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Prepared for the Ministry for Culture and Heritage by Dialogue Consultants Ltd, October 2003. [Also available as pdf document (3.64mb)]
This national study of the export of New Zealand published books was designed to gather both quantitative and qualitative information to assist in developing strategies to market New Zealand literature overseas. It was undertaken in three stages, the first two by postal questionnaire and the third by face-to-face interview. It establishes a baseline of New Zealand industry data relating to book publishing; provides quantitative information on the current level of activity in overseas markets; and provides qualitative information to identify current export strategies, international sales aspirations and perceived impediments to export growth. The report also reviews some relevant overseas examples of strategies adopted to promote the publishing industry and book exports.
The report was prepared by Murray Ellis (team leader), Dr Tom Ludvigson and Dr Peter Phillips.
5 Inputs to strategy development.
On 23 May 2002 the Rt. Hon. Helen Clark announced that the government was to make an extra $1 million per annum available to support authors and literature in New Zealand. The mandate of the working party set up to consider the allocation of these funds included possible initiatives to extend the market for New Zealand literature nationally and internationally.[1]
This research was commissioned by the Ministry for Culture and Heritage (MCH) to assist in the process of strategy development by:
The first phase of this study involved a postal survey of firms identified in various sources as publishers. This proved to be a considerably larger task than was expected. Whereas the contract had anticipated that there might be about 200 publishers, the extensive search process identified over 1000 candidates. This was eventually reduced to a survey population of 645 as non-publishers and others were eliminated.
The first survey provided a range of data on the book publishing industry and was also used as a sampling frame for a second postal survey which collected financial and market information. Both surveys were well supported by the industry (with some notable exceptions) with response rates of 63% and 72% respectively. The final stage of the project involved a series of face-to-face interviews to cover the qualitative aspects of the brief.
On the basis of these surveys it is estimated that the turnover of the book publishing industry in 2002 was $204 million, with $117 million of this (57%) generated by exports. A striking feature of the results is that this revenue and the associated production of more than 3600 titles is concentrated in a relatively few firms. The industry is dominated numerically by micro-businesses, with two thirds having either nil or one employee (many being just sole operators). Almost three quarters of the firms together generate just 2% of the revenue. Local arms of multinational publishers dominate amongst the larger operations.
The analysis of exporting strategies clearly identifies the importance of relationships in the markets and the various impediments that many New Zealand publishers face. It also identifies potentially preferred paths to markets given the issues associated with various stages and operators in the publishing industry value chain. Reference is also made to precedents from the UK and Canada of strategies they have adopted to assist their publishing industries.
While there are some structural and institutional issues (including those related to scale) which are particular to New Zealand, many of the issues which need to be addressed in proposed strategy are common to other peripheral producers. One is simply the apparent limited understanding of marketing and distribution channels on the part of some publishers. Many are apparently unfamiliar with how overseas markets operate (including how to collect revenue of books "sold").
In countries with much larger and robust industries, like the UK, efforts are made by industry organisations and government to ensure that publishers have access to necessary market information. This, and other themes identified in Section 5 of this report would be useful building blocks in strategy development.
Careful consideration should also be given to the parallels between the issues faced in the music industry and those with which the book publishing industry has to contend, particularly in terms of revenue collection (and notably for sellers of rights). The publishing industry has a partial equivalent to the Australasian Performing Rights Association (APRA) and the international network to which it is affiliated, in Copyright Licensing Ltd (CCL). However CCL has affiliates in only a limited range of countries, and undertakes a much narrower range of functions than APRA and its affiliates.
