The Market Demand for Books in the U.S.: 2006-2011

The Market Demand for Books in the U.S.: 2006-2011

Albert N. GrecoProfessor of Marketing

Fordham UniversityGraduate School of Business Administration

New York Cityand

The Institute for Publishing Research, Inc.201-439-1839

[email protected]

November 2008

mailto:[email protected]

Areas of ResearchBook Publishing Industry

• Publishers (Editorial; Sales/marketing; Intellectual property issues; Exports and imports; Market/consumer demand issues)

• Retailers (B & N; Borders; BAMM; Mass merchants; Price clubs; etc.)• Distributors (B & T; Ingram; Hudson News; etc)• Libraries (Public; School; College/university; Special libraries)

Scholarly Journals Publishing

Scholarly Communications

Marketing Entertainment (Industries)• Newspapers and Magazines• Motion Picture Industry• Broadway and the Performing Arts• Toys, Games, and Theme Parks

Market Demand Research Methodology

U.S. Department of Commerce Bureau of the CensusU.S. Department of Education U.S. Department of LaborThe Congressional Budget Office National Endowment For the ArtsInternational Trade Administration B.E.A.The Federal Reserve Bank S.E.C. Reports

Quarterly Reports Annual ReportsConference Calls Interviews/VisitsWall Street Analysts’ Reports Publishers WeeklySubtext The Wall Street JournalThe Financial Times The L.A. TimesThe Washington Post CNBCThe New York Times Bloomberg

Detailed Data Since 1982 ARIMA Models

Marketing Data: Major Trade Book Publishers FY 20007-2008 ($ Millions)

U.S. % of U.S. World U.S. %Sales Market Sales World

Share SalesRandom House $1,266 13.2% $2,388 53%Penguin 1,015 10.6 1,692 60HarperCollins 970 10.2 1,388 70Simon & Schuster 730 7.6 886 82Hachette 515 5.4 515 100Wiley 390 4.1 469 83Scholastic 390 4.1 422 92Holtzbrinck 225 2.4 350 64HM/Harcourt 180 1.9 197 91Rodale 193 2.0 193 100Thomas Nelson 190 2.0 190 100Sterling 150 1.6 150 100

Marketing Data: Juvenile Book Publishers (Net Publishers’ Revenues; $ Million)

2007 2006 % Change

Scholastic $432 $226 91.1%Random House 320 322 -6.2%HarperCollins 228 225 1.3%Penguin 224 223 0.4%Simon & Schuster 160 163 -1.8%Disney 80 84 -4.8%Candlewick Press 65 60 8.3%Little, Brown 52 47 10.6%Houghton Mifflin* 50 53 -5.6%Holtzbrinck 27 25 8.0%Harcourt* 20 23 -13.0%

TOTAL $1,658 $1,451 14.2%*Merged in 2008

Market Demand Data ForecastsDetermine “Top Line” Forecasts for Books in the U.S.

Revenues Projections Projections ReleaseEstimates Release Date Date: U.S. Department

of Commerce

2004 AG: Jan. 2004 Com. Dept. Dec. 20052005 AG: Jan. 2005 Com. Dept. Dec. 20062006 AG: Jan. 2006 Com. Dept. Dec. 20072007 AG: Jan. 2007 Com. Dept. Dec. 2008

2004- 98.4% of 2006 Commerce’s data

The Law of Supply and Demand*Supply and demand are the forces that make market economies work.

Law of Supply:A microecnomic law stating that, all other factors being equal, asthe price of a good or service increases, the quantity of goods orservices offered by suppliers increases or decreases.

Law of Demand:A microecnomic law that states that, all other factors beingequal, as the price of a good or service increases, consumerdemand for the good or service will decrease and vice versa.

* There are exceptions; e.g. gas used in cars, etc.

SupplyA fundamental economic concept that describes the total amountof a specific good or service that is available to consumers. Supplycan relate to the amount available at a specific price or the amountavailable across a range of prices.

Each product will have its own supply and demand patternsbased on price, utility, or personal preference. If consumersdemand more of a product and are willing to pay more for it, thenproducers will add to the supply.

As the supply increases, the price will fall given the same level ofdemand.

DemandAn economic principle that describes a consumer’s desire andwillingness to pay a price for a specific good or service.

Holding all other factors constant, the price of a good or serviceincreases as the demand increases, and vice versa.

