The Publishing Horizon

Market size of book retail in India

Technopak Advisors claim in the Business Standard that

The Indian book retail industry is estimated to be over Rs 3,000 crore, out of which organised retail accounts for only 7 per cent.

The industry is expected to grow by approximately 15 per cent a year.

Book retail contributes only about 1 per cent to the overall retail industry. Text and curriculum books account for about 50 per cent of the sales. Second-hand books are also a big chunk of the book retail market.

In the past few years, several large format book store chains have come up, such as Landmark, Crossword and Om Book Shop.

Book retailers are focusing on improved customer experience. Many book stores have also introduced coffee shops and provide a library-like atmosphere where customers can sit and read, while sipping coffee.

I expect better from Technopak Advisors. This kind of estimate is such a generic and meaningless estimate with no information on the basis for it, that I would discount this completely. It doesn't give me any data or insights that I can trust or use. They seem to be saying something for the sake of saying it and meeting a weekly deadline. It also does no good for their brand - I now wonder about all their other estimates of market size.

The sad part is that there is little or no other data on book retail out there and this is likely to be taken as correct and quoted over and over again by virtue of being the only data on the Indian book retail market out there. Use it as you please, but don't get taken in by it.

Spanish book publisher Grupo Planeta acquires French book publisher Editis

In May 2008, the largest Spanish book publisher Grupo Planeta (GP) acquired Editis, the second biggest French book publisher from Wendel Investissements, a French private equity firm, for EUR 1.026 billion. Barcelona-based Grupo Planeta, founded in 1949, with subsidiaries in Colombia and Mexico now has a made its first foray into publishing in a language other than Spanish. There're very few reports or analysis in the English language media (that I could find online) of this mega deal in the book publishing sector, which is likely a harbinger of deals to come. Here's what I've been able to gather on the deal.

• Some background on the Acquirer as described on Grupo Planeta's website,

  GP is the leading Spanish communication group with wholly family-owned capital and a producer of cultural, news, educational and entertainment contents for the Spanish-speaking market. It is the foremost publishing group in Spain and Latin America and is a reference shareholder of Spanish mass media including television, radio, press and the Internet. Founded in Barcelona in 1949 following the creation of Editorial Planeta and the promotion of direct sales of major encyclopaedic works, Grupo Planeta quickly became consolidated as a prestige brand with a capacity for combining tradition and a forward-looking approach. In 1966 it opened its first subsidiaries in Colombia and Mexico, marking what would be a constant part of its activity: an uninterrupted presence in Latin America. Today, Grupo Planeta boasts over 40 publishing labels that publish works by over 5,000 authors including the most outstanding writers of classical and contemporary literature. It is also leader in the commercialisation of major encyclopaedic works and in sales by instalments.

  and the Target as described on Editis' web site,

  With 2600 employees and about 44 publishing imprints, Editis holds leading positions in three segments of the publishing business, in particular Literature (trade and mass market formats), Education (scholarly, scholastic aids, middle school, high school, university, legal and medical), and Reference (dictionaries and encyclopedias), as well as in the field of publishing services (promotion and distribution). Prestigious publishers and efficient group-wide services have made Editis number two in the world of French publishing and a major player in Europe.

  20 December 2002: Vivendi Universal Publishing (VUP) sold its publishing business (including Editis) to the Lagardère group, subject to authorization by the European Commission.
  7 January 2004: The European Commission authorized Lagardère to retain ownership of part of the VUP's publishing assets, representing some 40% of Editis' total sales. Lagardère decided to keep the publishing firms Larousse, Dalloz, Dunod, Armand Colin, Sedes, Nathan-Université, Anaya group (Spanish) and the Ivry-Rigaud distribution center. The remaining 60% of VUP's publishing assets were put back on the market. Taking the name Editis, this group refocused its activity on publishing for the French-speaking world.
  30 September 2004: WENDEL Investissement announced that it had acquired Editis from Lagardère SCA for € 660 million.

