FEP REPORT ON BOOK STATISTICS November 2012 Core data 2004-2011 Consolidated data After the collection of questionnaires

with data from 2011 and the usual processes of correction and integration, FEP has compiled the information to build a fairly complete and reliable picture for trends in book publishing between 2004 and 2011. Since one of the aims of the collection of statistics is to be able to present them to our counterparts, the figures gathered have been further integrated (through estimates, data from the nearest year available or Eurostat) in order to obtain with a core of data; this exercise, first realised on data for 2006, has been repeated after the surveys conducted by FEP concerning data from 2007 to 2011. As a result of the data collection and processing, we have a fairly complete and reliable picture from 2006 to 2011. Some figures, as said, have been adjusted, and in various cases it was necessary to depart from those reported on the questionnaires. It must be kept in mind that absolute precision with the available figures is not achievable. In synthesis, the figures for the book publishing industry for 2011 in Europe1 (EU plus Norway and Iceland) are: Net publishers turnover Title production Active catalogue Employment2 22 800 000 000 530 000 8 500 000 135 000

Totals have been rounded quite conservatively, especially with respect to turnover and titles output (knowing that in some countries figures account for more than just new titles); the figure for the active catalogue has been instead increased by adding the yearly output of countries for which data on the catalogue itself was not available. The largest markets in terms of publishers turnover in 2011 were Germany, followed by the UK, France, Spain and Italy (the ranking was the same as in 2006-10) The countries reporting the largest new titles output were3 the UK (149,800), Germany (82,048), Spain (approx. 44,000), France (41,902) and Italy (39,898). Figures similarly obtained for 2006/2010 were as follows:

Data from FEP members have been integrated with estimates from external sources for Latvia, Malta and Slovakia. 2 It is worth noting that, besides the direct employment, book publishing contributes also indirectly to job creation: for example, there are more than 100,000 writers and literary translators in Europe, as well as more than 25,000 individual bookstores. 3 UK, France and Spain include new editions.

2010 Net publishers turnover Title production Active catalogue Employment 2009 Net publishers turnover Title production Active catalogue Employment 2008 Net publishers turnover Title production Active catalogue Employment 2007 Net publishers turnover Title production Active catalogue Employment 2006 Net publishers turnover Title production Active catalogue Employment 23 250 000 000 475 000 5 250 000 140 000 24 500 000 000 490 000 5 600 000 140 000 23 750 000 000 510 000 6 100 000 135 000 23 000 000 000 515 000 6 400 000 135 000 23 500 000 000 525 000 7 400 000 135 000

By the same standards, a similar exercise was applied to the figures collected through the questionnaires for 2004, giving this result (data for active catalogue was too incomplete): Net publishers turnover Title production Employment 22 200 000 000 455 000 145 000

As already mentioned, such figures should not be taken as 100% precise, but serve to analyse trends; in this case, we can see a certain increase of turnover until the beginning of the economic crisis in 2008 and a more remarkable one of titles produced, while employment shows a slight tendency to stagnate/decrease throughout the whole period considered. The crisis years saw a stagnation in terms of turnover (once accounted for the exchange rates effect, see below), finally reverted in 2010, when turnover started growing again (though not very strongly); 2011 was again a negative year, with all major markets recording turnover decreases. The title output, constantly increasing throughout the period, slowed down in 2009, although in some individual markets there had been decreases already in 2008, accelerated again in 2010, although not uniformly, and slowed once more in 2011 (also not uniformly). The active catalogue (number of titles commercially available), on the other hand, maintains a steady increasing trend (possibly supported by the fast development of electronic publishing); the huge upsurge of 2010 and 2011 is due mainly to the availability of titles in the UK. The following graph shows the comparison: 2

Graph 1: Core data on the book publishing sector, comparison 2004-2011

Source: FEP questionnaires, integrated and elaborated by FEP

In addition, a number of factors make it difficult to make precise comparisons of the complete aggregated figures between different years. In the previous two years, the most important point was the effect of exchange rates: whereas between 2007 and 2009 the large depreciation of a number of other currencies against the Euro accounted for a large proportion of the decrease in turnover (around 75% of it), in 2010 the exchange rates effect worked the other way around, nominally inflating the size of the recovery. Without such effect, the total turnover between 2009 and 2010 would have remained more or less flat, with an increase of around 1%, rather than the apparent 2%. In the case of the current analysis, though, no appreciable currency effects influenced remarkably the decline in turnover (see the Exchange Rates section for more details). Through future surveys, statistics will keep being collected on a yearly basis; thus, after 2011, the next survey, in the second half of 2013, will regard data for 2012. This will most likely allow keeping building time series that are more and more consistent and harmonised. Difficulties with comparisons A few words need to be spent to clarify some of the elements that make it difficult to compare the results of the integration and correction exercises applied to data from one year to another (as we did for the previous reports). First of all, part of these problematic elements are likely to be a permanent feature of the statistics collections, since there are some structural difficulties as far as the process is concerned (as illustrated in the report of FEP activities in the field of statistics, 03/2009). 3

