Publishing Hinges on the Book Number. What Can We Actually Know About It?

An unverified report says a third of the year's book numbers will not be issued. How much should we make of that?

On the evening of March 5, 2018, a message appeared on Sina Weibo: "2018 is a year of strict publishing controls. The publishing administration is cutting 100,000 book numbers, about a third of the year's total. Our read is that after September numbers will be scarce and dear, so get your books out in the first half of the year! The few that are left will go only to bestsellers!"

The account was "@Publisher Xing Hainiao," verified as "general manager of Sandingjia Books" — a broker between authors and publishing houses. His profile carried a slogan: "Want to publish a book? Come to Uncle Bird!"

Book publishing in China still runs on a strict quota system: how many books come out in a year is controlled by book numbers. Before 2009, each editor on a publishing house's staff had a quota of about five numbers a year. The body that hands them out is the "publishing administration" Xing Hainiao referred to — formally, the State Administration of Press, Publication, Radio, Film and Television, created five years ago in the last round of institutional reform by merging the General Administration of Press and Publication with the State Administration of Radio, Film and Television.

Among his 20,000-plus followers the post drew four reposts. Four days later he deleted it.

A market that has run for years without a ripple, capacity unchanged, and then a third of its licence to produce vanishes. What would that mean?

1.

Start with the book number itself.

In front of me is the mainland simplified-Chinese edition of Fang Si-Chi's First Love Paradise, published in February 2018.

The copyright page gives the book number, the copyright contract registration number, the printer, the word count, the distributor, the author, and one responsible editor.

Inside the back flap, six more editors' names are printed on the white belly band alongside the responsible editor's. Above their names is the holder of the book's mainland rights: Keyi Books, a wholly owned sub-brand of Motie Books.

So the simplified-Chinese rights to Fang Si-Chi's First Love Paradise sit with Motie Books. Motie chose the title, bought the rights, printed, distributed and marketed it; most of the work was done by those six editors and their colleagues. But the body that licensed the book to be published is not Motie. It is the other name on the cover: Beijing United Publishing Co.

In the trade's shorthand, Beijing United Publishing Co. owns the book number. It is a licensed publishing house, and the quotas described above are allocated to houses like it.

Perhaps two-thirds of the books you see in a bookstore today, online or off — bestsellers above all — have two or more companies working together behind them.

According to the book-market research firm OpenBook, the country's ten state-owned publishing groups together took 28.56% of total list-price sales in 2017, with Beijing United Publishing first among individual houses at 2.63%. Most of its books were planned and produced with companies like Motie. And while privately owned book companies held only 8.8% of the market, 90% of the titles on OpenBook's three main 2017 bestseller lists came from them.

It was these private companies that "@Publisher Xing Hainiao" was warning. If the supply of numbers shrinks, they are the first to feel it, because they are the ones who must work through a publishing house. One problem is price. The other is that if the supply really falls by a third, money may no longer be enough to "buy" a number — or, to use the polite word, to "partner" for one.

2.

China has more than 500 publishing houses. In commercial terms they hold a franchise: the publishing bureau issues each house a quota of book numbers, generally five per editor on staff before 2009. By the end of the year those numbers are printed in the books that come out; unused ones expire. In issuing the quota, the state has already estimated and capped how many books will appear that year.

From the 1980s on, as demand for publishing grew, private outfits began to appear, and they usually got their numbers by working with a house under the banner of "cooperative publishing": the house supplied the number and took charge of the final review, while the research unit handled the remaining editorial work, the printing and the distribution, and paid the house a publishing fee. This slowly turned into a business of selling book numbers. For small houses in particular it beat the slow, laborious work of developing titles themselves: no staff costs, the annual publishing quota filled in a very short cycle, and a tidy "book management fee" on top. Like plenty of state enterprises then making money off a franchise, state publishing houses got a taste for it.

The fee is usually collected under the name "publishing management fee" or "reading fee." An editor at a private publishing company told QDaily that numbers were dearest in the 1990s, when the market saw some go for as much as 300,000 yuan. As the publishing landscape settled, prices came down; today a number runs from about 6,000 to 15,000 yuan. "There are higher ones — I've heard of 20,000 — but nobody around me has bought anything that expensive. The house, or the company, sets a ceiling; it won't let you buy a pricey number. So, 10,000 to 15,000."

In this huge unpublished market, numbers are priced by a long list of unwritten rules: the standing of the house and whether it answers to the central or a local government, its name, whether it is a specialist house. One editor summed it up: "A very rough rule is that the more market-driven the house, the lower its price."

In 2009, industry insiders reckoned, private book studios were spending 1 billion yuan a year buying and selling numbers.