  [Lagardère's agreement to buy VUP's publishing business] attracted criticism from competitors and government agencies (e.g. comments that Lagardere would have over 50% of France's paperback sales, 80% of textbook sales and 69% of book distribution), reflected in the decision by the European Commission's competition unit that Lagardere should relinquish much of the acquisition. (Source: Ketupa)

• The details of the deal as described by Calcyon, Grupo Planeta's investment banker

  With a value of EUR 1,026 million, it is the largest acquisition ever made in France by a foreign media group and one of the largest media mergers & acquisition deal in Europe in 2008. Editis is the second largest French book publisher next to Hachette and the leader in its domestic market. With prestigious publishing brands such as Nathan, Bordas, Le Robert, Plon, Perrin and Robert Laffont, it generated sales of EUR 760 million and operating profit of EUR 93 million in 2007. Through this acquisition, Planeta becomes one of the leading European publishers of textbooks and literature and reaffirms its international ambitions.

  With the integration of Editis, Grupo Planeta will generate revenues of EUR 3.2 billion of which EUR 1.7 billion in publishing.

  Calyon is financial advisor to Grupo Planeta for the EUR 1 billion acquisition of Editis and bookrunner and coordinator of the acquisition syndicated loan. The acquisition financing is structured in two facilities: one EUR 120 million tranche for the acquisition holding company, owned by Planeta and its shareholders, and one EUR 550 million tranche at Editis level to refinance existing debt.

  The deal values Editis at 1.35 times 2007 revenues. Grupo Planeta's annual sales prior to the acquistion were EUR 2,500 million of which about EUR 1,000 was from their book publishing division.

• The logic for the acquistion?

  José Manuel Lara, Planeta chairman, stated that "the signing of this operation is doubly pleasing for us. Firstly, because it means an important step forward for the strategic development of Grupo Planeta, whose publishing activity, since its creation, has been exclusively focused on the Spanish-speaking market. From now on, we will have access to another great linguistic market, the Francophone market, making us one of the major European publishers. Secondly, because for Editis, belonging to a group like Planeta, with its clear international vocation, opens up great expectations for development as there is no duplicity between them but there are, in contrast, enormous potential synergies.

  Another report in Spanish dated April 22, 2008, accessible through Google's translation into English (sic) says

  [GP chairman] Lara has explained today at a press conference that 'in 2004 and the Grupo Planeta tried to buy Editis, then in the hands of Vivendi Universal, but the operation was closed because not appeared on stage Wendel'.

  According to Lara, the operation in France is a consequence of the strategy Planet, which can hardly grow in the domestic market because 'we can only Spain in a shaft of growth, the textbook, but now is a sector with uncertainty by raamatut policy, because you need some runs high and because it is not known how education will evolve in the future with the new electronic media '.

  Editis, which has a turnover of 760 million euros and 2,600 employees, is also one of the distributors of reference through its subsidiary Interforum. Since 2004, has initiated a process of internationalization with the acquisition of seven new companies, including the Belgian Boeck, who have contributed 150 million euros of turnover. The Planeta Group manages, on balance, a turnover of 2,500 million euros, 1,000 of them for the publishing, and has 12,500 employees. The transaction will be financed with 40% -50% of own resources and the rest through debt ratios, according to Lara, who 'do not represent a debt overhang of paternal society'.

  The acquisition of Editis lead to Planet group to 'think of other magnitudes, not so much to buy another group in France, such as expanding the business into other languages powerful', which has ruled the Asian languages, 'as a matter of different business cultures '.
  

  Grupo Planeta seem to have ambitions of expanding into Asian languages too, which would mean they may be interested in acquiring publishing houses in Chinese, Japanese, Korean and various Indian languages, some of which have far more speakers than either French, German, Japanese or Korean.
  
• How is GP planning to fund the acquisition? According to a Business Week report,

  Jose Manuel Lara, Founder of Grupo Planeta told Le Figaro that the company may launch an initial public offering (IPO) to finance the acquisition of Editis. When Jose Manuel Lara was asked if the company was planning to list on the stock exchange he replied: "Why not?" He did not exclude other possibilities to fund the acquisition.

  
  
• Grupo Planeta's next step? To break into the English publishing market? So says The Bookseller

  The €2bn (£1.57bn) book publishing giant created by the merger of Spain's Planeta and France's Editis will attempt to break into the English--language market once the takeover has been digested.

  In a ranking of global publishers, the deal will take the combined group to just outside the top five, competing for sixth position with Hachette Livre. Significantly, it will be the only group in the top 10 not to have either a UK or US presence.

  In an interview with the French daily newspaper Le Figaro, José Manuel Lara, president of the family-owned Grupo Planeta, said that the combination of the two would "be stronger to tackle the Anglo-Saxon market, even if it remains very difficult to penetrate". Editis chairman and c.e.o. Alain Kouck backed the plan, saying the deal would "enable us to build a new European publishing leader and ensure that Editis can expand outside the French-speaking world". He told The Bookseller: "Publishers reaching a certain size cannot grow [by acquisition] within their national borders without the risk of violating anti-trust laws."