In addition, some other issues are likely to emerge in the process of harmonisation and clarification of the information supplied by FEP members, both on behalf of FEP and of its members. This said, unlike in some of the previous years, there were no particular cases of discrepancies between the data sets for 2010 and 2011; the main difficulty in the overall estimation came once again from the increased amount of missing data. Consistent trends It is possible, however, to show more detailed trends using data from selected numbers of countries with complete or almost complete series. The following graphs show the result as regards turnover and production of new titles4. Graph 2: Publishers net turnover, selected countries, 2004-2011

Source: FEP questionnaires, integrated and elaborated by FEP

Data here refer to 11 FEP members with continuous data on turnover, representing more than 80% of the total for the EU. Some estimates have been made, so figures should not be taken literally, but it is possible to analyse the trend. Figures again point clearly to a continuous and fairly sustained growth throughout the period before the 2008 crisis, and a seemingly stark decrease in the years of financial and economic crunch; then again, this has to be tempered, as already mentioned, by eliminating the exchange rate effect. By the same standards, the
FEP members included in the turnover calculation are Austria, Belgium (Francophone), Denmark, Germany, Spain, France, Italy, Poland, Sweden and the UK; those included in the titles output calculation are Belgium (Fr.), Bulgaria, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Italy, Cyprus, Lithuania, Hungary, Austria, Poland, Slovenia, Finland, Sweden, the UK and Iceland.
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recovery of 2010 is confirmed, but this is also partly due to exchange rates effects, and so is the new decline of 2011, mostly valid also in real terms. Graph 3: Production of new titles, selected countries, 2004-2011

Source: FEP questionnaires, integrated and elaborated by FEP

Data here refer to 20 FEP members with continuous data on title output, representing more than 80% of the total EU production. Some marginal estimates have been made, and in some cases there is an overestimate due to the use of national library data (which usually include booklets and sometimes non-commercial publications), so figures should not be taken literally, but it is possible to appreciate the trend. After a flexion in 2005 (mainly due to a decreasing trend in titles production in the UK, reverted the following year), the production of new titles shows a clear tendency to grow, even in 2008 (although there were decreases in some individual markets, including a few large ones). The upward impulse showed signs of exhaustion in 2009, accelerated again in 2010 and slowed once more in 2011 (in recent years always with mixed results across different markets). Breakdowns Figures on publishers turnover are also collected according to a breakdown by book categories (school, academic/professional/reference, trade, childrens), destination market (home or export) and distribution channel (trade, book clubs, direct sales). Though such detailed information is not always available for all the countries surveyed, the existing sample is large enough to estimate the proportion of revenues due to the various categories at European level. The results of the estimation are as follows:

Graph 4: Publishers turnover, breakdown by categories, 2006-2011

Source: FEP questionnaires, integrated and elaborated by FEP

Trade is clearly the largest sector of book publishing in terms of revenues, followed by academic/professional, school and childrens books. Proportions have not varied largely in the years; the initial shift between the school and academic sectors is most likely due to adjustments in the data collection process. There were signs in 2008 of an increasing importance of the childrens sector and a loss of weight by educational publishing; in 2009, the childrens sector maintained its increased prominence, while the academic and professional sector lost some market quota compared to the school sector; in 2010, childrens books retained their improved position in a scenario where the sector composition remained more or less unvaried; in 2011, childrens books were still holding their position, while school publishing seemed to gain some market share compared to academic and professional publishing. Again, it is worth mentioning that the data collection methodology is partly responsible for some inaccuracy in the results, in particular due to bigger difficulties in retrieving data from the academic and professional sector. The analysis of figures on sales in the domestic market and abroad reveal that home markets are the main source of income for European publishers; exports account for a relevant share of turnover nonetheless, especially thanks to countries with widely spoken languages (the UK, France, Spain and Germany). It is worth here highlighting the importance of the export component for the European publishing industry. Until 2009, the share of exports in the total industry turnover decreased; the main explanations include the remarkable strengthening of the Euro against the US Dollar between 2006 and 2008 and, starting from 2008, the economic and financial crisis, which in general had a bigger impact on extra-EU sales than on domestic markets. In 2010 and 2011, the exports share grew consistently, helped partly by a weaker Euro and partly by stronger economic performances in a number of export markets outside the EU, especially emerging markets. 6

