Harry Potter and a nightmare for the high street bookshops
The Independent on Sunday
Millions of readers around the world may be shivering with excitement at the thought of Harry Potter and the Deathly Hallows being released at midnight on 21 July, but to those who sell the book, it is more likely to be remembered as Harry Potter and the Nightmare on High Street.
For, to them, Harry Potter is a loser. And that, ironically, may well include Bloomsbury, the publisher who found a diamond in the rockface when it discovered the author J K Rowling.
The problem is that the seventh and last book in the Potter series is expected to be the fastest-selling book of all time.
So the supermarkets, never ones to miss a “pile ‘em high, sell ‘em cheap” trick, will sell it way below cover price. And that means trouble for every other retailer, even the book chains.
Small bookshops, especially, will suffer as they struggle to keep up with the discounts offered by the industry’s big players.
Shop owners like Marilyn Brocklehurst of Norfolk Children’s Book Centre in Alby, near Cromer, said she will have to stock the book, once again, against her will for the 21 July launch.
“We will make a loss on it, but we can’t afford not to sell it,” she said. “We have to pay Bloomsbury £10.74 a copy, so I can’t afford to sell it for the price it is in Asda.” Thousands of bookshops around the country will face the same situation.
At £8.87, almost half the £17.99 cover price, Asda is treating the book as a loss leader to tempt customers through its doors rather than those of one of its rivals. Even the UK’s biggest book chain, Waterstone’s, is feeling the squeeze.
Simon Fox, who runs its parent company HMV, lamented last time round that high street bookstores looked uncompetitive, forcing him to offer the latest installment for £8.99.
But the traumas that Potter is causing bookshops pale next to the trouble the boy wizard is inadvertently causing Bloomsbury.
The publishing house was transformed from feisty independent with a few big names, such as Margaret Atwood and Will Self, to a stock market star with the world’s most valuable author.
Two years ago, the penultimate Potter novel, Harry Potter and the Half-Blood Prince, sold more copies in one day than Dan Brown’s Da Vinci Code did in a year.
And next month’s launch of Harry Potter and the Deathly Hallows will see it top the bestseller charts with sales of £17m, doubling the amount normally sold in each week.
The flipside is that when Potter hangs up his wand he will also leave a big hole at the publisher. Already Bloomsbury is facing a financial crisis with shareholders suffering from post-Potter jitters.
The value of the company has fallen by half, from £285m to £134m, because of fears about what will happen when Harry is no more.
The first clues of what this will mean financially came in April, when Bloomsbury revealed its profits had collapsed by three-quarters to £5.2m. The shortfall was due to last year’s lack of a Potter title and a string of flops.
The marketing director of one rival publisher said: “I think Potter has put Bloomsbury under unrealistic pressure. Most publishers operate on a 5 per cent profit margin. So effectively in non-Harry Potter years, Bloomsbury is being asked to make four times that – 20 per cent. That is an unrealistic amount of money in publishing.”
In search of a new cash cow, the publisher last year was accused of being the Roman Abramovich of publishing, shelling out several eye-watering advances: £2 million apiece for historian William Dalrymple and cookery writer Hugh Fearnley-Whittingstall, as well as the over-sized deal for David Blunkett’s diaries, which didn’t sell.
The one positive legacy Potter-mania will leave behind, however, is a healthy market for children’s books. J K Rowling proved, contrary to popular opinion, that boys read.
As a result Harry Potter has led to a tide of writers following in her wake – Daniel Handler (Lemony Snicket) and current favourites Anthony Horowitz (Stormbreaker) and Charlie Higson (Young James Bond).
Wizard Facts: Harry and the money trail
Bloomsbury has paid J K Rowling an undisclosed fee in advance of the publication of ‘Harry Potter and the Deathly Hallows’.
At least three million copies of the 608-page hardback will roll off the presses to meet first-day sale orders on 21 July.
Asda has proclaimed its intention to sell copies of the book for £8.87, an apparent net loss of £1.87.
Books are dispatched to retailers by wholesalers for £10.74 per copy. The hardback price is £17.99.
Amazon will ship out 1.5 million copies and more of the book at a price of £8.99 each.
As Tesco and Asda put their books out on the shelves, small retailers will be forced to buy stock from supermarkets so they can sell copies at a competitive price.
7 Responses to “Harry Potter and a nightmare for the high street bookshops”
ahhh that profit/loss problem sounds so familiar, Danuta. Great successes in publishing are such a double edged sword. All my time at Scholastic we were pushed harder and harder to produce more and more sales from our successful brands. There comes a time for every brand when the luck runs out and the punters stop buying… Bloomsbury have done such a fantastic job with HP, I hope they find something to take up some of the slack.
That is very interesting. It seems bizarre. In the old days of course, it could never have happened because there was an agreement forbidding bookshops to undercut……….
I can’t feel too sorry for Bloomsbury really. They may lose a little in the short term – but they have benefited quite a lot too!
Excellent blog. I found you through Flowerpot Days.
Thanks Sally. I tend to agree with Julia that these things are a double edged sword. Of course the great unsaid in all of this is the City and how the corporate shareholders create unrealistic pressure on a market. For Bloomsbury they are under pressure to find the “next Harry Potter” and for Waterstone’s to match the market share of Tesco…Capitalism hey?
What is due to happen with HP7 is only to be expected given the current state of the booktrade ; however, what is not to be expected is that Bloomsbury should “mug away” the second book by Khaled Hosseini.
Bloomsbury ‘offered’ an exclusive free excerpt of this title to Amazon who are currently predatory pricing most populist titles to ensure that the terrestial booktrade finds it near impossible to make a profit from selling such lines.
“A Thousand Splendid Suns” was launched by Amazon at 55% discount, since lowered to 50% – Waterstone.com presumably felt that they had to match price and go 50% off.
Sure fire winners, guaranteed to sell in high volumes ; but treated like brussel sprouts by Bloomsbury who have had a disastrous track record in recent years outside HP and a few select authors.
I expect Bloomsbury to be but one of a long line of business failures in the next three years as publishers behave like demented shipwrecked sailors frantically bailing out the sinking lifeboat.
I think Bloomsbury is very safe from failure, not least because of the money they have made from Harry, and they have had a few successes under their belt, such as Jonathan Strange, don’t forget.
Danuta
Please read Bloomsbury’s last set of accounts, and how they grossly over-valued digital reference rights. Money is of no use to a spendthrift such as Bloomsbury who have squandered so much of the HP inheritance.
When a publisher mugs away an author’s work as with “A Thousand Splendid Suns” then they are facing towards Carey Street. Please remember that “The Kite Runner” is one of the very few modern first editions from the 21st century which is genuinely collectable (true 1st prints, fine in fine d/w command upwards of £200)
Who decides which books get press (Harry Potter) and which get censored? After all, censorship is becoming America’s favorite past-time. The US gov’t (and their corporate friends), already detain protesters, ban books like “America Deceived” from Amazon and Wikipedia, shut down Imus and fire 21-year tenured, BYU physics professor Steven Jones because he proved explosives, thermite in particular, took down the WTC buildings. Free Speech forever (especially for books).
Last link (before Google Books caves to pressure and drops the title):
http://www.iuniverse.com/bookstore/book_detail.asp?&isbn=0-595-38523-0
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