All of it goes into the cost of books — part of a private bookseller's annual outlay, spread thin across every copy.

Against the Xinhua Bookstore network that was the only sales channel in the 1980s, the booksellers built what was then called the "second channel." Like most private companies in China's move from a planned to a market economy, it began as a supplement and ended up as the mainstream.

3.

By 2018 few private booksellers still worked in the standard cooperative-publishing form. Beijing Motie Books Co. is the most representative of those that do.

The company, on Dewai Street in Beijing's Xicheng district, was founded in 2007. It has three subsidiaries, one of them an animation company, and nearly ten publishing brands, including Tiehulu and Black Swan. It was at its height around 2010, with a run of bestsellers — Those Things About the Ming Dynasty 《明朝那些事儿》, The Grave Robbers' Chronicles, Jade Dynasty — and 800 million yuan in list-price sales in 2011, which made it the largest private publisher of general-interest books in China.

Motie describes itself as a "general publishing-development and distribution company" — no publishing business of its own — but it keeps a sizeable rights department. Like most state houses, this team of no more than seven people spends every day handling rights information, negotiating with authors and rights agencies and signing contracts.

More important, the department has to fill the book-number requests coming from the product managers, Motie's in-house term for its acquiring editors. An editor who used to work there described the routine to QDaily: "The acquiring editor decides which house suits the book's content and style, then asks the rights department for help and pays that house for a number. That's it."

Motie then sends the house the paperwork it has prepared. Another editor, surnamed Lei, said, "Every house asks for something different, but it's basically the author's ID details, a description of the book, sometimes the cover." Once the number is bought and the editing and proofreading are finished, the manuscript — through its three rounds of review and proofreading — goes with the cover to the number's owner for a read.

"We read a manuscript for its quality. I respect the author's copyright and get the text up to publishable standard. What they do" — the house selling the number — "is mainly political vetting. The political check," another product manager added.

At the printing stage the rights department is still on the phone to the house, which has to issue the printing authorization, the sales permit and the other papers publishing requires. Once the books are printed, Motie buys the entire run from the house and holds exclusive distribution rights to the title.

"Behind every book we publish," Lei said, "there are at least eight contracts between us and the house."

Thinkingdom Media Group, another private publisher, puts the arrangement this way in its stock prospectus: the issuer first conducts market research and develops a title, buys the rights, then signs a framework cooperation agreement with a publishing house, which is responsible for obtaining the publication number and for printing the book.

The prospectus also lists this way of distributing its own copyrighted books among the company's risks.

"It doesn't feel like a hassle. It's all standard procedure." None of the three Motie editors we interviewed saw the detour through a publishing house as having had much effect.

But the effects are real.

The book-number fee is the most concrete of them. A few years ago a successful private bookseller put it in numbers: for the same 500 books a year, "I pay close to 10 million yuan more in book numbers, while a licensed house, as a state cultural company, may save 10 million on tax breaks and the like. Counting both sides, that could be a 20 million yuan difference in profit."

Nor is that the end of it.

Before 2013, only publishing houses could issue a printing authorization to a printer, so house, bookseller and printer often signed an unenforceable three-way agreement letting the private company pay the printer directly. Otherwise the bookseller had to hand a large printing budget to the house in advance and file for approval with publishing bureaus in several places. "A manufacturer's business is not a distributor's business, and their tax treatment falls out of alignment. The biggest cost of all — paper and printing — can't be booked against the business, so there's no way to file taxes on a cost basis. Plenty of private companies end up keeping two sets of books, or asking the house to issue them other invoices. All of it gray, of course," an editor at Social Sciences Academic Press told QDaily.

Those gray areas in the accounts are also seen as a big reason private booksellers in China have never made it onto the capital markets.

And then there is censorship.

4.

The 2009 reform may have been the single largest release of productive capacity publishing has seen. The tightly held franchise loosened.

That year, confronted with a book-number trade that had become settled practice, the General Administration of Press and Publication introduced a new way of policing numbers. In July 2008 it trained all 519 publishing houses in the country on the real-name book-number application system. From March of the following year, all 579 book-publishing units would apply for numbers and bar codes online through that system.

The administration expected this to end the old model in which "an editor sells five numbers a year and calls the annual publishing plan done." Under the real-name rules it no longer released numbers in one allocation; it now had to check manuscripts that had been through three rounds of review and proofreading. A book could claim only one number, which also put a stop to the practice of the previous decade, when several books might share one.

But the tightening did not scare off the trade. Because numbers were now tracked, selling them cost publishing houses much more, and the price climbed higher still.

