Canelo / Arts Council England

Canelo / Arts Council England | 
24

Literature in the 21st Century: Understanding Models of Support for Literary Fiction
sharing or collaboration with larger publishers would be immensely 
helpful, but was unlikely in the current market to occur, not least 
because of the time pressure on all concerned. 
The general situation, then, is for consolidation at the top, inversely 
mirrored by a flourishing of new small independents. Whether large 
or small, however, the economics for publishers remain challenging. 
We have seen that sales and prices are both down; what this doesn’t 
capture is the publisher-side costs and challenges. One publisher gave 
us an indication of their cost structure. Production costs on a paperback, 
including cover and typesetting, tended to work out at around £1.80 per 
unit on a print run of 1000 to 2000 copies, normal for a typical literary 
fiction title (not a break out or a big name). The books then retail at 
£7.99 to £8.99, and big retailers typically take a percentage of between 
50% and 57.5% of the cover price. This, however, would only be on a 
small order of around 400 copies. Orders above this number from the 
big chains tended to carry an even higher percentage. Often the retailer 
would ask for a ‘retro’ – that is, a further sum to be paid by the publisher 
on each copy sold. This could be up to 75p per unit. Discounts as high 
as 68% were not unheard of. 
And all of this is before returns are factored in. Bookselling operates 
under an unusual system of sale-or-return, whereby if a book 
doesn’t sell, the bookseller is able to return it to the publisher and 
be reimbursed (within a certain time frame). Unlike most industries, 
financial and inventory risk is here loaded onto the producer rather 
than the retailer. The idea was that this would encourage retailers to 
stock new and untested books – but the system can be catastrophic 
for publishers, with returns of a half to two-thirds of sales not unusual 
according to those we spoke to. This figure is not uncontested: in an 
interview with the writer Jorge Carrión, James Daunt, the Waterstone’s 
boss, claims that Waterstone’s returns have ‘gone from 27 to 3 per 
cent and my aim is nil.’
14
While no one we spoke to in publishing cited 
returns levels this low, there was certainly a feeling that Waterstone’s 
new buying practices had contributed to lower returns, although this 
came about because their initial orders were lower. 
Factor in, as well, that small publishers will have to pay distribution and 
sales fees, which were quoted to us as around 25% of sales and the 
situation is clearly challenging, even before marketing costs, writers’ 
advances and overheads are considered. 
The mathematics of literary publishing are, then, exceptionally tough. 
Say you’ve printed 2000 copies of a book by a debut author. You get 
lucky and sell 600 to a major chain. This, after discount, nets the 
14
Carrión 2016, p205

---