John Harvey-Jones: Why the future looks bleak for books

From a speech given by the former chairman of ICI at the London International Book Fair

It is remarkable how little the publishing industry has changed, and how slow it has been to deal with the problems that have arisen for it over the years. The falling demand for books spells trouble, yet the number of titles published keeps going up. This is obviously in part due to falling production costs for books.

The are parallels to be drawn with the football industry. The top clubs are willing to pay ludicrous advances to what they consider to be the best players, and smaller clubs are left hoping that they will produce the footballing equivalent of Harry Potter. But this approach is like gambling on the pools.

In publishing there is a proclivity to bid up advances to new authors; they are, in fact, wedded to the whole advances system. In truth, they should be trying to spread risk rather than taking it all upon themselves in this way. What they should be doing is cultivating a generous royalties system whereby the author gets the bulk of their money when the books have actually been sold and paid for.

Publishers often have no real view of the cashflow at all. They are spending more and more money and seeing a greater and greater delay before they get a return on their investment. A priority for publishers must be to diminish the period between the initial investment and the earning. On top of this problem there is a growing divide between the number of blockbusters and ones that fail. The 80-20 rule used to apply, whereby 80 per cent would fail and 20 per cent would succeed. Now it is more like 95-5.

People are not buying books on impulse any more and this is another big problem. This is in some respects due to Amazon, the internet bookseller. Now people can just go online and are prepared to wait a few days to get the book. Also, the price of books means that fewer people will buy them on impulse. Other offers such as "buy-one-get-one-free" simply don't work in the publishing market. You either want to read a book or you don't.

It makes me weep buckets when I get a new flier or press release telling me about new books being released which are of no interest to me. Publishers and booksellers should have long ago created a database of who buys books from them and what sort of thing they're interested in, especially publishers in the niche market. I'm often left to read about new books that I'd like to buy in the newspapers.

One of the main problems is that the demand for books has dropped so much. When I was a boy, a long time ago, books provided me with almost all my entertainment and stimulation for my imagination. Now there is so much competition like DVDs and computer games. Even a golden oldie like me has found that whereas I used to read three books a week, now I only read one. At our house we never throw a book away, it would be like throwing away a child, but we've got a large house to keep them all. I appreciate that young people don't always have that facility.

There is no universal solution to this. Indeed, one of the joys of the trade is its diversity. It has always been a sort of hobby trade, and competition has never been as cut-throat as in other industries. Lots of people in publishing believed they could defy the laws of business. It was about prestige, it was about the lifestyle, and they learnt to live off low rations. And they were right, up to a point. Money cannot be the sole objective for the publishing industry. Nevertheless, it's cash that alone can give you the werewithal to pursue your hobby. Publishing needs to get to grips with dry, yet essential, concepts like stock value, stock turnover, cashflow and the time between investment and revenue.

I think that publishers need to sit down and adopt a clear strategy. If they can find a niche and utilise modern technology and then make the business global, then they can do very well. They need to incorporate normal business criteria into what is a necessary and worthwhile trade.