The Fall of the Spanish Publishing Empire

Abstract

The Spanish publishing industry has become over-inflated because the big publishers are getting higher volumes of returns. The books available in bookshops fund future editions in such a way that profits grow from speeding up the rotation of titles in the shops; this entails the sacrifice of long-tail books as publishers are pushed to launch new titles to keep the bubble inflated. For seven years, demand has not matched supply, leading to lower profitability per unit. The average print run is also low, reducing gross margin, while returns are still growing and industrial prices are increasing faster than the retail price of books. The sector is currently suffering a severe cash crunch. Grupo Planeta and other big publishers face a crisis of falling sales, and a large volume of money is caught in the bubble, so that bookshops cannot afford to buy new books and publishers cannot take returns without feeding a vicious cycle. Current law does not permit the reduction of book prices to encourage shopping or facilitate innovative marketing techniques. This law puts effective control of the sector in the hands of private institutions that would prefer nothing to change. The consequence of this systemic crisis is likely to be industrial restructuring driven by public-sector-based exemptions and tax incentives, and adaptation of the legislation to make it more flexible.