Graph 5: Publishers turnover, breakdown by destination market, 2006-2011

Source: FEP questionnaires, integrated and elaborated by FEP

Graph 6: Publishers turnover, breakdown by distribution channel, 2006-2011

Source: FEP questionnaires, integrated and elaborated by FEP

As to distribution channels, trade is in a dominant position, accounting for more than three quarters of turnover; direct sales are second, and book clubs close the ranking and seem to be 7

gradually losing their market share. In 2010, direct sales increased their market share remarkably, possibly due to electronic sales, but they decreased it again in 2011, maybe as intermediaries increased their shares in e-book sales. Inflation The growth of publishers turnover is now compared to the inflation rate in the EU and in the Euro area; this allows to put into perspective the trend in publishers revenues, showing whether possible increases are strong enough to overcome the depreciation of money. For greater significance, the comparison is made using the more consistent data trends from countries with the most reliable information rather than the total estimates. The following table reports the inflation rate (annual average rate of change in Harmonized Indices of Consumer Prices) in the EU countries and in the EEA ones which are FEP members, in the EU as a whole and in the Euro area. Table 1: Annual average rate of inflation in Europe, 2004-2011
2004 2005 2006 2007 2008 2009 2010 2 2,2 2,2 2,3 2,1 3,7 1 2,1 2,2 2,2 2,1 1,6 3,3 0,3 1,9 2,5 2,3 1,8 2,3 4,5 0 6,1 6,0 7,4 7,6 3 12,0 2,5 2,6 1,6 2,1 3 1,2 6,3 0,6 0,9 1,7 1,9 1,7 2,2 3,6 1,1 1,8 1,9 1,8 2,3 1,2 2,8 0,2 3 4,1 4,4 6,7 2,7 10,6 0,2 2,3 2,2 2,7 2,9 -1,6 3,1 -1,7 3 3,5 3,3 3 4,7 4,2 1,3 3,1 3,4 3,6 2,8 2 4,1 -0,2 2,3 1,9 1,9 1,6 1,7 3,2 0,1 2,3 2,2 2,2 2 1,6 3,5 0,8 1,9 2,0 2,2 2,2 2,6 4,4 0,2 6,2 6,9 6,6 10,1 -1,2 15,3 3,3 1,2 2,7 3,8 5,8 1,2 11,1 4,2 3,2 3,8 3 2,7 2,8 4,1 0 6,8 3,5 4 7,9 4,7 6,0 4 2,7 2,5 2,6 0,7 2 4,7 1,8 1,4 1,5 1,7 1,6 0,9 2,2 1 2 2,1 1,7 2,2 1,7 3,2 0,4 3,6 2,2 1,3 2,6 2,7 4,2 4 2,5 2,1 3 2,4 1,4 2,7 -0,9 11,9 9,1 6,6 4,9 6,1 7,9 5,6 3,7 2,5 2,5 3,8 2,1 5,5 0,9 7,5 2,8 4,3 1,9 0,7 3,9 0,9 0,1 0,8 1,3 1,6 1,7 3,9 1,6 1 0,8 1,5 1,7 1,9 3,3 1,9 1,3 2,1 2,3 2,3 3,3 3,6 2,2 2,3 1,4 4,6 3,6 12,8 7,5 16,3 0,6 1,5 2,5 0,7 3,4 2,3 2,3 Source: Eurostat, Annual average rate of change in Harmonized Indices of Consumer Prices (HICPs)
European Union Euro area Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom Iceland Norway

2011 3,1 2,7 3,5 3,4 2,1 2,7 2,5 5,1 1,2 3,1 3,1 2,3 2,9 3,5 4,2 4,1 3,7 3,9 2,5 2,5 3,6 3,9 3,6 5,8 2,1 4,1 3,3 1,4 4,5 4,2 1,2