Companies spend money to determine the amount of demandthat the public has for its products and services.

Incorrect estimates will either result in money left on the table if itunderestimates demand OR looses money if it overestimatesdemand.

Market Demand: Media Usage (Hours Per Person per Year Above the Age of 18; Selected List)

2006 2007 2008 2009 2010 2011Consumer• Books 110 109 109 108 108 108• Magazines 125 125 126 124 124 122• Newspapers 178 171 164 159 155 152

Videogames (+12) 76 85 101 116 125 131Broadcast TV (Net/Ind.) 650 639 639 642 643 644Cable TV (Basic/Prem.) 962 973 964 964 964 958Internet (+12) 182 189 193 195 197 197Mobile (Downloads)12 15 19 24 29 32Box Office 12 12 12 12 12 12Total media 3,499 3,496 3,493 3,493 3,509 3,502

Source: The Statistical Abstract of the U.S.

Market Demand: Media Expenditures (Dollars Per Person per Year Above the Age of 18; Selected List)

2006 2007 2008 2008 2010 2011Consumer• Books $99.56103.60 105.52 107.96 110.75 114.03• Magazines 44.46 44.35 44.42 43.97 44.31 43.10• Newspapers 49.23 47.74 45.78 44.61 43.85 44.20

Video Games 33.91 43.91 55.77 67.60 75.36 80.76Cable TV (Basic/Prem.) 306.60 330.93 354.51 378.15 400.78 422.82Internet 54.06 55.45 59.53 63.88 67.42 70.65Mobile 12.33 15.66 19.4 23.42 27.22 30.70Box Office 36.36 38.01 38.16 37.66 38.80 39.29

Total all media 813.19 851.57 903.30 950.64 998.07 1,038.70

Source: The Statistical Abstract of the U.S.

Market Segmentation

Refers to the aggregation of prospective buyersinto clearly defined groups (i.e., marketsegments) that have common wants and needsand will respond similarly to a marketing“action”.

Market Demand Shock And Market Anomaly

A sudden surprise event (sometimes called a “BlackSwan”) that increases or decreases demand for goods orservices and has an impact on prices.

A positive shock increases demand.

A negative shock will decrease demand

Market Equilibrium

The state in which market supply and marketdemand balance each other and, as a result, pricesbecome stable. Generally, when there is too muchsupply for goods or services, the price does down,which results in higher demand.

The balancing effect of supply and demand resultsin a state of equilibrium (which is often notachieved).

Market Equilibrium

The equilibrium price is where the supply ofgoods and services matches demand.

Is there “market equilibrium” in the U.S. bookindustry?

Supply: U.S. New Book Title Output

2003 2004 2005 2006 2007Agriculture 1,535 1,501 1,483 1,426 1,298Arts 8,431 8,779 8,762 9,201 9,423Biography 9,837 9,765 8,904 11,271 10,615Business 7,614 7,905 7,885 8,719 7,651Computers 8,955 6,928 6,092 5,472 5,709Cookery 2,590 2,857 3,062 2,705 2,673Education 7,562 7,135 6,951 6,449 7,335Fiction 24,666 38,832 34,927 42,777 50,071General Works 2,195 4,266 2,017 2,078 2,346History 13,192 14,191 12,686 15,241 14,764

Source: R.R. Bowker

Supply: U.S. New Book Title Output

2003 2004 2005 2006 2007Home Economics 1,628 1,760 1,634 1,755 1,682Juveniles 33,469 37,976 32,112 30,395 30,063Language 6,899 6,088 5,669 5,134 4,846Law 4,675 4,509 5,468 5,359 5,380Literature 6,493 7,972 6,297 8,227 9,796Medicine 10,552 11,834 11,688 10,931 10,720Music 3,740 4,859 4,076 3,545 3,407Personal Finance 402 552 542 582 538Philosophy/Psych. 10,040 11,410 10,556 12,961 12,635Poetry/Drama 7,007 9,891 9,414 10,700 10,258

Source: R.R. Bowker

Supply: U.S. New Book Title Output2003 2004 2005 2006 2007

Religion 14,517 21,669 16,785 19,854 18,956Science 12,962 12,639 12,626 12,655 12,872Sociology/Economics 23,530 23,222 23,750 27,675 24,596Sports/recreation 6,323 6,196 6,438 6,666 6,363Technology 7,142 7,753 7,138 7,262 6,858Travel 4,172 5,304 4,941 5,376 5,793