The project was designed to collect three types of information to help build a basis for a strategy to improve the viability of the New Zealand book publishing industry through increased foreign exchange earnings. This quantitative and qualitative information covered:
The study was prompted in part by the inadequacy for this purpose of currently available official information. The absence, unlike some other leading major book exporters, of appropriate official statistics presented some methodological issues in seeking to ensure that the results were fit for purpose. In particular, studies designed to collect similar market information (particularly that related to sales) in other sectors by mass mailing of mail questionnaires have suffered in terms of validity from low response rates.[2]
The approach adopted here addressed these issues by separating the collection of the three different types of the information required (relating to the character of the business; accounting data; and forward-looking qualitative information). This separation avoided potential problems that:
It also had the advantages that:
The study was undertaken in 15 steps which were undertaken generally in sequence but with a measure of overlap:
(1) inception review of proposed methodology, milestones and content with the Ministry and BPANZ;
(2) establishing a comprehensive list of New Zealand book publishers, whether exporting or not, with the assistance of BPANZ and TradeNZ;
(3) clarification of definitions, including fundamental terms such as a "book" and "published intellectual property" [3] to ensure that the outcomes of the project met the requirements of the stakeholders;
(4) a initial brief postal survey of every publisher to:
(5) use of the outcomes from the first stage survey to stratify the industry by size and genre;
(6) extraction of information from existing sources, both official statistics and from within the industry;
(7) follow-up letters and telephone requests as part of a specific non-respondents strategy to maximise the number of returns. This was undertaken for both surveys and was particularly important in the first survey in terms of identifying publishers;
(8) milestone 1 report to stakeholders after a preliminary analysis of the results of the first postal survey;
(9) a second postal survey sent to a sample of publishers to obtain the required financial information;
(10) evaluation of the second survey outcome, and identification of critical gaps in responses. Further follow-up of critical publishers, or substitution of other publishers for refusals and persons out of the country;
(11) selection of a sample of publishers for the qualitative interview survey;
(12) design of an interview protocol for the qualitative survey to ensure coverage and consistency between interviews;
(13) interview campaign of selected publishers;
(14) final analysis of the surveys and interviews; and
(15) reporting on overall project results.
A key step in the research was the identification of the publishers. A number of sources were used, primarily:
When it was realised that the numbers of publishers being discovered through this process was greatly exceeding that anticipated some consideration was given to weeding out those less likely to be significant. It was appreciated that a high proportion would be part-time publishers with very few titles, and in many cases they would have no new titles in 2002.
A reliable means of identifying the non-commercial publishers was somewhat problematical since many of them appeared to give themselves sophisticated sounding business titles. It was decided to suspend prior judgement and survey all identified the potential publishers. It was recognised that, to a degree, this just deferred the problem, which was faced in seeking responses and in analysing the results. At this stage a significant number of these nominal "publishers" were culled from the list.
The first postal questionnaire was designed to provide an initial characterisation of the book publishing industry and a sampling frame for the subsequent stages. It was written to comply with all known official requirements (which did not prove in any way obstructive) and was approved after consultation with the MCH, BPANZ, and Booksellers New Zealand.
Letters of support for the questionnaire, to encourage publishers to respond were provided by MCH and jointly by BPANZ and Booksellers New Zealand.
The first page covered all the data required with explanations and definitions on the reverse. Copies of the form and letters are attached in the appendix.
The second mail questionnaire was designed to collect financial information about book production and exports, and related information about the businesses.
It included a table which sought data on volume (units) and value ($) of sales by market (divided according to published market data) and by type of revenue divided between:
When designing both questionnaires considerable effort was made to get all questions onto a single page. It was essential to minimise potential adverse first reaction to the form (which would have been worse if there was a multi-page form to complete). As it was, the second questionnaire was fairly daunting with its substantial table of blank spaces to be filled in. Attempting to go beyond this and also obtain a breakdown of genre by export market would have made the questionnaire excessively demanding, and severely cut the response rate.
The intent of the personal interviews was to build up a picture of the opportunities and pitfalls in exporting books from Aotearoa-New Zealand and the perceived barriers (with a view to identifying real and imagined impediments) defining:
Exporting was explored using the following checklist:
If government assistance was raised a set of follow-up questions was triggered:
In relation to Frankfurt Book Fair respondents were asked about:
The discussion was rounded off by exploring whether there are any issues or deficiencies in the industry's relationships with government, or with the industry's representatives dealing with the government.
The extensive search process identified a total of 1027 possible publishers, a significantly higher number than the 200 initially anticipated. Each of these candidates was sent the first questionnaire.
The final survey population was defined by a process of deduction, Table 1:
| Response group | Number |
|---|---|
| First questionnaire sample | 1027 |
| Less | |
| Not publishers (authors, book sellers, etc.) | 180 |
| Undelivered (gone no address) | 41 |
| Not publishing at moment so not returning form | 2 |
| No identifiable and operating phone number | 136 |
| Didn't answer their phone, repeated rings | 23 |
| Identified publishers | 645 |
| Returned original copy of first return | 197 |
| Returned first reminder | 166 |
| Returned second reminder form | 31 |
| Returned third reminder form | 1 |
| Gave info over phone | 11 |
| Valid responses | 406 |
| Explicitly refused | 18 |
| Took messages (secretary/answerphone) but didn't ring back | 14 |
| Requested another copy of the form, but did not return it | 35 |
| Said they had returned it, but not received | 2 |
| Undefined | 170 |
| Non response | 239 |
The 406 responses to the first survey represent 63% of the final survey population. A sample of 79was selected from this group for the second survey (initially it was 80 but one was dropped when its publications did not have ISBNs – one of the tests of a "book"). Replies were received from 57 (72%).
