Is this the end for NZ publishing?

Two months later he was out of a job.

Chapman’s comments followed Pearson Education’s announcement it was pulling out of New Zealand and HarperCollins’ decision to move distribution and some editorial and back office functions to Australia.

Hachette NZ followed, abandoning its New Zealand publishing arm with the loss of 15 jobs, among them its managing director – Chapman.

With him goes 30 years of publishing experience and likely the confidence of an industry that started 2013 with four major players and will end the year with just one full-scale multinational operation.

To add to the bad news, the government last week announced it was winding up School Journal publisher Learning Media, because annual revenue had fallen by a quarter. The journal is expected to continue.

Chapman was spared the awkward discussion about his employer’s demise by a serendipitous change of Publishers Association president, with Auckland University Press publisher Sam Elworthy taking over in July. But the bigger question, about the future of book publishing in New Zealand, cannot be so easily evaded.

It’s worth considering what’s at stake here.

According to Publishers Association figures, about 2000 new Kiwi books are published every year. About 1200 are educational books like primary school reader series.

Or they were, until one of the country’s biggest educational publishers, Pearson, decided to cease publishing here. It’s not yet clear if it will still produce New Zealand-tailored titles from overseas.

That leaves the “big four” multinationals: Random House (80-90 local titles a year); Penguin (about 90); Hachette (20-30) and HarperCollins (about 50). The significant minnows, including Victoria University Press (VUP), Auckland University Press, Huia, Awa, David Bateman and Craig Pottonwhich between them account for to 200 titles.

So, take out Hachette’s 30 titles, cut HarperCollins’ list by half and factor in the likely rationalisation of Random House and Penguin’s publications following their July global merger, and it’s hard to avoid the conclusion that fewer Kiwi writers will end up in print. Unless they slap a self-published text on Amazon and embark on the difficult task of self-spruiking.

“I think it will mean that,” says International Institute of Modern Letters director Damien Wilkins.

“The idea that you could become a writer is absolutely mainstream now and that’s been a huge change over the past 20 years. But you have that at the same time as these eroded outlets and potential for getting your work to readers. So it’s a very curious paradox.”

Finlay Macdonald: “Our emphasis will be more on quality than quantity. I think the New Zealand market has arguably been over-published.”

But it’s about much more than numbers. It’s about our cultural identity, our history, our stories.

In some respects, the multinational retrenchments should come as no surprise. As Elworthy says, “publishing in New Zealand is going through a rapid transformation”, similar to that experienced in the United States over the past five years, but compressed into 12 to 18 months.

The culprit is an unholy trinity. First is the explosion in ebooks – which account for up to 20 per cent of some publishers’ sales.

Add the lax tax regime that allows Kiwis to import heavily discounted, GST-free books from internet behemoths Amazon and The Book Depository, and the result is fewer physical book sales in New Zealand. Which in turn means less need for multinationals to retain infrastructure here.

On announcing Hachette’s withdrawal, Australia and New Zealand chairman Malcolm Edwards blamed Elworthy’s two prime culprits – the hit to its New Zealand sales and rapid ebook growth.

But its New Zealand publishing arm should have been largely protected from ebook erosion. Just 4 per cent of all New Zealand-published books are novels and it’s hard in an ebook to reproduce the experience of leafing through glossy pages of illustrated non-fiction.

Also, Kiwis like to read Kiwi stories. In 2011, a quarter of books sold here, by value, were created in New Zealand. Book sales in New Zealand have held up better than elsewhere, dropping 2.7 per cent in volume in the first nine months of last year compared with 10.4 per cent in Australia and 13.6 per cent in the US.

But the cocoon is cracking. July book sales fell 16-19 per cent on last year.

“That’s dire,” says Booksellers New Zealand chief executive Lincoln Gould.

However, with a list including blockbusters such as Jonah Lomu’s life story and Richie McCaw’s biography, Hachette ought to have been among the most profitable of New Zealand publishers.

Elworthy thinks it probably was. Which brings us to the third factor: the vulnerability of New Zealand authors and readers to the whims of multinational executives in New York.

It’s easy to forget that New Zealand publishing hasn’t always been dominated by the multinational “big four”.

Penguin only started printing New Zealand books in about 1978. Its merger with Random House will create by far the largest non-educational publisher in New Zealand. Penguin would not comment on its post-merger plans.

