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MARCH 1960 O f the Making of Many Books Philadelphia Office Buildings in 1 9 6 0 Bank Earnings in 1 9 5 9 OF THE MAKING OF MANY BOOKS PREFACE For all that, book publishing is a singular industry. It is listed in the Census as a manu Johnny can’t read, and his parents don’t read— facturing industry but it does very little manu or so it is alleged. Then why is book publishing facturing. It feeds many presses but does very such a robust business? little printing. It pays millions in royalties but Last year about 15,000 new books and new supports few authors. The industry is a strange editions appeared on the market. People spent mixture of specialization and diversification, of over a billion dollars for a huge stack of books old firms and new, of big concerns and little, of close to a billion copies high. Surely, not all of modern methods and antiquated. There is no these books were bought for mere cultural “ average” publisher or an average output or adornment of homes or to raise Johnny’s chin average profits or an average reader. The in above the top of the dining table when he goes dustry defies the law of averages and thrives on visiting. inconsistencies. Its structure is complicated; its Over half of the people on the interurban on their way to work have their noses in the morn distributor system is loose-jointed, and its cus tomers are fickle. ing paper; most of the others sit with their Book publishing is an art, a craft, and a faces in neutral; three or four will be reading a gamble. As a business it is easy to get into, hard book. Yet the book business is flourishing— not to stay in. It’s a curious calling— an altogether exactly booming, but flourishing. Book produc amazing industry, fearfully and wonderfully put tion is on the increase; sales are rising; more together but somehow it works. publishers are entering the business, and some are making money. CHAPTER 1 Book publishing has been called “ the industry that capitalism forgot.” But the industry is no A SMALL BUT SIGNIFICANT INDUSTRY longer a stranger to Wall Street. Mergers are in The book business belongs to the family of in the headlines; privately owned companies are offering stock to the public, and old-line pub dustries called Printing and Publishing. Over lishers are expanding with the aid of capital publishing, book publishing is not a large in raised through new stock offerings. dustry judged by conventional measures of size. 2 shadowed by both newspaper and periodical business review The dollar value of annual output is only a encyclopedias were a close second. The two to fraction of 1 per cent of the national income. gether accounted for over half of the sales All of the industry’s employees could be seated in revenue. The book clubs did almost $100 million a football stadium with room to spare. The total of business, and sales of both juveniles and payroll is not particularly impressive and the paperbacks exceeded $50 million each. industry consumes but a small proportion of In physical volume, paperbacks ranked first, as might be expected, but it may be surprising the output of the paper manufacturers. Yet no one would question the importance of to find that juveniles outnumbered textbooks. the industry founded on Gutenberg’s invention The three classes together accounted for well of movable type. By its very nature the book over half of the total number of copies sold. publishing industry makes an inestimable con Adult trade books are literature for the general tribution to our cultural and educational ad reader— the stock-in-trade of the bookstores and vancement for the enrichment of our lives in book sections of department stores. innumerable ways. As an integral part of the free press, the industry serves the public by CHAPTER 2 facilitating the expression of ideas—-good and bad, conventional and controversial— on sub THE MULTITUDE OF PUBLISHERS Publishers are about as numerous as the fish in jects of every conceivable kind. Each year the industry puts out an astonishing the sea, and as diverse in size as sharks and variety and volume of books. For a comprehen shiners. Publishers’ Weekly, in its January 1960 sive summary we shall have to be content with Annual Summary issue, lists 382 publishers, the 1957 record, the latest available, shown in each of which issued five or more books last the table. In that year publishers sold over 800 year. To this must be added another group of million copies for more than $900 million. small and less active publishers numbering in Textbooks held first place in dollar sales, and excess of 400 enterprises. The University presses SALES OF BOOKS BY PUBLISHERS, 1957 (In millions ) ~ , Number Dollar U a t e q o r y r • • , ________ ^______[________________________________ot copies_________ receipts Textbooks (including workbooks) .................................................................. Encyclopedias ................................................................................................ Book Club b o o k s ............................................................................................ Business, technical, and scientific books* .................................................... Adult trade b o o k s.......................................................................................... Juvenile b o o k s................................................................................................ Pap erbacks...................................................................................................... Bibles and other religious b ook s.................................................................... University Press books (excluding textbooks)................................................ Other b ook s.................................................................................................... 158.5 58.3 67.0 21.7 32.3 166.9 240.2 51.3 2.0 23.5 $259.5 223.7 98.1 73.7 67.0 57.9 52.6 44.1 5.9 36.5 ____________ T o t a l..........................................................................................~ 821.7 $919.0 * Including law and m edical books (except textbooks). Source: Frase, Robert W ., "E co nom ic Development in Publishing," Library Trends, Vol. 7, No. I, Ju ly 1958. 