Concern for the potential impact of non-refusals and non-respondents led to a detailed analysis of the members of these groups. It was determined that the survey had achieved good coverage of the known larger companies with two exceptions. One of the outright refusals, despite repeated requests was one of the New Zealand companies noted for its export activities, while one significant multinational company was among the non-respondents. In both cases, it was necessary to make assumptions from other data sources to arrive at estimates that could be included in the overall assessment of the industry's turnover, exports, and resources.
The industry is dominated numerically by New Zealand-owned firms with only 18 wholly overseas-owned firms (4.5%), in the survey respondents, Figure 1.
It is estimated on the basis of the survey that the book publishing industry employs some 1870 people. The distribution of the staff is highly skewed. The 7% of the companies that employ more than 10 staff have 73% of the total employment, Table 2. This reflects the large number of one man/woman operations. However, there is a solid core of middle-sized publishers, even if this is fairly small by the standards of some other sectors.
| Number of staff | % of publishers | % of staff |
|---|---|---|
| 0-1 | 64% | 6% |
| 2-10 | 29% | 20% |
| More than 10 | 7% | 73% |
A high proportion of publishers have only been in existence for a short period, with over half as shown in Table 3, and Figure 2 (which include values for non-respondents for whom this data is known from other sources).
| Year | Number | Proportion |
|---|---|---|
| Up to 1950 | 26 | 8% |
| 1951-80 | 54 | 16% |
| 1981-90 | 78 | 23% |
| 1991-95 | 63 | 19% |
| 1996-2003 | 117 | 34% |
| Missing | 32 | |
| Total | 408 |
More than half of the firms responding to the survey were founded since 1990, although there is a hard core that has been operating in New Zealand for over 50 years. The situation is not greatly different even for the large publishers. Most of these were also founded in their present form in the 1980's and 1990's.
This situation suggests a high rate of turnover. This is also indicated by the substantial number of publishers found in "Books in Print" who are no longer in business. However, it would appear that the numbers of publishers has been growing, notwithstanding that a couple of multinationals have withdrawn from publishing in New Zealand and taken the work to Australia.
It is estimated that there were over 3600 titles published in 2002 of which nearly 2100 were exported, Table 4 and Figure 3. The concentration on educational titles is the most striking feature, with this genre making up:
| Genre | # of titles | % of total titles | # of titles exported | % of exports |
|---|---|---|---|---|
| Biography | 93 | 3% | 38 | 2% |
| Children's fiction | 205 | 6% | 96 | 5% |
| Drama | 11 | 0% | 7 | 0% |
| Educational | 2038 | 56% | 1375 | 66% |
| Fiction | 124 | 3% | 68 | 3% |
| General non-fiction | 482 | 13% | 194 | 9% |
| History | 195 | 5% | 102 | 5% |
| Poetry | 87 | 2% | 27 | 1% |
| Reference and Trade | 160 | 4% | 70 | 3% |
| Professional/Technical | 222 | 6% | 110 | 5% |
| Total | 3617 | 2087 | ||
| Notes: Estimates have been included for non-respondents. NB two major educational publishers did not respond. Estimates included for these firms are based on publicly available data. | ||||
Most of these educational books related to early childhood literacy. In contrast, the genres that could be considered to comprise "literature" (defined here as comprising biography, fiction (including children's fiction), drama, history, and poetry) accounted for 20% of the titles, but only 16% of the exports.
The relationship between ownership and the number of publications, Table 5, is striking given that there were returns from only 18 wholly-overseas owned firms in the survey. This is an average of 64 titles per firm and 35 exported compared with averages 6 and 4 respectively for the New Zealand-owned publishers.
| Ownership | Titles | Exported titles |
|---|---|---|
| Wholly New Zealand owned | 2406 | 1444 |
| Part New Zealand owned | 7 | 6 |
| Wholly overseas owned | 1155 | 634 |
| No response | 14 | 3 |
| Missing | 35 | 0 |
| 3617 | 2087 |
The total turnover of the book publishing industry in 2002 is estimated at $204 million with $117 million of this (57%) generated by exports.
