ii PA STATISTICS YEARBOOK 2014 | Highlights

,, £4.3bn Total physical and digital book sales and income from journals

©© 8% to £1.2bn Total digital books and electronic journal subscriptions

ªª 2% to £3,311m Total physical and digital book sales

©© 11% to £563m Total digital book sales

ªª5% to £2,748m Total physical book sales

©© to 17% Digital share of combined physical and digital value book sales

ªª 3% to £1,866m Home sales of physical and digital books

ªª 1% to £1,444m Export sales of physical and digital books

©© 3% to £1,016m Total income from journals

©© 8% to £162m Gross receipts from rights and coeditions

ªª to 94% Share of output on paper from known sources

PA STATISTICS YEARBOOK 2014 iii |  Acknowledgements

The Publishers Association would like to thank Nielsen Book Research, which has been responsible for the compilation and analysis of sales data on books and digital products, and Roger Watson, for the data on publishers’ income from rights and coeditions in this yearbook. Many thanks too for the individual contributions of those who have written the annual and sector reviews and the exchange rates appendix, to Nielsen BookScan for providing assistance and data to help in the yearbook’s compilation, and the participants of the various PA statistics schemes.

Finally, thanks for all the help with this project to the PA’s Yearbook Production Committee, chaired by Mark Gardiner (Penguin Random House), and to Nicholas Clee, the publication’s consultant editor.

Published by:

The Publishers Association 29B Montague Street London WC1B 5BW t +44 (0) 20 7691 9191 f +44 (0) 20 7691 9199 e [email protected] w www.publishers.org.uk

© The Publishers Association 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner.

ISBN: 978-0-85386-376-2

Book and digital data collected, analysed and compiled by:

e [email protected] w www.nielsenbook.co.uk

Rights and coeditions data collected analysed and compiled by:

Roger Watson e [email protected] w www.primaryprogresstoolkit.co.uk

Consultant Editor: Nicholas Clee

Designer: Lindsay Baugh, Howardsgate, based on an original design by Amanda Hawkes Printed and bound in the UK by Lightning Source UK, Milton Keynes.

iv PA STATISTICS YEARBOOK 2014 | Acknowledgements Contents

Acknowledgements iv

Preface xi Richard Mollet, chief executive, The Publishers Association

1 Total book sales 1 Annual review by Dominic Knight, executive director, Macmillan Science and Education and president of The Publishers Association, 2014 –15 1.1 Publisher sales of books: physical and digital 3 1.2 Publisher sales of physical books 6 1.3 Average invoiced price of physical books 9 1.4 Publisher returns of physical books 10 1.5 Publisher sales of digital books 11

2 Home (UK) book sales 13 Sector review by Jenny Todd, associate publisher, Canongate 2.1 Publisher home sales of books: physical and digital 15 2.2 Publisher home sales of physical books, by category 17 2.3 Average invoiced price of physical book home sales, by category 18 2.4 UK physical book market size 19 2.5 Publisher home sales of digital books 20

3 Export book sales 21 Sector review by Jonathan Atkins, international director, Pan Macmillan 3.1 Publisher export sales of books: physical and digital 23 3.2 Publisher export sales of physical books, by category 25 3.3 Average invoiced price of physical book exports, by category 26 3.4 Export sales of physical books, by region 27 3.5 Publisher export sales of digital books 28

4 Fiction book sales 29 Sector review by David Shelley, deputy chief executive officer at Little, Brown 4.1 Publisher sales of fiction books: physical and digital 31 4.2 Publisher sales of physical fiction books 33 4.3 Average invoiced price of physical fiction books 35 4.4 Export sales of physical fiction books, by region 36

5 Non‑fiction and reference book sales 37 Sector review by Rebecca Smart, managing director, Ebury Publishing 5.1 Publisher sales of non‑fiction/reference books: physical and digital 39 5.2 Publisher sales of physical non‑fiction/reference books 41 5.3 Average invoiced price of physical non‑fiction/reference books 43 5.4 Export sales of physical non‑fiction/reference books, by region 44

Contents | PA STATISTICS YEARBOOK 2014 v 6 Children’s book sales 45 Sector review by Cally Poplak, managing director, Egmont UK 6.1 Publisher sales of children’s books: physical and digital 47 6.2 Publisher sales of physical children’s books 49 6.3 Average invoiced price of physical children’s books 51 6.4 Export sales of physical children’s books, by region 52

7 School book sales 53 Sector review by Michael McGarvey, director, UK education at Cambridge University Press 7.1 Publisher sales of school books: physical and digital 55 7.2 Publisher sales of physical school books 57 7.3 Average invoiced price of physical school books 59 7.4 Export sales of physical school books, by region 60

8 ELT book sales 61 Sector review by Mike Thompson, ELT director, Cengage Learning EMEA 8.1 Publisher sales of ELT books: physical and digital 63 8.2 Publisher sales of physical ELT books 65 8.3 Average invoiced price of physical ELT books 67 8.4 Export sales of physical ELT books, by region 68

9 Academic and professional book sales 69 Sector review by Jonathan Glasspool, managing director, Bloomsbury Academic and Professional 9.1 Publisher sales of academic/professional books: physical and digital 71 9.2 Publisher sales of physical academic/professional books 75 9.3 Average invoiced price of physical academic/professional books 78 9.4 Export sales of physical academic/professional books, by region 79

10 Total journal sales 81 David Nicholson, publishing director at John Wiley & Sons Ltd and chair of The PA’s Serial Publishers Executive 10.1 Publisher income from learned journals 83 10.2 Publisher subscription income from learned journals by format 84

11 Rights and other income 85 Rights and coeditions review by Diane Spivey, rights and contracts director of Little, Brown Book Group Total income from photocopying, scanning and digital licensing of extracts, Sarah Faulder, chief executive, Publishers Licensing Society (PLS) 11.1 Publisher gross income from coeditions and rights 87 11.2 Publisher gross income from coeditions by category 88 11.3 Publisher gross income from rights by category 89 11.4 Publisher combined income from coeditions and rights by category 90 11.5 Publisher combined income from foreign language coeditions and rights 91 11.6 Publisher income from English language reprints and coeditions 92 11.7 Authors’ agent income from rights 93 11.8 Publisher total income from photocopying and digital licensing of extracts (PLS) 94

vi PA STATISTICS YEARBOOK 2014 | Contents 12 Book production and the environment 97 Review by Peter Hughes, director of sustainability, Pearson 12.1 Publisher purchase and specification of paper 99 12.2 Publisher use of accreditation scheme logos 99 12.3 Publisher output of paper 100

A Technical appendix 101 B Exchange rate appendix 106 Exchange rate changes affecting book exporters by Dr Frank Fishwick, statistics consultant C Trends in the UK school market by level of education 110 D UK higher education textbook market by category 113

Tables 1.1a Publisher sales of books: physical and digital (net invoiced value) 3 1.1b Publisher sales of home and export books: physical and digital (net invoiced value) 4 1.1c Publisher sales of physical and digital books: by category (net invoiced value) 5 1.2a Publisher sales of physical books: home and export 6 1.2b Publisher sales of physical books: by category (net invoiced value) 7 1.2c Publisher sales of physical books: by category (net units) 7 1.3a Average invoiced price of physical books: home and export 9 1.3b Average invoiced price of physical books: by category 9 1.4a Publisher returns of physical books (% of gross value sales) 10 1.4b Publisher returns of physical books (% of gross unit sales) 10 1.5a Publisher sales of digital books: by format (net invoiced value) 11 1.5b Publisher sales of digital books: by category (net invoiced value) 12 2.1a Publisher home sales of books: physical and digital (net invoiced value) 15 2.1b Publisher home sales of physical and digital books: by category (net invoiced value) 16 2.2a Publisher home sales of physical books: by category (net invoiced value) 17 2.2b Publisher home sales of physical books: by category (net units) 17 2.3 Average invoiced price of physical book home sales: by category 18 2.4 UK physical book market: by category (value at end purchase price) 19 2.5 Publisher home sales of digital books: by category (net invoiced value) 20 3.1a Publisher export sales of books: physical and digital (net invoiced value) 23 3.1b Publisher export sales of physical and digital books: by category (net invoiced value) 24 3.2a Publisher export sales of physical books: by category (net invoiced value) 25 3.2b Publisher export sales of physical books: by category (net units) 25 3.2 Average invoiced price of physical book exports: by category 26 3.4 Export sales of physical books: by region (net invoiced value) 27 3.5 Publisher export sales of digital books: by category (net invoiced value) 28 4.1a Publisher sales of fiction books: physical and digital (net invoiced value) 31 4.1b Publisher sales of home and export fiction books: physical and digital (net invoiced value) 32 4.2a Publisher sales of physical fiction books: home and export 33 4.2b Publisher sales of physical fiction books: by format 34 4.3 Average invoiced price of physical fiction books 35 4.4 Export sales of physical fiction books: by region (net invoiced value) 36 5.1a Publisher sales of non‑fiction/reference books: physical and digital (net invoiced value) 39 5.1b Publisher sales of home and export non‑fiction/reference books: physical and digital (net invoiced value) 40

Contents | PA STATISTICS YEARBOOK 2014 vii 5.2a Publisher sales of physical non‑fiction/reference books: home and export 41 5.2b Publisher sales of physical non‑fiction/reference books: by format/category 42 5.3 Average invoiced price of physical non‑fiction/reference books 43 5.4 Export sales of physical non‑fiction/reference books: by region (net invoiced value) 44 6.1a Publisher sales of children’s books: physical and digital (net invoiced value) 47 6.1b Publisher sales of home and export children’s books: physical and digital (net invoiced value) 48 6.2a Publisher sales of physical children’s books: home and export (net invoiced value) 49 6.2b Publisher sales of physical children’s books: home and export (net units) 49 6.3 Average invoiced price of physical children’s books: home and export 51 6.4 Export sales of physical children’s books: by region (net invoiced value) 52 7.1a Publisher sales of school books: physical and digital (net invoiced value) 55 7.1b Publisher sales of home and export school books: physical and digital (net invoiced value) 56 7.2a Publisher sales of physical school books: home and export (net invoiced value) 57 7.2b Publisher sales of physical school books: home and export (net units) 57 7.3 Average invoiced price of physical school books: home and export 59 7.4 Export sales of physical school books: by region (net invoiced value) 60 8.1a Publisher sales of ELT books: physical and digital (net invoiced value) 63 8.1b Publisher sales of home and export ELT books: physical and digital (net invoiced value) 64 8.2a Publisher sales of physical ELT books: home and export (net invoiced value) 65 8.2b Publisher sales of physical ELT books: home and export (net units) 65 8.3 Average invoiced price of physical ELT books: home and export 67 8.4 Export sales of physical ELT books: by region (net invoiced value) 68 9.1a Publisher sales of academic/professional books: physical and digital (net invoiced value) 71 9.1b Publisher sales of academic/professional books by category: physical and digital (net invoiced value) 72 9.1c Publisher sales of home and export social science/humanities books: physical and digital (net invoiced value) 73 9.1d Publisher sales of home and export science/technical/medical books: physical and digital (net invoiced value) 74 9.2a Publisher sales of physical academic/professional books: home and export 75 9.2b Publisher sales of physical social science/humanities books: home and export 76 9.2c Publisher sales of physical science/technical/medical books: home and export 77 9.3a Average invoiced price of physical academic/professional books: home and export 78 9.3b Average invoiced price of physical academic/professional books: by category: home and export 78 9.4a Export sales of social science/humanities books: by region (net invoiced value) 79 9.4b Export sales of physical science/technical/medical books: by region (net invoiced value) 80 10.1 Publisher income from learned journals (net invoiced value) 83 10.2 Publisher subscription income from learned journals by format (net invoiced value) 84 11.1 Total gross receipts from rights and coeditions 87 11.2 Publisher gross receipts from coeditions by category 88 11.3 Publisher gross receipts from rights income by category 89 11.4 Publisher gross receipts from coeditions and rights by category 90 11.5 Publisher gross receipts from coeditions and rights by language 91 11.6 Publisher gross receipts from English language reprints and coeditions 92 11.7 Agent income by category 93 11.8 PLS distributable income from all sources 94 12.3 Comparison of total output by weight produced on paper from known and unknown sources 100 A3 Derivation of UK book market size 2013 –14 104 B1 Exchange rates: 2000 –14 106

viii PA STATISTICS YEARBOOK 2014 | Contents Figures 1.1a All books: physical and digital shares (of net invoiced value) 3 1.1b Home and exported books: physical and digital shares (of net invoiced value) 4 1.1c All physical and digital book sales: category shares (of net invoiced value) 5 1.2a All physical books: home and export shares (of net sales) 6 1.2b All physical book sales: category shares (of net invoiced value) 8 1.2c All physical book sales: category shares (of net units) 8 1.5a Digital book sales: format shares (of net invoiced value) 11 1.5b Digital book sales: category shares (of net invoiced value) 12 2.1a Home sales of books: physical and digital shares (of net invoiced value) 15 2.1b Physical and digital home book sales: category shares (of net invoiced value) 16 2.2 Physical book home sales: category shares (of net sales) 18 2.4 UK physical book market: category shares (of value at end purchase price) 19 2.5 Digital home book sales: category shares (of net invoiced value) 20 3.1a Export books: physical and digital shares (of net invoiced value) 23 3.1b Physical and digital export book sales: category shares (of net invoiced value) 24 3.2 Physical book exports: category shares (of net sales) 26 3.4 Exported physical books: regional shares (of net invoiced value) 27 3.5 Digital export book sales: category shares (of net invoiced value) 28 4.1a Fiction books: physical and digital shares (of net invoiced value) 31 4.1b Home and exported fiction books: physical and digital shares (of net invoiced value) 32 4.2a Physical fiction books: home and export shares (of net sales) 33 4.2b Physical fiction books: format shares (of net invoiced value) 34 4.2c Physical fiction books: format shares (of net units) 35 4.4 Exported physical fiction books: regional shares (of net invoiced value) 36 5.1a Non‑fiction/reference books: physical and digital shares (of net invoiced value) 39 5.1b Home and exported non‑fiction/reference books: physical and digital shares (of net invoiced value) 40 5.2a Physical non‑fiction/reference books: home and export shares (of net sales) 41 5.2b Physical non‑fiction/reference books: format/category shares (of net invoiced value) 42 5.2c Physical non‑fiction/reference books: format/category shares (of net units) 43 5.4 Exported physical non‑fiction/reference books: regional shares (of net invoiced value) 44 6.1a Children’s books: physical and digital shares (of net invoiced value) 47 6.1b Home and exported children’s books: physical and digital shares (of net invoiced value) 48 6.2a Physical children’s books: home and export shares (of net invoiced value) 50 6.2b Physical children’s books: home and export shares (of net units) 50 6.3 Index of average price of physical children’s book sales: home and export 51 6.4 Exported physical children’s books: regional shares (of net invoiced value) 52 7.1a School books: physical and digital shares (of net invoiced value) 55 7.1b Home and exported school books: physical and digital shares (of net invoiced value) 56 7.2a Physical school books: home and export shares (of net invoiced value) 58 7.2b Physical school books: home and export shares (of net units) 58 7.3 Index of average price of physical school book sales: home and export 59 7.4 Exported physical school books: regional shares (of net invoiced value) 60 8.1a ELT books: physical and digital shares (of net invoiced value) 63 8.1b Home and exported ELT books: physical and digital shares (of net invoiced value) 64 8.2a Physical ELT books: home and export shares (of net invoiced value) 66 8.2b Physical ELT books: home and export shares (of net units) 66 8.3 Index of average price of physical ELT book sales: home and export 67

Contents | PA STATISTICS YEARBOOK 2014 ix 8.4 Exported physical ELT books: regional shares (of net invoiced value) 68 9.1a Academic/professional books: physical and digital shares (of net invoiced value) 71 9.1b Academic/professional books by category: physical and digital shares (of net invoiced value) 72 9.1c Home and exported social science/humanities books: physical and digital shares (of net invoiced value) 73 9.1d Home and exported science/technical/medical books: physical and digital shares (of net invoiced value) 74 9.2a Physical academic/professional books: home and export shares (of net sales) 75 9.2b Physical social science/humanities books: home and export shares (of net sales) 76 9.2c Physical science/technical/medical books: home and export shares (of net sales) 77 9.4a Exported social science/humanities books: regional shares (of net invoiced value) 79 9.4b Exported physical science/technical/medical books: regional shares (of net invoiced value) 80 10.1 Share of income by type 83 10.2 Share of subscription income by format 84 11.1 Gross receipts: share of income 87 11.2 Coeditions income: category share (of gross receipts) 88 11.3 Rights income: category share (of gross receipts) 89 11.4 Coeditions and rights income: category share (of gross receipts) 90 11.5 Combined rights and coeditions income: language share (of gross receipts) 91 11.6 English language reprints and coeditions: share (of gross receipts) 92 11.7 Agent income: category share 93 11.8 PLS distributable revenue year‑on‑year 94 11.9 PLS distributable income: source share 95 12.1 Publisher specification of paper as being sustainable 99 12.2 Publisher use of accredited logos 99 12.3 Output: known and unknown shares 100 B1 Exchange rate indicates: Book‑exports‑weighted and Bank of England since 2005 107 C1 Publisher sales of curriculum‑related learning resources to UK school market 110 C2 Publisher sales of curriculum‑related learning resources to primary schools 111 C3 Publisher sales of curriculum‑related learning resources to secondary schools 111 C4 Publisher sales of curriculum‑related learning resources to further education (vocational) colleges 112 D1 Higher education textbook sales by category 113

x PA STATISTICS YEARBOOK 2014 | Contents Preface

Richard Mollet, chief executive, The Publishers Association

elcome to The PA Statistics Yearbook for 2014, the central repository of analysis and Wstatistics on the UK’s publishing sector.

The central mission of The PA is to highlight the value and role of publishing on behalf of the industry to its external audiences – authors, readers, libraries, educationalists, politicians and the wider media. Having accurate and up-to-date statistics is vital to this and so we are as grateful as ever to publisher companies for providing us with their data and to the team of Mandy Knight (here at The PA), Steve Bohme of Nielsen Book Research, Nicholas Clee and Mark Gardiner (chief financial officer, Penguin Random House UK and chair of the Yearbook Production Committee) for putting this publication together.

This year’s report shows the sector in a steady state position. The headline figure for The PA’s members’ sales stays static at £4.3bn, but within this is a great deal of variation. Book sales saw a second year of 2% decline; journals saw a 3% rise; digital sales saw yet another year of steady but decelerating growth; and the share of export revenues for physical and digital books crept upwards to 44%.

The publishing sector is close to being a bellwether for the wider British economy, or at least it follows closely in its footsteps. We can say without doubt that the recovery is in train, but that we are not yet fully emerged from the tunnel of austerity. The high street remains a highly challenging environment, with consumers only recently beginning to sense a return to confidence. Those parts of the sector that are exposed to public expenditure – either in schools or university libraries – note that budgets remain squeezed. The continued sluggish to stagnant state of the European economy makes this a challenging export market, while the continued buoyancy of East and South East Asia conversely is delivering strong results for publishers.

Within the British economy, the UK’s entire creative industries are valued at approximately £77bn (about 5% of the country’s total GDP) and have been a consistently growing sector in the past 10 years. Publishing plays a strong part in this story and its performance equates well to that of the UK’s games sector (£2.3bn), DVD and film streaming accounting (£2.2bn) and recorded music (£730m).

The main message from The PA’s statistics – as well as a variety of other quantitative and anecdotal data points – is that the question of how physical books will fare in the digital world is redundant; as is the corollary question of whether publishing will successfully adapt to the online age. Those who ever tried to maintain that this was a binary choice have been shown to be have been posing the question in the wrong way. It is not a question of either physical or digital winning out, but rather of the sector coalescing around a balanced marketplace where all formats have a place.

Preface | PA STATISTICS YEARBOOK 2014 xi While publishing has been efficient and effective in its adaptation, the underlying driver of the evolution is of course the reader. What the 21st‑century consumer desires above all is choice. As long as publishers can give readers the option of paper or screen, the market will – and is – taking care of itself. The ebook is no more a challenge to the lifespan of paper than television is to the theatre. Although in some areas – notably academic journals – the demand is for an almost exclusively digital product, we can see in other areas – such as children’s – that the tangible object remains king.

I hope you find this Statistics Yearbook useful and informative. Following suggestions, in this issue we have split out home and export revenues for digital book figures in each sector; also we have extracted article publishing charges (APCs) from other non-subscription income in the journals section. Do let us know if there are any other aspects of the sector you would like to see covered in next year’s edition.

xii PA STATISTICS YEARBOOK 2014 | Preface 1 Total book sales

Annual review by Dominic Knight, executive director, Macmillan Science and Education and president of The Publishers Association, 2014 –15

he Publishers Association collects sales statistics for a vibrant and varied UK industry – for both Tbooks and journals, for publications and services for consumers, students, business people and scholars. Publishing is a global industry, and the fact that 44% of the UK industry’s book sales are to international markets is indicative of a wider integration with art, culture, learning and scholarship worldwide.

ªª2% to £3,311m Book sales in the period covered by this report were down 2% to £3.3bn, with an 11% rise in digital Total physical and sales failing to compensate – because of lower prices – for a 5% fall in printed book sales. digital book sales This Yearbook also covers journal sales (Section 10). In 2013, sales in the sector were up 3%, to just ©©11% to £563m over £1bn – putting the total size of UK publishers’ sales at about £4.3bn. Total digital sales Digital sales now represent an established core business for the publishing industry. For journals, ªª5% to £2,748m which adopted online business models early, digital and hybrid sales were 93% of the total in 2013. Total physical sales For books, digital sales are now 17% of the total by value, and have increased 33% in the last two years. For some categories of book, digital now vies with physical for importance: for fiction, ©©5% to £275m ebooks are 37% of the total by value, and have trebled in absolute terms in three years. But, as Sales of consumer was observed in the 2013 Yearbook, the rate of digital growth for books has levelled off overall in ebooks the last two years, and it is clear that a flexible mix of print and digital will continue to be required by consumers, with no single pattern dominating all categories. ©©21% to £147m Online subscription/ The consumer book market had a mixed year. The world of physical bookselling has enjoyed the access recovery of the Waterstones chain and the rediscovery of range-holding, dedicated bookshops managed with a strong commercial sense. And although the closure of independent bookshops ©©19% to £111m still makes the headlines, recent openings give promise for this sector, too. Online sales overtook Non-consumer ebooks in-store sales for the first time, Nielsen’s Books and Consumers survey reported, and the year saw tension between publishers and Amazon, as the new models of supply continue to emerge. ©©to 44% Publishers approach the new world with differing strategies for their relationship to consumers and Export share of total the development of new business models such as subscription. There were successes and reverses value sales of physical across both large and small publishers, with no model appearing to prevail. Plurality remains a tonic and digital books for the health of publishing.

Total book sales | PA STATISTICS YEARBOOK 2014 1 The star of consumer publishing was the children’s sector, which saw its best year since 2007, buoyed in particular by export growth and the success of the young adult category. Children’s ebook sales remain modest: the physicality of the children’s print book is still significant, and the experience of the bricks and mortar shop still counts. This is a sector where trends have most to teach us about the future of reading, and that will be keenly watched in coming years.

Adult fiction and non-fiction both had a more challenging year in overall sales.

Beyond consumer publishing, other book sectors had a mixed year. School books increased by 1%, with both print and digital moving a little ahead of last year. UK primary moved 5% ahead of the previous year, with digital moving to 12% of total sales. UK secondary reflected the various stages of new curriculum development and uncertainty of outcomes approaching the general election. In total, home sales of physical school books fell behind 2013, while export sales were 6% ahead – delivering export growth of 21% in physical school book sales over the last five years.

Academic and professional digital sales increased by 17% in the year, and now represent 23% of total sales, but this failed to offset the continued decline in print books, caused by patterns of student consumption and library budgets. For English Language Teaching books, the overall decrease in the year showed a drop in the sales to Europe, reflecting market conditions and contrasting with double‑digit increases in sales to the Middle East, Africa and Asia. The market for ELT is still at an early point in its transition to a digital future.

Journal growth in 2013 reflected the continued expansion of scientific and scholarly research (4% growth in articles published). The increase of 3.2% in revenue is broadly in line with past years, and the growth in article publishing charges indicates the change in revenue mix as open access develops.

The UK publishing industry is part of a world in which the benefits and challenges of a digital environment are shared by all. The figures in this Yearbook give some insight into the unfolding story of building accessibility with trust, inspiration with curation, and combining the technical with the human.

2 PA STATISTICS YEARBOOK 2014 | Total book sales 1.1 Publisher sales of books: physical and digital

The invoiced value of UK publisher sales of books fell 2% in 2014, to £3,311m, driven by a 5% decrease in physical book sales, and despite 11% growth in digital sales.1 Digital sales increased more than threefold between 2010 (£169m) and 2014 (£563m), but a 13% decrease for physical sales over the same period meant a 1% fall in sales overall over the five years (Table 1.1a).

Table 1.1a TOTAL Physical Digital Publisher sales of books: physical £m £m £m and digital (net invoiced value) 2010 3,341 3,172 169 2011 3,286 3,030 256 NB: % changes calculated prior to rounding 2012 3,463 3,039 424 2013 3,386 2,880 506 2014 3,311 2,748 563 % change in sales 2011/2010 -1.7 -4.5 +51.4 2012/2011 +5.4 +0.3 +65.5 2013/2012 -2.2 -5.2 +19.3 2014/2013 -2.2 -4.6 +11.2

2014/2010 -0.9 -13.4 +232.4

Digital formats (encompassing ebooks, audio downloads, online subscriptions and other digital book sales) accounted for 17% of the total invoiced value of book sales in 2014, with this share rising from 15% in 2013, and up from 5% in 2010 (Figure 1.1a).

Figure 1.1a All books: physical and digital shares 100% 5 8 (of net invoiced value) 12 15 90% 17 37 80% Digital sales 70%

60% Physical sales 50% 95 92 88 85 40% 83 63 30%

20%

10%

0% 2010 2011 2012 2013 2014

1 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Total book sales | PA STATISTICS YEARBOOK 2014 3 The invoiced value of UK publisher sales of digital books to UK customers rose 13% in 2014, but a 7% drop in the value of physical sales in the home market meant that home sales of books fell by 3% overall. Export sales fell 1% overall, with a 2% drop for physical slightly outweighing an 8% rise for digital (Table 1.1b).

Table 1.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and TOTAL Physical Digital TOTAL Physical Digital export books: physical and digital £m £m £m £m £m £m (net invoiced value) 2013 1,931 1,612 319 1,455 1,267 187 NB: % changes calculated prior to rounding 2014 1,866 1,507 360 1,444 1,242 203 % change in sales 2014/2013 -3.3 -6.6 +13.0 -0.7 -2.0 +8.2

Digital accounted for 19% of the invoiced value of UK publisher’s book sales in the UK market in 2014, up from 16% in 2013. The digital share of UK publisher sales outside the UK rose from 13% to 14% over the same period (Figure 1.1b).

Figure 1.1b Home and exported books: 100% physical and digital shares 13 14 90% 16 19 (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 87 86 40% 84 81

30%

20%

10%

0% 2013 2014 2013 2014 Home Export

4 PA STATISTICS YEARBOOK 2014 | Total book sales The overall drop in the invoiced value of UK publisher sales (physical + digital) in 2014 was driven by a 9% decrease for non-fiction/reference, with small (1–4%) decreases for fiction, ELT and academic & professional. In contrast, the invoiced value of children’s books rose 11%, while school book sales grew marginally. School book sales were up by 12% between 2010 and 2014, while there were single‑digit increases over the five years for fiction and children’s books. Non-fiction/reference sales fell by 9%, with revenue from sales of ELT and academic/professional books also down slightly over the period (Table 1.1c).

Table 1.1c Non‑fiction/ Academic/ Publisher sales of physical TOTAL Fiction reference Children’s School ELT professional and digital books: by category £m £m £m £m £m £m £m (net invoiced value) 2010 3,341 564 822 332 263 279 1,081 2011 3,286 562 803 314 277 262 1,067 NB: % changes calculated prior to rounding 2012 3,463 680 807 322 286 294 1,074 2013 3,386 599 818 314 291 283 1,082 2014 3,311 574 748 349 293 272 1,074 % change in sales 2011/2010 -1.7 -0.4 -2.2 -5.4 +5.5 -6.3 -1.3 2012/2011 +5.4 +20.9 +0.5 +2.4 +3.3 +12.3 +0.6 2013/2012 -2.2 -11.8 +1.3 -2.6 +1.5 -3.8 +0.7 2014/2013 -2.2 -4.1 -8.5 +11.3 +0.9 -3.9 -0.7

2014/2010 -0.9 +1.8 -8.9 +5.1 +11.7 -2.7 -0.7

Academic/professional titles continued to account for just under a third of the invoiced value of combined physical and digital sales in 2014, with non-fiction/reference taking a quarter of sales (though losing share between 2010 and 2014). Fiction maintained a 17% share of revenue over the five years, while the children’s and school sectors increased share slightly (to 11% and 9% respectively). ELT took 8% of sales in each of the last five years (Figure 1.1c).