3 business review issue scholarly works primarily but not exclu sified line of books and some of them also sively. Books are also published by religious publish periodicals and operate book clubs. societies, With so many publishers in the field, you foundations and public service institutions, and would expect the business to be very competitive bodies, professional and technical other nonprofit organizations that nevertheless — and it is. Despite recent mergers, the five make some inroads on the publishers that are in largest companies together produce only 12 per business for profit. There is yet another type of cent of the output. The industry is a “ free-for- publishing known as “ cooperative,” “ subsidy,” all.” Anyone can enter the competitive arena, or “ vanity” publishing where the author instead where survival depends upon a lot of know-how of the publisher assumes the risks. These houses and some luck, but many have failed to make publish graduate theses, local histories, geneal the grade. Indeed, book publishing is one of ogies, and manuscripts of too limited appeal to the best surviving examples of classical com interest the commercial publishers. If publishers of all kinds and shades are taken petition. Publishing is an urban industry and New into consideration, the total runs in excess of York City is its unchallenged center. Most of 1,200 enterprisers. It is the 800, however, that the large concerns are located there, as well as are the risk-assuming, royalty-paying publishers many of the smaller firms, and some of the lead which make up the industry in the commonly ing publishers with headquarters elsewhere have accepted sense of the term. Of these, the upper a New York office. The major attraction of New half put out 90 per cent of the new books. Some York is an abundance of skilled workers, authors, indication of their diversity in size is shown in agents, editors, copy editors, designers, printers, the table. proofreaders, illustrators, advertisers, and the whole gamut of technical skills indispensable to NEW TITLES AND NEW EDITIONS IN 1959 BY SIZE OF PUBLISHER N u m b er of publishers Size of publisher 100 50 25 5 or more t it le s .......... to 9 9 t it le s .............. to 4 9 t it le s .............. to 2 4 t it le s .............. 32 N ew books published 5,3 81 publishing. Although New York has a “ half nelson” on the publishing industry, the industry is well represented in other leading cities such as Boston, Philadelphia, Baltimore, and Chicago. Philadelphia has about a score of book pub ... 46 3 ,2 0 7 lishers, 67 . . . 2 ,2 9 2 houses. Lippincott, which leads the local pub 237 2 ,5 8 6 382 1 3 ,4 6 6 Source: Publishers' Weekly, Vol. 177, No. 3, Ja n u a ry 18, I960. including some well-known, old-line lishers in number of titles published last year, traces its origin to the late 18th century. Saunders, and F. A. Davis specialize in medical In the top bracket are the large corporate con books, as does Lea and Febiger which was cerns, 32 in number, each of which published founded in 1785 and has the distinction of being 100 or more books and together accounted for the oldest publishing house in the country. over a third of the total output. Among the very Winston publishes a variety of books with, how largest are familiar names such as Doubleday, ever, considerable specialization in textbooks. Harper, McGraw-Hill, Macmillan, and Prentice- According to a recent announcement, the com Hall. Most of the big publishers put out a diver pany is merging with Rinehart and Holt. Chilton, 4 business review a publisher of periodicals, now has a rapidly indefinable flair, intuition, or whatever it takes growing book division, including a varied line to determine what the public will buy. of textbooks, trade books, and books on arts When a manuscript is accepted, the publisher and crafts. Philadelphia has long been a medical enters into a contract with the author specifying and Bible publishing center but the trend is royalty payments, publication date, and related toward greater diversification. details. In some instances the author is requested to make alterations, minor shifts in emphasis CHAPTER 3 here and there, or major surgery if the piece is too long. Advice to the author may be specific JUST WHAT DOES A PUBLISHER DO? or it may be general— like the publisher who Publishing is to “ make public,” that is, to make returned to a name author his latest manuscript available the words and pictures created by an with a notation: “ Too good not to be made author and duplicated by the printers. The book perfect.” publishers’ work falls into three major categories: In making his list, the publisher usually en first, making a list; that is, selection of the deavors to obtain a balanced line. It would be manuscripts. Second, getting the books manu unwise, for example, to have two biographies of factured; and, third, getting the books sold. the same herb or to go too heavy on fiction. The publisher’s list often looks like a literary smor Making the list gasbord consisting of biography, fiction, text The publisher is obviously in business to make books, medical books, travel books, juveniles, etc. money, so it is very important to select manu scripts that will sell when they appear in book Books in the making form. Authors, or would-be authors, are even Before manufacturing begins, the publisher’s more plentiful than publishers, so there is seldom copy editor prepares the manuscript for the a shortage of manuscripts. printer with detailed instructions as to type of With respect to books intended for the general paper, typography, margins, captions, illustra reader, most manuscripts reach the publisher tions— all the myriad details that the author of through an intermediary— the literary agent. He a first manuscript never dreamed about. knows the publishers, their likes and dislikes, and Publishers no longer do their own printing; knows his way around the manuscript they farm it out to job printers. Modern high market. Sometimes, however, the publisher has speed presses are very expensive and require an a hunch and seeks an author to write a particular investment that most publishers gladly avoid. kind of book. A large publisher, as publishers Formerly when publishers had their own print go, may have several thousand manuscripts sub shops they were sometimes tempted to accept mitted to him in the course of a year. The manuscripts are submitted to a group of inferior manuscripts against their better judg ment to keep the presses operating at capacity. expert readers who pass judgment on the quality Printing is for printers; publishers have enough — the marketability. Those selected by the readers problems of their own. are submitted to the editorial board, over which Binding is the physical job of bookmaking, the editor-in-chief presides. He must have that which most publishers also farm out to concerns 5 