This income was largely generated by a few businesses – the top 5% of publishers produced nearly 90% of the total turnover, while 74% of the publishers together produced 2% of the turnover, Table 6.
| Turnover | Number of publishers | % of Publishers | % of Turnover |
|---|---|---|---|
| Under $100,000 | 300 | 74% | 2% |
| $100,000 - $999,999 | 52 | 13% | 10% |
| $1 million or more | 22 | 5% | 88% |
| Missing | 34 | 8% | |
| Total | 408 | ||
| Notes: Two major New Zealand publishers in the educational sector did not respond to the survey. Dummy returns have been included for these firms based on publicly available data increasing the number of publishers counted to 408 from the 406 responses. | |||
The table reveals a picture of an industry dominated numerically by micro-businesses but not in terms of their economic output.
Within this overall distribution there are variations based on ownership. While wholly overseas-owned firms are quite insignificant by number, they dominate the industry in terms of turnover, with more than half earning more than $1 million in 2002, compared with 4% of the New Zealand firms, Table 7.
| Turnover | % of New Zealand owned | % of joint owned | % of wholly overseas owned |
|---|---|---|---|
| Under $100,000 | 82% | 100% | 27% |
| $100,000 - $999,999 | 14% | 0% | 20% |
| $1 million or more | 4% | 0% | 53% |
A breakdown of the cost structure of the industry is provided by Statistics New Zealand in their Annual Enterprise Survey. The definition of the industry differs significantly from that applied in this study in that it does not include small publishers, or those publishing as an ancillary component of their operation. On the other hand it includes publishers of a variety of material other than books, but it does exclude magazine and newspaper publishers.
The cost structure of the industry defined by the Statistics New Zealand is summarised in Figure 4.
Grants are a very minor source of support for virtually all publishers. The most significant, in terms of size, are the grants of up to $5,000 per work by Creative New Zealand to assist publication of literary works. In practice, these grants rarely exceed $3,000. In 2002/03 over 40 such grants were made, at a cost approaching $100,000. The purpose of these grants is to enable authors to make their works available to be read. They are really support to the authors, rather than the publishers per se, but fit within a broader strategy of supporting all elements in the publishing industry value chain.
The only other form of support that a significant number of publishers have used is assistance to attend book fairs, particularly the Frankfurt one. All substantial publishers are aware of the importance of book fairs, and most have been to at least one. Often this has been at their own expense, but the assistance of TradeNZ (now part of New Zealand Trade and Enterprise) has been well used and appreciated. On the other hand, programmes such as "Biz" appear to be poorly known and virtually unused by publishers.
Official statistics [4] on book exports show exports rising from $32 million in 1990 to $60 million in 2001 before falling back to $57 million in 2002 and provisionally to $54 million in 2003, Figure 5.
These (year ending in June) figures are derived on a different basis from that adopted in this study and include other types of printed matter ranging from globes and Christmas cards to bus tickets.
In practice, the data appears to focus more on printing rather than books per se (selecting only the subclasses that include books and booklets reduces the 2002 exports to only $19.5 million). Furthermore, printed material was included only if it was physically exported from New Zealand. Books printed and distributed from Asia were not counted. Neither was revenue from royalties and the sale of rights. This was recorded elsewhere in the exports or services, but was buried in a much broader category of royalties and licence fees.
The recent time series of book exports with this more restricted and relevant definition is shown in Figure 6. The regional distribution of these sales is shown in Figure 7.
The estimate for book exports for 2002 established by the survey is $117 million. While 183 publishers reported exporting in 2002, only 16% of them gained 25% or more of their revenue from exports, Table 8.
| Proportion of turnover from exports | No. Publishers | % Publishers |
|---|---|---|
| Nil | 189 | 46% |
| 1-24% | 118 | 29% |
| 25% or more | 65 | 16% |
| Missing | 36 | |
| Total | 408 |
There is very little relationship between size of firm and export orientation. Even the very small publishers obtain as high a proportion of their income from exports as the bigger ones.
The distribution of export earnings is also highly skewed, Table 9.
| Turnover | No. publishers | % Publishers | % Turnover |
|---|---|---|---|
| Under $100,000 | 354 | 87% | 1% |
| $100,000 - $999,999 | 18 | 4% | 6% |
| $1 million or more | 9 | 2% | 93% |
| Missing | 27 | 7% | |
| Total | 408 |
A feature of the returns is the high proportion of each genre exported, Figure 8.