Figure 1.1c All physical and digital book sales: 100% category shares (of net invoiced value) 90% 32 32 31 32 32 80% Academic/professional 70% 8 8 8 8 8 ELT 60% 8 8 8 9 9 50% 10 10 9 9 School 11 40%

30% 23 24 Children’s 25 24 23 20%

Non‑fiction/reference 10% 17 17 20 18 17 0% Fiction 2010 2011 2012 2013 2014

NB: Due to rounding, sum of %s may not = 100%

Total book sales | PA STATISTICS YEARBOOK 2014 5 1.2 Publisher sales of physical books

The 5% decrease in the invoiced value of physical book sales in 2014 reflected falling revenue from both home sales (-7%) and exports (-2%), with unit sales down 9% for home sales, 4% for exports, and 7% overall. Between 2010 and 2014, export value sales of physical books fell 5%, whereas home sales value dropped by a fifth. Volume sales fell faster than value over the five years, with 23% and 13% decreases in unit sales to the home and export markets respectively (Table 1.2a).

Table 1.2a – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical books: Total Physical Physical Total Physical Physical home and export physical home export physical home export £m £m £m m units m units m units NB: % changes calculated prior to rounding 2010 3,172 1,860 1,312 756.2 447.2 309.0 2011 3,030 1,744 1,286 713.9 421.7 292.2 2012 3,039 1,721 1,317 713.2 417.0 296.2 2013 2,880 1,612 1,267 660.8 379.9 280.9 2014 2,748 1,507 1,242 613.7 344.1 269.6 % change in sales 2011/2010 -4.5 -6.3 -2.0 -5.6 -5.7 -5.4 2012/2011 +0.3 -1.3 +2.4 -0.1 -1.1 +1.4 2013/2012 -5.2 -6.3 -3.8 -7.3 -8.9 -5.2 2014/2013 -4.6 -6.6 -2.0 -7.1 -9.4 -4.1

2014/2010 -13.4 -19.0 -5.4 -18.8 -23.1 -12.8

Exports increased their share of the total physical book sales between 2010 and 2014, from 41% to between 44% and 45% of both units and value (Figure 1.2a).

Figure 1.2a All physical books: home and export 100% shares (of net sales) 90%

80% 41 41 41 42 43 44 45 42 43 44 Export sales 70%

Home sales 60%

50%

40%

30% 59 59 59 58 57 56 55 58 57 56 20%

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

6 PA STATISTICS YEARBOOK 2014 | Total book sales The 5% drop in the value of physical books sold by UK publishers in 2014 was driven by 9% decreases in fiction and non-fiction/reference sales, with 5% decreases for ELT and academic/professional. In contrast, school book sales rose marginally, while children’s sales increased by 10%. Between 2010 and 2014, revenue from sales of physical school books rose by 9%, while sales of children’s books and ELT fell slightly, non-fiction/reference and academic/professional sales were down by 13 –15%, and fiction sales dropped by a third (Table 1.2b).

Table 1.2b Non‑fiction/ Academic/ Publisher sales of physical books: TOTAL Fiction reference Children’s School ELT professional by category (net invoiced value) £m £m £m £m £m £m £m 2010 3,172 548 816 331 257 273 947 NB: % changes calculated prior to rounding 2011 3,030 492 783 307 271 256 921 2012 3,039 505 767 310 277 288 893 2013 2,880 400 763 298 280 274 866 2014 2,748 364 694 328 281 261 822 % change in sales 2011/2010 -4.5 -10.3 -4.1 -7.2 +5.6 -6.2 -2.8 2012/2011 +0.3 +2.6 -2.0 +0.8 +2.3 +12.2 -3.0 2013/2012 -5.2 -20.8 -0.5 -3.8 +1.0 -4.9 -3.0 2014/2013 -4.6 -9.0 -9.0 +10.0 +0.2 -4.8 -5.1

2014/2010 -13.4 -33.6 -14.9 -1.0 +9.3 -4.7 -13.3

Unit sales of physical books decreased in 2014 for all main categories bar children’s books (which saw 4% growth), with double‑digit decreases for fiction, school, ELT and academic/professional. Fiction sales were over a third lower in 2014 compared to 2010, with school and academic/ professional sales down by nearly a quarter over the five years. Non-fiction/reference and ELT also saw double‑digit decreases between 2010 and 2014, while children’s book units fell 7% over the period (Table 1.2c).

Table 1.2c Non‑fiction/ Academic/ Publisher sales of physical books: TOTAL Fiction reference Children’s School ELT professional by category (net units) m m m m m m m 2010 756.2 185.7 191.7 177.3 60.5 77.4 63.6 NB: % changes calculated prior to rounding 2011 713.9 166.0 191.1 164.3 59.7 72.2 60.5 2012 713.2 167.2 191.4 165.2 49.0 82.3 58.0 2013 660.8 129.3 185.0 159.9 53.9 78.5 54.1 2014 613.7 114.4 168.8 165.7 46.8 69.3 48.6 % change in sales 2011/2010 -5.6 -10.6 -0.3 -7.3 -1.3 -6.6 -4.9 2012/2011 -0.1 +0.7 +0.1 +0.5 -17.9 +14.0 -4.1 2013/2012 -7.3 -22.7 -3.3 -3.2 +9.9 -4.6 -6.7 2014/2013 -7.1 -11.5 -8.7 +3.6 -13.2 -11.7 -10.2

2014/2010 -18.8 -38.4 -11.9 -6.5 -22.7 -10.4 -23.6

Total book sales | PA STATISTICS YEARBOOK 2014 7 Between 2010 and 2014, the children’s sector saw its share of physical books rise from 10% to 12% of value and from 23% to 27% of units. The non-fiction/reference share of volume rose from 25% to 28% over the five years, but its share of value fell slightly. Conversely, school books gained in value but not volume. The academic/professional and ELT categories maintained their shares over the period, while fiction’s share fell from 17% to 13% of value, and from 25% to 19% of physical units (Figures 1.2b and 1.2c).

Figure 1.2b All physical book sales: 100% category shares (of net invoiced value) 90% 30 30 29 30 30 80% Academic/professional 70% 9 9 10 10 9 ELT 60% 8 9 9 10 10 50% 10 10 10 School 10 12 40%

30% Children’s 26 26 25 27 25 20%

Non‑fiction/reference 10% 17 16 17 14 13 0% Fiction 2010 2011 2012 2013 2014

NB: Due to rounding, sum of %s may not = 100%

Figure 1.2c All physical book sales: 100% category shares (of net units) 8 9 8 8 8 90% 10 10 12 12 11 80% 8 8 7 8 Academic/professional 8 70%

23 23 ELT 60% 23 24 27

50% School 40% 25 27 27 28 30% 28 Children’s 20%

25 23 23 Non‑fiction/reference 10% 20 19

0% Fiction 2010 2011 2012 2013 2014

NB: Due to rounding, sum of %s may not = 100%

8 PA STATISTICS YEARBOOK 2014 | Total book sales 1.3 Average invoiced price of physical books

The average invoiced price for physical books sold by UK publishers in 2014 was £4.48, up by 12 pence (3%) on 2013, and 7% higher than the average for 2010. The average invoiced price of physical books sold to the home market rose 3% to £4.38 in 2014, with export prices up 2% to £4.61. Export prices for physical books rose by 9% between 2010 and 2014, compared to a 5% increase in the invoiced price of books sold to the home market (Table 1.3a).

Table 1.3a TOTAL Home Export Average invoiced price of physical £ £ £ books: home and export 2010 4.19 4.16 4.25 2011 4.24 4.13 4.40 NB: % changes calculated prior to rounding 2012 4.26 4.13 4.45 2013 4.36 4.24 4.51 2014 4.48 4.38 4.61 % change in average invoiced price 2011/2010 +1.2 -0.6 +3.7 2012/2011 +0.4 -0.2 +1.1 2013/2012 +2.3 +2.8 +1.4 2014/2013 +2.8 +3.1 +2.1

2014/2010 +6.8 +5.2 +8.5

2014 saw increases in the average invoiced price of all categories bar non-fiction/reference, with a double‑digit increase in the price of school books, 6 – 8% rises for children’s, ELT and academic/professional, and a 3% increase for fiction. Between 2010 and 2014, the school book price rose the most (by 41%), with a 14% increase in academic/professional book prices, 6 – 8% prices rises for fiction, children’s and ELT, and a 3% drop in prices for non-fiction/reference books (Table 1.3b).

Table 1.3b Non‑fiction/ Academic/ Average invoiced price of physical TOTAL Fiction reference Children’s School ELT professional books: by category £ £ £ £ £ £ £

NB: % changes calculated prior to rounding 2010 4.19 2.95 4.26 1.87 4.24 3.54 14.90 2011 4.24 2.96 4.09 1.87 4.54 3.55 15.23 2012 4.26 3.02 4.01 1.87 5.66 3.49 15.40 2013 4.36 3.09 4.12 1.86 5.20 3.49 16.00 2014 4.48 3.18 4.11 1.98 6.00 3.76 16.90 % change in average invoiced price 2011/2010 +1.2 +0.4 -3.8 +0.2 +7.0 +0.5 +2.2 2012/2011 +0.4 +1.9 -2.2 +0.2 +24.7 -1.6 +1.1 2013/2012 +2.3 +2.4 +2.9 -0.6 -8.2 -0.3 +3.9 2014/2013 +2.8 +2.9 -0.3 +6.1 +15.5 +7.8 +5.6

2014/2010 +6.8 +7.7 -3.4 +5.9 +41.4 +6.3 +13.5

Total book sales | PA STATISTICS YEARBOOK 2014 9 1.4 Publisher returns of physical books

Returns stood at 10% of total gross value sales of physical books in 2014, 12% lower than in 2013, and 7% below the 2010 level. In units, the total returns rate in 2014 was 8% of gross sales, down 16% on 2013 and 5% on 2010. In the home market, returns stood at 12% of gross value sales of physical books in 2014 (9% lower than in 2013 and 2010), and 10% of gross unit sales (lower than in 2013 and, to a lesser extent, 2010). In exports, the 2014 rates of 7% for value and 4% for units were both higher than in 2010, although well below the rates seen in 2013 (Tables 1.4a and 1.4b).

Table 1.4a TOTAL Home Export Publisher returns of physical books % % % (% of gross value sales) 2010 10.8 13.5 6.8

NB: % changes calculated prior to rounding 2011 11.3 14.2 7.0 2012 11.2 13.7 7.6 2013 11.5 13.5 8.8 2014 10.1 12.3 7.3 % change in returns rate 2011/2010 +4.0 +5.3 +2.6 2012/2011 -0.9 -3.4 +9.3 2013/2012 +2.6 -1.9 +15.5 2014/2013 -11.9 -8.6 -17.4

2014/2010 -6.9 -8.8 +7.0

Table 1.4b TOTAL Home Export Publisher returns of physical books % % % (% of gross unit sales) 2010 8.1 10.7 4.0

NB: % changes calculated prior to rounding 2011 8.5 11.3 4.1 2012 9.1 11.2 5.9 2013 9.2 11.8 5.5 2014 7.7 10.3 4.3 % change in returns rate 2011/2010 +4.7 +5.6 +0.8 2012/2011 +6.9 -0.9 +44.6 2013/2012 +1.7 +5.0 -5.7 2014/2013 -16.1 -12.8 -22.4

2014/2010 -4.5 -4.3 +6.7

10 PA STATISTICS YEARBOOK 2014 | Total book sales 1.5 Publisher sales of digital books 2

Much of the increase in the invoiced value of digital sales in 2014 came from the educational/professional sector, with non-consumer ebook sales up 19% to £111m, and online subscriptions/access sales rising by a fifth to £147m. Consumer ebook sales rose by 5% to £275m in 2014, while audio download sales increased by nearly a quarter to £10m, and were more than double the figure in 2010 (Table 1.5a).

Table 1.5a Consumer Non‑ Online Publisher sales of digital books: audiobook Consumer Consumer consumer subscription/ Other non‑ by format (net invoiced value) TOTAL download ebook other ebook access consumer £m £m £m £m £m £m £m NB: % changes calculated prior to rounding * = <£0.5m 2010 169 4 20 - 29 92 24 2011 256 5 94 * 36 101 20 2012 424 7 220 1 62 113 21 2013 506 8 261 1 93 121 22 2014 563 10 275 1 111 147 19 % change in sales 2011/2010 +51.4 +39.8 +374.8 n/a +21.9 +10.0 -18.3 2012/2011 +65.5 +32.9 +134.1 +231.1 +74.5 +11.7 +5.8 2013/2012 +19.3 +17.8 +18.5 +34.3 +49.6 +6.9 +4.0 2014/2013 +11.2 +23.5 +5.3 +87.7 +18.6 +21.2 -12.2

2014/2010 +232.4 +170.3 +1,286.5 n/a +277.6 +59.3 -21.0

Consumer ebooks accounted for 49% of the invoiced value of UK publishers’ digital sales in 2014, down slightly on 2012–13, but up from 12% in 2010. The non-consumer ebook share of digital sales increased from 17% to 20% between 2010 and 2014, while the share of digital taken by online subscriptions/access dropped from 55% to 26% over the five years (Figure 1.5a).

Figure 1.5a Digital book sales: format shares 100% 8 5 4 34 (of net invoiced value) 14 90% 24 26 80% 27 Other non‑consumer 40 70%

15 19 20 Online subscription/access 60% 55 50% 14 Non‑consumer ebook 40%

30% Consumer ebook 52 52 49 17 20% 37

10% Audiobook download 12 2 2 1 0% 2 2 2 2010 2011 2012 2013 2014 NB: Due to rounding, sum of %s may not = 100%

2 See Technical Appendix for details of definitions and coverage of digital book sales.

Total book sales | PA STATISTICS YEARBOOK 2014 11 In 2014, UK publisher’s invoiced digital sales in the consumer categories increased by 6% to £286m, with digital fiction sales up 6% on 2013 at £211m and children‘s digital sales up by over a third to £22m. In contrast, digital non-fiction/reference sales fell slightly. Digital sales of school books rose by 20% to £13m in 2014, with digital ELT sales up by a quarter (to £11m), and digital book sales in the academic/professional sector increasing by 17% to £252m. Between 2010 and 2014, growth in digital sales has been fastest for fiction and children’s books, and slowest (albeit still almost doubling) for academic/professional (Table 1.5b).

Table 1.5b Non‑fiction/ Academic/ Publisher sales of digital books: TOTAL Fiction reference Children’s School ELT professional by category (net invoiced value) £m £m £m £m £m £m £m

NB: % changes calculated prior to rounding 2010 169 16 6 1 6 6 134 2011 256 70 21 7 6 5 147 2012 424 175 40 12 9 6 181 2013 506 200 55 16 11 9 216 2014 563 211 54 22 13 11 252 % change in sales 2011/2010 +51.4 +330.9 +266.4 +390.5 +0.2 -9.8 +9.6 2012/2011 +65.5 +148.9 +95.4 +71.4 +50.6 +18.1 +23.4 2013/2012 +19.3 +14.2 +36.2 +28.3 +18.4 +44.8 +19.0 2014/2013 +11.2 +5.5 -2.0 +36.0 +20.4 +25.4 +17.0

2014/2010 +232.4 +1,192.6 +855.7 +1,367.5 +115.1 +93.3 +88.3

The academic/professional sector saw its share of digital sales increase from 43% to 45% in 2014, though this remained well below 2010 –11 levels. Fiction lost a little share in 2014, but has seen its share of digital increase from 10% to 37% over the five years as a whole. The proportion of digital revenue taken by non-fiction/reference rose from 3% to 10% over the period, while the children’s share increased from 1% to 4% (Figure 1.5b).

Figure 1.5b Digital book sales: category shares 100% (of net invoiced value) 90%

80% 43 43 45 Academic/professional 57 70%

79 ELT 60% 2 2 2 2 50% 3 3 2 4 10 11 School 2 10 40% 2 3 30% 8 Children’s 20% 3 41 39 37 4 27 Non‑fiction/reference 10% 3 10 0% Fiction 2010 2011 2012 2013 2014

NB: Due to rounding, sum of %s may not = 100%

12 PA STATISTICS YEARBOOK 2014 | Total book sales 2 Home (UK) book sales

Sector review by Jenny Todd, associate publisher, Canongate

he 2014 headline figures in the PA Statistics Yearbook are an all too familiar story, showing a Tdecline in sales of physical books versus growth in digital. Physical book sales in the home market fell 7% by value and 9% by volume. However, while digital sales rose, we did not see the dramatic spikes that had been features of the previous few years, and growth has slowed, to 13%.

If the trends of the US market are our measure, we can assume this trajectory will continue. The maturing of the digital market and consequent rebalancing of the physical market were significant factors in the ªª3% to £1,866m UK in 2014, and ones that will no doubt continue to shape the industry in 2015 and beyond. Total physical and digital book sales Thanks to the PA and others, the book industry’s increasing ability to access and analyse digital sales data means we are beginning to understand and respond to the impact of digital on reading ©©13% to £360m habits and physical book sales in a more nuanced way. Having said that, the ebook sales data we Total digital sales rely on remains far from comprehensive, with publishers willing to share sales figures but, as yet, no retailers joining them – an issue that we must continue to work together as an industry to resolve. ªª7% to £1,507m The ebook chart data that is available shows a continuing dominance of major brand names and Total physical sales deep discounting mechanics – in effect, a mass market retail model.

©©3% to £226m The adult fiction market has been most affected by digital sales, with certain areas of adult non‑fiction Home sales of children’s remaining more stable but now also shifting. The children’s sector was a relative latecomer, and the physical books effects on that market are arguably the most enlightening, with the most to teach us about the future of reading and readers and the book market in general. That was the most heartening story of 2014. ©©8% to £155m Home sales of fiction While other creative industries, most notably TV, have struggled to retain the attention of younger digital books audiences, the children’s book sector was a real beacon of light in 2014; the only physical category to grow by value in the home market (+3%), with increased average invoiced prices (+8%) and a ©©22% to £141m plethora of bestsellers that appealed across age-ranges, such as Egmont’s Minecraft series, brand Home sales of academic/ names David Walliams and Jeff Kinney, and Zoe Sugg’s Girl Online (Penguin). A terrifically strong professional digital books Christmas, up 12% through BookScan year-on-year, confirmed the trend. If anyone was in any doubt that the print book could flourish in a digital landscape, then the buoyancy of the children’s ©©32% to £15m market must tell an encouraging story. Even in the adult market, BookScan’s bestselling adult fiction Home sales of children’s paperback of the year – John Green’s The Fault in Our Stars (Penguin) – is really a young adult title digital books (and represented in the children’s data in the Yearbook).

However, non-fiction and reference book sales were down in total – print and digital – by 10%. School book sales were also down, by 3%, but academic and professional book sales held up, 1% ahead of the 2013 performance.

Home (UK) book sales | PA STATISTICS YEARBOOK 2014 13 Celebrity non-fiction struggled in 2014, particularly the autobiography and biography category, normally a stalwart of the Christmas retail offering and publishers’ autumn lists. Among the factors cited for the disappointing performance were a downturn in supermarket sales as supermarkets reduced the shelf‑space dedicated to books, and, by general consent, weaker titles. Only two titles broke the 200,000‑copy mark: Lynda Bellingham’s There’s Something I’ve Been Dying To Tell You (Coronet – 330,625 copies through BookScan) and Guy Martin’s My Autobiography (Ebury – 221,496 copies). As a result, publishers and retailers reported a “range” Christmas. Print fiction sales were down 10%, a fall that cannot wholly be attributed to the migration to digital reading.

Backlist and range, as opposed to chasing chart positions, seem to have been where the success stories came from in 2014. Pan Macmillan showed the strongest growth among the major trade publishers, up 10% through the Nielsen BookScan TCM despite having had no bestsellers in 2014’s overall top 50. Waterstones reported a successful year and a return to break‑even, the fruits of managing director James Daunt’s strategy of reviving curation, core values and margin protection. Publishers across the board are reporting a good year with the chain, and Waterstones’ strong market share of fiction bestsellers such as Jessie Burton’s The Miniaturist (Picador) is evidence that it can “make” a book once again.

Amazon continued to dominate the digital market and have a significant impact on the industry as a whole, not least as a result of its widely reported dispute with Hachette and its launch of the Kindle Unlimited subscription service. Subscription models and the development of new business models and routes to readers will continue to be of key importance in 2015.

However, in the physical book market in 2014, traditional publishing and careful bookselling with an emphasis on protecting margin seem to have been where the steady wins were.

14 PA STATISTICS YEARBOOK 2014 | Home (UK) book sales 2.1 Publisher home sales of books: physical and digital

The invoiced value of UK publisher home sales of books fell 3% in 2014, to £1,866m, with a 13% rise in digital sales3 in the UK outweighed by a 7% drop in physical home sales (Table 2.1a).

Table 2.1a TOTAL Physical Digital Publisher home sales of £m £m £m books: physical and digital 2013 1,931 1,612 319 (net invoiced value) 2014 1,866 1,507 360 NB: % changes calculated prior to rounding % change in sales 2014/2013 -3.3 -6.6 +13.0

Digital formats (encompassing ebooks, audio downloads, online subscriptions and other digital book sales) accounted for 19% of the total invoiced value of home sales of books in 2014, up from 16% in 2013 (Figure 2.1a).

Figure 2.1a Home sales of books: physical and 100% digital shares (of net invoiced value) 90% 16 19

80% Digital sales 70%

Physical sales 60%

50%

40% 84 81

30%

20%

10%

0% 2013 2014

3 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Home (UK) book sales | PA STATISTICS YEARBOOK 2014 15 The small drop in the invoiced value of UK publisher home sales (physical + digital) in 2014 was driven by a 10% decrease in revenue from non-fiction/reference, with smaller (3-5%) decreases for fiction, school books and ELT. In contrast, the invoiced value of children’s and academic/professional home sales grew by 5% and 1% respectively (Table 2.1b).

Table 2.1b Non‑fiction/ Academic/ Publisher home sales of physical TOTAL Fiction reference Children’s School ELT professional and digital books: by category £m £m £m £m £m £m £m (net invoiced value) 2013 1,931 418 580 230 173 14 515

NB: % changes calculated prior to rounding 2014 1,866 402 521 241 168 14 520 % change in sales 2014/2013 -3.3 -3.8 -10.1 +4.8 -3.1 -5.3 +1.0

The academic/professional sector gained share of home sales revenue in 2014, while non-fiction/ reference lost share, so that each accounted for 28% of the total. The children’s sector increased share to 13% of home sales revenue, while fiction and school books respectively maintained 22% and 9% shares (Figure 2.1b).

Figure 2.1b Physical and digital home 100% book sales: category shares 90% (of net invoiced value) 27 28 80% Academic/professional 1 70% 1 9 9 ELT 60% 12 13 50% School 40% 30 28 30% Children’s 20%

Non‑fiction/reference 10% 22 22

0% Fiction 2013 2014

NB: Due to rounding, sum of %s may not = 100%

16 PA STATISTICS YEARBOOK 2014 | Home (UK) book sales 2.2 Publisher home sales of physical books, by category

2014 saw a 10 –11% drop in the invoiced value of physical home sales of fiction and non-fiction/reference, with 4 –7% decreases for school, ELT and academic/professional books. In contrast, home sales of children’s books rose 3% in value. Between 2010 and 2014, revenue from physical home sales of fiction was down by a third, with double‑digit decreases as well for non‑fiction/reference, ELT and academic/professional. Children’s sales values also fell, while school sales rose slightly (Table 2.2a).

Table 2.2a Non‑fiction/ Academic/ Publisher home sales of TOTAL Fiction reference Children’s School ELT professional physical books: by category £m £m £m £m £m £m £m (net invoiced value) 2010 1,860 386 606 242 154 15 457

NB: % changes calculated prior to rounding 2011 1,744 346 566 223 163 15 431 2012 1,721 344 546 233 172 13 414 2013 1,612 275 544 218 163 13 399 2014 1,507 247 486 226 157 13 379 % change in sales 2011/2010 -6.3 -10.3 -6.5 -8.0 +5.6 -0.0 -5.8 2012/2011 -1.3 -0.7 -3.5 +4.3 +5.5 -13.8 -3.9 2013/2012 -6.3 -20.0 -0.4 -6.1 -5.3 +1.8 -3.6 2014/2013 -6.6 -10.1 -10.7 +3.4 -3.8 -6.7 -5.0

2014/2010 -19.0 -36.0 -19.8 -6.8 +1.5 -18.2 -17.1

The fiction, non-fiction/reference, school and academic/professional sectors saw double‑digit decreases in physical unit sales to the home market in 2014, with 4% decreases for children’s books and ELT. All the categories also saw unit sales down between 2010 and 2014, with the greatest decreases for fiction and academic/professional, and least for school and ELT (Table 2.2b).

Table 2.2b Non‑fiction/ Academic/ Publisher home sales of physical TOTAL Fiction reference Children’s School ELT professional books: by category (net units) m m m m m m m 2010 447.2 128.9 138.0 124.0 23.6 1.7 31.0 NB: % changes calculated prior to rounding 2011 421.7 116.4 134.1 117.1 23.5 1.8 28.8 2012 417.0 112.4 131.0 119.1 25.0 1.6 27.9 2013 379.9 88.2 127.4 113.8 24.0 1.7 24.8 2014 344.1 76.2 114.5 109.0 21.2 1.7 21.6 % change in sales 2011/2010 -5.7 -9.7 -2.8 -5.5 -0.6 +7.5 -7.0 2012/2011 -1.1 -3.4 -2.3 +1.7 +6.4 -15.4 -3.1 2013/2012 -8.9 -21.6 -2.7 -4.5 -3.9 +11.2 -11.2 2014/2013 -9.4 -13.6 -10.1 -4.2 -11.7 -3.9 -12.6

2014/2010 -23.1 -40.9 -17.1 -12.1 -10.3 -2.8 -30.2

Home (UK) book sales | PA STATISTICS YEARBOOK 2014 17 Between 2010 and 2014 the share of home sales of physical books taken by children’s titles rose from 28% to 32% of units and from 13% to 15% of value. Non-fiction/reference gained share in volume (from 31% to 33%) but not in value, while school books saw its share rise slightly by both measures. The fiction share of physical book sales to the UK market fell from 21% to 16% of value, and from 29% to 22% of units over the five years (Figure 2.2).

Figure 2.2 Physical book home sales: 100% 7 7 7 7 6 category shares (of net sales) 90% 5 6 6 6 6 25 25 24 25 25 80% Academic/professional 28 28 29 30 32 70% 8 9 10 10 10

ELT 60% 13 13 14 14 15 50% School 31 32 31 40% 34 33 33 33 32 34 32 30% Children’s 20% 29 28 27 Non‑fiction/reference 10% 21 23 22 20 20 17 16 0% Fiction 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

NB: Due to rounding, sum of %s may not = 100%

2.3 Average invoiced price of physical book home sales, by category

2014 saw 8–9% increases in the average invoiced price of physical books sold to the UK market in the academic/professional, school and children’s categories, and a 4% rise in the price of fiction. In contrast, the average price of non-fiction/reference and ELT books fell slightly in 2014. Between 2010 and 2014, home market prices rose by 5% overall, with double‑digit increases for academic/professional and school books, and single‑digit rises for fiction and children’s books (Table 2.3).

Table 2.3 Non‑fiction/ Academic/ Average invoiced price of physical TOTAL Fiction reference Children’s School ELT professional book home sales: by category £ £ £ £ £ £ £

NB: % changes calculated prior to rounding 2010 4.16 2.99 4.39 1.95 6.52 8.94 14.76 2011 4.13 2.97 4.22 1.90 6.93 8.32 14.95 2012 4.13 3.06 4.17 1.95 6.87 8.48 14.84 2013 4.24 3.12 4.27 1.92 6.77 7.76 16.12 2014 4.38 3.24 4.24 2.07 7.38 7.53 17.52 % change in average invoiced price 2011/2010 -0.6 -0.7 -3.8 -2.6 +6.3 -7.0 +1.3 2012/2011 -0.2 +2.8 -1.2 +2.6 -0.8 +1.9 -0.7 2013/2012 +2.8 +2.0 +2.4 -1.7 -1.5 -8.4 +8.6 2014/2013 +3.1 +4.1 -0.6 +7.9 +9.0 -3.0 +8.7

2014/2010 +5.2 +8.3 -3.3 +6.0 +13.1 -15.8 +18.7

18 PA STATISTICS YEARBOOK 2014 | Home (UK) book sales 2.4 UK physical book market size

The value of the physical book market in the UK in 2014, at end purchase price, is estimated at £2,893m. This was 5% lower than in 2013, and down 13% since 2010. 2014 saw an 8% increase for children’s books, 6-7% decreases for fiction, non-fiction/reference and school/ELT, and a 9% fall for physical academic/professional books. Children’s was the only sector with a higher market value for physical books in 2014 than 2010, with a 29% decrease over the period for fiction, and double‑digit decreases as well for non-fiction/reference and academic/professional (Table 2.4).

