BISG TRENDS 2008: Challenges Ahead

The book industry should expect to face a challenging economy for the remainder of 2008 and for most of 2009, according to the Book Industry Study Group's (BISG) Book Industry TRENDS 2008. BISG announced some key findings of the study (which will be released on June 16) during a session on Friday, May 30, at BookExpo America. Michael Healy, executive director of BISG, hosted the BEA presentation, which featured Al Greco, senior researcher at the Institute for Publishing Research.

All told, "2007 turned out to be a pretty good year," said Greco, who reported that publishers' net revenues in 2007 increased to $37.26 billion, an increase of 4.4 percent over 2006. Units sold for the year increased by just less than 1 percent to 3.1 billion, while domestic consumer expenditures increased 4.4 percent to $56.63 billion. "Revenue increased due to increased suggested retail prices," he added.

Noting that over the next few years, the tax shortfall among the 50 states will reach more than $38 billion combined, Greco said, "The economy in 2008 and 2009 will be a challenging one, but we expect to see an uptick in 2010, maybe the last half of 2009."

Net publisher revenues are expected to increase by 2.8 percent in both 2008 and 2009, though units sold are predicted to decrease by 0.7 percent in 2008 and to remain flat in 2009. Consumer expenditures are expected to increase by 2.7 percent and 2.8 percent in 2008 and 2009, respectively. "There will be a significant slowdown in 2008 -- there will be continued increases in suggested retail prices, and we don't expect gas prices to go down, though there will be steady growth overall in terms of revenue."

Healy began the BISG presentation with a discussion of data on smaller publishers provided by InfoTrends, which, he explained, makes TRENDS that much more reliable. "There are 80,000 publishers in the U.S. with revenues of $50K or less, and the total revenue of those publishers accounts for just over $12.2 billion a year, so small publishers account for one-third of the revenue in the publishing industry," he explained. "Revenue from small publishers is declining, but the number of active [small] publishers is growing."

Greco provided some of TRENDS key findings and predictions:

• TRENDS estimates that adult trade net dollar sales increased 4.3 percent in 2007 to $9.6 billion, 1.8 percent in units sold, and 4.4 percent in domestic consumer expenditures.
  
  
• In the Juvenile Trade category, publishers' net dollar sales grew by 7.5 percent to $3.7 billion in 2007 (in large part due to the July release of the final title in the Harry Potter series), and they are expected to increase by just 0.1 percent in 2008. "This will be a very tough year for juvenile," Greco said. "But it's tough to compare 2008 to 2007 because of Harry Potter. This sector is in better shape than some of these categories indicate."
  
  
• The mass market paperback segment "suffered some serious declines" in 2007, with net dollar sales falling by 3.8 percent in 2007 to $1.8 billion, and revenues are expected to decline by 2.0 percent in 2008. The key reason for the decline was because of poor sales in the Romance sector.
  
  
• Though there was a slight softening in the religious book market, it once again showed significant increases as compared to other categories. In 2007, net dollar sales increased by 6.3 percent to $2.6 billion, and are expected to grow by 5.6 percent in 2008.
  
  
• Sales in the EL-HI market were estimated to be $5.1 billion in 2007, an increase of 6.4 percent over 2006, though BISG estimates that growth will jump by only 3.8 percent in 2008. These numbers do not include standardized tests.