The reason for high exportability of drama is not known, but there were only 11 titles. Poetry books also appear to mostly sell in only small numbers with a high proportion of small self-publishers with no exports.
The United States is the single largest export market reported in the second survey in terms of overall revenue, Figure 9.
Printed books comprise nearly 97% of export income, at $113 million. This is far greater than the $19.5 million shown in the external trade statistics. This is mainly because many of the larger publishers, and some not so large, have their books to be printed outside New Zealand (usually in Asia), and transported to market from there. Since the books are never in New Zealand, the income from their sale is not recorded as export of books in the official figures. It is buried in the export of services. The balance of the exports, another $4 million is almost entirely income royalties and the sale of rights. [5]
The geographic distribution of the income from rights and royalties is very different from that due to printed books. As shown in Figure 10, the greatest source is the UK, followed by South-East Asia and then USA and East Asia. A key reason for this difference is that almost all educational publishing is sold as printed books. A high proportion of the rights and royalty income, perhaps over half, appears to come from exports of literature.
Significant numbers of publishers have undertaken the various activities used to indicate how active they were in promoting their products overseas, Figure 11.
The proportion getting royalties from overseas (n=65, 16%) is higher than those selling rights in any one year (n=45, 11%) since royalties can continue for more than one year for successful books. Books in different genres have very different commercial lives. Some overseas publishers will remainder fiction books after as little as two months. Many education books can continue to sell for a number of years.
E-books do not yet sell in substantial quantities, with relatively few of the publishers involved in this activity (n=16, 4%).[6] Payment over the Internet is still very dependent on the perceived trustworthiness of the trader. Small and poorly known traders have a credibility issue.[7]
A detailed subdivision of the source of total and export revenue by genre is beyond the limits of a voluntary survey. Nevertheless an indication for "literature" can be deduced from the surveys. [8] In doing this it has been assumed that for publishers who sell a range of genre, the literature publications sell, on average, as well as their non-literature books. This is likely to be somewhat optimistic, as some works of literature, notably those requiring subsidy to be published, are known to sell fewer copies.
Within this limitation, domestic sales of New Zealand literature are estimated at $15 million. This is 18% of total domestic sales of New Zealand published books. Exports of New Zealand literature are estimated at some $7 million with the estimated regional distribution of these sales shown in Figure 12.
The two quantitative surveys were designed to establish a baseline of New Zealand industry data relating to book publishing and to provide quantitative information to determine the current level of activity in overseas markets. They revealed a higher level of export activity than previously anticipated but also a significant proportion of publishers not intending to export over the next three years. The companion qualitative survey was designed to explore the current export strategies, international sales aspirations and perceived impediments to export growth.
The following section begins with a discussion of exporting intentions and then examines the impediments to increasing export sales identified in the survey. The results of the survey in terms of the current pattern of exporting and strategies are then discussed. It then reviews the structure of the publishing industry in terms of the value chain and the opportunities and barriers to New Zealand publishers that are presented by the dynamics of the industry.
This is followed by a consideration of some of the strategies to promote publishing and book exports used overseas. Conclusions are then drawn which may assist in strategy development.
The prospects for raising the level of exports are reasonably positive in terms of the number of publishers indicating that they will definitely export or may possibly export in 2003-5, Figure 13.
It requires just over one quarter of the publishers who said they possibly will export in 2003-2005 to maintain the 2002 number of exporters, Table 10.
| Intent | Number | Proportion |
|---|---|---|
| Definitely will export in 2003-2005 | 148 | 35% |
| Possibly will export in 2003-2005 | 121 | 31% |
| Definitely will not export in 2003-2005 | 101 | 25% |
| No response | 38 | 9% |
| Total | 408 |
It is estimated that publishers spent between $8-10 million in 2002 on book fairs and other promotional expenses. In 2003:
The conventional way to picture the publishing industry is as a value chain comprising a series of operations. In the past companies have tended to focus in one particular step in the chain, Figure 14.
This pattern is now changing. Various factors including a desire to harvest value all along the chain have been driving vertical integration for some time. The rise of the Internet is also changing the relationship between supplier and user with consumers now being able to order on-line from global retailers and direct from publishers. Technology change is also facilitating the growth of micro-companies and self-publishing in electronic media.