  Planeta is little known outside of continental Europe. Based in Barcelona-when first contacted it said it wanted to conduct the interview in Catalan-the business was founded by Lara's father in 1949 and generates 70% of its €1bn (£785m) in annual book sales from Spain, 20% from Latin America and the remaining 10% from Portugal and Italy. Including its wider media activities, it generates €2.5bn (£1.96bn) in annual sales.

  Lara is a Francophile, having been French-educated in Barcelona during the reign of General Franco. "Our group, which had a tie-up with Larousse for years, always wanted to develop in France," he said. The company had talks with publishers Presses de la Renaissance (before the latter merged with Belfond) and with Presse de la Cité before it was bought by Editis, he said. It also looked at Editis before it was taken over by Wendel four years ago.

  
  
• How did Wendel fare with its acquisition of Editis in 2004 and sale in 2008 to Grupo Planeta? The Bookseller throws some light.

  Wendel should make a capital gain of about €320m (£251m) on the €1bn (£785m) deal. Although the sale came as no surprise, sources noted that when Wendel aquired Editis in 2004, supervisory board chairman Ernest-Antoine Seillière said it would keep the publisher for 10 to 15 years. "Instead, it has walked away after four years with a handsome profit," said one source.

  "No one could know in 2004 how difficult the publishing market would become," Wendel said in response. It denies reports that it opted for Planeta under pressure. "There was no ultimatum," the spokesperson said. "We accepted Planeta's offer, because it has a real project, with a sound, long-term vision and an uncontested leadership. The offer has been welcomed by the whole of the French publishing industry."

  
  
• How is the Planeta-Editis merger likely to fare? An op-ed piece in Spanish, (accessible through Google's translation into English) looks at the possibilities.

  The purchase by Planet of the French Editis is a qualitative and quantitative leap to another international dimension, in a mature market and an unknown environment, highlights the complainant. However, the trajectory of both groups and their management teams generate, in their view, optimistic expectations.

  Apart from the report in The Bookseller, there are no other reports or analysis of the Grupo Plaenta - Editis deal that I could come across in the English press - quite surprising.

For perspective (data from respective annual reports),

• Random House, owned by the Bertelsmann Group, publishes books in English, German and Korean (through its own subsidiaries) and in Spanish (through a joint venture with Mondadori) and Japanese (through a joint venture with Kodansha). Random House's 2007 revenues were EUR 1,837 million (EUR 1,947 million in 2006) with operating EBIT of EUR 173 million (EUR 182 million) at an operating margin of 9.4%. Random House contributes 10% of Bertelsmann's revenues.

• Multilingual book publisher Hachette Book Group, owned by conglomerate Lagardere publishes in French, Spanish and English. It's English publishing division acquired Time Warner Books in early 2006 from AOL-Time Warner in 2006 for US$ 538 million, at a little more than 1 times 2005 sales. Hachette's 2007 book publishing revenues were EUR 2,130 million (EUR 1,962 million in 2006), with operating margins of 11.2% (up from about 6% in 1998). 35% (EUR 746 million) of their 2007 revenues was from France, 10% (EUR 213 million) was from Spain and 41% (EUR 873 million) was from UK, USA and Canada.

• Penguin, owned by Pearson, is an English publisher. It began publishing in the Indian languages of Hindi and Marathi in 2005 in a small way. Penguin's 2007 revenues were £846 million (~ EUR 1,150 Million) with operating EBIT of £74 million (~ EUR 101 million) at an operating margin of 8.75%. Penguin contributes a substantial 20% of Pearson's revenues.

• HarperCollins, owned by NewsCorp, is an English publisher. HC's 2007 revenues were US$ 1,347 million (~ EUR 916 million) , with operating EBIT of US$ 159 million (~EUR 108 million), at an operating margin of 11.8%. HarperCollins contributes just 5% of its parent NewsCorp's revenues.

• Simon & Schuster, an English publisher owned by CBS had 2007 revenues of US$ 886 million (~ EUR 603 million), with operating EBIT of US$ 88 million (~ EUR 60 million), at an operating margin of 10%. Simon & Schuster contributes just 6% of revenues to its parent CBS.