Based on Eurostat data on inflation and on the detailed trends for the same period shown above, it is possible to build and compare indexes of publishers turnover and of price levels (the base is set =100 in 2004): According to our estimates, in the period 2004-2007 publishers turnover had been growing consistently at a higher pace than inflation, so that improvements in publishing revenues in Europe, as an average, had not been nullified by the increase of the cost of living. In particular, while turnover (for the selected countries with more complete data) had grown some 10%, inflation, both in the EU as a whole and in the Euro area, was close to 7% altogether over the four-year span. In 2008, though, overheated markets in the pre-crisis months brought about the highest inflation rates of the past few years; this, coupled with the decrease in publishers turnover, led for that year the price index to overcome the growth of turnover. In 2009, while inflation receded strongly due to the crisis, turnover went down as well, thus maintaining the price index above the turnover one; in 2010/2011 inflation regained momentum, while turnover did so only temporarily and mainly outside the Euro area, thus widening the gap. Considering data for the Euro area only (thus without exchange rates effects) the gap between inflation and turnover is smaller, but it is increasing as well. Graph 7: Publishers turnover (selected countries) and inflation rates, comparison of indices, 2004-2011

Source: Eurostat, Annual average rate of change in Harmonized Indices of Consumer Prices (HICPs), and elaboration of FEP data

Exchange rates Exchange rates are another element that can influence trends in publishers turnover (as already mentioned in the full report of March 2009). In periods of monetary turbulence, fluctuations in exchange rates, to which the economic crisis has been making us accustomed again, can be very large; this in turn can lead to large differences in interpretation of figures from different years, according to whether the original currency or its Euro equivalent is considered. The 9

choice of the rate of conversion of other currencies into Euros is therefore quite an important one, since in some cases exchange rate differences can account for deviations of 10, or even 15% in figures (an amount large enough to completely transform, if not subvert, the trends seen in the original currency). This is why, for a start, we have chosen to convert other currencies into Euros using the yearly average exchange rate as a first way to smooth fluctuations and make more equitable estimations. Still, since this might not be enough in case of prolonged and marked shifts in currency values, FEP statistical reports now include an illustration of the trends of other European currencies against the Euro, and an explanation of their impact on the estimation of the total publishers turnover, where deemed relevant.5 The following are the yearly average exchange rates with the Euro of the currencies of FEP members countries, for the period 2004-2011: Graph 8: Exchange rates with Euro, other European currencies, 2004-2011

BGN: GBP: British Pound; Bulgarian Lev; CZK: Czech Koruna; DKK: Danish Krone; EEK: Estonian Kroon; ISK: Icelandic Krona; HUF: Hungarian Forint; LTL: Lithuanian Litas; NOK: Norwegian Kroner; PLN: Polish Zloty; SEK: Swedish Krona.

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Source: Oanda.com, yearly averages, interbank rate

In most cases, it is possible to observe a certain degree of stability of the exchange rates over the medium term; this is obviously true, in particular, for currencies pegged to the Euro. As for the others, until 2007 the only remarkable cases were those of the CZK, which had gained almost 15% on the Euro between 2004 and 2007 (lack of consistent data on turnover did not allow to appreciate the exchange rate effect) and the PLN, which had appreciated close to 20% 11

vis--vis the Euro in the same period (thus accounting for a large part of the increase of Polish publishers turnover in Euro terms between 2004 and 2007 - nearly 40%; considering values in Zloty, the increase is somewhat above 16%). Both the CZK and the PLN kept appreciating in 2008; thus, the increase in the estimated Czech turnover of over 14% in one year is largely accounted for by an appreciation of the CZK of over 11%, while nearly half of another remarkable increase in the turnover of Polish publishers (up more than 20% in Euro terms) is due to a gain of the Zloty of over 8% against the Euro. But the most outstanding case is that of the GBP: while the publishers turnover was basically unchanged from 2007 to 2008, the 14% depreciation of the currency caused an apparent loss in Euro terms of around 600 million. In 2009, a number of currencies depreciated noticeably against the Euro: the GBP lost more than 10%, the PLN lost almost 20%, the SEK and the HUF around 10%. Altogether, these provoked an apparent loss of more than 600 million, thus accounting for most of the resulting decrease in turnover (the four countries together lost some 14% of turnover year-on-year, but the real decrease without the exchange rate bias was about 2.5%). In 2010, the trend reverted: the GBP gained almost 4%, the PLN almost 8%, the NOK almost 9% and the SEK some 11%. The increases in value of the Pound, Zloty and Krona alone account for about half of the growth of turnover (some 250 million). In 2011, fluctuations in the exchange rates were nowhere near those of the previous years and went into opposite directions: slight weakening of GBP and PLN, some appreciation of SEK and NOK, for an overall negligible impact. To illustrate the important effect of the exchange rates, the following graph compares the turnover development at current exchange rates (as shown in Graph 2) and the same figure calculated keeping exchange rates constant at the 2004 level. Graph 9: Publishers net turnover (constant exchange rate), selected countries, 2004-2011

