Analyst: Publishers Seeing Steady Print Declines Should Ready for Steep Drop

February 29, 2012 | Jeremy Greenfield Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid

Publishers are more optimistic that they won’t see “significant” drops in print revenue in 2012, according to a recent survey. That optimism may be misplaced.

While print publishing revenues showed a steady decline across the industry in 2011, publishers should ready themselves for a steep drop in 2012 or 2013, according to a Forrester analyst.

In a Digital Book World survey conducted by Forrester Research, 5% of publishers believe their print sales will “decrease significantly” in 2012 versus 12% who thought the same about 2011 when asked in 2010. The percentage of publishers who predicted any print declines in 2012 was virtually unchanged versus the previous year.

“There’s an optimism about the pessimism,” said James L. McQuivey, Ph.D., vice president and principal analyst at Forrester, who conducted the survey. “But in reality the decline hasn’t hit yet. And when it does, it comes in big drops, not gradual tapers – that’s what we learned from music and DVD, both of which tapered down until they hit big drops and shelf-space disappeared rapidly. The same will happen in books, probably by late this year and certainly in 2013.”

In late 2011, book publishers representing 74% of U.S. publishing revenues were surveyed on a wide range of topics concerning digital books. The same survey was conducted in 2010.

According to the Association of American Publishers, print revenue in the two largest publishing segments for which it tracks monthly book sales numbers was down 17.5% and 15.6%, respectively.

(E-book revenue overall was up 117%. E-book revenue’s increase of about half-a-billion dollars just about matched decreases in the adult hardcover and adult paperback segments, the two largest at $1.3 billion and $1.2 billion, respectively.)

At several major book publishing companies, including Penguin and Simon & Schuster, increases in digital revenues accounted for declines in print revenues. But, because of higher profit margins on e-book revenues versus print-book revenues, profits were up even though sales were flat.

For some, less-diversified publishers, a precipitous decline in print due to rapid drops in shelf space could be disastrous.

“For those people – illustrated books, cookbooks – if print goes down, they go out,” said Thad McIlroy, a Vancouver-based digital publishing consultant.

On the even more “pessimistic” side of pessimism, fewer publishers believe they will see “significant” gains in print in 2012 than did in last year’s version of the survey: 2% versus 9%.

“There is always a segment that can expect to grow,” said McQuivey. “But these successes will be modest and may not represent an opportunity worth investing in because they won’t last.”