The export of published books (as rights, editions and books) from New Zealand is taking place in the context of structural changes in the value chain which are reflected in the routes to market illustrated in Figure 15.
There are some common themes in terms of export strategies which in large measure revolve around developing and maintaining relationships to build and maintain credibility, whether the firm is a large multi-national or a one-man band. A generic pattern for this relationship development is seen in Figure 16.
The relative capacity of the large multi-national and the typical small New Zealand owned publisher to sustain these relationships, however, can vary markedly. Larger firms are able to dedicate staff members full-time to marketing while for the micro-firms which predominate amongst the New Zealand owned publishers it is just one amongst many of the tasks of the "manager"/general factotum. Local firms that are arms of multi-nationals also have the key attribute of credibility with the other companies in their organisation (even though this does not necessarily assure that their overseas affiliates will take their product – credibility is necessary but not sufficient, it opens doors but the product still has to be right).
For a New Zealand publisher with a product they wish to export, the attraction of selling to major overseas publisher/distributor is that this potentially offers instant access to a large market. There are, however, a number of difficulties:
An easier and potentially more successful strategy for the New Zealand independent would be to sell rights to independent publishers in the target overseas markets. They key issue here is identifying successful independent publishers i.e. those that have developed an effective distribution system. This requires up-to-date market information to which smaller New Zealand publishers will typically not have access.
The same issue is faced if seeking to deal through an independent distributor. The sheer numbers make it difficult to relate to them in another country and to identify who to target to get reasonable coverage of the country. There is also the reported risk with using independent distributors that they will not pay for the product. One reported practice is they will buy your "hit" product, but they will pay only when you have another one that they want.
At the retail level there are three main sales channels. The major retail chains are characterised by a mass market, "low end" focus, and volume sales. Working with modest margins they are typically very selective about what they will buy (some have eight pages of criteria!). Meeting such criteria may require substantial reworking of books which can be uneconomic. The discount stores are typically parallel importers of down-market product. The key issue to for the New Zealand independent publisher is the price at which these operations will purchase, a benchmark for which is set by "remaindered" books. The independent book retailers tend to focus on the higher end of the market. Their typically low volumes of sales precludes them as a focus of a volume growth strategy.
The key issue in targeting end users, be they institutions (of which education is a particular focus for New Zealand publishers) or individual readers is simply their numbers and the effort of attracting and retaining their attention in the face of an avalanche of competing messages.
In the face of these issues, there may be a number of preferred pathways for independent New Zealand publishers to get their product to market (their multi-national colleagues having the wider pool of their affiliates and typically having more resources to apply to marketing). Figure 15 has been redrawn below in Figure 17 to show only the pathways that might be preferred.
In large measure, the opportunities for small New Zealand publishers to deal with the vertically integrated majors are insignificant, not just because of the scale difficulties and the multitude of opportunities open to the major but in part because as multi-nationals they have their own access to New Zealand authors.
Given the issues involved, dealing with independent publishers and distributors is not an optimal strategy but it is one that can be made to work with the right connections. It may be preferable ultimately for books and editions to bypass the middle-men in the distribution system and go straight for book sellers. Of the retailers the major chains may prove to be the best target market for books and editions if for no other reason than the fact that there are fewer to understand in terms of their purchase decision-making and the volume of sales is potentially higher.
There are a number of significant New Zealand precedents of selling direct to end users, particularly in the education market, where an individual purchaser may buy a substantial number of books and associated material. Here the keys include defining a specific market niche, and very effective marketing and networking.
A clear understanding of the target market, in this case teachers and administrators, is essential. If teachers really want what you are selling to use in their teaching, (in varying degrees between countries) they can convince parents, purchasing departments, etc. to purchase the resource. Value can be added in this process in a number of ways, as illustrated by Biozone International, a firm based in Hamilton.
Three main classes of impediment have been identified that will need to be addressed if overseas sales of New Zealand books and published intellectual property are to be significantly increased. Using the rhetoric of the interviewees, these are:
Lack of money is commonly identified as a barrier to exporting. Typical funding requirements are for travel to:
All of this travel costs money and part of the difficulty for small companies is that this investment in exporting normally has to be financed out of cashflow.[9]
A second resource perceived to be in short supply is time. In the micro-firms that dominate New Zealand publishing there is often no-one to whom the principal can delegate the key commercial task of relationship management. As a result, in the one-man-band and small company there is not enough time for visits, for follow-up, to go through the cards gathered at the trade fair and systematically email everybody to stay in contact – all key tasks in building the relationships that are essential to successful exporting (particularly in terms of the sale of overseas rights).