business review that specialize in this type of work. Like print appearance of paperbacks and book clubs, trade ing, binding is a separate business which has books were hard-cover books sold primarily by undergone considerable mechanization and can the country’s bookstores, or the book depart be performed best by specialists. ments of department stores. Selling books the impression that trade books are easy to sell. The publicity that best sellers get may give Selling a book is the hardest part of publishing. On the contrary, trade books are just about the This is well expressed by Sir Stanley Unwin’s paraphrasing of a German poem: “ To write hardest thing in the world to sell because there are so many titles and so few stores. books is easy, it requires only pen and ink and Trade books are the most prolific in the num ever-patient paper. To print books is a little ber of new titles and new editions appearing each more difficult because genius so often rejoices in year. Last year, for example, publishers brought illegible handwriting. To read books is more out 2,437 new books and new editions in the difficult still, because of the tendency to go to category of fiction alone. Heading the list of sleep. But the most difficult task of all that best sellers was Leon Uris’ “ Exodus,” a story of mortal man can embark upon is to sell a book.” the making of modern Israel. Over 350,000 For books in the general field of literature, hard-bound copies were sold. The second best selling begins long before the book is ready for seller was Boris Pasternak’s “ Doctor Zhivago,” sale. Salesmen on the road bring to the attention with sales of over 200,000 copies; and third was of the trade the publisher’s forthcoming books, James Michener’s “ Hawaii,” with sales of close and on the basis of advance orders and early to 200,000 copies. The last on the ten-best- reception the publisher must decide how many seller list of fiction was Robert Ruark’s “ Poor copies are to be printed— a decision which has No More,” with sales over 60,000 copies. Among to be made in advance of the actual printing and all the authors and their publishers that didn’t bookmaking. In making the decision, the pub make the top ten there were mild and serious lisher is also guided by the reception of the re disappointments. viewers to whom advance copies have been sent. depending on the type of book and the particular “ Where in the [world] would you go to buy a book?” market for which it is intended. Consequently, The late A1 Smith’s classic remark summarizes Books reach their readers in different ways, major channels of marketing may be observed another difficulty in selling trade books— the along with an analysis of the major types of scarcity of book stores. It is hard to say just books published. how many book stores there are because there is conflicting evidence. The American Book Trade CHAPTER 4 Directory lists about 8,500 retail book stores; another source says about 1,450 by generous TRADE BOOKS count; and the industry estimates about 500 Trade books are a heterogeneous assortment of adequately stocked book stores. This is in con fiction and nonfiction for adults and constitute trast with 6,000 cigar stores. It is quite apparent the heart of the publishing industry. Prior to the that it’s easier to buy a cigar than a book. 6 business review The quest for profits last year’ s sales approximated 300 million copies. In the publication of adult trade books the quest Paperbacks have been one of the fastest growing for profits encounters numerous hazards. Costs branches of the book business. have a way of creeping upward and the revenue In the United States, paperbacks have a longer from sales is unpredictable. It has been said that history than is generally realized. They first the returns in this branch of the industry are sprouted in the 1830’s when magazines began almost as irregular as those of a theatrical serializing fiction, and soon thereafter issued producer. whole novels in pamphlet format for newsstand The difference between profit and loss in a sale. The next step was the issue of fiction, with publisher’s general book department is often in out separate wrappers, as newspaper supplements the income from rights. Supplementary revenue and magazine is frequently derived from the sale of rights to through the mail. This, the first wave of paper inexpensive reprint publishers (paperbacks), to backs, came to grief around 1845 when postal book clubs, and to magazines for serialization. regulations imposed book rates on these “ extras” One of the most successful postwar publica extras to permit distribution and “ supplements.” tions was “ The Egg and I.” That humorous story Paperbacks emerged again in the 1860’s and about the chicken business appeared right after precipitated an avalanche of “ dime novels” like the end of World War II when paper was still “ Buffalo Bill,” “ Nick Carter,” “ Diamond Dick,” scarce and the public, apparently relaxed from and “ Klondike Kid.” The Westerns degenerated wartime strains, was ripe for a humorous piece. Sales began to soar like a homesick angel and into cheap crime, detective, and mystery stories, although the works of some top-ranking authors the publisher was kept busy scrounging paper by like Dickens, Scott, and Thackeray were also the carload for the printers. Sales of the original included. Nevertheless, stern and none-too-dis publisher’s edition plus book club sales went over criminating parents forbade their children to read books without hard covers. The second 1 Y> million copies. wave of paperbacks, based largely on literary CHAPTER 5 piracy with complete disregard for royalty pay ments, came to a sudden end in 1891 when PAPERBACKS STAGE A COMEBACK America passed its first Copyright Act. Paperbacks, according to Bennett Cerf, are the The current flood tide of paperbacks began greatest invention since corn flakes. Unlike trade with Mercury Books in 1937 and was refined by books, paperbacks are reprints, for the most Pocket Books in 1939 when these firms began part, and are produced in pocket size on high selling their paperbacks through magazine mar speed automated presses and binderies that turn keting channels to department stores, drug stores, them out at the rate of 12,000 an hour. They and newsstands, thereby bypassing the regular are distributed through a multitude of out book trade outlets. Shortages of paper, machin lets like magazines, and sell for the price of a ery, and labor held paperbacks in check during movie ticket or less. Publishers turned out 240 World War II. After the war, new