As publishers engage in vicious price wars, authors lose millions

Authors are losing millions of shillings in reduced royalties as publishing companies cannibalise each other in a vicious price war to win government tenders for supply of books to schools.

The Sunday Nation has learnt that in order to make ends meet, after quoting ridiculously low prices, publishers have resorted to renegotiating their contracts with the authors downwards. Others have been forced to sign two contracts for the same title; one for the government tender and another for the open market.

In some cases, publishers have offered to give authors a one-off payment to write the books and avoid paying royalties altogether.

The government introduced the direct procurement of books from publishers in 2017 to lock out corruption cartels that had stifled efforts to ensure a 1:1 student to book ratio in schools. In just three years, this has been achieved and at a cheaper cost.

The model has also adversely affected booksellers, with some already having closed shop after they were cut out of the supply chain.

Royalty rates lowered

Kenya publishers Association Chairman Lawrence Njagi acknowledged that the royalty rates have been lowered. He revealed that publishers were only making between 3 and 4 per cent profit from government tenders.

“The logic is that the government is like a wholesaler. It is impossible to make 10 per cent profit,” he said.

Publishers who win the tenders are usually guaranteed millions of shillings from the direct bulk sales whereas missing out spells doom for a publisher, especially the small and mid-sized ones. This is what has forced them to quote extremely low prices in a past bid, a publisher infamously quoted one shilling for a teacher’s guide, hoping to make up through the pupil’s book sales.

Private schools

Usually, the same titles sell at higher prices in the open market, mainly targeting private schools.

However, according to various industry players, the strategy is unsustainable and could easily kill the multi-billion shilling industry in the long run.

In public schools, learners average about one million per level. That means winning a tender guarantees a publisher a sale of one million copies at once.

“The price wars have taken away the incentive to produce a great book. You are forced to do just the bare minimum to ensure your books pass content evaluation. This way, your publisher can afford to quote a lower price for the financial bid,” James, an author who preferred to be identified by only one name told the Sunday Nation.

Ordinarily, most publishers pay authors 10 per cent of the net sales as royalty, but they are currently offering as low as one per cent. It is more painful for books that have multiple authors as they have to share out the reduced percentage.

“Someone has to pay the cost for this cut-throat competition. Unfortunately, authors, who are the content creators will suffer,” a senior manager at a publishing house said. She added that learners might also be denied exposure to good books if publishers scale down their research budgets in order to remain competitive.

Printing costs account for between 35 and 45 per cent of the book production process. Other costs include value added tax (16 per cent) and distribution (15 to 20 per cent). To reduce the cost of printing, publishers tend to condense the content and pack it in a smaller book.

Struggle to pay printers

Publishers have also been struggling to pay printers, transporters and other suppliers since winning a tender does not guarantee immediate payment. Prof Charles Ong’ondo, the director of the Kenya Institute of Curriculum Development (KICD) recently told a committee of the Senate that the government owes publishers over seven billion shillings in unpaid bills.

In an interview, Prof Ong’ondo acknowledged that some publishers have in the past struggled to service the tender even after winning because they quoted in order to undercut rivals.  “At times the distribution of books to schools is extremely slow because a publisher may be unable to pay transporters,” he said.

Grade Six books

On Monday, the KICD revealed the Grade Six books that passed the technical threshold for approval for use in schools. The institute, which acts as the Ministry of Education agency in charge of books procurement, also opened the price bids. Prices quoted ranged between Sh50 shillings and Sh100, which are outrageous considering the production costs.

The government does not dictate prices but usually selects the lowest bid from the list of approved titles.

Officials at the institute are evaluating the bids, after which they will be presented to the KICD council for approval.