Publishing industry’s travail : Book production a high risk business

By Zubeida Mustafa

 BOOK PUBLISHING is a high risk business in Pakistan, says Mr Shams Quraeshi of Mackwin & Co. who has been in the book trade since 1947. Returns are slow in coming, hence not many people with capital to spare wish to invest in it. They would rather opt for an industry with quicker and guaranteed returns.

Even banks regard books as poor risk. Thus one can get a bank loan of Rs 80,000. against paper reams worth Rs 100,000. But as soon as the paper is converted into a book, no bank is prepared to accept it as security to advance a loan.

Malik Noorani, whose Maktabe-i- Daniyal has published the works of Faiz, Mushtaq Yusufi and Josh, considers himself to be lucky if he breaks even. “You have to be an entrepreneur, gambler and philanthropist to be a publisher. You also need a Qarun ka khazana and Ayub ka sabr,” sums up Mr Noorani, “I do not have the first, though I have the second.”

He admits that he manages to sell off all the books he publishes because he prices them abnormally low, which would not be feasible were he not subsidising his publications from his income from the sale of law books through the Pakistan Law House, which he runs at the Pakistan Chowk. In law books it is a seller’s market, Malik Noorani points out. Apparently the same conditions obtain in respect of law books as they do for textbooks — they are in demand.

Books-31-10-1982 

Not an industry?

Normally, however, the economics of book production does not work out that way. The problems involved in procuring finance for book production do not make it a popular sector for entrepreneurs. Moreover, publishing is strangely not recognised as an industry in Pakistan, although printing is. It is difficult to ascertain the number of publishers in the country. There are hundreds of one-book publishers. Many writers publish their own works.

Most of the big publishing houses which are located in Karachi and Lahore do not publish more than 10 titles a year now. According to a National Book Council (NBC) survey, Ferozsons, one of the largest publishers in Pakistan, has published 862 titles in 30 years. Many are reprints. Since publishing itself cannot sustain the company, it has had to diversify its business and now the major source of its revenue is income from contract work in printing.

Given such low turnovers, the prices of books are pegged high. What contributes foremost to the high prices in the exorbitant price of the materials which are used to produce a book, says Mr. Quraeshi.

The import duty on the paper used for printing books is Rs 4,000 per ton, plus 10 per cent sales tax on the import duty paid value, plus 5 per cent import surcharge. This works out to more than 110 per cent on the cost of paper. The importer’s profit and clearing agent’s charges further push up the price. The country produces 25,000 tons of paper, most of it not usable for books, when the total requirement is nearly 100,000 tons.

The price of paper in Pakistan is about 150 per cent more than in other countries. It is 400 or 500 per cent higher than the cost of paper in India which produces 1,600,000 tons of paper and imports 200,000. For encouraging the publishing industry, the Indian Government supplies paper to publishers at 50 per cent discount. To ensure that the subsidised paper is not used for other purposes, it is slightly coloured.

The high cost of paper in Pakistan makes books expensive to produce. According to Mr Quraeshi, the price of paper constitutes 70 per cent of the production cost. The import duty on other items is as follows; printing machinery 40 per tent, photographic material 40 per cent, ink 40 per cent and binding material 62 per cent. The country relies heavily on imports for all these items.

In Pakistan the Government has monopolised textbook production and thus destroyed the base on which publishers rely for the expansion of their publishing activities in other areas. On the plea that they wish to supply books at low cost to the students, the Textbook Boards are minting money and growing rich in the process while the private sector is being squeezed out. The breakup of the cost formulae on textbooks is as follows: Cost of paper 45 per cent; printing costs 12’/2 per cent; publisher’s profit 15 per cent; bookseller’s discount 15 per cent and author’s royalty 12% per cent. The cost of paper is low because it is heavily subsidised by the Government. It is now universally recognised that if the book industry in a country is to grow the perpetuation of Government monopolies and monolithic control especially over textbooks must be discouraged.

 

Piracy, copyright law

Another issue closely related to the economics of book production is that of piracy. Leaving the moral aspect aside, piracy, according to Mr. Saad, is attributable as much to necessity as lack of ethics. If foreign books were easily accessible at low costs, piracy would not flourish. But, Mr. Quraeshi says it is a misconception that only foreign books are being pirated. Eminent local writers find their works pirated. Effective copyright laws can help but they would not end the problem. The genuine publishers do not have the resources to challenge the pirate in a law court. Invariably his opponent is more resourceful, has more connections and has enough funds from his ill-gotten wealth to fight a case. Lowering the prices of books can help. Then piracy will no longer be paying or worth taking a risk. But that involves the economics of book production. As far as foreign books are concerned, Mr. Quraeshi suggests that the Government would, have to change some of its rules regarding foreign remittances in the book trade to discourage piracy.. At present an importer imports foreign books is a’ • ed to pay their cost in foreign exchange right away even though this is high. The pirate, capitalising on the high prices, floods the market with low cost locally produced pirated editions. Ziring’s book is selling for Rs 30 when the original cost was £ 12 (Rs.280).