Table 2.4 Non‑fiction/ Academic/ UK physical book market: TOTAL Fiction reference Children’s School/ ELT professional by category £m £m £m £m £m £m (value at end purchase price) 2010 3,330 746 1,171 473 234 705 2011 3,121 668 1,092 435 242 684 NB: % changes calculated prior to rounding 2012 3,126 667 1,061 456 254 688 2013 3,040 562 1,113 452 247 666 2014 2,893 528 1,039 488 231 607 % change in sales 2011/2010 -6.3 -10.5 -6.7 -8.2 +3.6 -3.0 2012/2011 +0.2 -0.1 -2.9 +5.0 +4.8 +0.6 2013/2012 -2.8 -15.7 +5.0 -1.0 -2.8 -3.3 2014/2013 -4.8 -6.1 -6.7 +8.0 -6.4 -8.9

2014/2010 -13.1 -29.2 -11.3 +3.1 -1.3 -14.0

Figure 2.4 illustrates that non-fiction/reference has been the largest UK market for physical books in each year, though saw its share of the market fall slightly to 36% in 2014. Fiction’s share has fallen from 22% to 18% between 2010 and 2014, while the children’s share has risen from 14% to 17% over the period. The school and academic/professional categories have respectively taken 7–8% and 21–22% shares in each of the five years.

Figure 2.4 UK physical book 100% market: category shares 90% (of value at end purchase price) 21 22 22 22 21 80% Academic/professional 7 8 8 8 8 70% 14 14 15 15 17 School/ELT 60%

50% Children’s 40% 35 35 34 37 36 30% Non‑fiction/reference 20%

22 Fiction 10% 21 21 19 18

0% 2010 2011 2012 2013 2014 NB: Due to rounding, sum of %s may not = 100%

Home (UK) book sales | PA STATISTICS YEARBOOK 2014 19 2.5 Publisher home sales of digital books 4

In 2014, the invoiced value of UK publisher sales of digital books to the home market in the consumer categories increased by 8% to £206m, with sales of digital children’s books up 32% to £15m, digital fiction sales up 8% to £155m, but a small decrease for digital non-fiction/reference. Digital sales of school books in the UK rose to £11m,5 while digital home sales in the academic/professional sector rose by a fifth to £141m (Table 2.5).

Table 2.5 Non‑fiction/ Academic/ Publisher home sales of TOTAL Fiction reference Children’s School ELT professional digital books: by category £m £m £m £m £m £m £m (net invoiced value) 2013 319 144 36 12 10 1 116 2014 360 155 35 15 11 1 141 NB: % changes calculated prior to rounding % change in sales 2014/2013 +13.0 +8.2 -1.1 +32.0 +8.2 +15.0 +21.7

Fiction remained the largest category for digital revenue in the UK in 2014, despite seeing its share of total digital home sales drop from 45% to 43%. The share of digital home sales value taken by non- fiction/reference also fell slightly (to 10%), while the academic/professional sector increased its share from 36% to 39%. The children’s and school categories continued to account for 4% and 3% of the total respectively (Figure 2.5).

Figure 2.5 Digital home book sales: category 100% shares (of net invoiced value) 90%

80% 36 39 Academic/professional 70% 3 ELT 60% 4 3 4 11 50% 10 School 40%

30% Children’s 45 20% 43

Non‑fiction/reference 10%

0% Fiction 2013 2014

NB: Due to rounding, sum of %s may not = 100%

4 See Technical Appendix for details of definitions and coverage of digital sales. 5 NB. Figures for home sales of digital school books as measured by the PASM scheme (and used to determine the figures in this section – see Appendix A) may differ from those measured by the PA’s Educational Publishers Council (as detailed in Appendix C) in terms of absolute numbers and growth rates. This reflects differences in companies participating in each scheme and, in particular, in the way that participants split their sales into physical versus digital (much school output consists of blended physical and digital elements, which are not always easily or consistently categorised by format).

20 PA STATISTICS YEARBOOK 2014 | Home (UK) book sales 3 Export book sales

Sector review by Jonathan Atkins, international director, Pan Macmillan

xport sales of physical books in 2014 were down 2% by value and 4% by volume, figures that Erepresented a small recovery from 2013, when sales were down 4% and 5% respectively. When combined with digital, overall export sales were down by less than 1%, with digital sales up 8%. Digital now accounts for 14% of total export sales.

Over the past five years physical sales have dropped 5% by value and 13% in units. The extent to which this decline is down to digital migration and how much it reflects challenges in various markets ªª1% to £1,444m and a strong pound is difficult to pinpoint. However, for consumer books at least there are clear signs Total physical and of a slowdown in the cannibalisation of physical sales by ebooks as digital sales flatten off. digital book sales In the fiction category, digital sales actually fell by 1%. While physical sales fell too, they were down ©©8% to £203m only by 6% compared to 23% the year before. Of course, that huge drop in 2013 was massively Total digital sales distorted by the Fifty Shades of Grey phenomenon in 2012. For trade books, however, the most striking feature of 2014 has been the dramatic growth in children’s sales – up 28% on the prior ªª2% to £1,242m year. Strong international brands led the way, from Minecraft to Divergent, from Disney’s Frozen to Total physical sales Jeff Kinney’s Wimpy Kid – and the biggest single UK book of 2014 was The Fault in Our Stars by John Green, aided partly by the power of Hollywood. ©©11% to £111m Export sales of Sales of physical ELT products fell by 5% in 2014, after a similar fall in 2013. ELT still represented the academic/professional second most significant chunk of physical export sales at £248m (20% of total sales), but suffered an digital books 18% fall in its most important market, Europe (see Section 8). This probably reflects the economic malaise in some of the big European ELT markets such as Greece and Spain, exacerbated by a weak ©©28% to £102m Euro. In all markets there has been a steady shift towards digital solution sales and to local curriculum Export sales of physical publishing (encouraged by legislation in certain countries), making life difficult for UK ELT publishers. children’s books Physical school book sales grew by 6%, and over the past five years have increased by over 20% ©©4% to £203m in value terms even though unit sales have fallen by over 30% over the same period, thanks to an Export sales of physical increase of 75% in the average invoiced price. books to East & South Asia Academic and professional physical sales dropped too by 5%, much more sharply than in recent years, which almost certainly does reflect a switch to digital as these sales grew by £11m (11% up) ©©4% to £139m to £111m, by far the biggest category of digital export sales and more than twice the value of the Export sales of physical next largest category, fiction. books to North America The pound strengthened against most currencies in 2014, 5% against the euro and by a welcome 13% against the Australian dollar. It encouraged Australian book buyers to revisit local booksellers, who in recent years had been made to look very expensive compared to overseas online retailers (see Appendix B).

Export book sales | PA STATISTICS YEARBOOK 2014 21 In other key markets – such as India, where the rupee lost 10% of its value against the pound, and South Africa, where the rand lost a whopping 18% – the strength of the pound just forced local prices up at a time when these notoriously price-sensitive markets were already experiencing other significant challenges, particularly in the chain retailing sector.

Europe remains the biggest trading area for UK books, making up 37% of all physical export sales by value. However, revenues have fallen for the past five years, with a drop in 2014 of 6%. While ebook growth has been relatively slow in local languages in all markets in Europe, there were signs in 2014 that heavy readers of English language books were loading up their Kindles, Kobos, Tolinos and tablets with the sort of low-priced offerings they could not find in their local languages. The same has been true for the online sale of physical books in Europe for some time, particularly in Germany and France, where fixed book price laws forbid discounting on local books, but do not affect imported product. This initially gave UK publishers a big boost in online sales, but there are worrying recent signs of a contraction in shelf space for English language books in chain retailers like Thalia and FNAC.

East and South Asia, including the burgeoning economies of India and China, consolidated its position as the second biggest trading area. With sales up 4%, the area now represents 16% of total export physical sales. There were massive variances in a far from homogenous territory, with the more mature markets of Singapore, Japan and Hong Kong seeing little growth while newer markets such as Indonesia, Thailand and Taiwan continued to sustain and develop an impressive range of well‑merchandised and lively chain bookstores. In India, the race for online supremacy has left the bricks and mortar chains such as Landmark and Crossword struggling to compete and sent their retail expansion plans into reverse.

The Middle East and North Africa remains a vital market for ELT and schools publishers as investment in education in English in this dynamic but turbulent region continues. However, after a welcome and marked recovery in 2013 following the uncertainty caused by political upheaval in 2012, there was a correction in 2014, and sales fell by 1%. Again there is a big difference between trading conditions in the mostly stable Gulf countries, where consumer sales thrived, and those in the more volatile and unsettled parts of the region. It still remains the third largest area by revenue for English language exports, comfortably ahead of North America, which still represents only 11% of total export sales – though this figure hides the huge volume of rights business that UK trade publishers do with their US counterparts (see Section 11). Sales direct to Canada declined disproportionately, as more and more sales are now channelled through US warehouses.

Australasia has traditionally been the most important market for UK trade publishers, and remains so for all digital consumer sales, being the most mature ebook market outside North America and the UK. Amazon Kindle launched an Australian storefront with pricing in Australian dollars at the end of 2013, three years after Apple had launched theirs, but, without a local marketing and merchandising presence, their dominance in the market is still not as pronounced as elsewhere. There were welcome signs of further recovery in the physical market in 2014 as local retailers welcomed a weaker Australian dollar that helped overall sales from UK publishers inch up by 1% over the previous year.

Elsewhere, the markets of Latin America returned to growth in 2014 despite the dire state of the wider economy in the key markets of Brazil, even in a World Cup year, and Argentina, where GDP growth has gone into reverse. By contrast, many emerging economies in Sub‑Saharan Africa such as Nigeria, where GDP growth stands at 7%, have struggled to develop their book sales while piracy of schools product has been such a problem. This region, dominated by South Africa, where all categories have suffered in recent years, saw the biggest sales drop, by 11% in 2014 and 33% since 2010.

22 PA STATISTICS YEARBOOK 2014 | Export book sales 3.1 Publisher export sales of books: physical and digital

The invoiced value of UK publisher sales of books for export fell 1% in 2014, to £1,444m, with an 8% rise in digital sales 6 to overseas markets not quite overturning a 2% drop in physical export sales (Table 3.1a).

Table 3.1a TOTAL Physical Digital Publisher export sales of books: £m £m £m physical and digital 2013 1,455 1,267 187 (net invoiced value) 2014 1,444 1,242 203 NB: % changes calculated prior to rounding % change in sales 2014/2013 -0.7 -2.0 +8.2

Digital formats (encompassing ebooks, audio downloads, online subscriptions and other digital book sales) accounted for 14% of the total invoiced value of sales of exported books in 2014, up from 13% in 2013 (Figure 3.1a).

Figure 3.1a Export books: physical and digital 100% shares (of net invoiced value) 13 14 90%

80% Digital sales 70%

Physical sales 60%

50% 87 86 40%

30%

20%

10%

0% 2013 2014

6 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Export book sales | PA STATISTICS YEARBOOK 2014 23 The small drop in the invoiced value of UK publisher export sales (physical plus digital) in 2014 was driven by 2–5% decreases in revenue from exports of fiction, non-fiction/reference, ELT and academic/professional books. In contrast, the invoiced value of school exports grew by 7%, with children’s export sales up by 29% (Table 3.1b).

Table 3.1b Non‑fiction/ Academic/ Publisher export sales of physical TOTAL Fiction reference Children’s School ELT professional and digital books: by category £m £m £m £m £m £m £m (net invoiced value) 2013 1,455 181 238 83 118 268 567

NB: % changes calculated prior to rounding 2014 1,444 172 227 108 126 258 554 % change in sales 2014/2013 -0.7 -4.8 -4.6 +29.3 +6.8 -3.8 -2.3

Academic/professional titles continued to account for nearly two‑fifths of invoiced value for physical and digital sales combined in 2014, with ELT taking nearly a fifth of sales, and non-fiction/reference accounting for 16% of revenue. Fiction, school and children’s respectively took 12%, 9% and 8% of export sales in 2014, with children’s and school books gaining share over 2013 (Figure 3.1b).

Figure 3.1b Physical and digital export 100% book sales: category shares 90% (of net invoiced value) 80% 39 38 Academic/professional 70%

ELT 60% 18 50% 18 School 40% 8 9

30% 6 7 Children’s 20% 16 16

Non‑fiction/reference 10% 12 12 0% Fiction 2013 2014

NB: Due to rounding, sum of %s may not = 100%

24 PA STATISTICS YEARBOOK 2014 | Export book sales 3.2 Publisher export sales of physical books, by category

2014 saw 5 – 6% decreases in the invoiced value of physical exports of fiction, non-fiction/reference, ELT and academic/professional books, contrasting with a 6% rise for school books and a 28% increase for children’s books. Between 2010 and 2014, there were double‑digit increases in the value of physical exports of children’s and school books, but a double‑digit decrease for fiction. Exports of ELT, academic/professional and – marginally – non-fiction/reference books also fell over the five years (Table 3.2a).

Table 3.2a Non‑fiction/ Academic/ Publisher export sales of TOTAL Fiction reference Children’s School ELT professional physical books: by category £m £m £m £m £m £m £m (net invoiced value) 2010 1,312 162 210 88 103 258 490 2011 1,286 146 216 84 108 241 490 NB: % changes calculated prior to rounding 2012 1,317 161 221 77 106 275 479 2013 1,267 125 219 79 117 260 467 2014 1,242 117 208 102 124 248 443 % change in sales 2011/2010 -2.0 -10.2 +3.0 -4.8 +5.6 -6.6 +0.0 2012/2011 +2.4 +10.5 +1.9 -8.7 -2.6 +13.8 -2.3 2013/2012 -3.8 -22.6 -0.9 +3.1 +11.2 -5.2 -2.5 2014/2013 -2.0 -6.4 -4.6 +28.3 +5.7 -4.7 -5.2

2014/2010 -5.4 -28.1 -0.8 +15.0 +20.9 -3.9 -9.7

Children’s book exports grew by a quarter in terms of physical unit sales in 2014, contrasting with single‑digit decreases for fiction, non-fiction/reference and academic/professional books, and double‑digit decreases for school and ELT books. Unit sales of physical fiction and school books saw the most rapid decrease between 2010 and 2014, with ELT and academic/professional sales also down. Children’s and non-fiction/reference were the only sectors showing export unit growth over the five years (Table 3.2b).

Table 3.2b Non‑fiction/ Academic/ Publisher export sales of physical TOTAL Fiction reference Children’s School ELT professional books: by category (net units) m m m m m m m

NB: % changes calculated prior to rounding 2010 309.0 56.9 53.7 53.3 36.9 75.6 32.6 2011 292.2 49.7 57.0 47.2 36.2 70.4 31.7 2012 296.2 54.8 60.4 46.1 24.0 80.8 30.1 2013 280.9 41.1 57.6 46.2 29.9 76.8 29.4 2014 269.5 38.2 54.4 56.8 25.5 67.7 27.0 % change in sales 2011/2010 -5.4 -12.6 +6.3 -11.5 -1.7 -7.0 -2.9 2012/2011 +1.4 +10.3 +5.9 -2.4 -33.7 +14.8 -5.0 2013/2012 -5.2 -25.0 -4.6 +0.1 +24.3 -4.9 -2.4 2014/2013 -4.1 -7.0 -5.7 +23.0 -14.4 -11.9 -8.1

2014/2010 -12.8 -32.8 +1.3 +6.5 -30.7 -10.5 -17.3

Export book sales | PA STATISTICS YEARBOOK 2014 25 Between 2010 and 2014 the share of physical book export unit sales taken by children’s and non‑fiction/reference titles each rose from 17% to 20 –21% of units, with small gains as well in terms of value share. School books gained share in value, but lost share of volume. Fiction and academic/professional books lost share by both measures, but the academic/professional category remained the largest in terms of export revenues. ELT remained the largest export category by volume despite losing share in 2014 over 2013 (Figure 3.2).

Figure 3.2 Physical book exports: 100% category shares (of net sales) 11 11 10 10 10 90% 36 80% 37 38 36 37 24 24 25 Academic/professional 27 27 70%

ELT 60% 12 9 12 8 11 20 19 21 21 20 50% 16 School 17 16 16 21 40% 8 8 8 9 10 30% 7 7 6 6 8 Children’s 17 20 20 21 20 20% 16 17 17 17 17

Non‑fiction/reference 10% 18 18 17 15 14 12 11 12 10 9 0% Fiction 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

NB: Due to rounding, sum of %s may not = 100%

3.3 Average invoiced price of physical book exports, by category

The average invoiced price of physical book exports rose by 2% in 2014 over 2013, reflecting price rises in all categories, and most notably for school books. Book prices for school books also grew fastest between 2010 and 2014, and together with 7– 9% rises in prices for academic/professional, ELT, children’s and fiction, drove up export prices by 9% overall over the five years. Non-fiction/reference exports saw a slight price decrease over the period (Table 3.3).

Table 3.2 Non‑fiction/ Academic/ Average invoiced price of physical TOTAL Fiction reference Children’s School ELT professional book exports: by category £ £ £ £ £ £ £

NB: % changes calculated prior to rounding 2010 4.25 2.86 3.92 1.66 2.78 3.41 15.03 2011 4.40 2.94 3.80 1.78 2.99 3.43 15.48 2012 4.45 2.94 3.65 1.67 4.39 3.40 15.91 2013 4.51 3.04 3.79 1.72 3.93 3.39 15.91 2014 4.61 3.05 3.83 1.79 4.86 3.67 16.41 % change in average invoiced price 2011/2010 +3.7 +2.8 -3.1 +7.5 +7.4 +0.4 +3.0 2012/2011 +1.1 +0.2 -3.8 -6.5 +47.0 -0.8 +2.8 2013/2012 +1.4 +3.2 +3.9 +3.0 -10.5 -0.3 +0.0 2014/2013 +2.1 +0.6 +1.1 +4.3 +23.5 +8.2 +3.2

2014/2010 +8.5 +6.9 -2.1 +8.0 +74.6 +7.4 +9.2

26 PA STATISTICS YEARBOOK 2014 | Export book sales 3.4 Export sales of physical books, by region

The 2% decrease in the invoiced value of physical book exports in 2014 reflected a drop in revenue from sales to Europe, Africa Sub-Sahara and the Middle East/North Africa. In contrast, there were 4% increases in sales to North America and East/South Asia, and marginal growth in exports to Australasia and the Other Americas region. East/South Asia saw the fastest growth in export value between 2010 and 2014 (+14%), ahead of the Other Americas and Middle East/North Africa. Exports to Africa Sub-Sahara fell fastest over the five years, with double‑digit decreases as well in sales to Australasia and North America (Table 3.4).

Table 3.4 Export sales of physical Mid East/ Africa E & S North Other books: by region TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 1,312 500 163 117 178 136 157 58 3 2011 1,286 488 171 107 184 128 144 61 3 2012 1,317 513 166 93 190 140 147 64 4 2013 1,267 490 178 88 195 117 133 62 4 2014 1,242 460 176 79 203 118 139 63 4 % change in sales 2011/2010 -2.0 -2.5 +5.1 -8.6 +3.7 -6.3 -8.2 +5.4 +5.5 2012/2011 +2.4 +5.1 -3.1 -13.3 +3.4 +9.7 +1.9 +6.3 +25.4 2013/2012 -3.8 -4.4 +7.3 -5.2 +2.4 -16.3 -9.5 -3.7 +0.2 2014/2013 -2.0 -6.1 -1.4 -10.5 +3.9 +0.5 +4.4 +1.9 +16.8

2014/2010 -5.4 -8.0 +7.7 -32.8 +14.1 -13.5 -11.6 +9.9 +54.9

NB: % changes calculated prior to rounding

Europe accounted for 37% of the invoiced value of exports in 2014, lower than in 2010-13. The Middle East/North Africa region saw its share of exports increase from 12% to 14% over the five years, with East/South Asia up from 14% to 16%. Australasia and North America saw slight share decreases over the same period, while Africa Sub-Sahara’s share fell from 9% to 6% (Figure 3.4).

Figure 3.4 Exported physical books: regional 100% 4 5 5 5 5 shares (of net invoiced value) 90% 12 11 11 11 11 Unspecified 80% 10 10 11 9 9 Other Americas 70% 15 14 14 14 16 N America 60% 7 9 8 7 6 Australasia 50% 12 13 13 14 14 East & South Asia 40%

30% Africa Sub‑Sahara

20% 38 38 39 39 37 Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

Export book sales | PA STATISTICS YEARBOOK 2014 27 3.5 Publisher export sales of digital books 7

In 2014, the invoiced value of UK publisher’s digital sales to overseas markets in the consumer categories increased by 1% to £80m, with digital children’s sales outside the UK up 47% on 2013 (to £6m), but small decreases in digital fiction and non-fiction/reference export sales. Digital sales of school books outside the UK more than trebled (to £2m), with double‑digit increases for ELT (to £10m) and for the academic/professional sector (to £111m) (Table 3.5).

Table 3.5 Non‑fiction/ Academic/ Publisher export sales of TOTAL Fiction reference Children’s School ELT professional digital books: by category £m £m £m £m £m £m £m (net invoiced value) 2013 187 56 19 4 * 8 100 2014 203 55 19 6 2 10 111 NB: % changes calculated prior to rounding * = < £0.5m % change in sales 2014/2013 +8.2 -1.2 -3.7 +47.4 +327.7 +26.6 +11.4

The academic/professional sector remained the largest category for digital exports in 2014, accounting for 55% of total digital sales outside the UK, up from 53% in 2013. The share of digital export revenue taken by fiction fell from 30% to 27% in 2014, with the non-fiction/reference share down slightly to 9%. Children’s, school and ELT all made small share gains in 2014, and together increased from 6% to 9% of the total (Figure 3.5).

Figure 3.5 Digital export book sales: category 100% shares (of net invoiced value) 90%

80% Academic/professional 53 55 70%

ELT 60%

50% 4 School 5 40% 2 1 3 10 30% 9 Children’s 20% 30 27 Non‑fiction/reference 10%

0% Fiction 2013 2014

NB: Due to rounding, sum of %s may not = 100%

7 See Technical Appendix for details of definitions and coverage of digital sales.

28 PA STATISTICS YEARBOOK 2014 | Export book sales 4 Fiction book sales

Sector review by David Shelley, deputy chief executive officer at Little, Brown

he PA Statistics Yearbook shows that the value of fiction sales continued to decline in 2014. TThe 6% rise in ebook sales – a much more modest increase than in recent years – was more than outweighed by a 9% reduction in physical sales, transacted at much higher prices.

When considering the 2014 numbers, it is worth first looking back to 2013. In that year there were no global mega-sellers in fiction to rival 2012’s Fifty Shades of Grey, and the mix of bestsellers was similar to that in 2014 – perennial chart-toppers, prize-winners, and unexpected debut successes. ªª4% to £574m The only anomaly in 2013 was, arguably, the publication of Dan Brown’s Inferno, which generated Total physical and digital more than £6m of turnover. So the two years are broadly comparable, and the reasons for the drop book sales in value in 2014 cannot be attributed to a single publishing phenomenon in the preceding year.

©©6% to £211m The bestselling hardcover of 2014 recorded by Nielsen BookScan was Lee Child’s Personal Total digital sales (Bantam Press), followed by Lamentation by CJ Sansom (Macmillan). New titles from reliable bestsellers Martina Cole, Wilbur Smith, Bernard Cornwell, George RR Martin (this a companion ªª9% to £364m volume to his Song of Ice and Fire series, rather than a new novel) and Philippa Gregory also Total physical sales appeared in the top 10, indicating an undimmed public appetite for the big fiction brands. Also appearing in the hardcover top 10 for 2014 were Jessie Burton’s The Miniaturist (the literary ªª10% to £247m debut hit of the year, from Picador), Robert Galbraith’s second novel The Silkworm (Little, Brown), Home physical sales the long‑awaited new David Nicholls novel Us (Hodder), and Richard Flanagan’s much-lauded, Man Booker-winning The Narrow Road to the Deep North (Chatto & Windus). ªª6% to £117m Export physical sales The bestseller in paperback fiction, by a country mile, was John Green’s The Fault in Our Stars (Penguin), which sold nearly 900,000 copies in paperback alone, across two editions – ©©8% to £155m an astonishing number. (Green’s novel was classified as an adult title for BookScan, but is Home digital sales represented in the children’s section of the Yearbook.) This was followed by Gillian Flynn’s Gone Girl (Orion), Dan Brown’s Inferno (Corgi), Kate Atkinson’s Life After Life (Black Swan), The Goldfinch by ªª1% to £55m Donna Tartt (Abacus), And the Mountains Echoed by Khaled Hosseini (Bloomsbury), Mad About Export digital sales the Boy by Helen Fielding (Vintage), The Rosie Project by Graeme Simsion (the paperback debut hit of the year, from Penguin), and Never Go Back by Lee Child (Bantam). Other notable paperback successes in the year included Terry Hayes’ I Am Pilgrim (the thriller breakthrough of the year, from Corgi), Nathan Filer’s The Shock of the Fall (Borough Press – an example of a book driven by exceptional word-of-mouth), and Karen Joy Fowler’s We Are All Completely Beside Ourselves (a huge critical and commercial success for indie Serpent’s Tail).

It is worth noting the increasing power of film adaptations to sell books – the two bestselling paperbacks of the year, Gone Girl and The Fault in Our Stars, were originally published in 2013, but continued to sell exceptionally well in 2014 on the back of film adaptations.

Fiction book sales | PA STATISTICS YEARBOOK 2014 29 In the retail arena, the reboot of Waterstones by James Daunt seemed to come to fruition in 2014. Sales and profits were up, and Daunt reported that the chain was likely to break even in the year. Publishers benefited from his strategies of concentrating on “core” Waterstones titles; promoting a few carefully selected titles very prominently; ordering in low volumes but being quick to replenish; and using curation and attention to detail to drive sales, rather than widespread discounting.

Elsewhere, WH Smith and WH Smith Travel continued to perform well, notably during the fourth quarter, and their Richard & Judy promotion helped create several more bestsellers in 2014. The supermarkets were down in some areas in 2014 but remained solid in others; competition for space in-store with other non-food products remains an issue, as does the popularity of core supermarket genres such as women’s fiction and crime in ebook form. On a positive note, Morrisons and Waitrose show good signs of growth, and Tesco, Asda and Sainsbury’s all continued to back books strongly, despite the challenges.

The challenges facing the independent sector were as tough as ever, and in February it was reported that the number of independent bookshops in the UK fell below 1,000 for the first time. However, there were signs as 2014 drew to a close that many independent booksellers were holding firm; undoubtedly, initiatives such as the well-received “Books Are My Bag” campaign are helping.

The evidence from the Yearbook is that fiction ebook sales, currently standing at 37% of total fiction sales by value, are still rising, but that the growth trajectory is less steep than it was in 2012 and 2013. If the UK follows the pattern shown in the US, this graph may well level off completely in 2015. Amazon continues to be the major player in this market, followed by Apple and Kobo. It is worth noting that some authors and genres skew more towards ebook sales than others – it is not unheard of in the paranormal romance or “new adult” genres for ebooks to make up 90% of all sales, whereas in some more traditional genres ebooks account for under 20%.

A key and growing concern for all publishers of fiction is to ensure that it is still as easy for readers to discover new writers in an environment with many fewer bookshops, and an online environment that offers a bewildering amount of choice. One interesting development has been the role of social media in helping people share book recommendations, and in cross-referencing different forms of media – perhaps helping to explain some of the extraordinary recent book successes that tie in to films and computer games. Social media has also undoubtedly featured largely in the marketing of some of the big fiction successes of 2014 – The Miniaturist, I Am Pilgrim, and We Are All Completely Beside Ourselves among others – suggesting this could be an increasingly important part of the mix for the book trade in helping to build the fiction stars of the future.

30 PA STATISTICS YEARBOOK 2014 | Fiction book sales 4.1 Publisher sales of fiction books: physical and digital

The invoiced value of UK publisher sales of fiction books fell by 4% in 2014, to £574m. This decrease came despite a 6% rise in digital sales revenue in this sector, to £211m.8 The invoiced value of physical fiction sales dropped by 9% in 2014 over 2013, and was down by 34% between 2010 and 2014 as a whole. However, with digital added, the value of fiction sales rose by 2% over the five years (Table 4.1a).

Table 4.1a TOTAL Physical Digital Publisher sales of fiction £m £m £m books: physical and digital 2010 564 548 16 (net invoiced value) 2011 562 492 70 NB: % changes calculated prior to rounding 2012 680 505 175 2013 599 400 200 2014 574 364 211 % change in sales 2011/2010 -0.4 -10.3 +330.9 2012/2011 +20.9 +2.6 +148.9 2013/2012 -11.8 -20.8 +14.2 2014/2013 -4.1 -9.0 +5.5

2014/2010 +1.8 -33.6 +1,192.6

Digital formats (encompassing both ebooks and audiobook downloads) accounted for 37% of the total invoiced value of fiction sales in 2014, up from 33% in 2013, and 26% in 2012 (Figure 4.1a).

Figure 4.1a Fiction books: physical and digital 100% 3 shares (of net invoiced value) 12 90% 26 33 37 80% Digital sales 70%

Physical sales 60%

50% 97 88 40% 74 67 63 30%

20%

10%

0% 2010 2011 2012 2013 2014

8 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Fiction book sales | PA STATISTICS YEARBOOK 2014 31 The invoiced value of UK publisher sales of digital fiction books to UK customers rose 8% in 2014, but a 10% drop in the value of physical fiction sales in the home market meant that home sales of fiction fell by 4% overall. Export sales of fiction fell 5% overall, with a 6% drop for physical and a 1% decrease for digital (Table 4.1b).