But what of HarperCollins? Industry insiders agree moving warehousing to Australia is unremarkable. What does matter is what happens to its New Zealand list.

HarperCollins says it is committed to publishing Kiwi books, a position reinforced by the appointment of veteran journalist Finlay Macdonald, who was a commissioning editor at Penguin until 2005.

Why come back at a tumultuous time?

Former Penguin publishing director, Geoff Walker, now a publishing consultant and manuscript assessor: “There’s no doubt at all that the decline of book retailing is a dangerous development.”

“I really like books,” Macdonald says. He’s cautiously optimistic about publishing’s future, seeing promise in ebooks for time-dependent stories, and planning “more books that tackle big important-issue current events”. If he can make them pay.

But he’s frank about HarperCollins’ plans to reduce its New Zealand titles from about 50 a year to “20-plus”. “Our emphasis will be more on quality than quantity. I think the New Zealand market has arguably been over-published.

“I can’t see any good New Zealand authors really going begging for a publisher just because this industry is changing and maybe slightly retracting in New Zealand. It might be more competitive for those coming up through the ranks. But that might not be such a bad thing.”

He acknowledges the risk in Australians editing New Zealand books and says where cultural knowledge is important, he’ll use freelance Kiwi editors and proofreaders.

“Yes there’s pain and there’s a huge amount of readjustment to be done but I think it [the industry] will emerge quite strong and refocused.”

Former Penguin New Zealand boss and book blogger Graham Beattie agrees. “By and large I think New Zealand publishing is OK”.

But another former Penguin publishing director, Geoff Walker, now a publishing consultant and manuscript assessor, is more gloomy.

Like many, he says much will depend on the future of book sales in the country’s 400 bookshops. Though the multinationals’ New Zealand sales of imported bestsellers don’t directly subsidise New Zealand publishing, “the two very much go together”.

“There’s no doubt at all that the decline of book retailing is a dangerous development.”

Print runs are reducing and the Penguin-Random merger will inevitably lead to further rationalisation, he says.

On the one hand, Walker says, the ease of self-publishing means authors are “taking back control”. But most self-published books don’t sell more than a few hundred copies.

“We are actually starting to get fairly close to the wall. If you’re a New Zealand fiction writer and you’ve been turned down by Penguin-Random, and you don’t live in Wellington so you probably won’t get published by Victoria University Press, you’re not Maori so you won’t be published by Huia, then goodness, gracious, where are you going to go?”

Wilkins fears a return to the arid 1980s when you could easily read every Kiwi novel published.

“The sense of commitment to the career suffers if you have such a volatile publishing world … It’s especially punishing on say mid-career writers who suddenly find themselves without publishers, who’ve had support for two or three books. And pretty hard on new writers who might feel it’s all or nothing for one book.”

Publisher plenitude or drought, Wilkins is confident Kiwis will continue to write.

“At the point of conception, all you’re trying to do is write a great book. And it’s kind of hard to kill that, thank God.”

The one bright spot is the prospect that independent publishers could pick up the slack.

It’s telling that this year, for the first time, all but one of the New Zealand Post Book Awards winners were from Kiwi indie publishers.

Former Penguin New Zealand boss and book blogger Graham Beattie: ‘By and large I think New Zealand publishing is OK.”

Multinational retrenchment removes competition, says VUP publisher Fergus Barrowman. But it also removes infrastructure and investment, pushing up distribution costs and further jeopardising the viability of the -important booksellers.

The small and nimble independents are “finding it hard”, Barrowman says. VUP is increasingly reliant on university subsidies.

“Average sales per title have declined over the past 10 years – maybe halved. We’re doing smaller print runs with less profit margin.”

VUP has been publishing ebooks for three years with little take up. And, ebooks save only about a third of traditional print costs, but you cannot sell them for two-thirds of the print price.

Also, while website sales help tap niche overseas markets, international distribution deals mean VUP’s books also land on Amazon, often for less.

With fewer options for Kiwi novels, VUP’s fiction submissions have soared and it’s now printing eight novels a year instead of four. The university’s subsidy has allowed it to take a punt on debut authors, which has paid off handsomely in the cases of Elizabeth Knox, Emily Perkins and Eleanor Catton, who is tasting success with this year’s Man Booker Prize nominations.

“When the overall margins are becoming more challenged, it’s harder to use those successes to balance the risks that don’t quite pay off,” Barrowman says.