Both HarperCollins and Simon & Schuster might be attractive acquisition targets for a publishing conglomerate like Grupo Planeta with aspirations of breaking into English publishing through acquisitions. Private equity firms have also been eyeing some of the leading publishers for a while now. The book publishing sector seems set for a wave of consolidation over the next decade.

Indian book publishing firm, Frank Brothers, acquired for Rs. 43 Crores (~ US$ 10 million)

Macmillan India Limited announced that it had acquired an 80% stake in Indian book publisher Frank Brothers in November 2007. The Macmillan India web site, their 2007 Annual Report, and the Frank Brothers web site provide more details on Frank Brothers and the acquisition.

• FRANK BROTHERS & CO. (PUBLISHERS) LTD, New Delhi was set up by Shri. K. L. Govil, a dedicated educationist, in 1930. It started off as a proprietary concern which was later converted to a partnership. The Company was incorporated as a private limited company in 1977 and converted into public limited company in 1993. Their web site has more on their early years.
  
• "Frank Bros (FB) is one of the oldest publishing houses in India and is engaged in publishing of quality education books for schools, institutes, government and other educational intermediaries. Frank Brothers is today one of the most reputed brands in the field of school publishing and has more than 1000 active titles in all subjects catering to the needs of ICSE and CBSE students and professional institutes in the areas of hotel management and tourism. Frank Brothers operates through 10 offices all over India with its Head Office at New Delhi and enjoys excellent relationship with around 10,000 Schools and institutions, and trade links with around 5,000 booksellers across India."
• FB's annual turnover for the financial year ended March 2007 was Rs. 31.5 crores.
• FB's sales in the month of December 2007 was Rs. 2.46 crores with a profit before tax of Rs. 20 lakhs for the month.
  
• FB's sales in the JFM quarter of 2008 was Rs. 22.33 crores. Macmillan India's total publishing sales for the same period, including FB's sales, was Rs. 31.5 crores.
  
• FB had a paid-up share capital of Rs. 25 lakhs (2,500 shares with a face value of Rs. 1,000 each) and reserves of Rs. 1.78 crores as on December 31st 2007.
• FB had assets of Rs. 26.53 crores and liabilities of Rs. 24.5 crores as on December 31st 2007.
• FB had 225 staff as on December 31st 2007.
  
• Macmillan had acquired an 80% stake in FB in November 2007 for a sum of Rs. 32.87 crores and has committed to purchase the balance 20% stake for Rs. 9.43 crores (if purchased before Sep 30, 2008) or for Rs. 10.83 crores on or before June 30, 2009.This effectively values the transaction at about Rs. 43 crores (~US$ 10 million).

Macmillan's publishing business focussing on publishing for schools has gotten a big boost thanks to its acquisition of Frank Brothers.

Subsequent to the acquisition, Macmillan India has announced that it is planning to demerge its publishing business and hive it off into a separate company to be called Macmillan Publishers India Limited (MPIL) and has called for an EGM in August 2008 to consider the demerger.

For perspective, in an earlier transaction, Cambridge University Press acquired a 51% stake in Indian publisher and distributor, Foundation Books for a sum of £2.7 million (~ US$ 5 million) on July 17, 2006. Foundation Books was subsequently renamed as Cambridge University Press India Private Limited. Foundation Books had declared revenues of Rs. 25 crores for the fiscal ending March 31, 2006. According to the Cambridge University Press 2007 Annual Report, CUP India's revenues grew by 25% post-acquisition to Rs. 31 crores for the fiscal ending March 31, 2007, which is on par with the revenues of Frank Brothers for the same period.

Are these transactions likely to pave the way for more such acquisitions in the Indian book publishing sector, with plenty of family owned publishing firms? Unlikely. Subroto Majumdar, the then head of Pearson India had stated in an NBT seminar in mid 2007 that Pearson India had seriously considered acquisitions of Indian publishing companies, but gave up after coming across due diligence issues, presumably in terms of copyrights and contingent liabilities.

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David Davidar's insights on book publishing, in Canada, in India and their implications

from an interview with Sharif Khan.

Book publishing

But think of the odds...There are about 100,000 books published every year. How on earth are you going to get each of those books to a reader's attention!

Let's say you walk into a bookstore, you face the first novel that appears and you have no idea what it's about. There is so much competing for your attention. Most novels sell only about 400 or 500 copies. If it's a good seller it will sell 5000 copies if it won an award and got great reviews.

