The number of publishers becoming insolvent has jumped 42% over the last year. 98 publishers went bust in the last year,* up from 69 the year before, according to research by Wilkins Kennedy, the Top-25 accountancy firm.
Wilkins Kennedy explains that publishers’ business models have been undermined by the strategy of discount sellers – such as Amazon and the supermarkets – forcing publishers to cut their margins so that they can sell books at much lower prices.
Amazon’s highly organised marketplace for second hand books also makes it far easier for consumers to get hold of recent hardbacks, textbooks and other usually expensive books at a vastly reduced cost. As a result of this, the number of insolvencies amongst publishers has increased year by year.
Comments Anthony Cork, Partner of Wilkins Kennedy: ‘The growth of the internet has accelerated a dynamic that started with the end of the ‘Net Book Agreement in 1997. The rise of Amazon and other ‘discount’ sellers with massive buying power means the pressure on publishers’ margins is now immense. While publishers might be able to sustain relatively small margins on a best-seller, it is much harder for niche publishers. At the same time, the arrival of Amazon has transformed the second-hand book trade from a fairly minor nuisance to a serious threat. Where once you had to trawl the second hand bookshops if you wanted to get hold of a cheap hardback or academic book, you can now be fairly certain of getting hold of what you want at the click of a button, and the publisher will not make a penny.’
Wilkins Kennedy adds that the growing popularity of electronic books has been detrimental to some traditional publishers, and poses major challenges for the industry.
The majority of the publisher insolvencies related to book businesses, but the figure, compiled by accountancy firm Wilkins Kennedy from Companies House reports for the 12 months ending August 31 2013, also comprises publishers of newspapers, journals, periodicals and directories.
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