Subtotal 240,098 275,793 251,903 274,416 276,649

POD/Short Run/Misc. 26,224 19,730 30,597 21,936 134,773

Total 266,322 295,523 282,500 296,352 411,422Annual % Change -- +11% -4.4% +4.9% +38.8%

Source: R.R. Bowker

Supply: U.S. New Book Title Output: 2007New Annual Titles: 411,422

Net Title Published Every Day: 1,127.18 (365 Days)

New Title Published Every Hour: 46.97

New Fiction Title Published Every Hour: 5.72New Juvenile Title Published Every Hour: 3.43New Religious Title Published Every Hour: 2.16New Sociology/Econ. Title Pub. Every Hour: 2.81

2006 2007 2008 2009 2010 2011

Publishers Net Dollar Sales Millions USD $ 35,685.9 37,264.1 38,298.6 39,371.0 40,653.7 42,009.9 % Change 4.4 2.8 2.8 3.3 3.3

Publishers Net Units Millions 3,100.2 3,126.8 3,106.3 3,107.0 3,116.4 3,132.2 % Change 0.9 -0.7 0.0 0.3 0.5

Domestic ConsumerExpenditures Millions USD $ 54,244.0 56,625.1 58,128.8 59,739.3 61,574.7 63,525.0 % Change 4.4 2.7 2.8 3.1 3.2

All Books (Excl. Stand. Tests)

2006 2007 2008 2009 2010 2011


Publishers Net Units Millions 824.3 838.8 835.8 839.6 841.7 844.2 % Change 1.8 -0.4 0.5 0.3 0.3


Adult Trade Books (Total)

2006 2007 2008 2009 2010 2011


Publishers Net Units Millions 873.4 900.9 888.3 886.9 887.4 888.2 % Change 3.1 -1.4 -0.2 0.1 0.1


Juvenile Trade Books (Total)

Juvenile Trade Book Categories2006 2007

Fiction/YA/Fantasy $ 529.9* $ 736.9Picture Books 1,355.6 1,369.2Chapter Books 457.5 462.6Readers: Early Beginners 305.8 324.7Workbooks/Activity Books 452.0 457.1Religion 58.7 59.6Reference 129.7 132.3Novelty/Film Tie-Ins/”Other” 110.7 114.2

*Net Publishers’ Revenues

Juvenile Trade Books: Hardbound Best SellersHow Many Copies Do You Have to Sell to Make the Top Ten List?

2007 H.P & The Deathly Hallows (13,114,692)2006 The End (Series of Unfortunate Events) (2,089,054)2005 H.P. & The Half-Blood Prince (13,500,000)2004 The Grim Grotto (1,404,367)2003 H.P & the Order of the Phoenix (12,193,840)2002 Carnivorous Carnival (Series of Unfort. Events)

(726,543) 2001 The Prayer for Jabez for Kids (478,957)2002 H.P. and the Goblet of Fire (7,900,000)2003 H.P. and the Prisoner of Azkaban (3,600,000)

N.B. H.P is Harry Potter

2006 2007 2008 2009 2010 2011

Publishers Net Dollar Sales Millions USD $ 1,886.2 1,814.7 1,777.7 1,765.4 1,771.5 1,790.6 % Change -3.8 -2.0 -0.7 0.3 1.1

Publishers Net Units Millions 575.1 541.8 520.8 506.5 495.3 488.9 % Change -5.8 -3.9 -2.8 -2.2 -1.3

Domestic ConsumerExpenditures Millions USD $ 3,242.2 3,125.4 3,069.2 3,047.7 3,054.9 3,081.8 % Change -3.6 -1.8 -0.7 0.2 0.9

Mass Market Paperback Books

2006 2007 2008 2009 2010 2011


Publishers Net Units Millions 263.4 275.5 284.1 293.3 302.7 312.2 % Change 4.2 3.5 3.2 3.2 3.1


Religious Books (Total)

2006 2007 2008 2009 2010 2011




* Print. Digital books TBA.

Professional Books (Total)*

2006 2007 2008 2009 2010 2011




*Includes printed textbooks and supplementals. Digital TBA.