Table 4.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and export TOTAL Physical Digital TOTAL Physical Digital fiction books: physical and digital £m £m £m £m £m £m (net invoiced value) 2013 418 275 144 181 125 56 NB: % changes calculated prior to rounding 2014 402 247 155 172 117 55 % change in sales 2014/2013 -3.8 -10.1 +8.2 -4.8 -6.4 -1.2

Digital sales accounted for 39% of revenue from fiction sales in the UK market in 2014, up from 34% in 2013. The digital share of fiction exports rose from 31% to 32% over the same period (Figure 4.1b).

Figure 4.1b Home and exported fiction books: 100% physical and digital shares 90% (of net invoiced value) 34 31 32 80% 39

Digital sales 70%

60% Physical sales 50%

40% 66 69 68 30% 61

20%

10%

0% 2013 2014 2013 2014 Home Export

32 PA STATISTICS YEARBOOK 2014 | Fiction book sales 4.2 Publisher sales of physical fiction books

The 9% decrease in the invoiced value of physical fiction sales in 2014 was reflected in both home and exports, which fell by 10% and 6% respectively, with unit sales dropping at a slightly faster rate in each case. Between 2010 and 2014, home sales of physical fiction fell by over a third in both invoiced value and volume, with fiction exports down by just under a third (Table 4.2a).

Table 4.2a – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical fiction Total Physical Physical Total Physical Physical books: home and export physical home export physical home export

NB: % changes calculated prior to rounding £m £m £m m units m units m units 2010 548 386 162 185.7 128.9 56.9 2011 492 346 146 166.0 116.4 49.7 2012 505 344 161 167.2 112.4 54.8 2013 400 275 125 129.3 88.2 41.1 2014 364 247 117 114.4 76.2 38.2 % change in sales 2011/2010 -10.3 -10.3 -10.2 -10.6 -9.7 -12.6 2012/2011 +2.6 -0.7 +10.5 +0.7 -3.4 +10.3 2013/2012 -20.8 -20.0 -22.6 -22.7 -21.6 -25.0 2014/2013 -9.0 -10.1 -6.4 -11.5 -13.6 -7.0

2014/2010 -33.6 -36.0 -28.1 -38.4 -40.9 -32.8

Exports increased their share of physical book sales in the fiction sector between 2010 and 2014, from 30% to 32% in terms of invoiced value, and from 31% to 33% in units (Figure 4.2a).

Figure 4.2a Physical fiction books: home and 100% export shares (of net sales) 90% 30 30 32 31 32 31 30 33 32 33 80% Export sales 70%

Home sales 60%

50%

40% 70 70 68 69 68 69 70 67 68 67 30%

20%

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

Fiction book sales | PA STATISTICS YEARBOOK 2014 33 The drop in sales in the physical fiction market in 2014 was driven by double-digit decreases for hardbacks in both invoiced value and units, with paperback units down 11%, and revenue down 7%. Between 2010 and 2014, value and unit sales of paperbacks decreased by 35–40%, with hardback sales down by 30% (Table 4.2b).

Table 4.2b – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical fiction Total physical Paperback Hardback Total physical Paperback Hardback books: by format £m £m £m m units m units m units

NB: % changes calculated prior to rounding 2010 548 435 113 185.7 163.6 22.2 2011 492 386 106 166.0 145.5 20.5 2012 505 406 99 167.2 148.6 18.6 2013 400 306 93 129.3 111.4 17.9 2014 364 285 79 114.4 98.8 15.6 % change in sales 2011/2010 -10.3 -11.2 -7.0 -10.6 -11.1 -7.4 2012/2011 +2.6 +5.1 -6.5 +0.7 +2.1 -9.1 2013/2012 -20.8 -24.5 -5.6 -22.7 -25.0 -3.8 2014/2013 -9.0 -7.1 -15.1 -11.5 -11.2 -13.3

2014/2010 -33.6 -34.5 -30.2 -38.4 -39.6 -29.8

Hardbacks have slightly increased their share of physical fiction sales between 2010 and 2014, up from 21% to 22% in value, and from 12% to 14% in volume (Figures 4.2b and 4.2c).

Figure 4.2b Physical fiction books: format shares 100% (of net invoiced value) 90% 21 21 20 23 22

80% Hardback 70%

Paperback 60%

50%

40% 79 79 80 77 78 30%

20%

10%

0% 2010 2011 2012 2013 2014

34 PA STATISTICS YEARBOOK 2014 | Fiction book sales Figure 4.2c Physical fiction books: format shares 100% (of net units) 12 12 11 14 14 90%

80% Hardback 70%

Paperback 60%

50% 88 88 89 86 86 40%

30%

20%

10%

0% 2010 2011 2012 2013 2014

4.3 Average invoiced price of physical fiction books

The average invoiced price for physical fiction books rose 3% to £3.18 in 2014, with the invoiced price for home sales up 4% to £3.24, and the price of paperbacks increasing by 5% to £2.88. In contrast, the invoiced price of physical fiction exports rose only marginally in 2014, and hardback prices falling 2% to £5.09. Between 2010 and 2014, home and export prices for physical fiction have risen by 7–8% each, with paperback prices also up 8%, but hardback prices down slightly (Table 4.3).

Table 4.3 TOTAL Home Export Paperback Hardback Average invoiced price of £ £ £ £ £ physical fiction books 2010 2.95 2.99 2.86 2.66 5.12

NB: % changes calculated prior to rounding 2011 2.96 2.97 2.94 2.65 5.14 2012 3.02 3.06 2.94 2.73 5.29 2013 3.09 3.12 3.04 2.75 5.19 2014 3.18 3.24 3.05 2.88 5.09 % change in average invoiced price 2011/2010 +0.4 -0.7 +2.8 -0.1 +0.4 2012/2011 +1.9 +2.8 +0.2 +3.0 +2.9 2013/2012 +2.4 +2.0 +3.2 +0.7 -1.8 2014/2013 +2.9 +4.1 +0.6 +4.7 -2.0

2014/2010 +7.7 +8.3 +6.9 +8.3 -0.6

Fiction book sales | PA STATISTICS YEARBOOK 2014 35 4.4 Export sales of physical fiction books, by region

The drop in the value of exports of physical fiction books in 2014 was driven by decreases in sales to Australasia, Europe, Africa Sub-Sahara and East/South Asia. These regions all saw double‑digit decreases in fiction sales between 2010 and 2014, with sales to Europe, Africa Sub-Sahara and Australasia down by over a quarter. Sales to North America were also down by over 20% over the five years, though rose in 2014 itself. The Middle East/North Africa and Other Americas regions were much the smallest destinations for fiction sales, but did see growth in both 2014 and over the five years (Table 4.4).

Table 4.4 Export sales of physical Mid East/ Africa E & S North Other fiction books: by region TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 162 61 3 10 14 55 18 1 * 2011 146 55 3 10 13 49 15 1 * 2012 161 54 3 9 13 62 18 1 * 2013 125 48 3 7 14 39 13 1 1 2014 117 44 4 6 13 34 14 1 1 % change in sales 2011/2010 -10.2 -8.7 -14.8 -4.5 -9.2 -11.0 -17.0 -10.5 +85.2 2012/2011 +10.5 -2.4 -1.1 -6.7 +3.6 +26.1 +25.4 +7.7 +48.4 2013/2012 -22.6 -11.6 +4.9 -22.5 +1.0 -36.6 -31.2 +3.7 +32.0 2014/2013 -6.4 -7.2 +23.2 -6.6 -7.3 -13.5 +9.3 +15.3 +20.0

2014/2010 -28.1 -26.8 +9.0 -35.5 -11.8 -38.4 -21.8 +15.3 +335.2

NB: % changes calculated prior to rounding * = < £0.5m

Europe maintained its place as the largest destination for exports of physical fiction books in 2014, with Australasia in second place, despite seeing its share drop from 34% to 29% between 2010 and 2014. East & South Asia gained share of fiction export sales over the five years (Figure 4.4).

Figure 4.4 Exported physical fiction books: 100% 1 1 1 1 1 regional shares (of net invoiced value) 10 11 11 10 12 90% Unspecified 80%

Other Americas 34 32 29 70% 34 39

N America 60%

11 11 Australasia 50% 9 9 8 6 7 6 6 40% 3 East & South Asia 2 2 6 2 2 30% Africa Sub‑Sahara 20% 37 38 38 38 33 Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

36 PA STATISTICS YEARBOOK 2014 | Fiction book sales 5 Non ‑fiction and reference book sales

Sector review by Rebecca Smart, managing director, Ebury Publishing

he non-fiction book market had a challenging 2014. According to the PA Statistics Yearbook, Tthere was a 9% drop in overall sales value, and ebook revenues fell after four years of rapid growth, by 2%. There is no smoking gun to explain the decline in 2014 – all the key variables such as format, genre and territory (non-fiction sales in the Middle East and North America were the exceptions) saw a softening of physical sales.

So what was behind the decline in physical sales in 2014 after a surprisingly resilient 2013? ªª9% to £748m Total physical and digital The Yearbook data are echoed in Nielsen BookScan’s Total Consumer Market (TCM), which shows book sales sales of physical non-fiction in the UK down by 4% in trade and 3% in specialist non-fiction.

ªª9% to £694m The three biggest genres in trade non-fiction in the UK are autobiography and biography, food and Total physical book sales drink, and history and military – all saw physical sales value decline in 2014.

ªª2% to £54m The biggest print genre was autobiography and biography. Overall this genre saw a print sales Total digital book sales decline in the UK of 7%. Any analysis of this area must acknowledge the extraordinary sales in 2013 of Alex Ferguson’s autobiography, which was worth in excess of £10m to UK retailers in that year ªª11% to £486m and was one of the most successful autobiographies since records began. Taking that outlier into Home sales of physical account, the print market actually grew by 3% in 2014. This was across a range of titles rather than books being driven by three or four huge celebrity titles at Christmas – which is, of course, the key trading period for these books. ªª5% to £208m Export physical In 2010, six autobiographies published for the Christmas period (August to December) sold over book sales 200,000 copies; 9 in 2012 four books hit that number; in 2013 there were three titles at that level; and in 2014 only one book published in the autumn passed the 200,000-copy mark. That bestseller was ªª1% to £35m Lynda Bellingham’s There’s Something I’ve been Dying To Tell You (Hodder) – sales rocketed after Home digital book sales the actress and broadcaster’s death in October 2014. The other surprise autobiography bestseller at Christmas was not published for the Christmas market: Guy Martin’s My Autobiography (Ebury) came ªª4% to £19m out in May, was number one for Father’s Day, and then, with the help of a second TV series, was Export digital book sales propelled back up the charts in November, becoming the first book since The Dangerous Book for Boys (HarperCollins) published outside autumn to be in the top five in December. No one would have predicted that Bellingham’s and Martin’s books would be the top two autobiographies of the Christmas period, and their strong sales only emphasised the apparent lack of successful autobiographies published during the autumn, as did the fact that The Guinness Book of World Records was the number one non-fiction hardback in 2014, a feat it achieved for the first time in five years.

9 Sales information in this and following paragraphs come from the Nielsen BookScan Total Consumer Market (TCM).

Non‑fiction and reference book sales | PA STATISTICS YEARBOOK 2014 37 In food and drink the top 50 print titles were worth £29m to UK retailers in 2014, a figure that represented a 24% drop year-on-year. In 2013 eight of the top 20 non-fiction titles had been food and drink titles, while in 2014 the number had reduced to five. Partly this was the result of delivery – there was no new Nigel Slater or Rick Stein title during the year. The food and drink market once again was dominated by TV tie-ins – the biggest titles were Mary Berry Cooks (Ebury) and Jamie’s Comfort Food (Penguin). But new stars not related to TV made a mark – notably Sabrina Ghayour’s Persiana (Mitchell Beazley), Jack Monroe’s A Girl Called Jack (Penguin), and Hemsley & Hemsley’s The Art of Eating Well (Ebury). This rising talent could not, however, prevent a sales decline of 11%.

In history and military the predicted glut of first world war titles appeared, but – with the possible exception of Max Hastings’ Catastrophe (HarperCollins) – none sold extraordinary numbers or caught the public’s imagination. History turnover, in this year of the great war anniversary, was 5% down in print.

Most other genres also recorded print sales declines: the only subject areas showing sales growth in 2014 were mind, body and spirit, popular sciences, and health and family.

No non-fiction paperback cracked the 200,000 Nielsen Bookscan Total Consumer Market barrier in 2014. In 2013 we had seen the extraordinary success of intermittent dieting titles, notably The Fast Diet (Short Books). It was telling that the biggest paperback non-fiction title in 2014 was The Highway Code – the first time this had been number one since 2008.

In 2013, 21 hardback non-fiction books published for Christmas (August to December) sold more than 75,000 copies through the TCM, whereas only 14 hit that sales level in 2014. The top 30 books published for Christmas had an enormous value shortfall of 31% (13% excluding Ferguson) year‑on‑year. But further down the lists there were improved sales – it was, as the trade says, a ‘range Christmas’. The top 250 non-fiction titles were 11% down year-on-year (3% down without Ferguson). The shape of this market benefited range booksellers and online sellers over mass market outlets, where the space dedicated to books focused on those big Christmas bestsellers.

Books that drove this range Christmas included Alan Johnson’s memoir, with combined hardback and paperback sales approaching 200,000 copies; the truly original H Is for Hawk (Vintage), selling 72,000 copies; Boris Johnson’s The Churchill Factor (Hodder), achieving more than 120,000 copies; and Owen Jones’s The Establishment (Penguin), selling 47,000 copies.

The lack of big hitters in paperback also saw some backlist titles with increasing sales becoming some of the bestselling books of the year – notably Wreck This Journal (Penguin) with 170,000 copies sold, and The Chimp Paradox (Ebury), achieving sales of 136,000 copies.

So did 2014 mark the end of celebrity autobiography and the big paperback sensation? Probably not. In 2015 it is unlikely that The Guinness Book of World Records will be the biggest hardback and The Highway Code the biggest paperback of the year yet again. Food and drink will bounce back, propelled by new books from some key TV stars including Nigella Lawson and Rick Stein. Diet publishing tends to hit a high every two years, and 2014 was significantly down on 2013.

YouTube has already delivered some big successes in 2014 for the book market – notably in children’s books with Girl Online (Penguin) and in non-fiction with Alfie Deyes’ The Pointless Book (Bonnier). It’s likely that two or three of the key non-fiction titles in 2015 will come from this platform, particularly in the lifestyle markets such as food and drink and fashion.

38 PA STATISTICS YEARBOOK 2014 | Non‑fiction and reference book sales 5.1 Publisher sales of non‑fiction/reference books: physical and digital

The invoiced value of UK publisher sales of non-fiction/reference books fell by 9% in 2014, to £748m. This decrease came mainly from physical sales, which saw revenues down 9% to £694m, though digital sales of non-fiction/reference also fell slightly in 2014, to £54m.10 The decreases in 2014 meant that the invoiced value of non-fiction/reference sales was also 9% lower in 2014 than in 2010, with physical sales value down 15%, and despite a ninefold increase for digital revenue over the five years (Table 5.1a).

Table 5.1a TOTAL Physical Digital Publisher sales of non‑fiction/ £m £m £m reference books: physical and 2010 822 816 6 digital (net invoiced value) 2011 803 783 21 * = < £0.5m 2012 807 767 40 NB: % changes calculated prior to rounding 2013 818 763 55 2014 748 694 54 % change in sales 2011/2010 -2.2 -4.1 +266.4 2012/2011 +0.5 -2.0 +95.4 2013/2012 +1.3 -0.5 +36.2 2014/2013 -8.5 -9.0 -2.0

2014/2010 -8.9 -14.9 +855.7

Digital formats (encompassing both ebooks and audiobook downloads) accounted for 7% of the total invoiced value of non-fiction/reference sales in 2014, similar to 2013, and up from 5% in 2012 (Figure 5.1a).

Figure 5.1a Non‑fiction/reference books: 100% 1 3 5 7 7 physical and digital shares 90% (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 99 97 95 93 93 40%

30%

20%

10%

0% 2010 2011 2012 2013 2014

10 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Non‑fiction and reference book sales | PA STATISTICS YEARBOOK 2014 39 The invoiced value of UK publisher sales of digital non-fiction/reference books to UK customers fell 1% in 2014, and an 11% drop in the value of physical non-fiction/reference sales in the home market meant that UK sales of the category fell 10% overall. Export sales of non-fiction/reference books fell 5% overall and for physical formats in 2014, with digital sales to overseas markets down 4% (Table 5.1b).

Table 5.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and TOTAL Physical Digital TOTAL Physical Digital export non‑fiction/reference £m £m £m £m £m £m books: physical and digital 2013 580 544 36 238 219 19 (net invoiced value) 2014 521 486 35 227 208 19 NB: % changes calculated prior to rounding % change in sales 2014/2013 -10.1 -10.7 -1.1 -4.6 -4.6 -3.7

Digital sales accounted for 7% of revenue from non-fiction/reference sales in the UK market in 2014, up from 6% in 2013. The digital share of non-fiction/reference exports stayed level at 8% over the same period (Figure 5.1b).

Figure 5.1b Home and exported non‑fiction/ 100% 6 7 8 8 reference books: physical and digital 90% shares (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 94 93 92 92 40%

30%

20%

10%

0% 2013 2014 2013 2014 Home Export

40 PA STATISTICS YEARBOOK 2014 | Non‑fiction and reference book sales 5.2 Publisher sales of physical non‑fiction/reference books

The decrease in the value of physical non-fiction/reference sales in 2014 was matched by a 9% drop in physical unit sales. Home sales fell at a faster rate (10-11%) than exports (5-6%) for both measures. Between 2010 and 2014, volume sales of physical non-fiction/reference exports grew by 1%, with revenue from these sales down just 1%. In contrast, physical non-fiction/reference sales to the home market fell by nearly a fifth over the same period in both units and value (Table 5.2a).

Table 5.2a – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical Total Physical Physical Total Physical Physical non‑fiction/reference books: physical home export physical home export home and export £m £m £m m units m units m units

NB: % changes calculated prior to rounding 2010 816 606 210 191.7 138.0 53.7 2011 783 566 216 191.1 134.1 57.0 2012 767 546 221 191.4 131.0 60.4 2013 763 544 219 185.0 127.4 57.6 2014 694 486 208 168.8 114.5 54.4 % change in sales 2011/2010 -4.1 -6.5 +3.0 -0.3 -2.8 +6.3 2012/2011 -2.0 -3.5 +1.9 +0.1 -2.3 +5.9 2013/2012 -0.5 -0.4 -0.9 -3.3 -2.7 -4.6 2014/2013 -9.0 -10.7 -4.6 -8.7 -10.1 -5.7

2014/2010 -14.9 -19.8 -0.8 -11.9 -17.1 +1.3

Exports increased their share of physical book sales in the non-fiction/reference sector between 2010 and 2014, from 26% to 30% of invoiced value, and from 28% to 32% of unit sales (Figure 5.2a).

Figure 5.2a Physical non‑fiction/reference books: 100% home and export shares (of net sales) 90% 26 28 29 29 30 28 30 32 31 32 80% Export sales 70%

Home sales 60%

50%

40% 74 72 71 71 70 72 70 68 69 68 30%

20%

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

Non‑fiction and reference book sales | PA STATISTICS YEARBOOK 2014 41 The 9% drop in invoiced value/volume sales of physical non-fiction/reference books in 2014 reflected double-digit decreases in sales of general non-fiction hardbacks for both measures, and in volume sales of reference books. General non-fiction paperbacks, and revenue from reference sales, fell by 4–5% each. Between 2010 and 2014, physical sales of reference books fell at the fastest rate (by over a fifth), with a double-digit drop for general hardbacks, and a single‑digit decrease for paperbacks (Table 5.2b).

Table 5.2b – – – – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – – – – – – – – Net units – – – – – – – – – – – – – Publisher sales of physical Total General General Total General General non‑fiction/reference books: physical paperback hardback Reference physical paperback hardback Reference by format/category £m £m £m £m m units m units m units m units 2010 816 327 316 173 191.7 94.8 55.5 41.4 2011 783 317 300 165 191.1 96.5 53.0 41.7 2012 767 309 306 152 191.4 95.6 54.6 41.2 2013 763 310 313 140 185.0 92.1 53.8 39.1 2014 694 294 267 132 168.8 88.3 47.6 32.9 % change in sales 2011/2010 -4.1 -2.9 -5.1 -4.5 -0.3 +1.7 -4.5 +0.8 2012/2011 -2.0 -2.7 +2.1 -8.1 +0.1 -0.9 +3.1 -1.2 2013/2012 -0.5 +0.4 +2.1 -7.9 -3.3 -3.7 -1.4 -5.1 2014/2013 -9.0 -5.0 -14.5 -5.4 -8.7 -4.1 -11.5 -15.9

2014/2010 -14.9 -9.9 -15.4 -23.6 -11.9 -6.9 -14.2 -20.5

NB: % changes calculated prior to rounding

General paperbacks increased their share of physical non-fiction/reference sales between 2010 and 2014, from 40% to 42% in value, and from 49% to 52% in units, with reference books losing share over the period (Figures 5.2b and 5.2c).

Figure 5.2b Physical non‑fiction/reference 100% books: format/category shares 90% 20 18 19 (of net invoiced value) 21 21 80% Reference 70%

General hardback 39 60% 39 38 40 41

50% General paperback 40%

30%

20% 40 41 40 41 42

10%

0% 2010 2011 2012 2013 2014

42 PA STATISTICS YEARBOOK 2014 | Non‑fiction and reference book sales Figure 5.2c Physical non‑fiction/reference books: 100% format/category shares (of net units) 90% 22 22 22 21 19

80% Reference 70% 28 General hardback 29 28 29 29 60%

50% General paperback 40%

30% 49 50 50 50 52 20%

10%

0% 2010 2011 2012 2013 2014

5.3 Average invoiced price of physical non‑fiction/ reference books

The average invoiced price for physical non-fiction/reference books decreased marginally to £4.11 in 2014, and was 3% lower than in 2010. Prices for home and export sales in this category, and for paperbacks, hardbacks and reference books, all fell slightly over the five years, with decreases in 2014 itself for general non-fiction paperbacks and hardbacks, and for home sales (Table 5.3).

Table 5.3 General General Average invoiced price of physical TOTAL Home Export paperback hardback Reference non‑fiction/reference books £ £ £ £ £ £

NB: % changes calculated prior to rounding 2010 4.26 4.39 3.92 3.44 5.70 4.18 2011 4.09 4.22 3.80 3.29 5.67 3.96 2012 4.01 4.17 3.65 3.23 5.62 3.68 2013 4.12 4.27 3.79 3.36 5.82 3.57 2014 4.11 4.24 3.83 3.33 5.62 4.02 % change in average invoiced price 2011/2010 -3.8 -3.8 -3.1 -4.5 -0.6 -5.3 2012/2011 -2.2 -1.2 -3.8 -1.9 -1.0 -7.0 2013/2012 +2.9 +2.4 +3.9 +4.3 +3.6 -2.9 2014/2013 -0.3 -0.6 +1.1 -0.9 -3.4 +12.4

2014/2010 -3.4 -3.3 -2.1 -3.2 -1.5 -3.8

Non‑fiction and reference book sales | PA STATISTICS YEARBOOK 2014 43 5.4 Export sales of physical non‑fiction/reference books, by region

The 5% decrease in the value of exports of physical non-fiction/reference books in 2014 was driven by a drop in sales to Africa Sub-Sahara, Australasia, East/South Asia and Europe. These contrasted with a rise in the value of non-fiction exports to the Middle East/North Africa and, marginally, to North America. Between 2010 and 2014, growth in sales of physical non-fiction/reference books was fastest for East/South Asia (+17%), ahead of the Middle East/North Africa (+10%) and North America (+5%). Sales to Europe, Africa Sub-Sahara, Australasia and the Other America region decreased over the five years (Table 5.4). Table 5.4 Export sales of physical Mid East/ Africa E & S North Other non‑fiction/reference books: TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified by region (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 210 82 13 15 29 39 26 3 2 2011 216 82 14 16 34 40 26 3 2 2012 221 79 13 15 35 44 28 3 2 2013 219 82 13 14 35 43 27 2 2 2014 208 80 15 12 33 36 27 2 3 % change in sales 2011/2010 +3.0 -0.7 +3.7 +1.3 +19.8 +2.2 -1.3 -4.1 +8.7 2012/2011 +1.9 -2.8 -3.3 -2.9 +1.8 +8.4 +10.8 -0.2 +22.3 2013/2012 -0.9 +3.1 -0.7 -9.8 -0.3 -0.9 -5.7 -22.6 -1.8 2014/2013 -4.6 -1.8 +10.0 -14.7 -4.0 -17.2 +2.2 -2.5 +11.2

2014/2010 -0.8 -2.3 +9.6 -24.3 +16.8 -9.1 +5.4 -27.7 +45.2

NB: % changes calculated prior to rounding

Europe remained the largest destination for exports of physical non-fiction/reference books in 2014, regaining share lost between 2010 and 2013. East/South Asia’s share rose from 14% to 16% over the five-year period, with Australia’s share down from 19% to 17% (Figure 5.4).

Figure 5.4 100% Exported physical non‑fiction/ 2 1 1 1 1 reference books: regional shares (of net invoiced value) 90% 12 12 13 12 13

Unspecified 80% 19 19 20 20 17 70% Other Americas

60% 14 16 16 N America 16 16 50% 7 7 6 Australasia 7 6 6 6 7 40% 6 6 East & South Asia 30%

Africa Sub‑Sahara 20% 39 38 36 37 39

Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

44 PA STATISTICS YEARBOOK 2014 | Non‑fiction and reference book sales 6 Children’s book sales

Sector review by Cally Poplak, managing director, Egmont UK

he decline of reading for pleasure and the rise of digital have dominated the headlines recently, Tbut here is the real story: 2014 saw the best performance for the children’s book industry since 2007 – the year of publication of the seventh Harry Potter novel. The PA Statistics Yearbook shows that revenue from children’s books rose 11%, from £314m in 2013 to £349m in 2014. This makes 2014 bigger than 2009, when Twilight hit the charts, and bigger than 2012, the year of The Hunger Games.

©©11% to £349m So what has driven this growth? Export sales were particularly strong in 2014, rising 23% by volume Total physical and and 28% by value; and a 6% rise in the average selling price helped to boost overall revenues. digital book sales Children’s ebook sales rose by 36%, but still accounted for only 6% of the total, generating £22m in revenue. Half of children’s ebook sales were within the young adult fiction sector, according to ©©36% to £22m Nielsen, and more than 60% of these were bought for those aged 18 and over. The children’s book Total digital sales market is still dominated by print.

©©10% to £328m These ebooks sales might seem surprising when reports such as Ofcom’s 2014 study of media use Total physical sales among children and parents show that 71% of households own tablets and that children’s personal tablet ownership is increasing, with about a third of 5 to 15‑year‑olds having their own devices. ©©3% to £226m However, recent Nielsen research shows that, according to parents, only 23% of children use their Home physical sales devices to read ebooks, while 84% use their tablets predominantly for gaming.

©©28% to £102m What will be fascinating to see over the next few years is how – or whether – a new generation of Export physical sales children, whose digital world is increasingly all‑consuming, will take to ebooks. The latest Childwise report (The Monitor Report 2015) highlights the continuing importance of the printed book in the lives ©©32% to £15m of children despite the ever‑increasing use of the internet and technology. Home digital sales Likewise, how will the attitude of parents to their children reading on digital devices rather than in ©©47% to £6m print develop? As it stands, physical books remain by far the favourite choice for children’s book Export digital sales buyers. A 2013 Nielsen survey of book‑buying habits shows that bricks and mortar bookshops are consistently cited among the top three ways that our consumers discover children’s books. Being able to browse, touch and interact with the “product” is still paramount when buying a children’s book, and the collectability of physical books remains hugely appealing to children.

This preference for physical children’s books over ebooks is a key asset for bricks and mortar bookshops. According to Nielsen’s Books & Consumers, while internet retailers (dominated by Amazon) increased their market share of children’s sales from 33% to 36%, high street retailers have maintained a market share of 30%. It is the supermarket sector that has suffered, mainly as a result of reduced shelf space and store closures.

Children’s book sales | PA STATISTICS YEARBOOK 2014 45 The outstanding performance of the children’s market in 2014 has come from nearly all sectors. The children’s and young adult fiction sector continued to be the biggest generator of revenue, and was up again after a challenging year in 2013 (Nielsen BookScan data). The importance of movie adaptations to the young adult market was more apparent than ever in 2014, with film versions of five young adult properties hitting the screens, most notably Veronica Roth’s Divergent series and John Green’s The Fault in Our Stars. And a blogging sensation called Zoella, with immediate access to her fans via the internet, showed how a physical book you can touch and own can also make a powerful connection with the internet generation.