firms entered million in 1957, which yielded them a revenue the field and sales multiplied with the aid of in excess of $50 million, and it is estimated that “ sexsational” covers in color and a multiplicity 7 business review of sales outlets. By 1950, paperbacks had about “ High-brow” paperbacks 100.000 outlets in such places as drug, candy, And now paperbacks are going high brow and and variety stores, railway, bus, and airplane higher priced. As college and high school en terminals, newsstands and, more recently, super rollments have grown faster than the financial markets. With so many retailers, a run-off of resources of students and teachers, another 200.000 copies of a title achieves a complete market has opened. Higher grade paperbacks are sellout if only two copies are sold at each outlet. eagerly serving this market. Titles are serious, The success of paperbacks rests largely upon the huge number of outlets which permits mass Scholarly, sometimes avant-garde. In contrast with the mass paperbacks, the quality paper production at low unit cost and a low selling backs are printed on better paper, are bound in price. The basic costs of producing a paperback attractive covers, with modernistic design, are are the manuscript or reprint rights, editing, put out in smaller quantities, and sell at some typesetting, plate making, layout, and design. what higher prices. Prices range from 85 cents These costs remain nearly the same for a run of to $2.95 a copy, in contrast with a 35-cent to 5.000 90-cent price range for the mass-market paper or a quarter-million copies. Paper, print ing, and binding are only a small percentage of backs. This time, paperbacks seem to have come to the price of the book. The popularity of paperbacks rests on their stay and they have already had a far-reaching small size and low price. The 25-cent paperback, effect on the book trade and the reading public. however, is on the way out because publishers Today there are about 100 producers of paper of paperbacks have been facing ever-rising costs, backs, including some University presses. the same as all other publishers. Reprint rights in particular have been rising. One publisher C H A P T E R 6 recently paid $265,000 for the reprint rights of BOOK CLUBS a popular hard-back novel. Heretofore, paperback publishers “ mined” A book club is just another way to sell books. the extant literature but with the approach of de It is, in effect, a mail order book store that uses clining reserves some paperback houses are en Uncle Sam’s 36,000 post offices to sell books that gaging authors to write a paperback and then go directly from the printing presses to the arrange with a trade house to publish first a doorstep of the customer. First in the field was hard-cover edition which is then followed by the the Book-of-the-Month Club, organized in the paperback edition. Instead of publishing “ hidden mid-twenties. Now there are about a hundred originals,” the publication of original fiction in clubs and they sell annually about $100 million paperbacks has also been tried, but all too often worth of books to their more than 7 million sales failed to catch up with costs. Paperbacks members. seem to do best when riding hard-cover editions Some sell general literature after the pattern “ piggyback.” Paperback publishers have also ex of the pioneer club and others restrict their perimented with the simultaneous release of selections to specialties— for example, classics, original fiction in hard-cover and paperback mysteries, travel, history, art, biography, re editions with some success. ligion, drama, or Irish literature. There are also 8 business review mately the cost of extending membership may book clubs for juveniles. Publishers were originally hostile to the book become prohibitive, the rate of rejections may clubs, but this wore off as the clubs prospered become too high, and in the case of the highly and publishers gained financial advantage from specialized or limited club the supply of titles the sale of reprint rights to the clubs of growing becomes membership. Now a number of the clubs are cesses of some of the leading clubs, book clubs exhausted. Despite outstanding suc owned and operated by the publishers. One of have surprisingly high mortality-—just another the big publishers operates 21 book clubs, and evidence that it’s hard to sell a book. there are about a dozen firms that operate two or more clubs each. It is estimated that most of the CHAPTER 7 book club business is concentrated in 70 clubs TEXTBOOKS NEED NOT BE DULL operated by 27 publishers. Book clubs operate according to a fairly uni Think back, if you can, to your school days. form pattern with, of course, minor variations. Remember your history book— black and white Preliminary screening of books is usually done with a plain grey cover; the arithmetic book— by a special staff or outside readers, and final black and white with a plain brown cover; the selection of books for adoption is made by spelling book with columns of words in black either a committee or a staff editor. Arrange and white and a plain buff cover. And you ments are made with the publisher of the selected thought summer vacation would never come. book for rental of plates on a royalty basis and Not so with modern textbooks; they are bright the book is then published in the book club’s and cheerful looking jobs, durably constructed, own edition or the publisher’s original edition. handsomely gotten up, beautifully printed, gen Royalties, which are split with the author, run erously illustrated, and abound in bright colors from 5c to 15c a copy and are said to account including the covers. Even algebra has gone for about half of the “ subsidiary” income to artistic. The publication of textbooks, which include publishers. To build up membership, book clubs in their workbooks, is one of the largest and the fastest advertising stress the prestige in belonging to a growing branches of the book industry. The big club by pointing out that their members receive wartime jump in the birth rate created an ex the best books culled by their staff of experts. panding market for textbooks, first in the ele They also lay stress on price appeal by offering mentary schools, next in the high schools, and books priced below that of the original edition finally in the colleges. Yet, in accommodating (which they can do by reason of their large the bulge in the school-age population, the volume of distribution), and they also offer book budgeting for buildings has frequently left in “ premiums” sufficient funds for