It is only superstars that sell more and superstars are very few and every one knows who they are. The question we need to ask is why are there so few superstars? Why isn't every writer published famous? There isn't enough attention available for these writers. So that TV time, radio time, bookstore sales, all mitigate against every writer getting in.

Two or three industries suffer from the same thing, movie and TV, and music being closest to the book industry. Think of the tens of thousands of artists who've produced CDs and nobody's heard of them, and nobody will hear of them because that is the way the system works.

....

Finding a good agent is becoming increasingly tough because they too are inundated with manuscripts as well. The agent comes to us generating interest in a book and we have special editors, one specializes in Canadian writers; she says okay or no, I like it or don't like it. The book is brought to a meeting where she says she wants to pay this kind of money. You have a price on this book say $35 dollars, so the author will get a percentage royalty on every book sold. For a 10% royalty you will get $3.5 dollars on every copy sold.

So what we will do, is advance the author, through his or her agent x amount of money, say $35,000 dollars because we expect to sell 5,000 or 6,000 hardback and 10,000 copies in paperback, so we figure its worth about $35,000. So it's not an outright gift...it's an advance against royalties.

Then hopefully the book is published and lives up to expectations and earns out and the response is we're happy, the author is happy, and the agent is happy...but in 90% of the cases it doesn't earn out the advance and so you're in trouble. Of the 100 books published in Canada, I expect 20 books to support the rest.

in Canada

Canada has certain problems and certain advantages like many markets in the world. I'll deal with the problem first. It's a small market. It's 35 million of which 5 million are French speakers, so you can't do much with that size of market. Whereas America is 200 million plus, UK is over 60 million, Australia is really small, about 20 million. So tens of thousands of books are jostling for attention in this country.

Plus you have the major superstore Indigo Chapters which controls over 50% of market, so if they don't support a book it's dead in the water. And there is immense pressure on them as well because there are so many books pouring in. So these are the problems people have to deal with including the fact that there are lots of writers, agents, lots of publishing houses, everyone competing for that elusive customer.

On the positive side, because of the way Canada has been encouraging immigration for the last 30 years, you have the whole world sitting here, and so Canada's stories are quite fresh; whereas writing about one's experiences living in Mississauga that's where a lot of these books get bogged down because if your domestic experience is not interesting, how will you make your book interesting?

Your life is interesting to friends, family, and about a 100 people who know you. That is where most first novels fail because they are so autobiographical, instead of trying to sell a story. Why would people want to read a book unless they're interested in your life?

The interesting thing here is you have people from Somalia, Kosovo, Taiwan, India, and they're all writing books about their own experiences and that's what makes it interesting. So I think Canada has a great future about the stories its writers are starting to tell. And it is a very good domestic market for its size because per capita people read a lot more here than other countries.

I was once asked at the Canada Book Expo, where I was giving a presentation, what advice can I give aspiring writers. My reply is they should always take risks. There's no point in writing a small, safe, book...it just disappears. Take risk! What do you have to lose? Stretch yourself, write a big, huge, ambitious book! And those are the books that always leave a mark because there's so few around.

in India

The Indian publishing scene in 20 years will be the second or third largest in the world overtaking Canada and Australia; I'm talking about English language publishing. I've heard there are about 300 million Indians using some form of English, so they've already taken over the US and UK, but for the publishing industry you need to use English as first language or frequently because otherwise you're not going to go to the bookstore to buy a book. You might go to a street fair, but you're not my market. That's going to take a while.

I think today there are 7 to 8 million Indians who use English effortlessly, so that's about the size of New Zealand, but because you have next generation teenagers and young people learning English at the speed of light, they are going to join the market in another 5 to 10 years; this generation will continue to be the market, and there's going to be bit of the previous generation also in the market, so from about 7 to 8 million India will go to 30 to 40 million in the space of 15 to 20 years which means it's just going to explode. It's already the fastest growing market in the world and it's a huge market.

Penguin India is fortunate, we came in the beginning so we got in on the ground floor; all we need is to reap the benefits of our earlier labor because this market is growing, while the Canadian market is pretty much static. However, it is growing through some immigration. That is why Canada needs to look out for itself constantly and build its strengths to the world if it's going to keep its economy and lifestyle going.

Davidar's observations are pregnant with implications for book publishing in India.