That April, meanwhile, after loud lobbying from private booksellers and market players, the General Administration of Press and Publication issued its "Opinions on Further Advancing Reform of the Press and Publication System," encouraging publishers, distributors and distribution groups to take stakes in one another and encouraging non-state capital to enter permitted fields in various forms. The reform package pushed that year by the administration's director, Liu Binjie, explicitly called for "guiding the healthy development of non-state publishing studios and developing new productive forces in publishing." By then, apart from textbooks, which state houses kept to themselves, private book companies already held 50% to 80% of the market in every category.

After two decades as "targets of severe crackdown," private booksellers finally had legal standing. From that point on the book number could no longer tie their hands. They had any number of ways around the licence, all of them lawful.

The 2009 policy had barely landed when, that April, Phoenix Publishing and Media Group announced that Jiangsu People's Publishing House and Beijing Gonghe Liandong Books Co. would form a strategic partnership, putting in 100 million yuan to set up Beijing Phoenix Liandong Culture Media Co. Gonghe Liandong's founder, Zhang Xiaobo, contributed his company's brand and other resources as his stake. Liu Jianping, president of Jiangsu People's Publishing House, became chairman; Zhang Xiaobo became general manager.

Private publishers rushed into partnerships with state houses. Through these "public-private joint ventures," state houses that had been running on empty gained control over private companies. The first book Phoenix Liandong published, China Is Unhappy, sold more than 600,000 copies in its first month.

In 2008 Lu Jinbo's Rongshuxia team merged with Liaoning Publishing Group's Wanjuan Publishing to form Wanrong Books; in 2011 Beijing Bojitianjuan Book Distribution Co. married into China South Publishing & Media Group to create a joint venture. Private publishers that had always lived outside the system won, by being taken into it, the one legal resource that mattered most: the right to publish, and the numbers.

Motie, which stayed independent, also began treating publishing as central to the company's growth. Getting numbers became an indispensable but routine step. Some market-minded state houses worked out a standing procedure for selling them; close to the private companies, quick, and not too heavy-handed in their vetting, they even built brands of their own out of this number-and-cooperation business. "What lets a house like Beijing United collect the industry's honors and awards is precisely what the private companies contribute."

More telling, a former Motie product manager said companies like his also receive a few specially approved numbers each year. Nowhere near enough to use, but proof that the administration's policy toward private publishing has loosened.

Besides, by 2018 the book was no longer the only way knowledge reached readers — or the only way these booksellers made money.

Plenty of studios, including the team behind the popular ZHI JAPAN series, told QDaily that their arrangements with publishing houses are no longer the number trade of ten years ago. Su Jing, ZHI JAPAN's editor-in-chief, calls his team a "big author" for CITIC Press: they develop and produce content on a schedule, and CITIC handles everything else — publishing, printing, distribution.

Holding just one link in the publishing chain no longer determines a company's income the way it once did. Su Jing sees publishing as one of several ways to turn content into money. In the business plans of Thinkingdom and Motie, the rights they hold will become films and television series, and bring in far more than printed books ever could.

5.

Book numbers no longer matter — unless they change.

In 2014 the Fudan University scholar Ge Jianxiong submitted a "Proposal on Improving the Publishing Industry" at the Two Sessions, again recommending that "restrictions on book numbers be abolished," that "journal numbers be increased step by step," and that "the documents offering guidance on authors' fees be rescinded." It was the first time since 2009 that the call to scrap book numbers had surfaced in the press.

He wrote: "I propose abolishing book numbers and journal numbers, to guarantee the freedom of publication the Constitution provides." And: "Restricting book numbers is probably a wonder in the history of world culture. … On one hand we talk about building culture; on the other we are still restricting book numbers. Since the Constitution provides for freedom of publication, publication itself cannot be restricted. If a book breaks the law after it appears, you can prosecute — but you cannot limit how much someone publishes."

Even Ge himself said later that the proposals never got a reply.

So if anything changes, it will not be that.

For all the years of gloom about the book market, China posted very high growth from 2012 to 2015 — the 2015 rate reached 34%. By 2017 the Chinese book market was worth 80 billion yuan; the retail market moved 1.89 million titles, of which 204,000 were new, a figure that has held steady for six years running.

When QDaily called "@Publisher Xing Hainiao," he sounded hesitant and wary. He said the post had been deleted, and would not say where the information came from.

We have learned nothing more about the cut in book numbers.

The latest news from the industry is that in the State Council's new round of institutional reform the State Administration of Press, Publication, Radio, Film and Television, itself the product of a merger five years ago, will be abolished, and the State Council will set up a new National Radio and Television Administration. Unconfirmed reports say oversight of press and publishing will move to the Publicity Department of the CPC Central Committee.

Cover image, banner image and long cover image, respectively: The Great Passage, shutterstock, Ryoji Ikeda