books. Nevertheless, dollar for joining and periodic book “ dividends” as a reward to stay joined. sales of textbooks to elementary schools and high Operating a book club is not so easy as it may schools (known in the trade as “ elhi” sales) have sound. Changing interests of subscribers result more than tripled in the postwar period, and in a constant attrition of membership which re sales of college textbooks have almost doubled. quires a perpetual drive for replacements. Ulti There are at least 75 textbook publishers, con 9 business review sisting for the most part of the larger com from the campus book store, which may or may panies. Textbook publishing has peculiarities of its not be operated by the college. On their rounds, own. The authors, though specialists in their particularly among the authorities in their respec respective fields, are frequently inexperienced tive fields. the travelers are on the alert for manuscripts, writers; therefore there must be close coopera The textbook market is alluring. It is large, tion between author and publisher. Unlike a sure, and growing. By 1970, elementary school trade book, a textbook with its diagrams, tables, enrollment is estimated to increase by more than illustrations, symbols, and special notation pre one-fourth, high school enrollment by more than sents a more difficult job of make-up. The publi half, and college enrollment almost double. But cation of textbooks also requires more capital there will be plenty of competition among the than the publication of a trade book and that is textbook publishers already in the business to why the larger companies predominate in the which others no doubt will be attracted. textbook field. A publisher may have a million dollars or more invested in an elementary series CHAPTER 8 of six textbooks before the first sale is made. WHAT’S THE ANSWER? Besides, the marketing of textbooks is different. In the marketing of “ elhi” books, the cus Knock, knock! “ W ho’s there?” “ The encyclo tomers don’t do the buying and the salesmen pedia man.” That’ s one of the oldest ways of don’t carry order blanks. The publishers have selling books, and the salesmen who canvass roving salesmen, called “ bookmen,” who pound their territory and sell encyclopedias by sub their beat from September to June, calling on scription do a good job. Publishers’ sales of the school authorities to stir up interest in the encyclopedias and related reference books hold publisher’s wares. The firm follows up with second place in dollar volume of annual sales, mailed promotion material and sample copies. ranking just below textbooks. The method of selection varies. Some states have Encyclopedias are the Cadillacs of the book uniform adoption where selections are made on a trade. They usually come in sets from 10 to 30 state-wide basis; others use the so-called “ multi volumes, and sell from $60 to $600 a set. William ple list” in which each school district makes its Jovanovich, in “ The Structure of Publishing,” choice from a list of perhaps a half-dozen differ says the publishing of reference books is “ an ent textbooks; still others use the “ open list” altogether mysterious pursuit.” He points out where each school district selects textbooks with that whereas trade books are the products of out any restrictions. The sales that follow are amateurs and textbooks are the products of made on a wholesale basis. amateur-specialists, encyclopedias are the prod College textbooks are sold in a somewhat dif ferent way. The publisher’s representatives, ucts of pros. The authors are top-ranking authorities in known as “ travelers,” call on the college pro their fessors to acquaint them with the books suitable amount of work goes into the publication of an for texts in their courses. The professor makes encyclopedia, and the finished product is in most the selection and his students buy the books instances a scholarly work of the highest order 10 respective specialties. An unbelievable business review and good bookmaking. The publisher of an en in 1919 by one of the leading publishers and cyclopedia may run off 100,000 to 400,000 copies others were quick to follow. Women play a and tie up an immense investment in advance of prominent role not only as authors but also as sales. In this business there are about 20 firms editors of children’s books. of considerable size, with smaller firms frequently Juvenile books now gross about $60 million appearing and disappearing. About 90 per cent annually and there are about 100 publishers of the business, however, is accounted for by either specializing in children’s books or with a half-dozen major publishers. Revising and specialized keeping an encyclopedia up to date presents a books yield from one-third to two-thirds of the major problem. The editor of the Britannica total revenue of some of the leading book pub said some time ago that the yearly editorial lishing concerns. budget runs over SIV2 million and a complete revision runs $5 million to $10 million. juvenile departments. Children’ s One of the basic reasons for the rapid growth in publication of juveniles in the postwar period is, of course, the rapid growth of the child popu CHAPTER 9 lation. Contributing factors have been the growth of school libraries, the improved quality and ONCE UPON A TIME attractiveness of books, the greater awareness of One of the fastest growing branches of the book parents and schools of the need and value of business is children’s books. The dollar volume books for children, the prosperity of the times, of juvenile books is now three times what it was mass production and distribution of attractive at the beginning of the postwar period, and the and inexpensive books, and more research in number of children’s books published each year children’s preferences in books. In the course of a year the juvenile editor of is exceeded only by paperbacks. From the appearance of John Cotton’s “ Milk a publishing house may receive as many as 1,000 for Babes, Drawn out of the Breasts of Both manuscripts, most of them unsolicited. For in Testaments,” in 1646, which was the first chil expensive juvenile books, authors usually receive dren’s book published in this country, down to a lump sum payment ranging from $100 to $500 the second half of the 19th century the Puritan a manuscript, and for the higher priced juveniles strain dominated children’s books. Mark Twain the customary royalty is 10 per cent of the retail in his “ Tom Sawyer,” published in 1876, “ car price. ried realism across the tracks,” in the words of How juvenile books are sold depends upon the