Mergers.” Library Collections. Retrieved from http://www.lib.berkeley.edu/scholarlycommunication/publisher_mergers.html Shariff, S. (2013) “Report From the Frankfurt Book Fair: Digital is Growing Up!” Oct 21, 2013. DBW. Retrieved from http://www.digitalbookworld.com/2013/report-from-the-frankfurt-book-fair-digital-is-growing-up/ Sporkin, A. (2013) “US PUBLISHERS SEE ONGOING SALES GROWTH IN PRINT AND E-FORMAT BOOKS WORLDWIDE, ACCORDING TO 2013 INDUSTRY EXPORT SALES REPORT .” Jun 27, 2013. Association of American Publishers. Retrieved from http://publishers.org/press/111/ Tagholm, R. (2013) “Why Publishing’s Future is All About Globalized Brands.” Jan 16, 2013. Publishing Perspectives. Retrieved from http://publishingperspectives.com/2013/01/why-publishings-future-is-all-about-globalized-brands/ Thompson, J. (2008). Concentration and Innovation in the Book Publishing Industry: Full Research Report ESRC End of Award Report, RES-000-22-1292. Swindon: ESRC Read More