A third impediment is a lack of market expertise/ country knowledge about countries targeted for sales. This can mean that effort put into overseas marketing may be partly/completely wasted because the effort is not targeted to the right people in terms of who actually can make the decision to buy the New Zealand intellectual property or books.[10]
For the New Zealand firms the decision to export is essentially one of individual motivation (free from the dictates of a command economy). A barrier to be overcome is that some potential exporting publishers cannot see enough return on the investment of time, money, etc., to actually bother to make the effort. This is expressed in terms of how exporting is "too" this or "too" that: "it's too expensive"; "it's too difficult", "it's too time-consuming" for the results that can be expected to flow from it (all of which may also be true!).
Underpinning this lack of motivation is a set of uncertainties about working in foreign countries, typically in terms of:
Book publishing has its share of stories of idiosyncratic success – like authors who approach 127 publishers before one picks up their book and a multi-million dollar business is launched. While the individual "hit" may be unpredictable, a series of basic criteria which are typically necessary to demonstrate that what is on offer could sell in overseas markets can be identified (although these are not sufficient to ensure it will sell). Having the "right product" means that it is:
Success in the domestic market is a practical way in which a publisher can demonstrate that a book will sell. New Zealand publishers face an inherent problem in that the domestic market is swamped by imports. Just in terms of sheer volume and the exposure that domestic product gets in book shops, it is always in a minority and can have a problem achieving visibility.
The most obvious form of ensuring "fit" with the target market is translation for non-English speaking countries. This can be an issue if selling books, but less so if selling rights because the overseas publisher buying the intellectual property will normally manage the translation.
Adaptation of material can be an expensive but necessary task. This is particularly the case in the education market because it is not sufficient to assume that the material that was written to reflect conditions appropriate to teaching New Zealand children will fit the UK, Canadian or American markets. Furthermore, thinking in terms of national aggregates is not sufficient given the autonomy of local and regional education boards. Maintaining relevance to the market is also an on-going task, as curricula change.
In the case of books that have a general subject then typically these need to have a modest/minimal New Zealand focus if they are to be marketable overseas. A DIY book which focuses on local materials and building systems in metric units, for instance would have little relevance in the US. Essentially it becomes an issue of the cost of re-working the book. This cost may be avoided by selling rights rather than books, as the re-working becomes the responsibility of the publisher that is buying the product, but the book must have particular value to make this worthwhile in the face of domestically-produced books in the overseas market.
The rise of the Internet, the recording of creative production (written, visual and audio) is a challenge to traditional production and copyright. While music and DVD file swapping has attracted much attention, publishing has been similarly affected. There is a recent example of a purported Jamie Oliver cook book which went around the world on the Web.[11] Even an elaborate hoax of this type can reduce the anticipated income to the publisher (and author) from book and rights sales by people having free access to a document via the Internet.
As markets become more sophisticated and adding value to products becomes more prevalent it is important to ensure appropriate packaging for development of the product to suit the overseas market. If selling rights and not books then the potential to exploit those rights in different media may be useful leverage in some markets.
The UK provides some useful examples of strategy development in both the broader creative industries (of which book publishing is a minor part) and more specifically related to publishing. The work builds on the mapping of the creative industries (including publishing) undertaken in the late 1990s by the Department of Culture Media and Sport (DCMS). This led to the publication of the Creative Industries Mapping Document in 1998 and its subsequent updating in 2001. The DCMS had a broader coverage of publishing than that used in the current research, although it did separate out books and learned journals for which it reported revenues of £4,476M in 1999. [12]
In 2002 the results of a major study on the publishing industry for the Department of Trade and Industry was published. [13] It identified three challenges for the industry to meet as it moved towards operating in a knowledge economy:
As a result of these investigation a 34 point Action Plan was developed for government, industry and associated stakeholders. Some of the highlights are set out in Table 11.