one authority on children’s books. Some of the price. Children’s books fall into two categories— other writers of his period whose books brought those that retail at a dollar and over and those joy to the hearts of children were Louisa May that sell for less than a dollar. The principal out Alcott, Joel Chandler Harris, Thomas Bailey lets for the juvenile books that sell at a dollar and Aldrich, and Kate Douglas Wiggin. The full up are the book stores, book sections of depart potentialities of the market for children’s books, ment stores, and the schools and public libraries. however, was not appreciated until the decade of Teachers and librarians are the biggest buyers. the 1920’s. The first department devoted to the Their purchases account for about 85 per cent of production of children’s books was established the total. The principal outlets for juvenile books 11 business review selling for less than a dollar are supermarkets, there may be a fad for books about the Civil drug stores, newsstands, variety stores, candy War, then travel books or biographies may come and stationery stores, mail order houses, and also into popularity. “ Do-it-yourselfism” created a the regular book channels. demand for the how-to books. At the manuscript- Unlike most adult best sellers that shoot up selecting stage of publishing, about the best the across the sky like a comet and then disappear, publisher can do is to navigate by the seat of his an established juvenile book may sell 15,000 pants and hope that in the making of his list he copies or more each year over many years. The will have books which when they appear on the publication of children’s books is faced by the market will win, show, or place. problem of rising cost of production, finding The acceptance of a book is also influenced by good manuscripts, and producing books that ap how it is gotten up— its design, the paper, the peal to both the children that read them and the typography, the binding, the jacket, the advance librarians, teachers, or parents who buy them. advertising it receives and what the reviews say The most favorable prospect for this branch of about it. The final test, however, comes when the the industry is its rapidly growing market. book hits the market. If it is a trade book with $5,000 of the publisher’s money invested in it up CHAPTER lO to that point, it is a $5,000 market research project. If it is a textbook or a reference book PUBLISHING IS MARKET RESEARCH IN ACTION with a half-million-dollar investment, the pub lisher has embarked on a half-million-dollar re All industries engage in market research to in search project. If the book goes over better than crease the sale of their products, and in the proc the publisher had expected, he orders additional ess some industries meet with more success than printings; if he overestimated the market, he has others. What distinguishes the book publishing gained more experience. industry is not that it engages in market research but that it is market research in action. Publishers are forever striving to improve the effectiveness of their market research. In the For the publisher, market research begins field of textbooks, one publisher has invested a with the selection of the manuscript, and it ends million dollars in a new elementary textbook with the return of the remainders— the unsold series with a minor mystery on every page de books. (No motor manufacturer takes back the signed to stimulate thinking. Another has devel cars the dealers can’t sell.) Ocean-bound garbage oped an inventory control plan for his dealers scows have been used to assist publishers in the in which day-to-day reports of sales are fed into process of inventory liquidation. computers that yield accurate estimates of the Selecting a manuscript is like betting on a potential of each book on the company’s list. horse, only the stakes are higher. No one really Along with an enlarged force of salesmen making knows why one book sells better than another, more frequent calls on the book stores, the com not even the experienced publisher. There is pany sees that the retailers’ shelves are well- nothing to account for the reader’s taste, and it stocked with fast-selling items. changes from time to time. In books, as in ap Publishers know very well that one of their parel, there are styles and fashions. For a time major difficulties in marketing books is that only 12 business review a small percentage of people read books. A recent when the pictures are uninteresting, people turn Gallup poll revealed that only 17 per cent of to reading. And they don’t have to read the adults could say that they were “ currently” read commercial on the jacket. ing a book. No, it can’t all be blamed on tele Despite all of its handicaps, the industry just vision because the English have “ tele” too and completed its biggest year of sales. The number in Great Britain half of the adults are book of publishers who entered the industry last year readers. In fact, some publishers believe that TV exceeded the number that withdrew, and people helps more than it hinders the sale of books. who like to read welcome the publishers’ new TV, they say, helps to keep people at home and spring lists. 13 PHILADELPHIA OFFICE BUILDINGS IN 1960 More 6 Elbow R o o m 9 Favors Expansion and “ Trading U p9 to 6 9 9 Better Quarters. From the end of World War II until the mid- created space came in each of the following two nineteen fifties commercial space in central Phila years. delphia office buildings could be described by for comfort. Some tenants wanting to expand Office building space is at an all-time high found themselves stalled; others desiring more By early 1960, total commercial space in center just one word— tight. And it was much too tight modernized facilities quickly discovered that next city office buildings had reached the record-high to nothing was being offered. Little new con level of almost 11.8 million square feet. There struction had been completed in this period and now was “ elbow room” and some to spare, with several companies had taken over entire buildings the rental lists of building managers offering a for their own use, thus reducing the supply of choice of space unequaled in nearly two decades. commercial space on the rental lists. About 75 per cent of the space added from 1956 This situation, however, was completely re through 1959 was in four brand new office versed when a postwar office-building program buildings. The remainder was created by the began paying off a year or so later. Beginning conversion of five existing buildings that