K-12/Elhi [Elementary and High School] Books (Total)*

2006 2007 2008 2009 2010 2011


Standardized Tests (Total)

2006 2007 2008 2009 2010 2011




*Includes printed textbooks. Digital TBA.

College Books (Total)*

2006 2007 2008 2009 2010 2011

Publishers Net Dollar Sales Millions USD $ 531.0 546.9 563.3 580.2 597.0 613.7 % Change 3.0 3.0 3.0 2.9 2.8

Publishers Net Units Millions 29.0 28.7 29.1 28.2 27.9 27.7 % Change -1.0 1.4 -3.1 -1.1 -0.7

Domestic ConsumerExpenditures Millions USD $ 641.7 683.6 704.1 724.5 745.5 766.4 % Change 6.5 3.0 2.9 2.9 2.8

University Press Books (Total)

Market Demand: U.S. Books

Certain book categories have or will experience declinesin unit sales. Why? Problem with the “marketing mix”?

Product (not what consumers want?)Price (too expensive for consumers?)Placement (books are hard to find?

Promotion (publishers and retailers do not promote?)or

Economic issues (discretionary expenditure?)

Demographic Data: Who Reads Books?

Percent of U.S. Population1982 2002

Read any book 60.0% 56.6%Read literature 54.0% 46.7%

Literary Reading 1982 1992 2002Males 48.1% 47.4% 37.6%Females 63.0% 60.3% 56.1%

Source: National Endowment for the Arts

Demographic Data: Who Reads Books?Men’s Favorite Book Categories

Under 18 Science Fiction & Fantasy18-24 Science Fiction & Fantasy25-34 Science Fiction & Fantasy35-44 Science Fiction & Fantasy45-54 History55-64 Mystery+65 Mystery

Source: Codex Group

Demographic Data: Who Reads Books?Women’s Favorite Book Categories

Under 18 Young Adult18-24 Literary Fiction25-34 Literary Fiction35-44 Romance45-54 Romance55-64 Romance+65 Romance

Source: Codex Group


Literary Reading By Age1982 1992 2002

18-24 58.6% 53.3% 42.8%25-34 62.1% 54.8% 47.7%35-44 58.7% 58.8% 46.6%55-64 54.8% 56.8% 51.6%65-74 52.8% 52.8% 43.8%+75 47.2% 50.8% 45.3%Source: National Endowment for the Arts


Literary Reading By Age (Millions)1982 1992 2002

18-24 17.8 12.9 11.425-34 24.9 23.1 17.635-44 17.0 23.4 20.545-54 12.7 15.8 20.155-64 12.0 11.3 12.665-74 7.8 9.3 8.0+75 4.1 5.0 5.7Source: National Endowment for the Arts

Demographic Data: Who Reads Books?Literary Reading by Percentage of Population

by Geographic Region: 2002

Northeast 49.7% [N.E. 50.0%; Mid-Atlantic 49.7%]

Midwest 46.7% [West No. Cen. 49.9%; East No. Cen.45.5%]

South 42.1% [South At. 43.3%; West So. Cen. 40.9%East So. Cen. 40.9%]

West 51.2% [Mountain 53.4%; Pacific 50.4%]



Literary Reading by Gender1982 1992 2002

Males 49.1% 47.4% 37.6%

Females 63.0% 60.3% 55.1%

Overall56.4% 54.2% 46.7%


Demographic Data: Who Reads Books?America’s Most Literate Cities

MinneapolisSeattleSt. PaulDenverWashington, DCSt. LouisSan FranciscoAtlantaPittsburghBoston

Source: Jack Miller. Based on: booksellers; educational attainment; Internetresources; library resources; newspaper circulation; and periodical publications.

Marketing Information: Where Do Consumers Find Out About New Books?