And it might get harder still. He looks fearfully at music-streaming services Spotify and Pandora, which return minuscule royalties to artists. “If that’s the future for books, we might as well quit now.”

Elworthy’s Auckland University Press (AUP) is more buoyant, with sales holding up in the six years he’s been in the job. “We’re going to have our best year ever, I think.”

While an average non-fiction print run might be 1000 copies, AUP’s Patched: The History of Gangs in New Zealand is expected to crack 10,000. Nonetheless, it couldn’t survive without university support.

Nelson-based Craig Potton Publishing is recovering from the kicking it suffered when Whitcoulls was put into voluntary administration in 2011, says co-owner Robbie Burton.

They’ve diversified from calendars and tourist temptations to tales of backcountry eccentrics and a bible of trees. But print runs are down and the future is murky.

Children’s book publisher Greet Pauwelijn: “For many people in the book trade it’s a passion. We know we’re never going to get rich.”

Like others, Burton laments the demise of the multinationals, “because what really counts is that the bookselling infrastructure survives. If we lose that it’s all over”.

“We have very clear strategies if we have to trim things, about how we would do that. We’re making sure we can turn on a dime.”

In only a decade, Awa Press has cemented its place as one of our leading independent publishers, so owner Mary Varnham’s revelation is a bombshell: “I don’t know if we’ll still be here in five years.”

Multinationals pulling out could allow smaller publishers to lure top authors and redress the power balance in favour of the “drowning minnows”, Varnham says, but the odds might already be stacked too far.

“It’s still a damn hard thing to produce a book in New Zealand and sell enough copies to break even. I think independent publishers in New Zealand are in some sort of heroic position of self-sacrifice … it is pretty unprofitable.”

Varnham struggles to secure writers. Who can afford to take months off to research and write a book for a $3000 advance? More government support – for writers and publishers – would help.

And, she says, ebooks are not the answer. They’re a fabulous way to get books out worldwide but sales are minimal and the return to the publisher is tiny.

“I think the answer for us is to persuade New Zealanders to buy more New Zealand books.”

She credits Awa’s survival to bookshops such as Wellington’s Unity, which stacks front windows with Kiwi stories.

“I always say I need valium before I go into the average bookstore in New Zealand. It’s so distressing if you don’t see your own books properly displayed and you just walk through a towering mountain of Dan Brown and The Hunger Games. Not to mention Fifty Shades of Grey.”

The only way bookshops will survive, says Booksellers chief executive Lincoln Gould, is if they work together with publishers to find new sales models.

Awa Press owner Mary Varnham: “I don’t know if we’ll still be here in five years.”

In his less gloomy moments, Walker sees opportunity for small independents or writer co-operatives such as those emerging in the United States.

But you’d have to be insane to launch a publishing company in the midst of such turmoil, surely?

Greet Pauwelijn launched children’s book publisher Book Island last April, selling Dutch language books to her native Belgium and the Netherlands and English versions to Kiwis. Her Dutch books are more expensive but sell better.

With start-up costs of about $150,000 and skinny margins, it will be years before she can turn a profit.

“For many people in the book trade it’s a passion. We know we’re never going to get rich.”

But it’s surprisingly easy to be taken seriously. When Wellington publishing student Stephen Minchin set up Steam Press in 2011, he never expected media attention, but his second title made the Listener’s top 100 books of 2012.

Setting up a new publishing house, he says, is “ridiculously easy”. He found a niche – New Zealand science fiction and fantasy – then put the word out to authors.

His most successful books are selling a respectable 1000 copies and he’s scored some international rights deals. Not that it’s making money. Each new title costs him $3000 to $4000. So will he ever be able to give up his day job?

Auckland University Press publisher Sam Elworthy: “We’re going to have our best year ever, I think.”

“That’s what I keep telling my wife. Essentially she is funding this whole thing. I will definitely keep chipping away at it for another couple of years. It can’t go on forever if I’m throwing money at it, but it’s bloody good fun.”

Whether they’re the work of multinationals, startups or even self-published, the future of New Zealand books must be non-negotiable.

As Varnham puts is: “Books are about who we are as a people. They have a long life and I think it’s really important that they don’t die. It’s really exciting that some novelists break through internationally but the book industry in New Zealand has to be about more than just two novels a year. It has to be about telling our own stories.