had with 1956, new space in downtown skyscrapers been originally designed for purposes other than came on the market at a somewhat faster rate business or professional offices. than it could be absorbed. The pace accelerated Some additional space came on the rental in 1957 and successive large increases in newly market in the closing years of the 1950 decade 14 business review ployees moved into their own newly completed The rise in occupancy has tapered off buildings. These moves also had an appreciable During 1956 and 1957 occupancy showed pro impact on occupancy since they created vacancies nounced increases, very nearly matching the rate in existing buildings which had to compete with at which new space was coming on the market. when a number of companies and State em all the new space resulting from the building Since then, however, the trend has become rela program. tively static. An occupancy rate of around 90 COMMERCIAL SPACE IN PHILADELPHIA OFFICE BUILDINGS MILLIONS OF SQ UARE FEET TOTAL AVAILABLE OCCUPIED SPACE DECLINED WITH DEMOLITIONS AND SINGLE COMPANIES TAKING OVER ENTIRE BUILDINGS LITTLE "E L B O W ROOMVAC ANC Y RATE — 1 % - 5 °/ 0 FROM END OF W AR MID 950 BUILDING PROGRAM OF THE LATE 1950 BUILDING PROGRAM O F THE !920'S SPACE AND OCCUPANCY BOTH DECLINED AS S IN G LE CO M PAN IES TOOK OVER MORE BUILDINGS AND GO VERN M EN T RELINQUISHED SPACE RISE IN OCCUPANCY AS EXISTING TENANTS EXPANDED GO VERNM ENT OCCUPANCY ROSE STEEPLY IN THE W AR YEARS TREND OF O CCUPANCY REVERSED IN GREAT DEPRESSION 1922 1932 Source: Building Owners' and Managers' Association of Philadelphia 1942 1952 1959 15 business review per cent is generally regarded as pretty much are some interested tenants right here who would necessary to assure a satisfactory earnings pic like to expand. ture for office buildings. At present, over-all occupancy is running a little under the 90 per Inquiries are more numerous cent mark. It is considerably higher than that in Interest in office space has shown encouraging the most modern, up-to-date buildings. Occu improvement in recent months. For the most part, pancy has become a real problem mainly in older it concerns only small blocks— almost no really buildings which have not been given even a large areas. But inquiries are coming from many “ face lifting” in some years. Many of them seem sources. Perhaps the best immediate prospects to need something in the way of more attractive are tenants already located in center-city build exteriors, better lighting fixtures, and improve ings. Some of them have been suggesting for ments in elevator service. Over-all occupancy in space. Others have indicated a desire to “ trade quite a while that they could do with additional Philadelphia office buildings, however, was not expected to keep up” to more modern quarters, in spite of the pace with a building program of the magnitude higher price tags they carry. We are in a rising recently has phase of the business cycle, so office space needs shown that it takes more time to absorb office may very well be increasing. Then, too, pros space here than in some other large cities, notably perity always calls for something just a little New York. Compared with New York, Philadel better in the nature of one’s surroundings. experienced. Past performance phia does not have many head offices of large large blocks of space is much less. Moreover, this The pace of modernization is quickening seems to hold true whether the space is for a Building managers say they expect modernization corporations. Thus, our potential demand for tenant from another city or represents expansion to be a most significant development in the near by the present occupant. future. In their opinion, its importance cannot Are we overbuilt? elevators, and lighting appear to be the main be overemphasized. Air conditioning, automatic Demand and supply may be somewhat out of areas likely to receive treatment. Competition balance now, but it is unlikely we are overbuilt within Philadelphia and in its nearby suburbs for the longer run. At least that seems to be the underscores the urgency of modernizing some of consensus of representative managers of Phila our older buildings if the original investments delphia office buildings with whom we have are to be preserved. In the opinion of many, an talked. The existence of around 12 per cent out-of-date building is fast becoming a losing more space than may be immediately occupied proposition and should be torn down unless it does present a problem— or a challenge— how can be modernized. ever you may want to look at it. Most of those in the business seem to regard this as a challenge Rental trends are firm to get out and sell space. But all of the selling Although there is some pressure on rents, most effort need not be directed at prospects from out managers tell us the line is solidly held in all of town. On the basis of current inquiries, there the more modern buildings. The only signs of 16 business review weakness are in buildings that have not been insurance companies have been cited as a case kept up-to-date. Where the prospect of fixing up in point. But most businesses seem convinced a property or reducing the rent must be faced, that a center-city location offers advantages not the accent usually is on the former measure. A found in outlying areas. reduction in the rental generally is regarded as income irretrievably lost, while there always is the possibility that a vacancy can be filled. Little new construction is in sight No doubt some office building plans are on archi tects’ drawing boards and more will be drafted this year. But, fortunately, office space in these buildings will not come on the market for a while at least. The years just ahead quite likely Suburban competition is still with us will see many old buildings modernized, few new Estimates of the total space in suburban office whole occupancy picture, because modernizing ones constructed. And this may improve the buildings run to one million square feet or a little usually creates little new space but it does offer more. Most of this is in new, modern buildings the attractions that hold old tenants and draw which offer strong competition with some older new ones. and less up-to-date facilities in Philadelphia. Arguments for and against a location in the suburbs have not changed much in recent years. The outlook calls for optimism Outside the city there is no mercantile tax Managers of Philadelphia office buildings gen and for some employees the wage tax also does erally are optimistic. Basically, they regard the not apply. Parking