Inspiring fiction for 8‑plus children is crucial for instilling the habit of reading for pleasure, and so it is fantastic to see this area of the market continuing to shine. Humour remains a magical ingredient when appealing to this age group, and David Walliams overtook Jeff Kinney as top‑selling author. Equally exciting is the fact that picture books, the category that first ignites that love of books, is up by 9% on last year.

However, it is not all rosy. Growth in these sectors has been driven by a few big names. The market is much less encouraging for new talent, because physical retailers remain risk‑averse. Their focus is almost exclusively on bestsellers and big brands that will bring a guaranteed return. In this way, the effects of a long recession still resonate.

For the first time in eight years, the activity and novelty sector saw a slight decline in print sales, but there was compensation in significant growth within the character sector. The incredible success of Minecraft shows that games and books can coexist quite wonderfully in the world of a child, and that the brands of the moment are increasingly derived from digital sources. That said, alongside Minecraft, Peppa Pig, Lego and Mr Men were also among the top character book brands. Together, they represent the entertainment world of children today: digital gaming, TV, toys and, yes, still books.

Children still love print; parents still value reading. The world of the child is squeezed for time, but books continue to have a special place. The growth of the children’s market in 2014 was driven by outstanding publishing across all sectors: by writers who provide vitamins for the minds of children, and brands that provide a stepping stone into the world of reading. The golden age for children’s books continues.

46 PA STATISTICS YEARBOOK 2014 | Children’s book sales 6.1 Publisher sales of children’s books: physical and digital

The invoiced value of UK publisher sales of children’s books rose by 11% in 2014, to £349m. This increase was driven by both a 10% rise in physical sales (to £328m), and a 36% increase in the value of digital sales (to £22m).11 Between 2010 and 2014, revenue from children’s books fell 1% excluding digital, but rose by 5% with digital included (Table 6.1a).

Table 6.1a Publisher sales of children’s TOTAL Physical Digital books: physical and digital £m £m £m (net invoiced value) 2010 332 331 1

* = < £0.5m 2011 314 307 7 NB: % changes calculated prior to rounding 2012 322 310 12 2013 314 298 16 2014 349 328 22 % change in sales 2011/2010 -5.4 -7.2 +390.5 2012/2011 +2.4 +0.8 +71.4 2013/2012 -2.6 -3.8 +28.3 2014/2013 +11.3 +10.0 +36.0

2014/2010 +5.1 -1.0 +1,367.5

Digital formats (encompassing both ebooks and audiobook downloads) accounted for 6% of the total invoiced value of children’s book sales in 2014, rising gradually in each of the last four years (Figure 6.1a).

Figure 6.1a 100% Children’s books: physical and digital 2 4 5 6 shares (of net invoiced value) 90%

80% Digital sales 70%

Physical sales 60%

50% 100 98 96 95 94 40%

30%

20%

10%

0% 2010 2011 2012 2013 2014

11 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Children’s book sales | PA STATISTICS YEARBOOK 2014 47 The invoiced value of UK publisher sales of digital children’s books to UK customers rose by a third in 2014 and, with a 3% increase in the value of physical children’s sales in the home market, drove home sales of children’s books up 5% overall. Export sales of children’s books increased by 29% overall, with a 28% rise for physical sales, and 47% growth for digital (Table 6.1b).

Table 6.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and export TOTAL Physical Digital TOTAL Physical Digital children’s books: physical and £m £m £m £m £m £m digital (net invoiced value) 2013 230 218 12 83 79 4 NB: % changes calculated prior to rounding 2014 241 226 15 108 102 6 % change in sales 2014/2013 +4.8 +3.4 +32.0 +29.3 +28.3 +47.4

Digital sales accounted for 6% of revenue from children’s book sales in the UK and export markets in 2014, up from 5% in 2013 (Figure 6.1b).

Figure 6.1b 100% Home and exported children’s books: 5 6 5 6 physical and digital shares 90% (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 95 94 95 94 40%

30%

20%

10%

0% 2013 2014 2013 2014 Home Export

48 PA STATISTICS YEARBOOK 2014 | Children’s book sales 6.2 Publisher sales of physical children’s books

Physical children’s book sales rose at a slower rate in volume (+4%) than value (+10%) in 2014, with physical unit sales to the home market dropping 4%, in contrast to a 23% increase for exports, and the 3% rise in home sales by value. Between 2010 and 2014, decreases in sales of physical children’s books to the home market outweighed growth in export sales, so that sales of physical children’s books overall fell, particularly by volume, over the five years as a whole (Tables 6.2a and 6.2b).

Table 6.2a Total Physical Physical Publisher sales of physical physical home export children’s books: home and export £m £m £m (net invoiced value) 2010 331 242 88

NB: % changes calculated prior to rounding 2011 307 223 84 2012 310 233 77 2013 298 218 79 2014 328 226 102

2011/2010 -7.2 -8.0 -4.8 2012/2011 +0.8 +4.3 -8.7 2013/2012 -3.8 -6.1 +3.1 2014/2013 +10.0 +3.4 +28.3

2014/2010 -1.0 -6.8 +15.0

Table 6.2b Total Physical Physical Publisher sales of physical physical home export children’s books: home and export m units m units m units (net units) 2010 177.3 124.0 53.3

NB: % changes calculated prior to rounding 2011 164.3 117.1 47.2 2012 165.2 119.1 46.1 2013 159.9 113.8 46.2 2014 165.7 109.0 56.8

2011/2010 -7.3 -5.5 -11.5 2012/2011 +0.5 +1.7 -2.4 2013/2012 -3.2 -4.5 +0.1 2014/2013 +3.6 -4.2 +23.0

2014/2010 -6.5 -12.1 +6.5

Children’s book sales | PA STATISTICS YEARBOOK 2014 49 Exports accounted for a higher share of physical children’s book sales in 2014 than in 2010 –13, rising from 27% to 31% of value, and from 30% to 34% of volume, over the five years as a whole (Figures 6.2a and 6.2b).

Figure 6.2a Physical children’s books: home and 100% export shares (of net invoiced value) 90% 27 25 27 27 31 80% Export sales 70%

Home sales 60%

50%

40% 73 75 73 73 69 30%

20%

10%

0% 2010 2011 2012 2013 2014

Figure 6.2b Physical children’s books: home and 100% export shares (of net units) 90% 30 29 28 29 34 80% Export sales 70%

Home sales 60%

50%

40% 70 71 72 71 66 30%

20%

10%

0% 2010 2011 2012 2013 2014

50 PA STATISTICS YEARBOOK 2014 | Children’s book sales 6.3 Average invoiced price of physical children’s books

The average invoiced price for physical children’s books stood at £1.98 in 2014, 6% higher than in 2013, and compared to 2010. The average unit price for physical sales to the home market in this category increased by 8% in 2014 (to £2.07), with export prices rising more slowly (by 4%) to £1.79. Conversely, between 2010 and 2014, prices for physical children’s books sold overseas rose a little more quickly than for home sales (Table 6.3).

Table 6.3 TOTAL Home Export Average invoiced price of physical £ £ £ children’s books: home and export 2010 1.87 1.95 1.66 2011 1.87 1.90 1.78 NB: % changes calculated prior to rounding 2012 1.87 1.95 1.67 2013 1.86 1.92 1.72 2014 1.98 2.07 1.79 % change in average invoiced price 2011/2010 +0.2 -2.6 +7.5 2012/2011 +0.2 +2.6 -6.5 2013/2012 -0.6 -1.7 +3.0 2014/2013 +6.1 +7.9 +4.3

2014/2010 +5.9 +6.0 +8.0

Figure 6.3 charts the changes in average invoiced prices for physical children’s books over the last five years, using an index where 2010 = 100. It illustrates that prices for export sales have increased in three of the last four years, while prices for home sales and overall rose only in 2014 itself.

Figure 6.3 Index of average price of 120 physical children’s book sales: home and export 115

(2010 = 100) 110 Export sales 105 Total sales

100 Home sales 2010 2011 2012 2013 2014 95 Index 2010 = 100 90

85

80

Children’s book sales | PA STATISTICS YEARBOOK 2014 51 6.4 Export sales of physical children’s books, by region

The increase in the value of exports of physical children’s books in 2014 was driven by a double‑digit rise in sales to Europe, the Middle East/North Africa, Australasia and North America, with single‑digit increases in sales to the other regions. Between 2010 and 2014, the value of physical exports of children’s books to North America almost doubled, with sales to Australasia rising by a third, and contrasting with a decrease in sales of children’s books to Africa Sub-Sahara (Table 6.4).

Table 6.4 Export sales of physical Mid East/ Africa E & S North Other children’s books: by region TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 88 22 6 10 18 23 8 2 * 2011 84 20 5 8 18 22 10 2 * 2012 77 20 4 7 16 19 9 2 * 2013 79 19 5 7 17 19 11 2 * 2014 102 23 6 7 18 30 16 2 * % change in sales 2011/2010 -4.8 -11.6 -12.5 -16.5 -0.1 -5.3 +21.0 +5.0 +76.0 2012/2011 -8.7 +1.0 -11.1 -10.4 -12.0 -12.2 -10.7 -15.9 +36.6 2013/2012 +3.1 -1.4 +4.0 -10.7 +5.8 +2.7 +20.7 +1.7 -4.3 2014/2013 +28.3 +19.1 +29.6 +6.1 +6.0 +53.6 +50.3 +5.6 -11.8

2014/2010 +15.0 +4.9 +4.9 -29.1 -1.4 +31.1 +95.9 -5.1 +102.8

NB: % changes calculated prior to rounding * = < £0.5m

Australasia increased its share of exports of physical children’s books in 2014 (to 29%), making it a more important destination for this category than Europe (23%). North America’s share of children’s export sales has risen from 9% to 16% over the five years as a whole, while the shares taken by East/South Asia and Africa Sub-Sahara have fallen to 17% and 7% respectively over the same period (Figure 6.4).

Figure 6.4 100% Exported physical children’s books: 2 2 2 2 2 regional shares (of net invoiced value) 9 90% 12 12 14 16 Unspecified 80% 26 Other Americas 26 25 70% 25 29

N America 60%

20 20 Australasia 50% 21 21 17 40% East & South Asia 11 10 10 8 30% 7 6 6 6 Africa Sub‑Sahara 6 6 20%

Mid East / N Africa 25 26 25 10% 23 23

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

52 PA STATISTICS YEARBOOK 2014 | Children’s book sales 7 School book sales

Sector review by Michael McGarvey, director, UK education at Cambridge University Press

fter another frenetic year of activity supporting an ambitious roll‑out of reformed Department Afor Education (DfE) curricula, 2014 ended with a pointed critique by Nick Gibb on the quality of some British textbooks. In an industry address, the schools minister railed against the underuse of textbooks in English schools compared with those of Singapore and Shanghai; his call to action was that we learn lessons from the Far East and focus on crafting high‑quality print textbooks that become the centrepiece of teaching and learning in the classroom.

©©1% to £293m While opinion is welcome (and we can only applaud the sentiment that calls for greater use of Total physical and digital publisher-produced resources), we in the industry strongly believe that this particular challenge book sales requires deeper engagement from all the key policymakers across our system to establish a wider understanding of the education market drivers and needs. As technology adoption in our homes ,,£281m and schools transforms teaching and learning, sales data reveal a shifting marketplace that is more Total physical book sales complex than the evidence presented to the industry suggests. We look forward to continuing this dialogue throughout the year, and stand ready and willing to be part of a wider campaign to drive the ©©20% to £13m usage and value of resources in our schools. Total digital sales The total market for educational books, ebooks and digital content across home and export ªª4% to £156m markets rose by 1% in 2014 (from £291m in 2013 to £293m), with export revenues increasing Home physical sales by 7%. The growth was driven by price increases for printed books of 9% in the home market and 24% in the export market. Home and export unit sales of printed school books fell by 12% ©©6% to £124m and 14% respectively. Export physical book sales Home sales

©©8% to £11m Primary schools. The new national curriculum was made mandatory for key stages 1 and 2 in Home digital sales September 2014 after a year of disapplication of the programmes of study. Publishers responded with a raft of new and revised courses and resources, playing a major role in disseminating the new ©©328% to £2m requirements and the reality of life after curriculum levels, which were abandoned to some disquiet as Export digital sales part of the reform process.

As expected, demand for core materials grew, and sales as recorded by the Educational Publishers Council (EPC – see Appendix C) increased by 5% year-on-year. Gains were especially strong in mathematics, ICT and sciences; English and literacy resources were down on prior year as schools felt the impact of funding withdrawals. With new national curriculum tests and assessments in 2016, it seems likely that spending on assessment-based products will continue the major gains of 2014, which recorded 57% growth for EPC members. Of the 5% gains overall, this can be attributed solely to growth in digital, up 48% on the prior year, now accounting for over 12% of total sales.

School book sales | PA STATISTICS YEARBOOK 2014 53 Secondary schools. In the secondary school market the emerging trends of 2014 reflected the various stages of new curriculum implementation. Overall sales were down 2%, but variances were marked by key stage.

At key stage 3, the new national curriculum requirements were made compulsory in September, and sales were up by 33% on the prior year, once again driven by major gains in mathematics, science and ICT spending, and moderate gains in the humanities, but surprising falls within English departments.

With new linear GCSE specifications being accredited during 2014 (signalling a phased roll-out of subjects starting with English and maths for first teaching in September 2015), the GCSE market proved to be tough, as schools focused spending priorities elsewhere. Overall sales in 2014 dropped 11% from the prior year, with ICT the only subject showing growth, perhaps reflective of the introduction of computing as the fourth science on school accountability measures. After a long-awaited consultation, Ofqual eventually published new conditions on endorsement of teaching resources, and they came into force on 1 September 2014. They included recognition of the value of endorsements to teachers and students— provided the exam boards manage clear policies on use of examiners; predictability of content; and conflicts of interest.

A similar picture emerged in sixth forms, as spending on AS and A2 material dropped 14% ahead of the new decoupled A and AS level specifications for 2015. With the opposition claiming that it will reverse this policy after the May general election, and with many universities encouraging schools to retain AS to support the admissions process, schools could be forgiven for being unclear on purchasing decisions. In December, revisions to the largest subject at A level, mathematics, were deferred by a year to reflect the much higher level of demand the reformed qualification would place on students studying the current GCSE.

Digital purchasing in secondary schools as a whole was a fifth higher than in the prior year, and offset most of the 5% attrition in print buying. When the PA statistics are combined with the British Educational Suppliers Association (BESA) Software and Technology Special Interest Group (SATSIG), the overall demand for digital resources shows a growth rate of 13%, and a market size of over £67m, suggesting a very mixed economy in terms of current and future demand. Recent industry research among school leaders and subject heads points strongly towards improving sentiment towards the value of premium digital content driven by the demands of new curricula.

Export sales

As stated above, export revenues rose in 2014, thanks to increases in selling prices that offset volume declines, suggesting greater profitability from export markets over the full year. Once again the thriving private K12 market in the Gulf states and Middle East continues to drive purchases of international curriculum material, and this region now represents the largest destination for exports of school books. Further reductions in Africa points towards reduced ministry bulk tenders and greater share for local players or operations of major publishers. Sales to Europe, East/South Asia and North America show double-digit growth year-on-year.

54 PA STATISTICS YEARBOOK 2014 | School book sales 7.1 Publisher sales of school books: physical and digital

The invoiced value of UK publisher sales of school books rose by 1% in 2014, to £293m. This growth reflected a 20% increase in the value of sales of digital products (to £13m),12 with the value of physical book sales also rising marginally. Between 2010 and 2014, sales in the school sector rose 12% overall, with a 115% increase in digital sales and 9% growth for physical sales (Table 7.1a).

Table 7.1a Publisher sales of school TOTAL Physical Digital books: physical and digital £m £m £m (net invoiced value) 2010 263 257 6

NB: % changes calculated prior to rounding 2011 277 271 6 2012 286 277 9 2013 291 280 11 2014 293 281 13 % change in sales 2011/2010 +5.5 +5.6 +0.2 2012/2011 +3.3 +2.3 +50.6 2013/2012 +1.5 +1.0 +18.4 2014/2013 +0.9 +0.2 +20.4

2014/2010 +11.7 +9.3 +115.1

Digital formats (encompassing ebooks, online subscriptions and other digital products) accounted for 4% of the total invoiced value of sales of school books in 2014, marginally higher than in 2013 (Figure 7.1a).

Figure 7.1a 100% School books: physical and digital 2 2 3 4 4 shares (of net invoiced value) 90%

80% Digital sales 70%

Physical sales 60%

50% 98 98 97 96 96 40%

30%

20%

10%

0% 2010 2011 2012 2013 2014

12 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

School book sales | PA STATISTICS YEARBOOK 2014 55 The invoiced value of UK publisher sales of digital school books to UK customers rose by 8% in 2014,13 with a 4% decrease in the value of physical children’s sales in the home market, and a 3% drop in home sales of school books overall. Export sales of school books increased by 7% overall, with 6% growth for physical sales, and a more than threefold rise for digital, albeit from a low base (Table 7.1b).

Table 7.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and export TOTAL Physical Digital TOTAL Physical Digital school books: physical and digital £m £m £m £m £m £m (net invoiced value) 2013 173 163 10 118 117 * NB: % changes calculated prior to rounding 2014 168 156 11 126 124 2 * = <£0.5m % change in sales 2014/2013 -3.1 -3.8 +8.2 +6.8 +5.7 +327.7

Digital sales accounted for 7% of revenue from school book sales in the UK market in both 2013 and 2014. The digital share of school exports rose to 1% in 2014 (Figure 7.1b).

Figure 7.1b Home and exported school books: 100% 6 7 1 physical and digital shares 90% (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 100 99 94 93 40%

30%

20%

10%

0% 2013 2014 2013 2014 Home Export

13 NB. Figures for home sales of digital school books as measured by the PASM scheme (and used to determine the figures in this section – see Appendix A) may differ from those measured by the PA’s Educational Publishers Council (as detailed in Appendix C) in terms of absolute numbers and growth rates. This reflects differences in companies participating in each scheme and, in particular, in the way that participants split their sales into physical versus digital (much school output consists of blended physical and digital elements, which are not always easily or consistently categorised by format).

56 PA STATISTICS YEARBOOK 2014 | School book sales 7.2 Publisher sales of physical school books

While 2014 saw a marginal increase in the value of physical schools sales, driven by export growth, there were double‑digit decreases in unit sales of physical school books in both home and export markets, and a 13% drop in unit sales of the category overall. Between 2010 and 2014, physical school book unit sales fell 23%, with export units down by almost a third. Conversely, the value of export sales of physical school books rose by a fifth over the five years, driving the 9% increase in school book value overall (Tables 7.2a and 7.2b).

Table 7.2a Total Physical Physical Publisher sales of physical physical home export school books: home and export £m £m £m (net invoiced value) 2010 257 154 103

NB: % changes calculated prior to rounding 2011 271 163 108 2012 277 172 106 2013 280 163 117 2014 281 157 124 % change in sales 2011/2010 +5.6 +5.6 +5.6 2012/2011 +2.3 +5.5 -2.6 2013/2012 +1.0 -5.3 +11.2 2014/2013 +0.2 -3.8 +5.7

2014/2010 +9.3 +1.5 +20.9

Table 7.2b Total Physical Physical Publisher sales of physical school physical home export books: home and export (net units) m units m units m units

NB: % changes calculated prior to rounding 2010 60.5 23.6 36.9 2011 59.7 23.5 36.2 2012 49.0 25.0 24.0 2013 53.9 24.0 29.9 2014 46.8 21.2 25.5 % change in sales 2011/2010 -1.3 -0.6 -1.7 2012/2011 -17.9 +6.4 -33.7 2013/2012 +9.9 -3.9 +24.3 2014/2013 -13.2 -11.7 -14.4

2014/2010 -22.7 -10.3 -30.7

School book sales | PA STATISTICS YEARBOOK 2014 57 Exports maintained a 55% share of physical school book unit sales in 2014, although this remained lower than in 2010 –11. In value, the export share rose over the five years, from 40% to 44% (Figures 7.2a and 7.2b).

Figure 7.2a Physical school books: home and 100% export shares (of net invoiced value) 90%

80% 40 40 38 42 44 Export sales 70%

Home sales 60%

50%

40%

30% 60 60 62 58 56 20%

10%

0% 2010 2011 2012 2013 2014

Figure 7.2b Physical school books: home and 100% export shares (of net units) 90%

80% 49 Export sales 55 55 70% 61 61

Home sales 60%

50%

40%

30% 51 45 45 20% 39 39

10%

0% 2010 2011 2012 2013 2014

58 PA STATISTICS YEARBOOK 2014 | School book sales 7.3 Average invoiced price of physical school books

The average invoiced price for physical school books rose by 16% to £6.00 in 2014, and increased by two‑fifths since 2010. The average unit price for sales in this category to the home market rose 9% in 2014 (to £7.38), and was up by 13% between 2010 and 2014 as a whole. The average price for exported physical school titles rose by 75% over the five‑year period, with a 24% increase (to £4.86) in 2014 itself (Table 7.3).

Table 7.3 TOTAL Home Export Average invoiced price of physical £ £ £ school books: home and export 2010 4.24 6.52 2.78

NB: % changes calculated prior to rounding 2011 4.54 6.93 2.99 2012 5.66 6.87 4.39 2013 5.20 6.77 3.93 2014 6.00 7.38 4.86 % change in average invoiced price 2011/2010 +7.0 +6.3 +7.4 2012/2011 +24.7 -0.8 +47.0 2013/2012 -8.2 -1.5 -10.5 2014/2013 +15.5 +9.0 +23.5

2014/2010 +41.4 +13.1 +74.6

Figure 7.3 charts the changes in average invoiced prices for physical school books over the last five years, using an index where 2010 = 100. It illustrates the dramatic rise in prices for export sales in 2012 and 2014, compared to a more gradual rise in prices in the home market over the five‑year period.

Figure 7.3 Index of average price of physical 180 school book sales: home and export 170 (2010 = 100)

160 Export sales

150 Total sales

Home sales 140

130 Index 2010 = 100 120

110

100 2010 2011 2012 2013 2014

School book sales | PA STATISTICS YEARBOOK 2014 59 7.4 Export sales of physical school books, by region

The increase in the invoiced value of exports of physical school books in 2014 was driven by double‑digit rises in sales to Europe, East/South Asia, Australasia and North America. In contrast, revenue from school book sales to Africa Sub-Sahara fell in 2014. Between 2010 and 2014, growth in school book exports was driven by large increases in sales to the Middle East/North Africa and to East/South Asia, with increases as well for Europe, North America and the Other Americas region, but declining sales to Africa Sub-Sahara and Australasia (Table 7.4).

Table 7.4 Export sales of physical Mid East/ Africa E & S North Other school books: by region TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 103 17 26 25 11 5 3 17 * 2011 108 18 34 18 13 3 4 19 * 2012 106 20 34 12 15 2 4 20 * 2013 117 18 45 15 16 2 4 18 * 2014 124 22 46 12 19 3 5 18 * % change in sales 2011/2010 +5.6 +10.3 +32.7 -24.9 +11.8 -45.8 +15.8 +12.5 -18.4 2012/2011 -2.6 +9.5 +0.5 -37.3 +16.1 -18.5 -0.4 +3.5 -46.1 2013/2012 +11.2 -10.0 +31.6 +30.1 +6.9 -0.9 +4.9 -8.1 +1.5 2014/2013 +5.7 +23.9 +2.5 -22.2 +19.3 +21.3 +35.2 -1.2 +22.1

2014/2010 +20.9 +34.8 +80.1 -52.3 +65.6 -46.8 +63.6 +5.8 -45.4

NB: % changes calculated prior to rounding * = <£0.5m

The Middle East/North Africa was the largest destination for exports of physical school books in 2014, having seen its share of the sector rise from 25% to 37% since 2010. East/South Asia and Europe also saw small share gains in school export value over the five years, whereas the shares taken by Africa Sub-Sahara and the Other Americas regions fell from 24% to 9% and from 16% to 14% respectively (Figure 7.4).

Figure 7.4 Exported physical school books: 100% regional shares (of net invoiced value) 15 14 90% 16 17 18

Unspecified 3 3 4 80% 3 2 2 5 3 2 2 13 Other Americas 12 15 70% 11 14

N America 60% 13 9 17 11 24 Australasia 50%

40% East & South Asia 37 32 38 31 30% 25 Africa Sub‑Sahara 20%

Mid East / N Africa 10% 19 16 17 15 18

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

60 PA STATISTICS YEARBOOK 2014 | School book sales 8 ELT book sales

Sector review by Mike Thompson, ELT director, Cengage Learning EMEA

n 2014, ELT represented roughly 11% of UK publishers’ overall sales volumes (print books) and 8% Iof overall sales values (print and digital. The reliance on export is extremely pronounced, with ELT making up 18% of export sales but only 1% of UK sales.

The PA Statistics Yearbook shows declines for ELT sales by volume and value both at home and abroad. In the UK, sales revenues decreased by 5%, roughly in line with the overall year‑on‑year decline across all categories. On the export side the decline in value was 4%, against an overall ªª4% to £272m market decline of 1%. In volume terms, domestically the decline in ELT physical book sales was 4%, Total physical and again roughly in line with the overall market. Overseas the decline was more worrying: ELT print book digital sales volumes declined from 77m to 68m, or 12%. Only reference publishing, with a decline of 16% in total physical book sales, appeared in worse shape. ©©25% to £11m Total digital sales UK market

ªª5% to £261m In the UK, the price of a physical ELT book fell by 3%, to an average price of £7.53, in an educational Total physical sales marketplace that has seen aggressive price hikes elsewhere. (STM publishers, for example, put up their prices by 12% and children’s books went up by 8%.) The overall decline of ELT sales in ªª7% to £13m the UK is, however, something of a conundrum given the continuing popularity of the UK as a Home sales of language study destination, combined with the growing volume of overseas students attending physical books higher education institutions here. This trend may be linked to wider issues around immigration and the obstacles encountered by many language school students obtaining study visas. Certainly, the ªª5% to £248m scandal surrounding English language proficiency qualifications obtained through bogus examination Export sales of centres, highlighted by a Panorama documentary, has not helped the overall picture. physical books Overseas markets ©©15% to £1m Home digital sales The overseas markets further emphasise this pattern. Despite a hike of 8%, the price of the average ELT print book was £3.67 (in contrast to the average price of STM publications: £21.87). A large ©©27% to £10m fall of 18% in revenues from ELT book sales in UK publishers’ largest market, Europe, has caused Export digital sales the overall figure to be in the red. Elsewhere, there were gains, with sales in the Middle East and North Africa up 17%.

ELT book sales | PA STATISTICS YEARBOOK 2014 61 The causes of the overall decline are not hard to identify. Europe remains in the economic doldrums. The large state schools markets of Spain, Italy and Poland are in retreat, with state purchase of textbooks having almost universally replaced parental purchase. Greece, once the golden child of ELT publishers, has continued on the path of inevitable decline and has been largely vacated by international publishers. Gains in the Middle East/North Africa notwithstanding, continuing political turmoil in large parts of the Middle East has meant that only the Gulf states are now viable markets there. Worldwide, only Latin America continues to offer overall market growth opportunities, although the Brazilian economy has lost some of its lustre.

Trends

Despite the downturn in the fortunes of ELT for UK publishers in traditional markets, the underlying demand for English as a passport to international education and a role in the global economy remains undiminished. The roll‑out of bilingual education programmes throughout Europe and the continuing high level of private sector demand for ELT across the age spectrum beginning at pre‑kindergarten are testimony to this fact. Considerable value therefore remains in the sector.

The transition to a digital future, however, remains illusory despite the growth of digital sales in ELT by 25%. Beyond the hype, digital still accounts for only 4% of ELT total revenues, and it is still not clear how digital products will become embedded in future classroom practice. Only the interactive whiteboard is a regular feature of the average ELT teacher’s repertoire. Virtual learning environments, ebooks and courseware remain the preserve of early adopters and digital pioneers.

62 PA STATISTICS YEARBOOK 2014 | ELT book sales 8.1 Publisher sales of ELT books: physical and digital

The invoiced value of UK publisher sales of ELT books fell 4% in 2014, to £272m. This decrease reflected a 5% drop in the value of sales of physical books, which was not offset by a 25% rise in sales of digital products.14 Between 2010 and 2014, sales in the ELT sector fell 3% overall, with a 5% drop in revenue from physical sales, while digital sales doubled to £11m (Table 8.1a).

Table 8.1a Publisher sales of ELT TOTAL Physical Digital books: physical and digital £m £m £m (net invoiced value) 2010 279 273 6

NB: % changes calculated prior to rounding 2011 262 256 5 2012 294 288 6 2013 283 274 9 2014 272 261 11 % change in sales 2011/2010 -6.3 -6.2 -9.8 2012/2011 +12.3 +12.2 +18.1 2013/2012 -3.8 -4.9 +44.8 2014/2013 -3.9 -4.8 +25.4

2014/2010 -2.7 -4.7 +93.3

Digital formats (encompassing ebooks, online subscriptions and other digital book sales) accounted for 4% of the total invoiced value of sales of ELT books in 2014, a slightly higher proportion than in previous years (Figure 8.1a).

