BusinessTN

Michael Hyatt, CEO of Thomas Nelson Books, the world's largest Christian publishing company, freely admits that as a consumer he starts more books than he finishes. "Most books I buy aren't worth finishing," Hyatt says. "They leave me underwhelmed. The authors would have done better to boil down the content and make it a magazine article. We don't need more books. We need better books."

Figures bear out the veracity of Hyatt's statement regarding book overproduction in the United States. The New York Times recently reported that 300,000 new books were introduced to the market in 2006, a number that rose 33% to 400,000 titles last year. Meanwhile, bookstore sales have risen just 3.6% over the past five years, according to Hyatt. That's a lot more books competing for the same shelf space.

How did the industry allow such a publishing glut? "It's not unlike the housing market, where people see an opportunity, everybody jumps in, the market gets overbuilt, people go out of business, and there's a lot of paring back," Hyatt says. Take Thomas Nelson as an example. Five years ago, the company was publishing about 270 books a year. Last fiscal year, which ended March 31, it published 712—nearly two per day.

In response, Hyatt announced that Thomas Nelson would cut the number of its titles in half this fiscal year, simultaneously laying off around 10% of its workforce. That ratcheting down is clearly in order, says Sara Nelson, editor of Publishers Weekly, the 136-year old magazine covering the book publishing industry.

"As someone who has been whining publicly for years about the overproduction of books in this country, I read the news of Nelson trimming—well, maybe since it's 50%, I should say slashing—as positive," Nelson says. "We simply publish too many books to give them each a fair share of the potential market and reader attention." Sara Nelson also rightly predicted that other publishers would soon follow suit. Shortly after Hyatt's announcement, publishing behemoth HarperCollins announced a review of titles and subsequently a strategic realignment (a euphemism for layoffs) at its Christian imprint, Zondervan—Thomas Nelson's top competitor.

So just how will Hyatt cut title count without reducing revenues? "All books have to be contracted, edited, typeset, proofread, packaged, catalogued, sold-in, merchandised and promoted—that's all the same amount of labor there," Hyatt explains. "But they don't yield the same returns." An internal analysis revealed that about 23% of Thomas Nelson's titles drove 90% of its revenues, and this provides a clear path for the company. "What it does mean is that a first-time author has to have a competitive advantage of some sort," Hyatt explains. "We published Denise Jackson last year. It was her first book, and it became a New York Times bestseller. But she was married to [country music star] Alan Jackson, who has a pretty significant following." (Hyatt warns against concluding that no new authors will get published, saying "otherwise, we're not sowing the seeds for our future.")

As America's largest publisher of Bibles, a steady, predictable income stream accounting for roughly one-third of all the company's publishing, Thomas Nelson has a fairly significant buffer amid the sea change—from digital content to Internet delivery—occurring in the book publishing industry. But it is by no means insulated fully. The challenge for Thomas Nelson and other traditional booksellers? Remain committed to the content, just not wedded to the format.