• Unlike Canada, or the other major book publishing markets of USA, UK, Europe and Australia, there are no dominant superstore or even small bookstore chains in India controlling over 10% of the book retail yet. In fact, the penetration by the organised retail sector in India in the Books & Music segment is just about 10% (Ernst & Young India retail report), which is itself fragmented across the few chains that are there today. Publishers ought to think about the extent to which the chains can help in reaching the readers, and the extent to which they can/should invest in supporting the growth of the independent/unorganised book retailers. 
  
• The potential audience for English publishing in India may be about 30-40 million in 15-20 years, but the potential reader base for Indian language book publishing (across all the top Indian languages of Assamese, Bengali, Gujarati, Hindi, Kannada, Malayalam, Marathi, Oriya, Punjabi, Tamil, Telugu and Urdu) is close to 500 million today! According to the National Readership Survey 2006,

  • Over the last 3 years the number of readers of dailies and magazines put together, among those aged 12 years and above, has grown from 216 million to 222 million.
  • 359 million people who can read and understand any language do not read any [newspaper or magazine]. It is not just affordability that is a constraint, since 20 million of these literate non-readers belong to the upscale SEC A and B segments

• If the excitement of an experienced publisher like David Davidar, by the diversity of the demographics of the small Canadian immigrant population and the interesting stories emerging from them, is any indicator, the sheer demographic diversity within India and the stories waiting to be told in all the Indian languages including English, is an opportunity that's visible but unseen.

Writer's Side - India's first manuscript assessment service

Jai Arjun Singh interviews Kanishka Gupta, a 25-year-old writer and editor, who has set up Writer's Side - India's first manuscript assessment service. For a flat fee, Writer's Side will read, critique and edit manuscripts, and recommend the good ones to publishers.

What was the genesis of Writer's Side? Why does the Indian publishing market need a service like this?

When I was working for the literary agency Siyahi, I often wondered why we had to go through a hundred manuscripts in the hope of finding one publishable one. Why not try and give exhaustive feedback (for a service fee) to writers, rather than a cold, impersonal rejection letter? I feel that a combination of editorial support along with the occasional recommending (only for really good manuscripts) would work better.

I am not happy with some Indian publishers. Innovation is zero, or close to it. The global conglomerates coming in are hardly buying books written by promising new writers; they're relying on building up book ideas conceived in-house and commissioning already established writers.

What does the first-time, inexperienced writer gain from all this?

Nothing. Writer's Side has been established to empower emerging writers and help them evolve through our several feedback options.

What is the nature of your agreements with writers? What services will you provide?

It's a simple writer-editor agreement. We don't promise publication or recommendation — we can only work on the manuscript and try to bring it to a publishable level. The rest of it depends on a particular list a publishing house is planning to expand, and, I am sorry to say, an individual editor's mood. We provide reading, critiquing, all kinds of editing — exactly what an editor at a publishing house would do.

The work you are doing — as middlemen, providing advice and guidance — is similar to that of literary agents in the West. Do you think such agents will catch on in India?

Agents take a cut in the royalties, while we charge a flat, one-time fee. In the long run, we are bound to benefit more because we don't have to waste our time on reading unpublishable manuscripts. We make money on every submission, at the same time offering the opportunity to improve it.

We need many more outfits like Writer's Side to unearth first time talent. The bigger publishers are unlikely to have the time and inclination to deal with a large number of first time authors, but there are a large number of first time authors with potential and they will only get better as they get published. It is important to build a feeder channel of authors to grow the publishing industry - after all it is the writer who is at the root of the publishing industry. I think Writer's Side has caught on to the leading edge of a trend.

The book publishing process - why does it cost so much?

In a three part series, Dave Young provides a nice explanation of the book publishing process starting from the idea for a book to the point of sale, pointing out the parts which entail costs.

In the first part, he looks at the different options for an author to get his book published - sell the manuscript to a traditional publisher, use a vanity press, work with a print-on-demand publisher, or print and sell it yourself.

In the second part, he looks at the fixed costs involved covering the editorial, design and layout aspects and in the final part, he looks at the variable costs involved to print the book, distribute it and deal with returns.

India's growing clout in English language publishing

Just about 7% of India's population can read English according to the 1991 Census (2001 census language data is yet to be released). But even that 7% works out to a substantial 65 million potential English readers. For perspective, compare that to the number of English speakers in USA (about 215 million), number of English speakers in Canada (about 20 million) the entire populations of Britain (about 60 million) and Australia (about 20 million).

India's clout is only likely to grow further in the coming decades in the global market for English language publishing.