Figure 8.1a 100% ELT books: physical and digital 2 2 2 3 4 shares (of net invoiced value) 90%

80% Digital sales 70%

Physical sales 60%

50% 98 98 98 97 96 40%

30%

20%

10%

0% 2010 2011 2012 2013 2014

14 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

ELT book sales | PA STATISTICS YEARBOOK 2014 63 The invoiced value of UK publisher sales of digital ELT books to UK customers rose by 15% in 2014 but, with a 7% decrease in the value of physical ELT sales in the home market, UK sales of ELT fell 5% overall. Export sales of ELT dropped by 4% overall, with a 5% decrease for physical sales, and 27% growth for digital (Table 8.1b).

Table 8.1b – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and export TOTAL Physical Digital TOTAL Physical Digital ELT books: physical and digital £m £m £m £m £m £m (net invoiced value) 2013 14 13 1 268 260 8 NB: % changes calculated prior to rounding 2014 14 13 1 258 248 10 % change in sales 2014/2013 -5.3 -6.7 +15.0 -3.8 -4.7 +26.6

Digital sales accounted for 8% of revenue from ELT sales in the UK market in 2014, and 4% of ELT exports. In each case, these were slightly higher shares than in 2013 (Figure 8.1b).

Figure 8.1b Home and exported ELT books: 100% 7 8 3 4 physical and digital shares 90% (of net invoiced value) 80% Digital sales 70%

Physical sales 60%

50% 97 96 93 92 40%

30%

20%

10%

0% 2013 2014 2013 2014 Home Export

64 PA STATISTICS YEARBOOK 2014 | ELT book sales 8.2 Publisher sales of physical ELT books

In addition to a 5% decrease in the value of physical ELT sales, 2014 saw a 12% decrease in ELT unit sales, with export units dropping 12% by volume and 5% by value, and sales to the UK market down 4% and 7% respectively. Between 2010 and 2014, physical ELT unit sales of exports were down 11%, with revenue down 4%. ELT sales to the home market fell by 3% (units) and 18% (value) over the five years (Tables 8.2a and 8.2b).

Table 8.2a Total Physical Physical Publisher sales of physical physical home export ELT books: home and export £m £m £m (net invoiced value) 2010 273 15 258

NB: % changes calculated prior to rounding 2011 256 15 241 2012 288 13 275 2013 274 13 260 2014 261 13 248 % change in sales 2011/2010 -6.2 -0.0 -6.6 2012/2011 +12.2 -13.8 +13.8 2013/2012 -4.9 +1.8 -5.2 2014/2013 -4.8 -6.7 -4.7

2014/2013 -4.7 -18.2 -3.9

Table 8.2b Total Physical Physical Publisher sales of physical ELT physical home export books: home and export (net units) m units m units m units

NB: % changes calculated prior to rounding 2010 77.4 1.7 75.6 2011 72.2 1.8 70.4 2012 82.3 1.6 80.8 2013 78.5 1.7 76.8 2014 69.3 1.7 67.7 % change in sales 2011/2010 -6.6 +7.5 -7.0 2012/2011 +14.0 -15.4 +14.8 2013/2012 -4.6 +11.2 -4.9 2014/2013 -11.7 -3.9 -11.9

2014/2013 -10.4 -2.8 -10.5

ELT book sales | PA STATISTICS YEARBOOK 2014 65 Between 2010 and 2014, the home sales share of physical ELT sales has stood at 5– 6% of value in each year, and 2– 3% of unit sales (Figures 8.2a and 8.2b).

Figure 8.2a Physical ELT books: home and export 100% shares (of net invoiced value) 90%

80% Export sales 70%

Home sales 60% 94 94 95 95 95 50%

40%

30%

20%

10% 6 6 5 5 5 0% 2010 2011 2012 2013 2014

Figure 8.2b Physical ELT books: home and export 100% shares (of net units) 90%

80% Export sales 70%

Home sales 60%

50% 98 97 98 98 98

40%

30%

20%

10% 3 0% 2 2 2 2 2010 2011 2012 2013 2014

66 PA STATISTICS YEARBOOK 2014 | ELT book sales 8.3 Average invoiced price of physical ELT books

The average invoiced price of physical ELT titles rose by 8% in 2014, to £3.76, with export prices up at the same rate, but a 3% drop in prices for home sales. Between 2010 and 2014, the average prices for ELT books sold to export markets rose 7% to £3.67, while the average price for sales to the home market fell 16% to £7.53 (Table 8.3).

Table 8.3 TOTAL Home Export Average invoiced price of physical £ £ £ ELT books: home and export 2010 3.54 8.94 3.41

NB: % changes calculated prior to rounding 2011 3.55 8.32 3.43 2012 3.49 8.48 3.40 2013 3.49 7.76 3.39 2014 3.76 7.53 3.67 % change in average invoiced price 2011/2010 +0.5 -7.0 +0.4 2012/2011 -1.6 +1.9 -0.8 2013/2012 -0.3 -8.4 -0.3 2014/2013 +7.8 -3.0 +8.2

2014/2010 +6.3 -15.8 +7.4

Figure 8.3 charts the changes in average invoiced prices for physical ELT books over the last five years, using an index where 2010 = 100. It illustrates that prices overall and for exports were steady between 2010 and 2013, before rising in 2014, while prices for ELT books sold to the home market have fallen over the period.

Figure 8.3 Index of average price of physical ELT 120 book sales: home and export 115 (2010 = 100)

110 Export sales

105 Total sales

Home sales 100

2010 2011 2012 2013 2014 95 Index 2010 = 100 90

85

80

ELT book sales | PA STATISTICS YEARBOOK 2014 67 8.4 Export sales of physical ELT books, by region

The overall decrease in the invoiced value of physical ELT exports in 2014 reflected a drop in sales to Europe, contrasting with double‑digit increases in revenue from sales to the Middle East/North Africa, Africa Sub-Sahara and East/South Asia, and smaller rises in sales to North America and the Other Americas region. Between 2010 and 2014, there was growth in the value of exports of ELT books to East/South Asia (+26%), the Middle East/North Africa (+22%) and the Other Americas (+19%), but double‑digit decreases for all other broad regions (Table 8.4).

Table 8.4 Export sales of physical Mid East/ Africa E & S North Other ELT books: by region TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified (net invoiced value) £m £m £m £m £m £m £m £m £m 2010 258 132 39 5 29 2 20 31 * 2011 241 119 44 5 29 2 9 33 * 2012 275 150 42 2 33 1 11 36 * 2013 260 138 40 3 34 1 9 36 * 2014 248 114 47 3 37 1 9 37 * % change in sales 2011/2010 -6.6 -9.7 +14.4 +10.9 -1.6 +3.4 -55.6 +4.4 - 2012/2011 +13.8 +25.8 -5.6 -53.1 +13.7 -62.7 +19.3 +10.8 - 2013/2012 -5.2 -7.7 -3.5 +4.5 +2.3 +0.2 -19.6 -0.1 - 2014/2013 -4.7 -17.6 +16.7 +13.3 +10.4 +23.7 +4.9 +2.5 -

2014/2010 -3.9 -13.7 +21.6 -38.4 +26.2 -52.1 -55.3 +18.5 -

NB: % changes calculated prior to rounding * + <£0.5m

Europe remained the largest destination for exports of physical ELT books in 2014, despite its share falling from 51% to 46% since 2010. The shares taken by the Middle East/North Africa, East/South Asia and Other Americas regions rose from 15% to 19%, 11% to 15% and from 12% to 15% respectively over the five years (Figure 8.4).

Figure 8.4 Exported physical ELT books: 100% regional shares (of net invoiced value) 12 14 13 14 15 90% 4 Unspecified 8 4 3 4 80% 12 12 13 Other Americas 11 15 70% 1 2 1 2 1 15 N America 60% 16 15 18 19 Australasia 50%

40% East & South Asia

30% 54 Africa Sub‑Sahara 51 53 49 46 20%

Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014 NB. Due to rounding, sum of %s may not = 100%

68 PA STATISTICS YEARBOOK 2014 | ELT book sales 9 Academic and professional book sales

Sector review by Jonathan Glasspool, managing director, Bloomsbury Academic and Professional

n 2014, total invoiced global sales of academic and professional books from UK publishers Ideclined by 1%, from £1,082m to £1,074m. The decline in print over the year was 5%; the growth in digital, at 17%, was lower than the previous year.

The year-on-year decline in the sector is exactly the same (1%) as that during the past five years. In real terms after inflation – and ignoring any currency fluctuations – the no-nonsense number is a ªª1% to £1,074m decline of 18%. Total physical and digital book sales In the USA, the latest available data of sector sales to market from the Association of American Publishers is telling a more mixed story. For the period January to September 2014, print and digital ©©17% to £252m sales of professional books were up marginally, at 0.1%, higher education course materials were Total digital sales up 3%, and the university presses’ sales were down 2%.

ªª5% to £822m Given the importance of the US market to UK academic and professional publishers, the static Total physical sales picture for much of 2014 tells a marginally less negative story than the UK numbers.

©©22% to £125m Print sales Home sales of SSH digital books Older readers of the PA Statistics Yearbook may recall a popular 1980s Volvo car advertisement, where white crash dummies were strapped into the latest estate model and rammed into a wall in slow motion. ©©7% to £68m Export sales of SSH A slow motion car crash driven by helpless automata is perhaps an apt metaphor for the sector’s digital books print publishing (and some of its senior managers), which over the past five years has declined by 24% in unit terms, and by 13% in value. This fall sped up in 2014. ©©21% to £16m Home sales of STM Digital sales digital books The sector continues to see rapid growth in digital consumption – in many subject areas at a much ©©20% to £43m faster rate than in consumer publishing. Digital revenues are up by 88% over the same five‑year Export sales of STM period, and the rate remains healthy, if not enough to compensate for print falls. digital books Sales by subject

Sales of print and digital rose by 1% in revenue terms in the year in social science and humanities publishing (SSH), and fell by 4% in scientific, technical and medical (STM). Digital revenues were up by 16% (SSH) and 20% (STM). Together, these sectors represent 45% of UK publishers’ digital turnover.

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 69 So what made 2014 a different year for many academic and professional publishers? It is tricky to pinpoint new developments specific to 2014 behind the numbers. And in any case the academic and professional sector covers a wide range of customers and markets, with different dynamics to each. What we are seeing is the ratchet effect of a number of systemic changes in the market over the past five years. The cumulative effect is to speed up the rate of decline of traditional publishing revenues.

More recent factors include:

The growth in investment and in a number of disruptive educational technology businesses, the size of which are matched by gravity-defying valuations. The new edtech business 2U (TWOU) has a market capitalisation of over $750m (January 2015), on a turnover in 2013 of $83m

The remarkable growth in specialist aggregators around specific niche academic communities, like the innovative theology site www.logos.com

The proliferation of open access models, from sponsored moocs (massive online open courses) (EdX in USA and Futurelearn.com in the UK are but two examples) to innovative “institutional crowd-sourcing” ventures such as Knowledge Unlatched

The proliferation of mobile devices among student and professional users has led to a massive increase in mobile access to content – much of it free – with web builders and publishers struggling to keep up with users’ expectations.

But the principal drivers of the decline remaining changing patterns in consumption, particularly educational textbook content; the move to short term loans and patron-driven access models by research libraries; and tighter institutional budgets.

And some things to watch out for in 2015:

News of the Mellon Foundation investments in early stage academic research publishing

The RCUK report on how Open Access is working – or not

The ongoing slugfest in the global legal information space between the newly integrated Westlaw and Practical Law Company (PLC) in the red corner and Lexis Nexis in the blue

How scientific publishing is affected by the Macmillan and Springer merger

How or if Amazon will apply its Kindle Unlimited model to the textbook market

Which of the many very highly valued edtech businesses will run out of money first.

See Appendix D for the UK higher education textbook market by category.

70 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales 9.1 Publisher sales of academic/professional books: physical and digital

The invoiced value of UK publisher sales of academic/professional books fell 1% in 2014, to £1,074m. This decrease came despite a 17% rise in the value of digital book sales in this sector, reflecting instead a 5% drop in the value of physical sales.15 Revenue from digital academic/professional book sales has almost doubled since 2010, almost counteracting a 13% decrease for physical books over the same period, so that value sales in the sector overall have fallen 1% over the last five years as a whole (Table 9.1a).

Table 9.1a TOTAL Physical Digital Publisher sales of academic/ £m £m £m professional books: physical and digital (net invoiced value) 2010 1,081 947 134 2011 1,067 921 147 NB: % changes calculated prior to rounding 2012 1,074 893 181 2013 1,082 866 216 2014 1,074 822 252 % change in sales 2011/2010 -1.3 -2.8 +9.6 2012/2011 +0.6 -3.0 +23.4 2013/2012 +0.7 -3.0 +19.0 2014/2013 -0.7 -5.1 +17.0

2014/2010 -0.7 -13.3 +88.3

Digital formats (encompassing both ebooks and online subscriptions) accounted for 24% of the total invoiced value of sales of academic/professional books in 2014, with this share rising steadily from 12% in 2010 (Figure 9.1a).

Figure 9.1a Academic/professional books: 100% physical and digital shares 12 14 90% 17 20 (of net invoiced value) 24 80%

Digital sales 70%

60% Physical sales 50% 88 86 40% 83 80 76 30%

20%

10%

0% 2010 2011 2012 2013 2014

15 See Technical Appendix for details of definitions and coverage of digital sales. Note that while physical unit sales and unit prices are provided in this section, the data on the digital market is limited to showing value sales. This is due to the wide variation in what constitutes a ‘unit’ in the digital market, and the difficulty of collecting comprehensive or reliable figures for these measures.

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 71 The invoiced value of sales of social science/humanities (SSH) titles grew by 1% in 2014, with a 16% increase in digital sales more than offsetting a 4% decrease in revenue from physical sales. The science/technical/medical (STM) sector fell by 4% in sales overall, with a 9% drop in the invoiced value of physical sales outweighing 20% growth in digital revenue. Between 2010 and 2014, digital sales of SSH titles almost doubled to £193m, while sales of digital STM titles more the doubled to £59m. Physical sales of STM titles fell by 22% over the five years, while physical SSH sales were down 10% (Table 9.1b).

Table 9.1b – – – Social science/humanities – – – – – – Science/technical/medical – – – Publisher sales of academic/ Total Physical Digital Total Physical Digital professional books by £m £m £m £m £m £m category: physical and digital 2010 764 657 107 318 290 27 (net invoiced value) 2011 766 647 119 302 274 28 NB: % changes calculated prior to rounding 2012 777 636 141 297 257 40 2013 782 616 166 300 250 50 2014 787 594 193 287 227 59 % change in sales 2011/2010 +0.2 -1.5 +11.2 -4.9 -5.7 +3.3 2012/2011 +1.5 -1.6 +18.7 -1.7 -6.3 +43.4 2013/2012 +0.6 -3.2 +17.9 +1.0 -2.4 +22.8 2014/2013 +0.7 -3.5 +16.0 -4.4 -9.2 +20.1

2014/2010 +3.1 -9.5 +80.6 -9.7 -21.7 +118.6

Between 2010 and 2014, the share of invoiced value taken by digital sales increased from 14% to 25% in the SSH sector, and from 9% to 21% in STM (Figure 9.1b).

Figure 9.1b Academic/professional books by 100% 9 9 category: physical and digital shares 14 16 14 90% 18 17 (of net invoiced value) 21 25 21 80%

Digital sales 70%

60% Physical sales 50% 91 91 86 84 86 40% 82 83 79 75 79 30%

20%

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Social science/humanities Science/technical/medical

72 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales The invoiced value of UK publisher sales of digital SSH books to UK customers rose by a fifth in 2014, enough to turn a 3% decrease for physical sales into 4% growth for home sales of SSH overall. Conversely, a 4% drop in revenue from physical SSH exports outweighed a 7% increase in digital sales of SSH books to overseas customers, so that exports in this category fell 2% overall (Table 9.1c).

Table 9.1c – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and TOTAL Physical Digital TOTAL Physical Digital export social science/humanities £m £m £m £m £m £m books: physical and digital 2013 389 287 103 393 329 64 (net invoiced value) 2014 403 278 125 384 316 68 NB: % changes calculated prior to rounding % change in sales 2014/2013 +3.6 -3.0 +21.9 -2.2 -4.0 +6.6

Digital sales accounted for 31% of revenue for SSH sales to the UK market in 2014, up from 26% in 2013. The digital share of export sales of SSH rose from 16% to 18% (Figure 9.1c).

Figure 9.1c Home and exported social science/ 100% humanities books: physical and digital 90% 16 18 shares (of net invoiced value) 26 31 80%

Digital sales 70%

60% Physical sales 50%

40% 84 82 74 69 30%

20%

10%

0% 2013 2014 2013 2014 Home Export

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 73 The invoiced value of UK publisher sales of digital STM books to UK customers rose by a fifth in 2014. However, a 10% decrease in the value of physical STM sales in the home market means that home sales in this category fell 7% overall. Export sales of STM books fell by 2% overall, with an 8% decrease for physical sales outweighing 20% growth for digital (Table 9.1d).16

Table 9.1d – – – – – – – Home sales value – – – – – – – – – – – – – – Export sales value – – – – – – – Publisher sales of home and TOTAL Physical Digital TOTAL Physical Digital export science/technical/medical £m £m £m £m £m £m books: physical and digital 2013 126 112 14 174 138 36 (net invoiced value) 2014 117 101 16 170 127 43 NB: % changes calculated prior to rounding % change in sales 2014/2013 -7.0 -10.4 +20.6 -2.4 -8.3 +20.0

Digital sales accounted for 14% of revenue from STM sales in the UK market in 2014, up from 11% in 2013. The digital share of STM exports rose from 21% to 25% (Figure 9.1d).

Figure 9.1d Home and exported science/ 100% technical/medical books: physical and 11 14 90% 21 digital shares (of net invoiced value) 25 80%

Digital sales 70%

60% Physical sales 50% 89 86 40% 79 75 30%

20%

10%

0% 2013 2014 2013 2014 Home Export

16 The figures in Table 9.1d and Figure 9.1d require caution, because they are extrapolated from home versus export STM sales figures provided by only a relatively small sample of those providing digital sales for STM overall.

74 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales 9.2 Publisher sales of physical academic/professional books

2014 saw a 5% decrease in the value of physical academic/professional sales to both the home market (to £379m), and in exports (to £443m). The number of physical academic/professional units sold to the home and export markets dropped by 13% and 8% respectively in 2014. Between 2010 and 2014, the value of physical academic/professional exports fell by 10%, with unit sales down 17%. Home sales of physical academic/professional books dropped 17% over the five years by value, and by nearly a third in volume (Table 9.2a).

Table 9.2a – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical Total Physical Physical Total Physical Physical academic/professional books: physical home export physical home export home and export £m £m £m m units m units m units 2010 947 457 490 63.6 31.0 32.6 NB: % changes calculated prior to rounding 2011 921 431 490 60.5 28.8 31.7 2012 893 414 479 58.0 27.9 30.1 2013 866 399 467 54.1 24.8 29.4 2014 822 379 443 48.6 21.6 27.0 % change in sales 2011/2010 -2.8 -5.8 +0.0 -4.9 -7.0 -2.9 2012/2011 -3.0 -3.9 -2.3 -4.1 -3.1 -5.0 2013/2012 -3.0 -3.6 -2.5 -6.7 -11.2 -2.4 2014/2013 -5.1 -5.0 -5.2 -10.2 -12.6 -8.1

2014/2010 -13.3 -17.1 -9.7 -23.6 -30.2 -17.3

Exports increased their share of physical book sales in the academic/professional sector between 2010 and 2014, from 52% to 54% of invoiced value, and from 51% to 55% of units (Figure 9.2a).

Figure 9.2a Physical academic/professional 100% books: home and export shares 90% (of net sales) 80% 51 52 53 54 54 54 52 52 54 55 Export sales 70%

60% Home sales 50%

40%

30% 48 47 46 46 46 49 48 48 46 20% 45

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 75 In SSH, 2014 saw a 4% decrease in the invoiced value of physical sales, with unit sales down 9%. The decrease reflected a 3% value and 11% volume decrease for home sales, with export sales dropping 4% and 7% respectively. Between 2010 and 2014, export revenue from physical SSH books fell 6%, with a 13% drop in value sales in the home market. Unit sales for the sector as a whole were down by a fifth over the five years, with home sales falling 27% and exports down by 14% (Table 9.2b).

Table 9.2b – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical social Total Physical Physical Total Physical Physical science/humanities books: home physical home export physical home export and export £m £m £m m units m units m units 2010 657 321 336 48.5 23.8 24.7 NB: % changes calculated prior to rounding 2011 647 309 338 46.6 22.5 24.1 2012 636 301 335 45.1 22.0 23.1 2013 616 287 329 42.2 19.4 22.9 2014 594 278 316 38.5 17.3 21.2

2011/2010 -1.5 -3.9 +0.7 -3.9 -5.7 -2.1 2012/2011 -1.6 -2.5 -0.9 -3.2 -2.1 -4.3 2013/2012 -3.2 -4.7 -1.9 -6.4 -12.0 -1.1 2014/2013 -3.5 -3.0 -4.0 -8.9 -10.6 -7.4

2014/2010 -9.5 -13.4 -5.9 -20.7 -27.4 -14.1

Exports increased their share of physical book sales in the SSH sector between 2010 and 2014, from 51% to 53% of invoiced value, and from 51% to 55% of units (Figure 9.2b).

Figure 9.2b Physical social science/humanities 100% books: home and export shares 90% (of net sales) 80% 51 51 52 53 53 53 52 51 54 55 Export sales 70%

60% Home sales 50%

40%

30% 49 49 48 47 47 47 48 49 46 45 20%

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

76 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales Physical STM sales fell 9% in invoiced value in 2014 over 2013, and were down 15% by volume. Home and export value sales fell by a similar 8-10%, while the unit decrease came more from home sales (-20%) than exports (-11%). Between 2010 and 2014, home sales fell 26% in value and 39% in units, while export sales were down 18% and 27% respectively (Table 9.2c).

Table 9.2c – – – – – – – Net invoiced value – – – – – – – – – – – – – – – – Net units – – – – – – – – – Publisher sales of physical Total Physical Physical Total Physical Physical science/technical/medical books: physical home export physical home export home and export £m £m £m m units m units m units 2010 290 136 154 15.1 7.1 7.9 NB: % changes calculated prior to rounding 2011 274 122 152 13.8 6.3 7.5 2012 257 113 144 12.9 5.9 7.0 2013 250 112 138 11.9 5.4 6.5 2014 227 101 127 10.1 4.3 5.8

2011/2010 -5.7 -10.2 -1.6 -8.3 -11.5 -5.4 2012/2011 -6.3 -7.3 -5.5 -6.9 -6.7 -7.1 2013/2012 -2.4 -0.6 -3.8 -7.5 -8.3 -6.9 2014/2013 -9.2 -10.4 -8.3 -14.9 -19.8 -10.8

2014/2010 -21.7 -25.9 -17.9 -32.8 -39.2 -27.1

Exports increased their share of physical book sales in the STM sector between 2010 and 2014, from 53% to 56% of invoiced value, and from 53% to 57% of units (Figure 9.2c).

Figure 9.2c Physical science/technical/medical 100% books: home and export shares 90% (of net sales) 80% 53 53 55 56 55 56 54 54 55 57 Export sales 70%

60% Home sales 50%

40%

30% 47 45 47 46 46 45 20% 45 44 44 43

10%

0% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Invoiced value Units

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 77 9.3 Average invoiced price of physical academic/ professional books

The average invoiced price for physical academic/professional books rose 6% to £16.90 in 2014, and was up by 14% since 2010. The average unit price for sales in this category to the home market rose by 9% in 2014 (to £17.52), and was up 19% between 2010 and 2014 as a whole. The average price for exported physical academic/professional titles grew 9% over the five‑year period, and rose 3% to £16.41 in 2014 itself (Table 9.3a).

Table 9.3a TOTAL Home Export Average invoiced price of physical £ £ £ academic/professional books: 2010 14.90 14.76 15.03 home and export 2011 15.23 14.95 15.48

NB: % changes calculated prior to rounding 2012 15.40 14.84 15.91 2013 16.00 16.12 15.91 2014 16.90 17.52 16.41 % change in average invoiced price 2011/2010 +2.2 +1.3 +3.0 2012/2011 +1.1 -0.7 +2.8 2013/2012 +3.9 +8.6 +0.0 2014/2013 +5.6 +8.7 +3.2

2014/2010 +13.5 +18.7 +9.2

The average invoiced price for home sales of physical SSH and STM titles rose by 9% and 12% respectively in 2014, with smaller (3-4%) rises for prices of exports in these categories. SSH prices as a whole rose by 6% in 2014 over 2013, and by 14% compared to 2010. Prices for STM overall increased by 17% over the five years, and were up 7% in 2014 itself (Table 9.3b).

Table 9.3b – – – – – Social science/humanities – – – – – – – – – Science/technical/medical – – – – Average invoiced price of physical academic/professional books: Total Home Export Total Home Export by category: home and export £ £ £ £ £ £ 2010 13.54 13.48 13.61 19.25 19.03 19.44 NB: % changes calculated prior to rounding 2011 13.87 13.73 14.00 19.79 19.30 20.21 2012 14.10 13.68 14.50 19.93 19.17 20.58 2013 14.58 14.82 14.39 21.04 20.77 21.28 2014 15.45 16.09 14.92 22.44 23.21 21.87 % change in average invoiced price 2011/2010 +2.4 +1.9 +2.9 +2.8 +1.4 +4.0 2012/2011 +1.7 -0.4 +3.6 +0.7 -0.6 +1.8 2013/2012 +3.4 +8.3 -0.8 +5.6 +8.3 +3.4 2014/2013 +5.9 +8.6 +3.7 +6.7 +11.8 +2.8

2014/2010 +14.0 +19.4 +9.6 +16.6 +21.9 +12.5

78 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales 9.4 Export sales of physical academic/professional books, by region

2014 saw growth in the value of exports of physical SSH books to the two smallest destinations for this category (Australasia and the Other Americas), but decreases in sales to other regions, and particularly to the Middle East/North Africa and Africa Sub-Sahara. Between 2010 and 2014, there was growth in SSH exports to Australasia (+28%), East/South Asia (+10%) and Europe (+3%), but double‑digit decreases in sales to North America, the Middle East/North Africa and Africa Sub‑Sahara (Table 9.4a).

Table 9.4a Mid East/ Africa E & S North Other Export sales of social TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified science/humanities £m £m £m £m £m £m £m £m £m books: by region 2010 336 123 49 35 53 9 63 3 * (net invoiced value) 2011 338 131 43 33 55 9 63 3 *

NB: % changes calculated 2012 335 132 42 33 57 10 59 3 * prior to rounding 2013 329 129 46 29 58 10 53 3 * * = <£0.5m 2014 316 126 39 26 58 12 52 3 1 % change in sales 2011/2010 +0.7 +6.5 -12.2 -5.1 +4.1 +0.8 +0.7 -7.3 -25.4 2012/2011 -0.9 +0.7 -2.6 +0.5 +3.1 +4.0 -7.7 -4.4 +12.3 2013/2012 -1.9 -2.3 +9.7 -11.3 +2.9 -1.0 -8.9 +1.7 -19.6 2014/2013 -4.0 -2.2 -16.4 -11.0 -0.8 +23.6 -3.2 +11.4 +56.7

2014/2010 -5.9 +2.6 -21.6 -24.8 +9.6 +28.2 -18.1 +0.3 +5.5

Europe was the largest destination for exports of physical SSH books in 2014, with its share rising from 37% to 40% since 2010. The East/South Asia region saw its share of the sector up from 16% to 18% between 2010 and 2014, while North America’s share dropped from 19% to 16%, and the combined share of the Middle East/North Africa and Africa Sub-Sahara fell from 25% to 20% (Figure 9.4a).

Figure 9.4a Exported social science/ 100% 1 1 1 1 1 humanities books: regional shares (of net invoiced value) 90% 19 19 17 16 16

3 4 80% 3 3 3 Unspecified 18 70% 16 16 17 18 Other Americas 60% 10 9 N America 10 10 8 50% 13 14 12 Australasia 15 13 40%

East & South Asia 30%

Africa Sub‑Sahara 20% 40 37 39 39 39

Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014

NB. Due to rounding, sum of %s may not = 100%

Academic and professional book sales | PA STATISTICS YEARBOOK 2014 79 The value of exports of physical STM books to East/South Asia rose by 13% in 2014 over 2013, and by 9% since 2010. There were also small increases in sales to Australasia over the period, contrasting with a drop in revenue from exports in this sector to all other broad regions in 2014 – most notably in sales to Europe and the Middle East North Africa. Between 2010 and 2014, there were double‑digit decreases in revenue from physical STM exports to Europe, Middle East/North Africa, Africa Sub‑Sahara and North America (Table 9.4b).