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It is clear how, once accounted for the exchange rate effect, the decrease in turnover of 2008 and 2009 gets largely scaled down; the comparison between 2009 and 2007 is corrected to an apparent -7% to a mere -2%, and the figure for 2009, rather than being below the one for 2005, is still above the one for 2006. On the other hand, the increase in 2010 is more likely just below 1%, rather than the nominal 2%. It is easy to appreciate also how the decline in 2011 does not depend in particular on exchange rate effects. Considering that often international transactions are conducted in US Dollars, and given the importance of book exports for some European countries, FEP also monitors the developments of the exchange rate of the Euro with the US currency. Graph 10: Exchange rates Euro/US Dollar, 2004-2011

Source: Oanda.com, yearly averages, interbank rate

The increasing value of the Euro compared to the Dollar in the period 2006-2008 is quite clear, and this can have created difficulties to countries that have their exports paid in Dollars; the Euros weakening in 2009 seemingly did not revitalise exports, most likely as the effects of the crisis were still stronger. Nevertheless, the Euro continued losing ground to the Dollar in 2010; this, coupled with the economic recovery in a number of extra-EU markets, explains at least in part the surge in the share of exports from the publishing sector. Anyway, as the Euro grew stronger in 2011, exports overall were not affected too negatively. US publishing It can be also interesting to compare the trends in turnover of European and US publishers, keeping moreover into account the fluctuations of the exchange rates. FEP will therefore monitor the sales figures of the Association of American Publishers (AAP) and compare them 13

to its data on Europe. The following table shows this comparison both in Euro and Dollar terms. Graph 11: Turnover of European and US publishers, in USD and EUR (bln), 2006-2011

In the period considered, the value of European publishing (net income) has been consistently above that of US publishing; the exchange rate developments until 2008 reinforced this trend, as the increase in the Euro value resulted in a constant increase of European turnover in USD terms and a constant decrease of the US turnover in Euro terms; of course, this trend was reverted in 2009. Taken each in their own currency, the two sets show similar trends in years of growth, while the US publishing sector seems not to have been particularly affected by the crisis, at least until 2011.6 Average book prices Where available, FEP has also collected data on trends of book prices in some countries in Europe, since this can be another interesting indicator of the performance of the industry. In the previous editions of this report, indexes built on the average book price trends in some selected markets were compared with the respective consumer price indices (as reported in the table above). From last edition, FEP has started using Eurostat data to track the trends in book prices and compare them to the general prices index. In fact, the previous method of analysis must be taken with some caution: on one hand, there are different ways to calculate consumer price indices; one the other, also the methods for estimating the average book prices can vary
US publishers launched an improved statistical survey for the years 2008-2010; this explains the difference with the previous FEP reports regarding US data and also makes data from 2008-2010 not comparable with older ones.
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widely.7 In addition, such methods do not necessarily depict the evolution of the prices actually paid by consumers, which are influenced by their preferences (for example, even if book prices as an average increase, the average price of books sold might decrease as consumers shift towards the cheaper ones). The following graph shows he overall trend in book prices and general consumer prices in the EU and the Euro area since 2005: Graph 12: Book prices indices (BPI) and consumer price indices (CPI), comparison, EU and Euro area, 2005-2011 (base: 2005=100)

Source: Eurostat, Annual average index of Harmonized Indices of Consumer Prices (HICPs)

The main conclusion that can be drawn by analysing the trends shown in the graphics is that in general book prices tend to increase less than the global consumer prices; also in the countries where in a few years this was not the case, the tendency was reverted by actual decreases in average book prices at the end of the period considered. This means that between 2005 and 2011, even though book prices have increased all in all, either constantly or with interruptions, the relative price of books has decreased; the phenomenon has been more remarkable in the Euro area. Between 2005 and 2011, book prices have increased more than global ones only in Hungary, Portugal and Slovakia (until 2010 the list included also Latvia and the UK).

In our case, for the UK we had the average price invoiced by publishers; for Germany, Italy and France, the figures provided by National Statistics Offices, based on surveys of street prices of various kinds of books, then combined and weighted according to the estimated volume sales of each category; for Spain and Poland, the ratio between turnover and books sold.

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