Under 25 55-64Browsing in local bookstore 67% 74%Recommendation friends 63 62Displays in local bookstore 45 47Info. In author’s prior book 32 32 re new bookLibrary/librarians 25 22E-mail from bookseller 24 25Rec. Bookstore staff 16 14E-mail from author/bookseller 12 10TV/radio ad 6 7

Marketing Data: Favorite Authors: Under 25

Stephanie Meyer 20%Kanye West 7Chuck Palahniuk 6Meg Cabot 9Dave Eggers 3Chelsea Handler 2Gregory Maguire 5Chris Paolini 5

Marketing Data: Favorite Authors: +25

Stephen King 14%Mitch Albom 7Harper Lee 13Jodi Picoult 6John Steinbeck 11Philip Roth 2Bill Bryson 2John Updike 2Daniel Silva 1Carl Hiaasen 2Janet Evanovich 4John Grisham 7Ian Fleming 2Lee Child 1Patricia Cornwell 2Ken Follett 1

Marketing Data: Top 15 Trade Book Categories: 2007

% of Total RevenuesAdult Fiction 17.97%Juvenile 16.26Religion 15.4Romance 6.97Health/Diet 5.22Business 4.62Self-Help/Inspiration 4.19Gen. Ref. 3.94Computer/Tech 3.42Cooking/Home Ent. 3.25Art/Illus/Coffee Table 3.17Sci-Fi/Mystery 2.74Travel 1.88Biography 1.63Personal Finance 1.37Other/Misc. 7.96

Marketing Data: Trade Books 2007: Where Do Consumers Purchase New Trade Books?

Revenues UnitsBookstores 48.84% 49.83General Retailers 25.80 25.90College Adoptions7.80 7.49Libraries & Insts. 8.28 4.43Elhi Schools 3.34 2.08Direct to Consumers 5.95 10.29

Marketing Data: Juvenile Books: Where Do Consumers Purchase New Juvenile Books?

Revenues UnitsLarge Bks.Chain 25.3% 18.3%Book Clubs 15.3 16.2Internet 11.9 8.3Mass Merchants 6.5 7.9Indep/Sm. Book Chains 9.0 8.6Mail Order 5.2 4.5Price Clubs 5.0 3.8Food/Drug 2.1 2.9Dollar Stores 2.1 5.7Used Bookstores 1.6 5.3Books Fairs 0.5 0.8Other 15.6 17.9

Market Demand: Will Consumers Accept Digital “E-Books”?

Are you ready and willing to read adigital book?

On a desktop computer?On a laptop computer?

On a SONY Reader ($270)?On a Kindle ($350)?

On a smart phone (Black Berry, etc.)?On a “Palm Pilot” type hand-held device?

Marketing Issue: Disruptive Technologies

Michael Porter’s Five Forces provide a framework toanalyze this question:

1. Competition in the industry

2. Potential of new entrants into the industry3. Power of suppliers4. Power of customers

5. Threat of substitute products

Market Demand: Threat of Substitutes

A product or service that partly satisfies the wants and needsof consumers.

For a product to be a substitute of another good, it must have aparticular relationship with that good OR provide a better service.

When a product’s price increases, the demand for its substitutewill increase because consumers will go looking for a cheaperalternative.

When a product’s price decreases, the demand for its substitutedecreases.

Market Demand: Threat of Substitutes

Switching Costs

This is the cost a consumer incurs as a result of switching toanother product or a supplier.

The switching “cost” could be financial or psychological.

Many companies try to employ marketing strategies that triggersome sort of high switching costs to dissuade consumers fromswitching to a competitor’s product (e.g., cell phone companies; 2year contracts; high cancellation clauses)

Market Demand

Would you have a “switching cost” if youdecided to read your books as “digital books”?

What would be the “switching cost”?

The Changing Marketing Landscape: E-Book Sales: 2003-2007

E-Book Wholesale Revenues: Trade Books

2003 $7.34 Million2004 $9.62 Million2005 $10.83 Million2006 $20.00 Million2007 $31.80 Million

Marketing Data: Kindle Owners Percentage of Age Cohorts

Percent of U.S. Book Buyers18-24 0.2%25-34 0.535-44 0.545-54 0.555-65 0.9+65 0.6

The Changing Marketing Landscape: E-Books

When will consumers switch to digital e-books?

Adult trade booksJuvenile trade booksMass market paperbacksReligious books

Professional booksCollege textbooksK-12 Elhi textbooks, supplementals, stand. tests

University press books

Marketing Data: Library and Institution Sales: 2006-2012 Net Publishers’ Revenues ($ Million)

2006 $3,478.8 2010 $3,975.22007 3,655.8 2011 4,091.32008 3,766.9 2012 4,213.42009 3,869.1

N.B. Includes: Public Libraries; School Libraries; College/University Libraries; and Special Libraries

Documents

The Market Demand for Books in the U.S.: 2006-2011