Table 9.4b Mid East/ Africa E & S North Other Export sales of TOTAL Europe N Africa Sub‑Sahara Asia Australasia America Americas Unspecified physical science/ £m £m £m £m £m £m £m £m £m technical/medical 2010 154 64 27 18 23 2 19 * * books: by region 2011 152 63 28 17 23 2 18 * * (net invoiced value) 2012 144 58 27 14 22 2 19 * *

NB: % changes calculated 2013 138 56 26 14 22 2 17 * * prior to rounding 2014 127 50 20 13 25 2 16 * * % change in sales 2011/2010 -1.6 -1.4 +4.2 -4.4 -3.6 -5.5 -5.1 +4.2 -52.8 2012/2011 -5.5 -7.7 -3.3 -16.2 -1.5 +6.0 +2.7 -5.6 +106.0 2013/2012 -3.8 -3.9 -5.5 -2.7 +1.0 -1.5 -7.1 -33.4 -7.3 2014/2013 -8.3 -10.6 -24.1 -7.1 +13.2 +2.0 -7.7 +0.0 +30.8

2014/2010 -17.9 -21.9 -27.8 -27.5 +8.6 +0.7 -16.4 -34.4 +17.8

Europe remained the largest destination for exports of physical STM books in 2014, despite seeing its share fall from 41% to 39% since 2010. The shares taken by the Middle East/North Africa and Africa Sub-Sahara fell from 17% to 15% and from 12% to 10% respectively, while East/South Asia’s share of STM rose from 15% to 20% (Figure 9.4b).

Figure 9.4b Exported physical science/technical/ 100% medical books: regional shares 12 12 13 13 13 (of net invoiced value) 90% 2 1 2 2 2

80% 15 Unspecified 15 15 16 20 70% Other Americas 12 11 10 10 60% 10 N America 50% 17 19 19 19 15 Australasia 40%

East & South Asia 30%

Africa Sub‑Sahara 20% 41 42 41 41 39

Mid East / N Africa 10%

Europe 0% 2010 2011 2012 2013 2014

NB. Due to rounding, sum of %s may not = 100%

80 PA STATISTICS YEARBOOK 2014 | Academic and professional book sales 10 Total journal sales

David Nicholson, publishing director at John Wiley & Sons Ltd and chair of The PA’s Serial Publishers Executive

s the new chair of The PA’s Serial Publishers Executive (SPE), I am delighted to follow in Athe footsteps of my predecessor from SAGE, Mark Walford, and to have this opportunity to comment on a vibrant and important part of the UK’s publishing industry.

This is the second consecutive year in which the UK’s journal publishing community, as represented through the SPE, has contributed to The PA’s survey on trends in the learned journals business. ©©3% to £1,016m The data supplied comes from the majority of SPE members and accounts for about 70% of journals Total income from published by organisations based in the UK, whether they are described as publishers, societies or journals other bodies. The same set of SPE members contributed figures for both 2012 and 2013 thereby providing a like‑for‑like comparison (see Table 10.1). ©©2% to £837m Total income from Another important development is that income from article publication charges (APCs) has been subscriptions broken out from “other non-subscription income”. If, as expected, this area of activity experiences significant growth over the next few years, this transparent approach will provide an important ªªto 82% baseline data point. Share of income from subscriptions The results depicted over the following pages highlight two realities: the continued importance of the sector to UK PLC, and an industry adopting (and adapting to) new business models. ©©77% to £24m Total income from APCs Institutional subscription revenues continue to represent the majority source of income for the learned journals published by the participating organisations. This is no surprise, and there is a very modest ªª5% to £27m increase of about 2% between 2012 and 2013, with the growth in the number of articles. Advertising Advertising income revenues showed a modest decline, from £28m in 2012 to £27m in 2013 (a decrease of 5%). Other non-subscription revenues grew by 4%, from £124m to £129m; but the big change is to be seen in ©©4% to £129m APCs, which while still a minority player in terms of the overall business, grew from £14m in 2012 to Other non-subscription £24m in 2013. Again, this is no surprise, and we would expect that the next dataset for collection income (2013 to 2014) will reveal significant growth in gold open access publishing activity across participating publishers, driven in part at least by the implementation of funder policies in the UK and elsewhere.

Alongside this trend in gold open access publishing it is worth mentioning the role played by the publishers taking part in this survey in the UK’s Access to Research project, whereby free access to over 10m articles from more than 8,600 learned journals has been facilitated via local authority libraries across the United Kingdom. The technical pilot phase of this project took place in late 2013 with a full, national launch following in February 2014.

Total journal sales | PA STATISTICS YEARBOOK 2014 81 The choice of format – print and/or electronic – made by (mostly) institutional customers continues to evolve, with a continued decline in the demand for print and print/electronic packages set against a growing preference for electronic only. Revenues from print‑only options declined by about 13%, and for print/electronic packages by about 9%. Electronic-only revenues grew by 6% to £659m, representing a 79% share of subscription income. Publishers are continuing to invest in the development of new services for customers and readers of their electronic journals, and we fully expect this migration towards digital to continue.

As Mark called out in the last edition of this Yearbook, the learned journals business is fundamentally an export one in nature, and one that continues to represent an important source of employment and tax revenues for the UK. Perhaps more importantly, it continues to support the very valuable work done by many learned and professional societies, makes a real contribution to the communication and dissemination of research findings, and supports the career development of the research community. The data presented in this survey is a partial picture, but one that provides a great overview of the state of play in this important part of our publishing industry.

82 PA STATISTICS YEARBOOK 2014 | Total journal sales In 2014 The Publishers Association repeated it survey on publisher’s income from learned journals from members of its Serial Publishers Executive (SPE). Approximately three‑quarters of the SPE members participated, accounting for about 70% of journals published by UK-based entities.17 The data that follows is based on the amalgamated responses of the participating companies only and has not been grossed up to represent the industry. 10.1 Publisher income from learned journals

The total value (home and export) of the participating publisher income from learned journals rose by 3% to £1,016m in 2013 due to a 2% increase in subscriptions, and increases in other non‑subscription income and article publication charges (APCs) of 4% and 77% respectively. At the same time the volume of articles published in journals grew 4%. In contrast, income from advertising declined by 5% (Table 10.1).

Table 10.1 Article Other Publisher income from learned TOTAL Subscriptions publication charges Advertising non‑subscription journals (net invoiced value) £m £m £m £m 18 NB: % changes calculated prior to rounding 2012 985 820 14 28 124 2013 1,016 837 24 27 129 % change in income 2013/2012 +3.2 +2.2 +76.8 -4.7 +3.8

The subscriptions share of income dropped slightly to 82% in 2013, while APC income rose to 2% and advertising and other non-subscription remained the same between the years (Figure 10.1).

Figure 10.1 Share of income by type 100%

90%

80% Subscriptions 70%

Article publication charges 60% 83 82 50% Advertising 40%

Other non‑subscription income 30% 20% 1 2 3 3 10% 12 12 0% 2012 2013

17 Publishers, societies or other bodies. 18 The same set of SPE members contributed to both the 2012 and 2013 learned journal figures shown in this Yearbook. These 2012 figures differ from those provided in previous editions of the Yearbook, due to data revisions and expansion in number of contributing members.

Total journal sales | PA STATISTICS YEARBOOK 2014 83 10.2 Publisher subscription income from learned journals by format

Between 2012 and 2013, the subscriptions to electronic journals increased 6% to £659m, while both print and print/electronic bundle declined by 13% and 9% respectively (Table 10.2).

Table 10.2 Print/electronic Publisher subscription income TOTAL Print Electronic bundle from learned journals by format £m £m £m £m (net invoiced value) 2012 820 67 621 131

NB: % changes calculated prior to rounding 2013 837 59 659 119 % change in income 2013/2012 +2.2 -12.5 +6.1 -9.1

Electronic journals accounted for 79% of subscription income in 2013, up from 76% in 2012 (Figure 10.2).

Figure 10.2 Share of subscription income 100% by format 16 14 90%

80% Print/electronic bundle 70%

Electronic 60%

50% 76 79 Print 40%

30%

20%

10% 8 7 0% 2012 2013

84 PA STATISTICS YEARBOOK 2014 | Total journal sales 11 Rights and other income

Rights and coeditions review by Diane Spivey, rights and contracts director of Little, Brown Book Group

Total income from photocopying, scanning and digital licensing of extracts, Sarah Faulder, chief executive, Publishers Licensing Society (PLS)

t is 10 years since the first PA survey of rights income was undertaken, prompted by the feeling Ithat our industry was not able to quantify or analyse the important area of rights licensing, which underpins the UK’s thriving cultural economy. The survey was initially compiled every two years and is now annual.

Sadly, participation by publishers is still low: only 31 publishing imprints contributed data. This is the same as last year (though a slightly different mix, with some imprints contributing anew, and some dropping out). There is good participation from literary agents: in cooperation with the Association of Authors’ Agents, 45 agencies, large and small, contributed data to a simplified questionnaire.

Inconsistency in the data received from year to year, and the change in composition of the publishers contributing data, makes like-for-like comparisons tricky. Overall, there was an increase of 8% over ©©8% to £162m 2013 in the reported rights and coeditions income from publishers: the total for 2014 being £162m. Gross receipts from rights However, the increase for a comparative group of contributing publishers was 4%. The breakdown and coeditions between coedition and rights income shows that rights income has increased over the past four years, with coedition income declining as part of the mix. Within coeditions, the majority of the ©©7% to £116m income was from foreign language coeditions (80%), although US coedition income increased in Gross receipts from rights 2014 to 17%. Income from bookclubs is now negligible.

©©11% to £45m Within rights income, the increase for publishers has mainly been driven by a rise in translation Gross receipts from income – up to 31% of the total, a steady increase after a dip in 2012. Agents, on the other hand, coeditions showed a decrease in translation income of 27% over 2013. For publishers, English language rights (which includes sale of US rights) remained steady, and electronic licensing income increased, with ©©to 28% a decrease in permissions income. US income increased for the literary agents by 17% over 2013. Coedition share of income Serialisation rights (once lucrative for trade publishers) now contribute below 1% of the total, and serial income reported by participating agents failed to register at all in 2014. ©©6% to £35m PLS distributable income The mix of languages into which publishers license was similar to 2013, with higher sales into from all sources Western European languages: all areas showed an increase except the Balkans and Central and Eastern Europe. There was a healthy increase in US rights income from both licensing and coeditions, although UK reprints (which includes large print rights, for example) was down by £3m on 2013 totals.

Rights and other income | PA STATISTICS YEARBOOK 2014 85 The strongest sector for total rights/coedition income in 2014 was academic and professional publishing, at 27% of the total. With the addition of strong coedition sales, children’s publishing was also strong (and on the rise), comprising almost a quarter of the total income. Schools publishing rights/coeditions remained steady, with decreases in reference and in adult trade fiction.

The data gathered in this survey remains crucial in recognising the importance of rights selling – within both publishing houses and literary agencies – to publishers, authors and the health of the UK publishing industry. I urge any publisher not currently contributing to these figures to participate in 2015.

Secondary licensing revenues distributed to publishers by PLS in the year to 31 March 2014 were over £35m, up 6% on the previous year. This upward trend has continued notwithstanding the economic pressures on licensees and their increasing reliance on digital use and scanning in place of photocopying.

While the underlying trend is upwards, it is important to understand that there were some one-off reasons for part of the increase. In particular, the 18% increase in higher education licensing revenues is largely accounted for by a one-off catch up payment of scanning fees. These are distributed on the basis of full census reporting by licensees rather than by reference to survey data (used for ascertaining photocopying usage). Previously these fees were distributed a year in arrears due to the time taken to gather and validate the data. Improvements in Copyright Licensing Agency (CLA) processes mean that they can now be distributed in the year to which they relate.

The CLA board also authorised CLA to release monies collected over recent years from various sources, including overseas reprographic rights organisations, where CLA had reason to expect data would be supplied but where such data had not materialised. This was worth some £701,000 to publishers.

And finally, CLA also brought forward the distribution of three months’ worth of business licensing revenues that would otherwise not have been distributed until the start of the following financial year. This was to take account of the changes outlined below involving some magazine publishers.

In a new development for PLS and magazine publishers the distributions for 2013/14 include licensing revenue received from NLA media access (NLA) for the first time. On the strength of a recommendation from the Professional Publishers Association, some of its magazine publisher members opted to instruct PLS to direct their mandates to NLA for business and government licensing. The revenue (£640,000) reflects the start‑up of such licensing in the second half of the year on behalf of a small number of publishers, but it is expected eventually at least to match the revenues such publishers would have from licensing through CLA.

Maintaining secondary licensing revenues for publishers at current levels is challenging for PLS, CLA and NLA. Ensuring that the licences continue to be relevant to users and their needs will be vital and publishers can expect to be called upon to support the efforts in this regard.

PLS has always allocated licensing revenues to publishers on the basis of the best available data, whether gathered from surveys, record keeping or reporting, showing what titles have actually been copied and used under the various licences. The revenues so allocated are then distributed in accordance with the PLS Distribution Charter, which is on our website at www.pls.org.uk.

86 PA STATISTICS YEARBOOK 2014 | Rights and other income For 2014, Roger Watson, on behalf of The Publishers Association, collected data on publishers’ income from rights and coeditions. This is now an annual survey and there were 31 respondents in 2014, which represented approximately 65% of the book sales of all UK publishers overall and in the two categories (consumer and non-consumer). It should be noted that the data that follows is based on the amalgamated responses of the participating companies only, and has not been grossed up to represent the industry as a whole. 11.1 Publisher gross income from coeditions and rights

The total gross income from rights and coeditions of the 31 respondents to the seventh PA survey on rights was £162m, an increase of 8% on 2013,19 and 18% higher than the equivalent figure for 2010 (Table 11.1). The increase in 2014 is influenced by the change in composition of the participants between 2013 and 2014; taking just those who participated in both years, the increase in rights income was 4%.

Table 11.1 Total Coeditions Rights income Total gross receipts from rights £m £m £m and coeditions 2010 137 43 94

NB: % changes calculated prior to rounding 2012 178 49 129 2013 149 41 108 NB: Participating publishers only 2014 162 45 116 % change in gross receipts 2012/2010 +29.7 +14.3 +36.7 2013/2012 -15.9 -16.3 -15.8 2014/2013 +8.4 +10.9 +7.4

2014/2010 +18.2 +6.0 +23.7

The share of income from rights has increased from 69% in 2010 to 72% in 2014, while the share of coeditions has declined from 31% to 28% during this period (Figure 11.1).

Figure 11.1 Gross receipts: share of income 100%

90%

80% Rights income 70% 69 72 73 72 60% Coeditions 50%

NB: Participating publishers only 40%

30%

20% 31 28 27 28 10%

0% 2010 2012 2013 2014

19 These percentage change figures are affected by changes in the composition of the participants between the years, combined with acquisition activity by the participants, which makes it difficult to estimate changes on a like‑for‑like basis.

Rights and other income | PA STATISTICS YEARBOOK 2014 87 11.2 Publisher gross income from coeditions by category

The 11% increase in income from coeditions to £45m was due to a 14% increase in income from foreign languages and a 78% increase in income from USA (Table 11.2).

Table 11.2 Foreign Other English language Publisher gross receipts from Total languages USA including UK book clubs Unallocated coeditions by category £m £m £m £m £m

NB: % changes calculated prior to rounding 2010 43 38 4 1 0 2012 49 43 4 1 1 NB: Participating publishers only 2013 41 32 4 1 4 2014 45 36 8 1 0 % changes in gross receipts 2012/2010 +14.3 +15.0 +2.2 -25.0 - 2013/2012 -16.3 -26.2 +13.5 -5.8 +483.9 2014/2013 +10.9 +13.7 +78.2 +1.0 -89.1

2014/2010 +6.0 -3.6 +106.7 -28.5 -

80% of income in 2014 came from foreign languages, up from 78% in 2013, while the share of USA increased to 17%. (Figure 11.2).

Figure 11.2 Coeditions income: category share 100% 3 2 1 2 9 2 (of gross receipts) 9 90% 8 2 17 11 80% Unallocated 70% Other English language including UK book clubs 60%

50% USA 86 88 40% 78 80

Foreign languages 30%

20% NB: Participating publishers only. 10% NB. Due to rounding, sum of %s may not = 100% 0% 2010 2012 2013 2014

88 PA STATISTICS YEARBOOK 2014 | Rights and other income 11.3 Publisher gross income from rights by category

The increase in income from rights from £108m in 2013 to £116m in 2014 was driven by increases in three out of the four main categories (English language reprints +7%), translations (+41%), permissions (-23%), electronic (+15) 20 (Table 11.3).

Table 11.3 English language Publisher gross receipts from TOTAL reprints Translations Permissions Electronic Serialisation Other Bilingual Media rights income by category £m £m £m £m £m £m £m £m £m 2010 94 21 35 11 17 2 2 4 3 2012 129 29 29 29 31 1 3 3 3 2013 108 21 26 17 28 2 6 2 4 2014 116 22 36 13 32 1 4 2 4 % changes in gross receipts 2012/2010 +36.7 +39.1 -17.1 +158.7 +77.6 -11.4 +83.7 -35.6 -10.6 2013/2012 -15.8 -27.5 -10.3 -43.0 -10.0 +41.2 +78.3 -4.6 +58.9 2014/2013 +7.4 +6.5 +40.6 -22.5 +14.6 -29.3 -33.4 +2.1 -9.7

2014/2010 +23.4 +4.8 +2.9 +18.2 +88.2 -50.0 +100.0 -50.0 +33.3

NB: % changes calculated prior to rounding NB: Participating publishers only

Translations held the largest share of rights income in 2014, with 31% (up from 24% in 2013), followed by electronic with 28%, English language reprints with 19% and permissions with 11%, down from 15% in 2013 (Figure 11.3).

Figure 11.3 100% Rights income: category share 2 4 3 (of gross receipts) 3 2 8 2 4 2 3 90% 2 1 4 1 2 2 Other and unallocated 80% 19 24 28 Media 70% 26

Bilingual 12 60% 23 11 Serialisation 50% 15

Electronic 40% 37 31 Permissions 22 30% 24

Translations 20%

English language reprints 22 10% 22 19 19 NB: Participating publishers only 0% 2010 2012 2013 2014

20 The year-on-year changes in these categories were affected by changes in the reporting participants.

Rights and other income | PA STATISTICS YEARBOOK 2014 89 11.4 Publisher combined income from coeditions and rights by category

The 8% increase in the combined income from rights and coeditions between 2013 and 2014 was driven by the increases in children’s (up 50% to £39m), adult non-fiction (up 42% to £19m), and in academic and professional (up 14% to £44m) (Table 11.4). Academic and professional had the largest share of combined income in 2014 with 27%, followed by children’s with 24% (Figure 11.4). 21

Table 11.4 Adult Adult Academic & Other and Publisher gross receipts from Total fiction non‑fiction Children’s Reference Schools ELT professional unallocated coeditions and rights by category £m £m £m £m £m £m £m £m £m Rights 2012 129 27 6 9 10 5 9 47 16 2013 108 30 9 9 5 4 10 39 4 2014 116 28 9 17 5 5 7 44 2 Coeditions 2012 49 0 8 12 28 0 0 0 1 2013 41 0 5 17 14 0 0 0 5 2014 45 0 10 22 10 0 0 0 3 Total 2012 178 27 14 22 37 5 9 47 17 2013 149 30 13 26 20 4 10 39 8 2014 162 28 19 39 15 5 7 44 5 % changes in gross receipts Rights 2013/2012 -15.8 +8.6 +47.2 -8.4 -45.3 -28.9 +17.4 -17.7 +75.0 2014/2013 +7.4 -5.1 -0.7 +97.8 -9.5 +30.1 -32.1 +14.1 -41.1 2014/2012 -9.5 +3.0 +46.2 +81.1 -50.6 -7.1 -20.3 -6.1 -86.4 Coeditions 2013/2012 -16.3 - -44.2 +39.1 -47.5 - - - +400.0 2014/2013 +10.9 - +121.5 +26.1 -27.8 - - - -40.0 2014/2012 -7.2 - +161.1 +75.4 +61.1 - - - +347.2 Total 2013/2012 -15.9 +8.6 -6.1 +18.6 -47.0 -28.9 +17.4 -17.7 -52.9 2014/2013 +8.4 -5.1 +41.7 +50.0 -22.8 +30.1 -32.1 +14.1 -41.1 2014/2012 -8.8 +3.0 +32.9 +77.9 -59.1 -7.1 -20.3 -6.1 -68.2

NB: % changes calculated prior to rounding NB: Participating publishers only Figure 11.4 Coeditions and rights income: 100% 2 4 1 6 category share (of gross receipts) 12 11 9 90% 23 27 Other and unallocated 80% 38 26 36 27

70% 37 56 35 Academic & professional 4 7 3 60% 5 2 6 3 10 ELT 9 4 13 50% 47 7 3 4 Schools 5 21 4 24 40% 8 15 8 17 Reference 42 30% 8 25 7 7 12 5 9 12 Children’s 20% 8 27 24 23 Adult non‑fiction 10% 21 20 17 15 17 11 0% Adult fiction 2012 2013 2014 2012 2013 2014 2012 2013 2014 Rights Coeditions Total NB: Participating publishers only

21 The year-on-year changes in these categories were affected by changes in the reporting participants.

90 PA STATISTICS YEARBOOK 2014 | Rights and other income 11.5 Publisher combined income from foreign language coeditions and rights

The total combined income from foreign language coeditions and rights increased in 2014 by 26% to £73m. The biggest change was an increase in sales to Western Europe from £21m to £30m, but all areas increased except for Balkans and Central & East European (Table 11.5). Western European languages produced the largest share of gross income by language in 2014 with 41%, followed by Asian (16%), Latin American (8%), Nordic (7%) and Central & East European languages at about 5% (Figure 11.5).

Table 11.5 Publisher gross receipts from West C & E Arabic/ Latin Other and coeditions and rights by language Total European Nordic Asian European Hebrew Balkan America unallocated £m £m £m £m £m £m £m £m £m Rights 2012 29 14 1 5 2 1 1 1 5 2013 26 11 1 4 2 0 1 1 6 2014 36 17 2 7 2 0 1 2 7 Coeditions 2012 43 23 6 5 4 0 1 1 3 2013 32 11 4 4 2 0 1 5 6 2014 36 13 4 4 1 0 0 4 9 Total 2012 72 37 7 10 6 1 2 2 8 2013 58 21 5 9 4 0 1 6 12 2014 73 30 5 12 3 0 1 6 16 % change in gross receipts Rights 2013/2012 -10.3 -20.9 -15.9 -14.9 -16.5 -43.5 -42.2 +19.0 +20.0 2014/2013 +40.6 +55.1 +99.2 +65.9 +11.9 -2.5 +11.6 +53.6 +16.7 2014/2012 +26.1 +22.7 +67.5 +41.1 -6.6 -44.7 -35.4 +82.8 +229.5 Coeditions 2013/2012 -26.2 -54.6 -32.8 -11.5 -50.7 -40.4 -37.5 +329.4 +100.0 2014/2013 +13.7 +22.9 -5.7 +1.4 -21.2 +41.7 -41.6 -5.8 +50.0 2014/2012 -16.1 -44.1 -63.5 -10.3 -61.1 -15.8 -63.5 +304.4 +1,343.4 Total 2013/2012 -19.9 -42.1 -30.5 -13.2 -39.0 -42.9 -39.2 +193.1 +50.0 2014/2013 +25.7 +39.1 +11.9 +33.5 -5.8 +6.5 -22.8 +4.7 +33.3 2014/2012 +0.7 -19.5 -22.5 +15.8 -42.5 -39.1 -53.1 +207.2 +571.9

NB: % changes calculated prior to rounding NB: Participating publishers only

Figure 11.5 Combined rights and coeditions 100% 7 income: language share 12 3 (of gross receipts) 90% 18 19 18 21 25 2 25 3 22 9 3 3 1 Other and unallocated 80% 1 3 3 4 8 2 1 2 2 1 1 5 12 14 10 8 70% 7 4 Balkan 1 12 1 14 1 5 6 6 13 6 60% 18 20 4 Latin America 9 16 17 14 12 15 50% 3 4 Arabic/Hebrew 3 7 10 8 40% 12 Central & East European 30% 54 51 Asian 47 46 42 41 20% 37 33 36 Nordic 10%

Western European 0% 2012 2013 2014 2012 2013 2014 2012 2013 2014 NB: Participating publishers only Rights Coeditions Total

Rights and other income | PA STATISTICS YEARBOOK 2014 91 11.6 Publisher income from English language reprints and coeditions

Income from English language reprints and coeditions increased by 18% from £26m in 2013 to £31m in 2014, with a 28% increase in USA/Canada income. In contrast, UK income fell by 51% from £6m to £3m (Table 11.6).

Table 11.6 USA UK (including Publisher gross receipts from English TOTAL & Canada book clubs) Other Unallocated language reprints and coeditions £m £m £m £m £m

NB: % changes calculated prior to rounding Reprints 2012 29 18 4 3 3 NB: Participating publishers only 2013 21 12 5 2 2 2014 22 14 2 3 3 Coeditions 2012 5 4 1 0 0 2013 5 4 1 0 0 2014 9 8 1 0 0 Total 2012 34 22 5 3 3 2013 26 17 6 2 2 2014 31 21 3 3 3 % changes in gross receipts Reprints 2013/2012 -27.5 -31.0 +9.4 -31.7 -54.3 2014/2013 +6.5 +11.1 -61.3 +64.9 +107.3 2014/2012 -22.8 -23.3 -57.6 +12.6 -5.2 Coeditions 2013/2012 +9.4 +13.5 -5.8 - - 2014/2013 +64.2 +78.2 +1.0 - - 2014/2012 +79.7 +102.4 -4.8 - - Total 2013/2012 -22.2 -23.2 +6.6 -31.7 -54.3 2014/2013 +18.2 +28.4 -51.0 +64.9 +107.3 2014/2012 -8.1 -14.3 -57.6 +8.2 -5.2

The USA & Canada share of English language reprints and coeditions increased to 70% in 2014 (Figure 11.6).

Figure 11.6 100% English language reprints and 6 11 7 11 10 10 coeditions: share (of gross receipts) 14 18 90% 10 21 8 10 9 11 80% 15 Unallocated 16 22 9 70% 15 23 8 Other 60%

50% UK (including book clubs) 89 40% 79 82 70 USA & Canada 65 64 30% 63 60 62

NB: Participating publishers only. 20%

10%

0% 2012 2013 2014 2012 2013 2014 2012 2013 2014 Reprints Coeditions Total

92 PA STATISTICS YEARBOOK 2014 | Rights and other income 11.7 Authors’ agent income from rights

The total picture of rights income from publishing is not complete without information from authors and their agents. Therefore The PA commissions an annual survey of the members of the Association of Authors’ Agents (AAA). The consolidated total of rights income collected from the 45 respondents was £129m in 2014. This total is estimated to represent about 70% of the potential income from all 97 members of the AAA, which suggests a potential overall total of about £175m, excluding their UK income 22 (Table 11.7).

Table 11.7 Total USA Translations Media Serialisation Other Unallocated Agent income by category £m £m £m £m £m £m £m

NB: % changes calculated prior to rounding 2010 130 32 55 38 1 2 2 NB: Participating publishers only 2012 135 29 76 22 1 1 7 2013 140 32 93 14 0 1 0 2014 129 37 68 18 0 1 5 % change 2012/2010 +3.2 -11.6 +38.9 -42.7 -50.8 -10.3 +131.5 2013/2012 +3.7 +10.2 +23.3 -37.6 -64.3 -34.8 -98.5 2014/2013 -8.1 +17.1 -27.3 +28.6 +110.9 +9.3 +723.0

2014/2010 -1.2 +14.1 +24.5 -54.0 -62.9 -36.1 +79.9

Figure 11.7 shows that, in 2014, the largest share of income came from translations with 53%, followed by the USA (29%) and media (14%).

Figure 11.7 100% Agent income: category share 3 6 1 4 1 1 10 90% 14 16 80% 29 Unspecified/unallocated 70%

Serialisation 60% 66 53 50% 56 Media (film, TV, radio, audiobooks) 42 40% Translations 30%

USA 20% 25 29 NB: Participating agents only. 10% 21 23

0% 2010 2012 2013 2014

22 See Technical Appendix for further information.

Rights and other income | PA STATISTICS YEARBOOK 2014 93 11.8 Publisher total income from photocopying and digital licensing of extracts (PLS)

The total income from licensing distributed by Publishing Licensing Society to over 3,000 mandated publishers was £35m in 2013–14, an increase of 6% on 2012–13, and a 27% growth over 2009 –10 (Table 11.8).

Table 11.8 PLS distributable income UK Document from all sources TOTAL* Schools FE HE Business Delivery Government NHS International Year £m £m £m £m £m £m £m £m £m 2009 –10 28 4 2 4 8 1 2 1 6 2010 –11 33 4 3 4 8 1 2 1 9 2011 –12 30 5 3 4 8 0 1 1 7 2012 –13 33 5 3 5 9 0 1 1 9 2013 –14 ** 35 5 2 5 12 1 2 1 6 % changes in distributable revenue 2010 –11/2009 –10 +19.0 +1.1 +16.1 +10.9 +13.1 +9.7 +26.9 -2.7 +50.3 2011 –12/2010 –11 -8.4 +9.1 -10.7 +4.0 -8.6 -29.4 -26.2 -19.3 -20.0 2012 –13/2011 –12 +12.3 +4.1 +5.4 +4.9 +16.2 -2.2 -18.8 +8.7 +28.6 2013 –14/2012 –13 +5.5 +2.3 -13.5 +18.3 +35.9 +3.9 +87.2 +0.2 -33.7

2013 –14/2009 – 10 +27.2 +17.6 -5.5 +43.1 +64.4 -21.4 +42.4 -14.5 +2.5

NB: % changes calculated before rounding. * These figures reflect distributions by sector excluding the reallocation of PLS and CLA surplus administration fees of £411,00. ** PLS distributed a further non-title specific sum of £701,000 to publishers in addition to the monies collected from the licensing sectors shown above and distributed in 2013/14, Such additional sum represented historic collections from various sources for which CLA has been awaiting data that never materialised.

