More than most industries, publishing is much affected by the external environment. While only a few environmental variables will be mentioned here, it is important for those interested in book publishing to scan a variety of news sources to identify news likely to impact publishing. For example, a text book publisher seeing a headline about a 1.8 trillion dollar federal budget may be interested in funding for education. Too, with so many major U.S. publishers now foreign owned, news about events in Germany or Britain may have impact here. Today's external environment is truly a global village. Contemporary U.S. book publishing is very much a multi-national affair.
Political decisions make a difference. While copyright receives the most attention, other local, state, and federal government decisions impact book publishing. Here are a few examples:
The best-known example of the political/governmental impact is the Thor Power Tool Decision. The IRS decreed that companies, including publishers, could not deduct from their taxes the cost of "unsalable" inventory which was kept in a warehouse and sold. Before this decision, publishers, especially children's, would print enough inventory for several years and then deduct the cost of any inventory that exceeded a projected five year demand even though they would sell it. The IRS said that inventory written off for tax purposes must be disposed of within six months of the write off decision. Publishers claimed that the decision forced them to reduce inventory and take books out of print much sooner than before. Most critics argue that the IRS decision has had little to do with publisher's OP and inventory decisions.
Since book buying is often a discretionary activity, publishing often blooms when the economy does well. The cost of raising capital or borrowing money can be important to publishers who need funds for new initiatives or for getting started. Interest rates certainly affect publishers as well as other businesses. Those publishers with publicly held stock are substantially affected by the mood and condition of the stock market. More recently buyouts by hedge funds have had some impact.
Reading requires readers who know how to read and enjoy reading. Much of the skill and the attitude toward reading is the result of the quality of reading instruction. Declining interest in books and reading has a substantial impact. For text book publishers, the criteria used by text book selection groups can open or close markets.
The paper codex book itself is an example of an innovative technology, a technology that was not welcomed by many members of the elite at the time. Today, changes in format and material loom before us. Ebooks are much talked about. The digital book may be a multi-media production with video, audio, and hypertext besides the traditional text and images. Publication on demand offers the opportunity for books to remain in print forever and be issued upon request. Technology may radically change the look and nature of the book in the future as it has in the past.
Social networking provides many opportunities for book recommending and community based bottom-up readers advisory work. Librarything is a good example.
Reading and book sales are certainly affected by population changes. For example, the growing number of Americans who are Hispanic, African-American or Asian-American has created a growing audience for multi-cultural genre fiction. This is an audience that until recently few publishers noticed. Similarly, more Americans are older and live in non-traditional families. What impact will this have on book publishing? The text book business ebbs and flows according to the number of young people in K-12 age cohorts.
How many external variables can you identify that are likely to impact contemporary book publishing?
Which of these variables seems most likely to really impact book publishing?
If you were an environmental scanner working for a large publishing firm, where would you direct your scanning attention?
Most recent revision: July 2007.