 

Foreign publications

If a publisher enters into an above-the-board agreement with a foreign published to print a book locally he is not allowed to remit the royalty before the books hav been sold and a chartered accountant’s certificate obtained. This obviously takes time, two years in most cases. As such it is not surprising that foreign publishers are not interested in such agreements although these books printed locally under agreement would be much cheaper than the originals and simply not worth pirating. Yet the Government’s logic/is strange. It does not mind an importer paying £ 10,000 in foreign exchange for a thousand copies of a book selling at £ 10 but a publisher is not allowed to transmit £ 400 as royalty (10 per cent of the price of the locally printed edition) right away on signing a contract or when a book is published. However, Malik Noorani believes that tighter control by the Government can alone help to root out piracy. He thinks above-theboard agreements with foreign publishers do not work out because a local publisher offers royalty on the price of the local edition which is much lower than the original. Many foreign publishers refuse to aco 1 that as a result their publications are pirated, sometimes by more than one publisher.

 

What the government can do

What can the Government do to help the book industry in Pakistan? First of all, it is unanimously agreed that the Government should reduce or preferably do away with the import duties on paper and other publishing material. After all, newspapers are getting newsprint duty free.

Mr. Quraeshi feels the paper for books should not only be duty free it should also be subsidised. The book trade should be given rebate on taxes. The publication of textbooks by private publishers should be allowed on a competitive basis. That will improve their quality and provide a reliable income to publishers to subsidise other publications. Measures also need to be taken to promote the sale of books by opening libraries and encouraging the reading habit in people. This would help to expand the book market. Malik Noorani feels the market can be considerably expanded if the Government were to allow a free exchange of books with India.

He believes many of the books published here are in demand in India and if export by the private sector were to be allowed they would find a ready and bigger market. However, others in the trade feel that indiscriminate import of Indian books could hurt the local publishers. Being low priced, Indian books would swamp our market. The NBC believes that the abolition of duty on paper and other printing goods can reduce the cost of book by 30 per cent. Production • costs are so high in the country that, according to Mr. Ibrahim Saad of the NBC, the Holy Quran is being printed in West Germany and is then imported in the form of printed sheets which are duty-free. They are bound here since labour is cheaper in Pakistan.

 

A pricing formula

Mr. Shams Quraeshi gives the formula adopted for pricing a book as: “Cost of Production X Factor: Selling Price” Cost of production includes cost of paper, printing and binding. In Pakistan the “Factor” is generally 3 (sometimes 4) depending on the nature of the book and the sale anticipated. In Britain, the factor is between 6 and 8 while it is 8 to 10 in the United States. The more popular a book is expected to be the lower is the factor. The other costs are calculated broadly as follows on the selling price (the figures have been rounded off): Cost of production : 30 per cent Royalty to author : 10 per cent’ Discount to wholesaler : 10 p.c. Discount to retailer : 25 p.c. Bank interest on financing for one year, postage and cartage publicity and publisher’s profit : 25 per cent It is the publisher who is at the greatest disadvantage. The bookseller’s discount cannot be lowered because his turnovr is so small that nothing less than 25-35 per cent can cover the cost of running and maintaining a bookshop. The publisher can incur a loss in two ways. First, he might not be able to sell all his copies within a year and thus the interest might be actually higher than what he had provided for. Secondly, all copies might not be sold in which case he literally disposes off the remaining copies at a nominal price as waste paper.

 

A vicious circle

Books have become more expensive than before which makes them difficult to sell. Hence the low print run which, further boosts up prices. It is a vicious circle. Books at low cost could sell more easily. The prices can be brought down if the print run is increased and more copies are sold. The larger the number of copies printed the less you have to raise the ‘factor’ which determines the price of a book. Mr. Quraeshi claims, if he can be certain of selling 2,000 copies of a book within a year, he can reduce the price of the book by 15 to 20 per cent on its present price level.

The only exception is the textbook. It sells in large numbers, the print run of some titles published by the Sind Textbook Board being as high as 60,000, and the returns are quick. Most textbooks are sold off at the beginning of the academic year. It is a universally recognised fact that textbooks are the mainstay of the publishing industry. They provide the financial returns and security which allow a publisher to invest in books which do not sell so easily.

Source: Dawn 31 October 1982