Figure 11.8 shows the year‑on‑year change in total PLS distributable revenue.

Figure 11.8 PLS distributable revenue 35 year‑on‑year 35 33 33

30 30 28

25

20

£m

15

10

5

0 2009/10 2010/11 2011/12 2012/13 2013/14

94 PA STATISTICS YEARBOOK 2014 | Rights and other income Figure 11.9 illustrates that total combined education (schools, further education and higher education) remains the largest source of licensing income with 37% in 2013 –14, followed closely by business, with 35%.

Figure 11.9 PLS distributable income: source share 15% 18%

Schools

7% Further education 3%

Higher education

6% Business

UK Document Delivery

16% Government

NHS

International

NB: % calculated before rounding. 35%

Rights and other income | PA STATISTICS YEARBOOK 2014 95 96 PA STATISTICS YEARBOOK 2014 | Rights and other income 12 Book production and the environment

Review by Peter Hughes, director of sustainability, Pearson

rees and books have a long and close relationship. Ever since the Egyptians discovered how Tpapyrus was effective at recording and sharing stories and stimulating debate, so authors, readers, teachers and learners have all embraced the book.

Publishers owe trees a huge debt for enabling reading and learning. Even in today’s world, where there are lots of digital ways to generate sales – online, mobile and via tablets – nevertheless print remains important. ªª9% to 238,572 tonnes As well as valuing and appreciating trees, we have a responsibility towards them. This is why Total output publishers remain committed to encouraging and supporting responsible forest management – helping to make a difference to forest management on the ground. ªª4% to 223,585 tonnes Over the last five years, publishers have made huge progress in eradicating paper coming from from known sources unknown sources. This was maintained again this year with the percentage share of output from known sources marginally down 1% at 94% reflecting sustained progress from the 71% share we ©©12% to 14,987 recorded in 2009. tonnes from unknown sources An important driver behind the progress made is PREPS – the Publishers’ database for Responsible Environmental Paper Sourcing – a group of 22 leading publishers that are working together on ªªto 94% responsible paper purchasing. The PREPS database includes information on the country of origin Share of total output from of the wood fibre, how forest sources have been managed and, increasingly, information on carbon known sources and water management practice. Labelling continues apace and publishers are setting their own standards based on the PREPS system.

Currently, certified forests are estimated to account for around a quarter of world supply. For publishers that proportion is well over 50%. Publishers’ commitment to progressive paper purchasing reinforces to retailers, subscribers and printers that these issues are important and are continually being addressed.

At an EU level, the illegal timber law is in force and while printed material is outside scope, this is to be reviewed and we expect this to change.

Book production and the environment | PA STATISTICS YEARBOOK 2014 97 The PA Environmental Review Group continues to play its role as a forum for publishers to keep abreast of and to discuss developments across the environmental agenda. For 2014, we worked closely with the Publishers Green Network and topics discussed including the digital footprint of ebooks, how we share our priorities as publishers on green issues as well as oversight on legislative developments. The groups work closely with outside partners, such as WWF and Forest Stewardship Council (FSC), and continue to coordinate activity with the Booksellers Association to ensure a joined‑up approach.

We also continue to work on engaging more publishers in furthering the green agenda.

98 PA STATISTICS YEARBOOK 2014 | Book production and the environment For the seventh year running, The Publishers Association collected data on book production from UK publishers. It should be noted that the data that follows is based on the amalgamated responses of the participating companies only, and has not been grossed up to represent the industry as a whole. 12.1 Publisher purchase and specification of paper

63% of the respondents purchased their paper through their printer only, and the remaining 37% purchased their paper both direct and via their printer. 100% of the respondents who purchased their paper direct, and 87% who purchased their paper via their printer, always or sometimes specified that this should be paper from known sources 23 (Figure 12.1).

Figure 12.1 Publisher specification of paper as 100% being sustainable 13 90% 8 80% No 70%

Sometimes 60%

50% 100 Yes 40% 79

NB: Based on 24 respondents representing 30% 32 publishing houses. 20%

10%

0% Direct Via printer

12.2 Publisher use of accreditation scheme logos

63% of the respondents who produced output on paper from known sources included a logo belonging to an accreditation scheme on or inside their titles during 2014. Of these, 87% used the FSC logo only, and 7% used FSC and PEFC logos and 7% use FSC, PEFC and Recycled Mobius (Figure 12.2).

Figure 12.2 Publisher use of accredited logos 7%

FSC only 7%

FSC and PEFC

FSC, PEFC and Recycled Mobius

NB: Based on 15 respondents representing 23 publishing houses.

87%

23 FSC/PECF/100% post-consumer waste recycled paper/Preps grade 3 paper.

Book production and the environment | PA STATISTICS YEARBOOK 2014 99 12.3 Publisher output of paper

Around three-quarters of the respondents to this survey were able to provide output by weight and these same respondents also provided figures over the past five years. Total output of these respondents fell by 9% to 238,572 tonnes in 2014, with the proportion on paper from known sources declining slightly from 95% in 2013 to 94% in 2014 (Table 12.3).

It has been possible to extract from the survey that 49% of book production paper from known sources in 2014 was on FSC-certified paper, and a further 50% was on paper from legal and known forestry sources (these can include forest certified according to FSC, PEFC and SFI standards).24 The remaining 1% was classed as post‑consumer waste recycled paper; however, this underestimates the overall use of recycled fibres as they are prevalent in a wide variety of papers that may not necessarily be classed as fully recycled.

Table 12.3 TOTAL Tonnes from known Tonnes from % share of tonnes Comparison of total output by tonnes sources unknown sources from known sources weight produced on paper from 2010 285,968 232,399 53,569 81.3 known and unknown sources 2011 241,349 209,984 31,365 87.0

NB: Based on 17 respondents representing 2012 229.532 210,202 19,330 91.5 25 publishing houses. 2013 261,767 248,371 13,396 94.8 2014 238,572 223,585 14,987 93.7 % change in tonnes 2011/2010 -15.6 -9.6 -41.4 2012/2011 -4.9 +0.1 -38.4 2013/2012 +14.0 +18.5 -30.6 2014/2013 -8.8 -3.8 +11.9

2014/2010 -16.6 -3.8 -72.0

Figure 12.3 shows that publishers have increased their output on paper from known sources from 81% in 2010 to 94% in 2014.

Figure 12.3 Output: known and 100% 8 5 6 unknown shares 13 90% 19

80% Output on sustainable paper 70%

Output on unsustainable paper 60%

50% NB: Based on 17 respondents representing 92 95 94 87 25 publishing houses. 40% 81

30%

20%

10%

0% 2010 2011 2012 2013 2014

24 Papers which are not fully FSC or PEFC certified, however, contain wood which comes from forests certified according to FSC and PEFC standards.

100 PA STATISTICS YEARBOOK 2014 | Book production and the environment A Technical appendix

The data in Sections 1– 9 of the PA Statistics Yearbook are based on The Publishers Association’s ongoing Publishers Association Sales Monitor (PASM) data collection scheme, which records the physical and digital book sales of publishers who are estimated to account for around three‑quarters of total UK publisher sales.

The data from PASM have been applied to the results of a one‑off Benchmarking Exercise conducted in 2005 in order to calculate a base total for all UK publishers. In addition, data collected from The Publishers Association’s annual Publisher Discounts survey are used to help derive the UK book market size estimates provided in Section 2.3. Separate studies collect the data on UK Publisher Journal sales (Section 10), Rights income (Section 11) and Book production (Section 12).

This technical appendix provides details of these surveys, and of the processes involved in deriving the figures shown in this Yearbook.

A1 PASM

In 2000, The PA replaced its annual survey of members with the PASM scheme, which involves collecting sales data from distributors and large publishers on a monthly or quarterly basis. The PASM scheme is administered by Nielsen Book Research (formerly Bowker Market Research and, prior to that, BML).

Physical sales

PASM participants provide Nielsen Book Research with a detailed breakdown of net unit and invoiced value sales of physical books for the latest calendar month and for the calendar year to date (including sales for the equivalent periods in the previous year). For reporting purposes, the data supplied are split into Home and Export sales, and within these destinations into six broad and 10 more detailed categories and – for exports by value – seven geographical regions used throughout the PA Statistics Yearbook. Data are amalgamated, thereby avoiding revealing the sales pattern and performance of any company.

The number of distributors/publishers providing physical book sales figures for PASM has gradually increased over time, with over 20 companies, representing c270 publishers and over 75% of sales, supplying data in 2014.

Technical appendix | PA STATISTICS YEARBOOK 2014 101 Digital sales

Since 2008, PASM has been extended to collect UK publisher sales of digital book products, with the frequency of digital collection increasing to quarterly in 2013 and to monthly from 2014. All companies participating in PASM, as well as additional PA members, are invited to provide digital sales figures for the latest and previous year, broken down into broad category and format. From 2014, participants were also asked to split their digital sales into UK versus overseas (i.e. based on location of end user, not merely the location – for invoicing purposes – of ebook retailers).

For the purposes of this data collection, digital sales are defined as follows:

ebooks, audiobook downloads, downloads of all/part of books, subscriptions/access to online book publications, and any other wholly digital material delivered online or via CD‑Rom. Subscriptions/access to online journals or journal product should not be included where it is possible to make the distinction between book and journal material, as journal products are outside the remit of the PASM scheme.

Sales of all other book products/formats, i.e. printed books and maps in hardback, paperback and other bindings (including print‑on‑demand); books on tape or CD (physical audiobooks); and combined book and physical audiobook products should be excluded.

Sales of products that combine both digital and other book products/formats (as defined above) should be included in the data on this form where the value of the product is principally in the digital component (i.e. where the other element is supplementary to that concept). Conversely, where the non‑digital component of a combined product is the principal element (and the digital component supplementary to that concept), then sales of the product should be excluded.

It should be borne in mind that the participants of the PASM scheme, and the universe of total digital sales recorded in this Yearbook represent the traditional publishing sector. Sales of self‑published titles, Amazon editions and from new digital‑only media companies are not currently included in PASM, and may not be represented in these figures.

A2 2005 Benchmarking Exercise: estimating total book sales of UK publishers

Physical sales estimates

A Benchmarking Exercise was undertaken by Nielsen Book Research (then BML) on behalf of The PA in 2005, which sought to estimate the book sales of all UK publishers. This involved collecting sales data on a one‑off basis from as many as possible UK publishers not already contributing to PASM, whose sales were added to the PASM figures. Additionally, estimates were made of sales for any other UK publishers using a combination of financial accounts information, and data supplied by The PA and Independent Publishers Guild (IPG) showing how their memberships segmented by turnover band.

These figures provided the benchmark to which the PASM growth rates recorded for subsequent years have been applied, thereby providing estimates of total UK publisher sales for these subsequent years and, in the case of this Yearbook, for the 2010 –14 period.

102 PA STATISTICS YEARBOOK 2014 | Technical appendix Digital sales estimates

Total digital book sales of UK publishers in 2014 have been mainly calculated by applying growth rates in digital sales from participating publishers – by broad category – to estimates of digital sales included in the 2013 Yearbook. These 2013 estimates were, in turn, calculated by looking at the proportion of total UK publisher sales of physical books accounted for by those providing digital sales figures, and grossing up the recorded digital sales accordingly. Year-on-year growth rates in digital sales from 2010 –13 were used to calculate approximate total UK publisher digital sales figures for 2010 –12. For the school and ELT sectors, because of changes in the figures provided by some participants in 2014 versus 2013, the 2014 figures have been used as the benchmark, with 2010 –13 calculated retrospectively, with some small adjustments to previous years.

A3 Publisher Discounts survey: calculating the size of the UK physical book market

The figures from PASM and the Benchmarking Exercise allow estimates to be made of UK publisher sales of books at invoiced prices. These are also used as the basis for estimating the size of the UK physical book market at end purchaser prices (see Section 2.3 of the Yearbook).

In order to help calculate the UK market size, Nielsen Book Research – on behalf of The PA – undertakes an annual Publisher Discounts survey. This asks PASM participants to provide the average discount on RRP offered by publishers to retailers, wholesalers, library suppliers, etc in the UK market, for physical sales in each of three sectors: consumer/trade, school/ELT and academic/professional.

In order to estimate the total value of the market at end purchaser prices, provision also needs to be made for the discounts subsequently offered by retailers, wholesalers, library suppliers, etc, to the end customer for each book. Data from Nielsen Bookscan (showing the difference between RRP and average selling price on books sold through retail and online booksellers), are used to calculate these end‑customer discounts.

Estimates of imports of books into the UK from non‑UK publishers are added to the figures derived from the discounting equations, while estimates of sales of UK bookseller exports (i.e. where books invoiced in the UK as publisher home sales are actually sold outside the UK) are subtracted. Calculations of these imports and exports are based on those used in the PA’s Book Trade Yearbook series. Details of the calculations used are shown in Table A3.

Technical appendix | PA STATISTICS YEARBOOK 2014 103 Table A3 Derivation of UK book market size Publisher Minus Publisher’s Discount Sales at end 2013 –14 invoiced sales bookseller discount Sales to end purchaser Plus to UK market* exports** on RRP*** at RRP purchaser# prices imports** 2013 £m £m % £m % £m £m Fiction 275 267 64.2 744 29.0 528 562 Non‑fiction/reference 544 528 64.2 1,474 29.0 1,046 1,113 Children’s 218 214 64.2 598 29.0 425 452 School/ELT 176 176 35.4 273 9.5 247 247 Academic/professional 399 351 41.7 602 14.9 513 666

TOTAL 1,612 1,537 58.4 3,691 25.2 2,759 3,040

2014 £m £m % £m % £m £m Fiction 247 240 64.3 672 26.1 496 528 Non‑fiction/reference 486 471 64.3 1,321 26.1 976 1,039 Children’s 226 221 64.3 621 26.1 459 488 School/ELT 169 169 35.5 262 11.9 231 231 Academic/professional 379 334 38.5 542 13.8 467 607

TOTAL 1,507 1,435 58.0 3,417 23.0 2,630 2,893 * see Table 2.1b ** assumptions based on Book Trade Yearbook 2000 (The Publishers Association, 2000) *** as recorded by the 2013 and 2014 Publisher Discounts surveys # based on data from Nielsen BookScan A4 PA surveys of rights income

Publisher survey

Since 2004, Roger Watson of Statistics Education, on behalf of The Publishers Association, has collected publishers’ income from rights and coeditions, initially every other year, and now annually, to remedy the gap in our understanding of the true scale of UK publishers’ rights income and its constituent elements.

The same questionnaire that has been used for each of the surveys was used for 2014 data. This questionnaire was mailed, with a covering letter, to all those who had completed returns for 2013, plus a selection of other publishers, in the hope of expanding the coverage.

In total, 31 publishers’ imprints completed both the 2013 and 2014 surveys. Imprints have been counted rather than publishers, because practice varies, particularly between the larger groups; for instance, HarperCollins makes one composite return while Oxford University Press (OUP) makes four separate returns. The composition of the group was similar between the two years but not identical: nine imprints dropped out and nine imprints were added. There were also some inconsistencies between the two years in individual returns, making it difficult to calculate increases and declines on a like‑for‑like basis.

104 PA STATISTICS YEARBOOK 2014 | Technical appendix Survey of authors’ agents

Income from the sale of rights is generally split between authors and their agents on the one hand and publishers. For some types of publishing, the author’s share will go direct to the author or more probably the author’s agent. The income that accrues to publishers will usually be split with authors in proportions that are laid out in the publishing agreement. The total picture of rights income from publishing would therefore involve pooling information collected by publishers with information from authors and their agents.

In cooperation with the Association of Authors’ Agents (AAA), Roger Watson sent out a simplified survey to all of their members to collect their 2014 income. As in 2013, UK income was included in the survey questionnaire, but has been excluded from the figures reported here, to avoid double counting with the parallel survey of publishers. Agents were asked to report the total of income received, not their commission on that income.

In total, 45 agents completed the 2014 survey. These 45 respondents represent 45% of the membership but a much larger percentage of the potential income from all agents. The AAA divides its membership into three broad categories: those with three or fewer staff (67); those with more than three and less than 10 (24); and those with more than 10 staff (11).

Of the returns, 22 are from companies with three or fewer staff (33% of their total); 15 are from companies with more than three and fewer than 10 staff (63% of their total); and nine are from companies with more than 10 staff (82% of their total). These two groups of larger companies account for over 95% of the total rights income collected.

It is therefore reasonable to estimate that the total collected will be at least 80% of the potential income from all members of the AAA, excluding their UK income.

A5 PA Journal Statistics Scheme

In July 2013 The Publishers Association started a new annual survey of the members of The PA’s Serial Publishers Executive (SPE) to find out UK publishers’ turnover from learned journals. The questionnaire asked for data on total sales by format (print, electronic, print/electronic bundle) and by type of income (subscription, advertising and other non-subscription income). As it was a new scheme, the first survey started with figures from 2011 and 2012. This survey was repeated in 2014, but as there were new participants in this second survey and a change to the questionnaire to extract the figures for article publishing charges from other non-subscription income, only the two years (2012 and 2013) covered by this second survey have been included in this Yearbook. The participating SPE members account for 70% of journals published by UK-based entities.

Technical appendix | PA STATISTICS YEARBOOK 2014 105 B Exchange rate appendix

Exchange rate changes affecting book exporters by Dr Frank Fishwick, statistics consultant

Both the Bank of England trade-weighted index of exchange rates and that weighted by book exports showed a rise in the first three quarters of 2014, but then fell slightly at the end of the year, when sterling fell against the US dollar and linked currencies, but rose against the euro and the Australian dollar.

B1 Recent history of exchange rate changes

Table B1 shows recent changes in exchange rates particularly relevant to book exporters.

Table B1 Exchange rates: 2000 –14 – – – Currency units per £ – – – Average for period shown US$ Ecu/euro Aus$ Bank of England index Book exports weighted index 2000 1.52 1.64 2.61 100.5 96.7 2005 1.82 1.46 2.39 100.0 100.0 2006 1.84 1.47 2.45 100.9 101.2 2007 2.00 1.46 2.39 103.3 104.0 2008 1.86 1.26 2.19 91.1 92.3 2009 1.57 1.13 1.99 80.6 81.3 2010 1.55 1.17 1.69 80.4 79.7 2011 1.60 1.15 1.55 80.0 79.0 2012 1.58 1.23 1.53 83.0 82.2 2013 1.56 1.18 1.60 81.5 80.6 2014 1.65 1.24 1.83 87.0 88.8

2013 Q1 1.55 1.17 1.49 79.7 79.9 Q2 1.53 1.18 1.47 79.9 79.8 Q3 1.55 1.17 1.69 80.5 82.5 Q4 1.62 1.19 1.75 82.8 85.1

2014 Q1 1.66 1.21 1.85 85.6 87.7 Q2 1.68 1.23 1.80 86.9 88.4 Q3 1.67 1.26 1.80 88.0 89.6 Q4 1.58 1.27 1.85 87.3 89.5

2013 December 1.64 1.20 1.82 85.1 84.6

2014 December 1.56 1.27 1.89 88.3 88.4

106 PA STATISTICS YEARBOOK 2014 | Exchange rate appendix For the “book exports weighted index” changes between 2013 and 2014 are derived from rates with each of 40 currencies, which together accounted for 95% of UK exports of books in 2013. These are weighted by the value of exports of books in that year. The weighted average changes have then been applied to the series derived by a similar process in previous years. This chain-weighting procedure allows for the changing geographical composition of exports.

In Table B1 the index is compared with that for sterling published by the Bank of England (BOE), in which exchange rate changes are weighted by the importance of trade (imports and exports) with each country or group of countries using the relevant currency. The Bank of England index has a base of 2005 and in this year’s report the same base is used for the books-exports-weighted index. The pre‑2005 data, which showed sharp diversion between the two indices, are of diminishing relevance and the use of the 2005 base facilitates analysis of the more recent figures. Values of the BOE index have been taken from the Bank’s current website and take account of revisions in methods of construction.

Divergence between the two indices is mainly explained by the greater representation of the euro in the Bank of England index (47.5% compared with 39% in the book-exports-weighted index); and for the US dollar (weights of 17% and 12% respectively).25 Another major difference is the greater representation in the book-exports index of current or former Commonwealth countries outside Europe, particularly Australia, which in 2013 accounted for 9.8% of total book exports, but had a weight of only 2% in the BOE index.

Figure B1 compares the two indices quarterly from 2005 to 2014.

Figure B1 Exchange rate indicates: Book‑exports‑weighted and Bank of England since 2005

110.0

105.0

100.0

95.0

90.0

Index 2005 average = 100 Books 85.0 Bank of England

80.0

75.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year and quarter

25 It must be noted that the importance of the US dollar in both indices is understated by its nominal weight. Other countries, particularly in the Far East, representing around 10% of books exports, aim to tie their currency to the dollar.

Exchange rate appendix | PA STATISTICS YEARBOOK 2014 107 An evident feature of this graph is the very close correlation between the two indices. This is due mainly to parallel changes in sterling rates against other currencies. Only since mid-2013 has there been any consistent divergence between the BOE index and that relating to exports of books. This divergence is almost entirely due to a rise in the sterling versus Australian dollar rate, which (as data in the summary table show) rose by nearly 26% between the second quarter of 2013 and the final quarter of 2014. Comparison in each quarter in 2005 –14 between the sterling versus Australian dollar rate and the index of commodity prices produced by the Reserve Bank of Australia shows that over 72%of the exchange rate changes can be explained by commodity prices.26 The prices of commodities are very sensitive to changes in world economic growth, currently the subject of much uncertainty.

The rise in sterling against the Australian dollar is the main reason why the book-exports-weighted index fell less sharply than the Bank of England index in the last quarter of 2014. The latter fall was due mainly to a fall of sterling against the US dollar, of 5% by December compared with the average for the previous full quarter. On 8 January 2015, the sterling-dollar rate had fallen further, to $1.51, compared with a 2014 peak last July of $1.72, a decline of over 12%. In contrast sterling has risen marginally against the euro, reaching a recent peak of €1.287 on 2 January.

B2 The likely evolution of exchange rates over the next year

The “efficient markets” theory proposes that the best estimates of future exchange rates are current rates adjusted for relative interest rates. With interest rates very low in most relevant countries, this means that current rates are, at least approximately, the best indication of rates over the next year. This principle is based on the assumption that markets reflect an average of current sentiment about a range of influences. However, analysis of recent comments on exchange rates and of relevant factors suggest that the average value of sterling is more likely to fall than to rise over the coming year.

Traditional economic theory proposes that where the composition of trade between two countries is broadly similar, the exchange rate between their currencies will in the longer term reflect comparative internal purchasing power. This “purchasing power parity” (PPP) theory does not apply to countries such as Australia, where primary commodities account for a large proportion of exports. Calculations based on OECD estimates of PPP for calendar year 2012 and relative inflation figures from 2012 to the third quarter of 2014 imply PPP rates of US$ 1.48 and €1.31 in that quarter. This means that sterling was overvalued against both the US dollar and the euro in mid-2014 and has subsequently moved towards PPP. While these recent changes may not be directly attributable to market recognition of inconsistency with PPP, the principle implies that a return to rates existing in mid-2014 cannot be presumed.

26 In a linear regression of the 40 observations of the two series the correlation coefficient is -0.84 The index of commodity prices is that defined in SDR units.

108 PA STATISTICS YEARBOOK 2014 | Exchange rate appendix The future of the euro remains uncertain. Asymmetry between economic conditions in different member countries continues to hinder the development of an integrated fiscal policy, considered by most economists to be essential for a common currency. Application of “austere” fiscal policies has led to rising unemployment in some countries and a decline in average consumer prices. The external value of the euro has been depressed by fear of one or other of two possible scenarios: (1) the break-up of the currency zone or (2) adoption of very loose monetary policies to offset the lack of fiscal expansion.

Sterling has not risen against the euro as much as the situation in the euro zone appears to imply. This may reflect the worsening UK balance of payments, with the current account deficit expected to amount to 5% of GDP in 2014, compared with a corresponding euro zone surplus of 3%.27 Also, nearly half of UK exports are to the euro zone and so depend on its prosperity. Political uncertainty, with the risk that the general election may not produce a definitive result, may place another brake on the UK currency. A forecast published by Barclays Bank 28 predicts that during 2015 sterling is unlikely to rise above €1.33. This would mean a rate close to purchasing power parity.

The same Barclays forecast predicts that the recent fall in sterling against the dollar may continue at least in the short-term, essentially for the same reasons that sterling is unexpected to rise much against the euro. The Barclays prediction that the US dollar rate may fall to as low as $1.43 must be subject to some doubt; for example, it is difficult to calculate the net effects of possible changes in the price of oil. Similarly, in order to predict the future of the Australian dollar, it would be necessary to predict commodity prices, which have been falling since mid-2013, but may well recover soon in line with a stock cycle.

The fall against the US dollar expected by some observers and the possible levelling of the Australian dollar may mean that the book-exports-weighted index will fall more over the coming year than the Bank of England index, because it is more strongly weighted towards currencies of English‑speaking countries.

27 The Economist 10 January 2015, p84. 28 See www.poundsterlinglive.com/exchange-rate-forecasts/1772-pound-dollar-forecast

Exchange rate appendix | PA STATISTICS YEARBOOK 2014 109 C Trends in the UK school market by level of education

The PA’s Educational Publishers Council collects supply side statistics that record the sales of curriculum‑related learning resources to schools in the UK, but not exclusively through the school channel. The figures represent an estimated 80% of UK educational publishers’ home turnover. The following data have been extracted from this scheme, which is separate to the PA Sales Monitor scheme outlined in A1, to give an insight into the trends within the UK school market by level of education. There has been a step change in the figures as assessment and revision guides have now been included from 2013, so that they are not directly comparable with previous years.

C1 Total sales

In 2014 total sales (print and digital) of the educational publishers within the EPC Survey rose by 1% over 2013.

Figure C1 Publisher sales of curriculum‑related 180 learning resources to UK 14 school market 160 12 10 16 18 Vocational 140

120 74 Secondary 80 76 100 83 85 Primary £m 80

60

40 76 75 80 60 51 20

0 2010 2011 2012 2013 2014

110 PA STATISTICS YEARBOOK 2014 | Trends in the UK school market by level of education C2 Primary sales

Primary sales in 2014 were 6% higher than in 2013, with a 2% increase in print sales and 51% growth in digital sales.

Figure C2 Publisher sales of curriculum‑related 100 learning resources to primary schools

80

Total 60 Print £m Digital 40

20

0 2010 2011 2012 2013 2014

C3 Secondary sales

Secondary sales fell by 2% in 2014, due to a 4% decline in print sales which was not offset by a 20% increase in digital sales.

Figure C3 Publisher sales of curriculum‑related 100 learning resources to secondary schools 80

Total 60 Print £m Digital 40

20

0 2010 2011 2012 2013 2014

Trends in the UK school market by level of education | PA STATISTICS YEARBOOK 2014 111 C4 Vocational sales

Total vocation sales declined by 16% between 2013 and 2014, with a 16% fall in print sales and a 14% increase in digital sales.

Figure C4 Publisher sales of curriculum‑related 20 learning resources to further education (vocational) colleges

15 Total

Print

Digital £m 10

5

0 2010 2011 2012 2013 2014

112 PA STATISTICS YEARBOOK 2014 | Trends in the UK school market by level of education D UK higher education textbook market by category

The PA’s Academic and Professional Division collects supply side statistics that record the sales of higher education textbooks to students and universities. The figures represent approximately 80% of UK academic publishers’ home turnover. The following data have been extracted from this scheme, which is separate to the PA Sales Monitor scheme outlined in A1, in order to give an insight into the UK higher education textbook market by category.

D1 Total sales

Total sales of the academic publishers within the APD Higher Education Textbook Survey fell by 6% between 2013 and 2014, and by 7% over the five‑year period. Digital sales accounted for 12% of total sales in 2014.

Figure D1 Higher education textbook sales 120 by category

5 100 Other 5 5 6 9 4 5 4 6 4 4 Education 9 80 14 9 15 12 Creative arts / Languages / 13 Humanities 14 13 12 60 Human / Social sciences £m 42 Business / Economics / Law 37 34 33 33 40 Sciences / Engineering / Mathematics / IT

19 Medicine 20 16 17 15 15

11 10 10 11 10 0 2010 2011 2012 2013 2014

UK higher education textbook market by category | PA STATISTICS YEARBOOK 2014 113 114 PA STATISTICS YEARBOOK 2014 | | PA STATISTICS YEARBOOK 2014 115 UK £75.00

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