facilities, while not neces current situation as a reasonably healthy one. sarily any better, are somewhat less expensive. It may take a little time to boost occupancy to a When it comes to traffic congestion, there seems more readily acceptable level, with the best per to be very little choice. The city’s best drawing formance in this respect likely in new and mod card still is a central location right in the heart ernized buildings. The expansion needs of present of industrial, commercial, and social activity. tenants are counted on to absorb some vacant Also, because many employees prefer public space in the immediate future. For the longer transportation to and from their jobs, a center- run, new tenants may be needed, and this calls city location offers access to a larger labor pool. for a greater selling effort. Competition with After weighing the pros and cons, some busi nearby suburban areas is expected to continue nesses may decide to locate in the suburbs, be but not intensify. With little new office building cause their particular type of activity can be construction in prospect now, the absorption of carried on just as efficiently in a decentralized existing space should have time to proceed in an area. The premium-collection agencies of life orderly fashion. 17 BANK EARNINGS IN 1959 Bank reports for 1959 reflect economic recovery, crease of $43 million in the aggregate to $419 the heavier demand for bank credit, rising money million was due mainly to increased income on rates and their counterpart— lower prices for loans. Current expenses also increased, neverthe fixed income obligations such as bonds. Figures less net current earnings before income taxes for Third District banks show sharp expansion were larger at four out of every five banks and in in loans, reduction in security holdings, and heavier borrowing from the Reserve Bank and total increased $19 million to a new high of $145 million. other sources. Adjustments changed materially from 1958 to Earnings reports for the year as a whole con 1959. Profits on securities dropped from the high firm tendencies shown in first-half figures. With level of 1958 and losses or charge-offs on se few exceptions, Third District member banks curities were distinctly heavier. These changes had larger total earnings than in 1958. The in- were reflected in lower income tax payments, EARNINGS, EXPENSES, AND PROFITS but net profits available for distribution declined M em ber Banks Third Federal Reserve District to $64 million, off $8 million from 1958, but still about $7 million more than in either 1957 or 1956. Despite this decline in the aggregate, half of the banks reported increases in net profits. Percentage changes in total earnings, in net current earnings, and in net profits were quite similar to those for member banks throughout the country. M EM B E R B A N K S Third Fed. Res. District (Dollar amounts in millions) 1959* Earnings: On U.S. G o v't securities $ 68.8 On other securities . . . . 25.3 On loans ....................... 264.0 All other ....................... 60.9 Change from 1958# Amount Per cent + 11% + 3 + 14 + 5 + 11% Total e a rn in g s........ $419.0 + $ 6.7 + 9 + 32.3 + 3.0 + $42.9 Current expenses: Salaries and w a g e s ........ Interest on deposits . . . . All other ....................... $113.6 61.4 99.3 + $ 4.7 + 5.9 + 13.3 + 4% + M + 15 Total expenses ........ $274.3 +$23.9 + 10% Net current e a rn in g s ........ $144.7 + $ 19.0 + 15% Recoveries, profits, and transfers from reserves . . $ 9.5 Losses, charge-offs, and transfers to reserves . . . . 53.3 Taxes on in c o m e ................ 36.8 — $15.9 -62% + 20.5 — 9.2 +63 — 20 N et p ro fits ......................... Cash dividends declared .. — $ 8.2 + 2.9 -11% + 8 * Preliminary tabulation. # Adjusted for mergers, etc. 18 $ 64.1 42.2 Additional copies of this issue are available upon request to the Bank and Public Relations Department, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pa. N EW PUBLICATION Tight Money Comes to Maple Springs is a story of what could well have happened at any bank in these days of tight money. In the form of correspondence between a hypothetical bank and a Federal Reserve Bank, this pamphlet explains the impact of tight money on a com mercial bank and the role of the Federal Reserve. The pamphlet is a reprint of one originally written for the Pennsylvania Bankers Association by David P. Eastburn, Vice President of the Federal Reserve Bank of Philadelphia. Copies will be sent shortly to those on the mailing list of the Business Review. F O R TH E R E C O R D . . . Third Federal Reserve District Factory* United States Per cent change Ja n . I960 from Ja n . I960 from mo. ago year ago mo. ago LO C A L CH AN G ES Payrolls Sales Stocks Per cent change Ja n . I960 from Per cent change Ja n I960 from Per cent change Ja n . I960 from Per cent change Ja n . I960 from 0 — 38 - 5 + 4 — 26 — 3 + 4 — 1 — 2 0 0 + 4 + 10 TRAD E* Department store sales . . . Department store stocks .. + 4 0 + 7 + 6 year mo. ago ago year mo. ago ago year mo. ago ago 1 + 1 + 3 +31 2 —1 + 1 - 1 0 + 4 + 3 + 6 + 8 + 5 0 + 3 + 5 + 6 Reading 0 + 1 1 -10 -13 — 2 + 4f — 4 — 2 - 2 — 2 — 1 —1 2 P R IC E S W holesale ......................... Consumer ........................... - + 2t 0 0 0 + 1 2 —1 3 — 17 - 2 + 4 •Adjusted for seasonal variation. |20 Cities + 0 1 tPhiladelphia 1 2 + 9 1 + 8 -14 1 - 1 0 + 3 - 2 — 4 - 3 0 - II Trenton ......... - 1 + 7 0 + 1 + 5 + 10 + 7 8 Wilkes-Barre . - 1 + 4 0 + 5 + 9 + 14 — 1 + 1 — II 5 W ilm ington .. + 5 York .............. it 0 + 10 + 3 + 8 + 0 + 8 - + 3 ....... — 1 + 4 — 3 + 7 + 7 + 9 + 2 + 10 — 5 + 9 Scranton ....... - 4 — 2 — 2 - 3 — 1 — I4f year ago — 7 + 7 Philadelphia . 0 year mo. ago ago — i + 3 — 2 + 16 Lancaster . . . . B A N K IN G (A ll member banks) Deposits ............................ Loans .................................. Investments ....................... U.S. G o vt, securities....... Other ................................ Check payments .............. + 1 2 — 5 + 1 + EM PLO YM EN T A N D IN C O M E Factory employment (Total) .............................. Factory wage incom e....... Per cent change Ja n . I960 from year ago mo. ago O UTPUT Manufacturing production. Construction contracts . . . Coal mining ..................... Check Payments Em ploy ment Per cent change SU M M A RY Department Storef 1 + 7 + 6 + 3 + 4 + 2 + 0 + 3 + 1 + 4 + 1 0 - 0 - - 2 3 + 5 1 -23 3 + 2 -13 - 8 + 9 + *Not restricted to corporate limits of cities but covers areas of one or more counties. fAdjusted for seasonal variation. 1
@FedFRASER