David Davidar, former publisher of Penguin India and currently publisher of Penguin Canada, is quoted as saying,

“Canada is a mature market that is growing slowly, whereas India is an emerging market that is the fastest growing English language market in the world today. It is estimated that the Indian market could be bigger than Canada and Australia in the next 10-15 years.”

Richard Marcus writing in the online magazine, Blogcritics wonders why American and even British publishers haven't shown much interest yet in India as sizeable English language market.

What amazes me is how [British and American publishers] seem to have forgotten, or even worse not noticed, the potential audience beyond the confines of our continent and the British Isles. American companies could perhaps be excused on grounds of ignorance, but for the Brits to forget about India and the rest of the Commonwealth nations (the countries that were formerly colonies of England) is just silly. They were the ones who forced the English language down their throats in the first place.

India has probably one of the largest, educated English-speaking populations in the world right now. Its economy is booming, and more and more of her people have the money to spend on books and other forms of leisure. How hard would it be for an imprint to reach an agreement with an Indian press and start delivering titles for publication?

But with the exception of Penguin India, no one seems to be doing very much to take specific advantage of the market. Even Penguin treats India like another foreign country and gives preference to American publications. What this means is that while Penguin can dump as many American-published titles as it wants onto the Indian market, it only exports a few Indian-published titles to the States.

While this does provide a market for whatever is being published in the States, it does nothing to properly develop the Indian market. Penguin needs to remind itself that if it wants the world to know more than the names of one or two authors from India it needs to start treating India with the respect it deserves.

That means that her authors should be given the same treatment as their American counterparts and not be limited in the number of titles they are allowed to export to the American market. The best way to develop a solid audience base is to ensure that the authors of the home country are able to thrive. Keeping their names in the public eye as much as possible is a reminder that Indian writers are just as important as American or British.

If American publishers would open their eyes to the fact that English is spoken in more then a few countries around the world ,they might find their sales figures rising. Sign on a couple of Indian authors and publish them simultaneously in India and the United States. It might take awhile for sales to develop in the United States, but that will be compensated by sales in India.

At the encouragement of a friend of mine in India I sent my manuscript to Penguin India for consideration; I haven't heard anything from them yet, but that doesn't bother me. When they publish the book I expect that it will be available in Canada because that's where I'm from, as well as sold as India, but I doubt it will be for sale in the United States.

It used to be that without the American market your book couldn't really sell enough to make you much money. But times have changed, and America is not the only large English speaking market anymore. American publishers need to remember that - if they want their business to continue to grow. Otherwise they could find themselves being left behind and no longer as important as they think they are.

What are publishers for?

asks Rob Jones, a small British publisher, and provides some answers.

One's first thought is that publishers are useful because they bring us books - but then a moment later, you realise that a lot of what publishers do is outsourced (which I like to think of as the business equivalent of sending out for pizza instead of cooking dinner). Publishers don't print books; frequently they don't typeset them, or design the covers, or warehouse the stock, or ship it to stores. They may in some sense provide the world with books, but publishers don't drive lorries or mix ink. And, of course, for the most part, they don't generate the words and pictures between the covers.

What they do are two things. They select which titles to print - and then they tell everyone else how great those titles are. Or to put it more succinctly, they do acquisition and marketing.

Defenders of publishing's place in the world like to talk about publishers being a quality filter: they sift for gold amongst the dross. But when you have hundreds of publishers all clamouring that every one of their thousands of titles is a nugget of pure gold, it's not clear how effectively that filter is working. The best you could say is that things might be much worse if publishers didn't at least try to protect us from sub-standard work. Or perhaps not.

And as for the clamouring part of their job, marketing to retailers gets the titles into stores and marketing to customers gets books into shopping baskets - but that's all for the publisher's benefit; what do non-publishers get out of it? From some angles it looks like very little. So, "Publishers (grunt) what are they good for? Vanishingly close to nothing" (as the song goes).

Of course publishers do one more thing: they absorb risk. That's to say, they take a chance on their titles. They put their money, effort and reputation behind a book and hope that their gamble pays off. In that sense they do make books, thus ensuring that a few horribly formatted files on a computer (or god forbid, a sheaf of typewritten pages) become an actual, professional-looking, shop-bought book.

I've had other suggestions of functions that publishers perform. For instance, they administer the process of creating books, coordinating all the various roles - which doesn't strike me as much of a hook to hang your survival on. And one well-meaning publisher told me that their most important role is to develop authors. I think that's a lovely idea and the sooner it actually happens the better, I say.