Expressing a concern that UK rules make it easier for new entrants into the UK media market from abroad to establish a presence here than for UK companies to build a strong home base, it was recommended that:
Concerned about the supply of a skilled workforce it was recommended that:
Better understanding of the scope of the industry and the way it is perceived underpin recommendations to:
Acknowledgement of the growing importance of information technology was reflected in recommendations:
Issues around gaining a better understanding and servicing the end customer prompted recommendations that:
The need to service the advertiser more effectively and to extend channels to the end consumer were reflected in recommendations that:
The report also contains a further 18 action points related to the changing competitive landscape addressing a range of issues including:
The action plan for industry development will build on a range of existing strategies for growing the industry in the UK. The Publishers Association, for example, runs market familiarisation seminars such as that held in March 2003 on the US market held in conjunction with the London Book Fair. [16] The Association also provides market intelligence for a wide range of countries. [17]
One of the more sophisticated strategies to develop national book publishing has been put in place by Heritage Canada[18]. Its programme is intended to strengthen the capacity of the Canadian-owned and controlled sector of the industry to publish and market Canadian books in both domestic and international markets. It is designed, amongst other things, to:
The BPIDP includes a specific component administered by the Association for the Export of Canadian Books designed to:
Canadian publishers can apply for financial assistance for their attempts to expand export markets for their Canadian books. Eligible marketing costs include:
Other measures to promote publishing also recognise the interdependency of publishing and origination. Various schemes are in place around the world to encourage creative production including exemption from income tax for authors in Ireland and an extensive programme of support for authors and related businesses in Denmark.
The analysis of market structure and dynamics and of the impediments to increased exports of New Zealand published books provided a number of elements required for strategy development. Looking, for example, at the impediments in terms of the issues and consequences enables potential interventions to be identified, Figure 18.
Similarly each of the possible market development strategies for independent New Zealand publishers discussed in Section 5.2 can be seen to have an associated market research agenda. If selling rights, for example, it is necessary to identify the successful independent overseas publishers. A database of useful contacts (as provided in the UK Publishing Association's market reports) would be a useful starting point with general benefit.
There are clearly issues of scale in the New Zealand market which create particular challenges for the development of the local publishing industry. Many of the issues, such as the perceived need for a strong domestic market, and possible strategies have been put in place elsewhere and there is much to learn and interpret from that experience.
[1] There has been some official support for overseas marketing. Trade New Zealand (now a division of New Zealand Trade and Enterprise, for instance, has supported participation in the Frankfurt Book Fair for a number of years.
[2] see, for example, PriceWaterhouseCoopers, (2000), Visitor Industry Businesses Research Outcomes, prepared for Destination Northland, with a response rate of 16%.
[3] RFP page 10, section 10, third bullet point. The adopted "book" definition required an ISBN.
[4] Statistics New Zealand, (2003) "New Zealand External Trade Statistics June 2003", Section 3 Commodity Trade by HS Classification.
[5] It should be noted that this will be much more significant to publishers (and authors) than its contribution of a little over 3% to the total might suggest, since no printing costs are met out of it.
[6] Although downloads can be numerous if no payment is required.
[7] Other sectors addressed this by accreditation, e.g. retailers on ZDNet (www.zdnet.com).
[8] Some of the authors included may not be New Zealanders, but authorship was not surveyed
[9] Clearly there is also the option for some of raising investment funds to finance development. A key in determining the bankability of a proposition is likely to be the experience of the person seeking the funding. If, for example, they have already had extensive experience in exporting as an employee and have perhaps explored setting up their own business while still an employee, they might be an attractive proposition to a bank and bee able to raise six figure sums.
[10] From an author's point of view it is essential that the product is controlled by a publisher with significant marketing skills. If the publisher is too small to have the cashflow to afford the investment in marketing (and can't substitute cash with process and networks), then the product can fail because it isn't with someone who can develop it.
[11] See the discussion at: http://www.planetpdf.com/mainpage.asp?webpageid=2962.
[12] Department of Culture Media and Sport (2001), Creative Industries Mapping Document, DCMS, London, p11|02, (available at: www.culture.gov.uk/creative/mapping.html).
[13] Department of Trade and Industry, (2002), Publishing in the knowledge economy: Competitiveness analysis of the UK publishing media sector, DTI, London.
[14] CRM is Customer Relationship Management.
[15] CTN is a UK retail class comprising Confectioners, Tobacconists and Newsagents.
[16] US Book Market: A Route Map for UK Publishers, US Book Market Seminar at London Book Fair, 16 March 2003.
[18]Refer: Publishing Programs: Book Publishing Industry Development Program (BPIDP), Applicant's Guide 2001-2002, Canadian Heritage: Patrimoine canadien, Ottawa, 18pp.
