Executive Summary

The UK market for book publishing was worth £3.24bn in 1996. Key Note forecasts reasonable growth in the market for most of 1997. This is likely to be followed by more modest growth for the rest of the decade, with a possible slowdown in growth after 1998.

The suspension of the Net Book Agreement (NBA) and the consequent ending of retail price control, in October 1995, had no initial visible effect on sales. In the final quarter of 1996, however, sales rose strongly. Publishers are still not sure whether this development is a flash in the pan or a pointer to future growth. They are also still undecided what the long-term effect of the end of price control will be. The output of books, including reprints and imported imprints, continues to grow topping more than 100,000 titles in 1996. The biggest growth was in law, economics, literature and social science titles.

The structure of the industry consists of three dominant publishers (which are part of conglomerates), several medium to large publishers, between 20 and 30 small- to medium-sized publishers, and then many small firms. On the surface, the industry looks as if the concentration started in the 1980s is complete and all is settled. There are, however, signs that the whole acquisitions bandwagon is going into reverse, with Harper Collins Publishers Ltd having sold its educational interests in 1996, and Reed Elsevier PLC likely to put Reed International Books Ltd on the market again in 1997.

Across the publishing industry as a whole, there are four problems. Sales in school books are declining in actual and real terms and sales in the academic and professional sector are barely keeping pace with inflation. For those who export, a third problem is that the rising exchange rate of sterling is eating into their profits. A fourth problem for the publishers is the rising power of the retailers and wholesalers. The retail chains are gradually becoming more important in the total retail picture at the expense of independent retailers. They can negotiate bigger discounts from the publishers than can the independent booksellers and they can determine which books are promoted and which are not. Meanwhile, the book distributors have contracted into three big groups -- there having been five in 1994 -- plus a few others. Some distributors have started to enter overseas markets, in direct competition with the publishers, who are very concerned.

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