80-20 rule in publishing, decline in 16-24-year-old readership
In the cuthroat publishing business, according to this Financial Times story, publishing houses rely only on a few titles to break out and make them money (like the venture capital and music business):
[A]ll publishers are focusing on new titles - particularly authors with guaranteed fans - because retailers want to stock fewer titles that they know they can sell....For many years, publishing has lived by the "80-20 rule" - whereby 80 per cent of the revenues are earned by 20 per cent of the authors. "Most novels and books in general don't make money and it's always been relatively few authors who made a great deal," says one London literary agent.
...children's books have emerged as the fastest-growing area of the global consumer books market, worth a total of $45bn. According to Merrill Lynch, the US investment bank, the market for children's books has increased at a compound rate of 8 per cent in each of the past five years, compared with a 0.7 per cent annual decline for the industry overall. Even the profitability of children's books, however, is under pressure with the growth of the internet.
More worrying, there has been a steady decline in readership among the crucial 16-24-year-old age group. Some publishing groups fear that industry could be facing the same sort of problems seen in the music sector, where the proportion of under-25s buying recorded music has fallen by 15 percentage points in the past two years. "Among book buyers only 5 per cent are now in this 25 or younger segment," says the chief executive of one publishing group. "I can't believe readership levels will go up in this area."
...At Random House, the world's largest book publisher, author costs have reached 25 per cent of net sales. The company, which publishes 3,500 new titles a year, insists it has no plans to cut back on advances. But it is also one of the lower-margin publishers, at 2.2 per cent compared with 18.5 per cent at Harlequin.