Via Melville House, comes word that 98 UK publishers there have declared insolvency over the last year, a 42% increase compared with the previous year. Anthony Cork of Wilkins Kennedy, the accounting firm that issued the report, attributes much of this to the “massive buying power” of Amazon and other discount sellers, squeezing publishers’ profit margins.
Cork also said the increasing popularity of digital books — UK ebook sales soared 134% in 2012, according to the Publishers Association — creates opportunities for publishers, but also a new set of problems.
“However, the e-book market is now itself subject to fierce price competition and as with the music and film industries and the arrival of downloads, piracy is a serious threat. Academic text books are amongst the most vulnerable to piracy as today’s students are simply accustomed to accessing the content they want on the Internet for free.”
Melville House notes that the pricing pressures on publishers and booksellers trace back to a major change in UK bookselling in 1995.
“Publishers in the UK were formerly protected by the Net Book Agreement, which was in effect from 1900 to 1995 and kept book prices static for all merchants. Books could only be discounted if they were second-hand or damaged, which led to many booksellers defacing books with markers or hole-punching the covers in order to offer reductions.”
UK bookstores have fared worse than publishers since then. Melville House points to a 2009 BBC report that 500 independent UK bookstores had gone out of business since price controls were dropped in 1995.