So I think we're left with publishers being the backers and risk-takers behind books. And what I see is that every year technology makes it easier to turn a Word file into a pallet full of paperbacks - or just a single copy, if you prefer. And every year devices for reading books electronically get more desirable, more practical and more affordable. I'm wondering if there'll come a day when the only reason that publishers can put forward to justify their cut of the book industry's profits is that they tell readers what to read. Then all it would take is for readers to band together into online communities and share their collected opinions of new writing and we wouldn't need publishing companies' biased views on what was good; we could be guided by our fellow readers. And on that day publishers will go the way of the dodo and the clanger, and Em and I will have suddenly have a lot more time on our hands to work on our blog entries.

I had earlier tried to break down the current book publishing business model to see where the value is added and wondered if Amazon or someone else could do an Ebay and make conventional publishers history. The global book publishing industry turns over about US$ 60-70 billion a year - presenting a substantial business opportunity for a transaction player who simply provides the platform for authors and intermediaries to come and work together to deliver the authors' works to interested readers.

Private equity firms eyeing book publishers Penguin, Simon & Schuster and Harper Collins

So says a Reuters report from August 2006. This interest follows the buyout of Time Warner Book Group by Lagardere for $538 million last February.

Private equity firms are mulling approaches for Penguin, Simon & Schuster and HarperCollins, people familiar with the situation said, as the cash-rich financiers expand their voracious appetite for the media sector.

Acquiring a publisher of best-selling novels and biographies would be a departure for private equity, which has traditionally focused on other media, and mainly on educational and scientific specialties where book publishing is concerned.

Although they are notorious for their snail's pace growth and tight margins, general interest publishers generate a reliable stream of steady cashflow from their back-catalogue titles, an attractive element for potential bidders.

The plans are at an early stage, the sources cautioned, and might not lead to any formal offers. Several firms already have made overtures to Penguin's parent company, Pearson Plc , to ask whether the iconic pioneer of the mass-market paperback might be put up for sale, according to two of the sources.

General interest book publishers typically sell for about one times revenue, which would value Penguin at around 800 million pounds ($1.53 billion).

The suitors include Cinven, Candover and Permira, according to one of the sources. "People have asked, 'Is it for sale?' The answer is officially 'No,' unofficially 'Not quite yet,'" said the source, who requested anonymity. "They are quietly biding their time."

Any decision about selling Penguin would need to overcome the reluctance of Pearson Chief Executive Marjorie Scardino, who has repeatedly argued that the company's three divisions -- education, books and newspapers -- fit together. "On a scale of one to 10, with one being 'over my dead body,' and 10 being the start of an auction, the internal deliberations have reached about a five or a six," one source said.

Pearson declined to comment about whether it had received any approaches. "The board has a rolling review of all of our businesses, and those discussions belong in the boardroom," a spokesman said. "Penguin is making very good progress with continued strong publishing performance and efficiency gains, often in collaboration with our education business."

Banking sources also say private equity firms continue to contemplate buying out Pearson in its entirety, but no serious approaches have yet been made. Interest in CBS's Simon & Schuster and News Corp.'s HarperCollins is less developed, but sources say they are being more closely scrutinised than in the past.

The Reuter's report has more details.

The Bookseller has John Makinson, CEO of Penguin, responding to suggestions of Penguin being up for sale and making a strong case for syngeries between Penguin and its parent Pearson.

Penguin c.e.o. John Makinson has rebutted analyst claims that there are "limited synergies" between Penguin and Pearson's education business, and that Penguin is a "drag on group growth". The points were made following Pearson's results for the nine months to 30th September, which showed 6% sales growth at Pearson Education compared with 2% at Penguin worldwide.

Makinson said Penguin's UK division grew by more than 2% over the period, with strong performances from Penguin Press and Puffin. "Now is the time of year that Penguin General takes up the reins," he continued. "Our commercial publishing is led by Jamie Oliver but it's also quite significantly deeper than it was this time last year. But it is a very much more crowded and competitive market than it was a year ago."

He added that synergies between Penguin and Pearson are "extensive". "Being part of the largest book company in the world is quite attractive when it comes to negotiating print contracts and supply agreements. In this country education and Penguin are quite extensively integrated, as they are in Australia, New Zealand, Canada and India. To pull them apart would be no easy matter.