News analysis: The publishing industry

There is a moment in every plot when something happens that changes everything, and that is true now, in this one. A decision is about to be made, and the world of books expects a huge change. The writers are waiting, the agents, the editors, the publishers and the booksellers, not to mention the readers, are all waiting for a deal to be made that will close scores of little bookshops, deprive the world of interesting writers and lead to great books being sold like Big Macs.

Or not, depending on who you believe. But it is certain that if a takeover currently being considered by the Office of Fair Trading does go ahead it will change the way books are bought, sold and written.

The villain of this plot, according to some of its other characters, is the HMV Group, which owns the book chain Waterstone's. It wants to buy its rival Ottakar's for £96.4m. That would create a new super-chain with up to 335 branches, selling half of all the books that are sold in bookshops. The OFT is about to decide whether to allow the deal, or refer it instead to the Competition Commission. A ruling was expected two days ago, but put back to this week. It could come tomorrow.

If the deal does go ahead then the people who make the decisions at Waterstone's - who decide which titles go on the shelves, and which in the windows - will become even more powerful than they already are, with the ability to make authors rich and famous (or strangle at birth the careers of those not chosen).

That would be a disaster, according to the Society of Authors, whose concerned members include Margaret Drabble and the children's laureate Jacqueline Wilson. They say the takeover would mean smaller advances for writers, fewer and less interesting books being commissioned, and fewer of those that are published getting to the shop shelves where they can be seen and bought.

"The whole books industry is on tenterhooks," says Joel Rickett of The Bookseller magazine. "The deal would bring about the biggest change that publishing has faced in years."

The industry is already struggling. Supermarkets and mail-order companies are slashing the price of books - you can buy all six titles on the 2005 Man Booker Prize shortlist for just £29.99 from one company. Quality can still sell, then, but at prices that are sustainable only for the biggest players. Otherwise, the top sellers are celebrities such as Jamie Oliver.

New talent is struggling to get through - a book that is not a hit within a month can disappear from the shelves. And one senior publishing executive at a company previously known for nurturing writers says the mood there now is that if an author has not made it big within two books then he or she should be dropped.

The path of a book from inspiration to the reader can be tortuous even when the author is highly acclaimed. Ali Smith is an intensely private Scottish author with a habit of winning or being shortlisted for major literary prizes. She nearly won the Orange and Booker prizes in 2001 for Hotel World, and was in the running for the Booker again this year for her latest, The Accidental, about a family whose holiday at a cottage in Norfolk is disturbed by a stranger.

"My mother began me one evening in 1968 on a table in the café of the town's only cinema," is how The Accidental begins. The 43-year-old author, who lives in Cambridge, first had the idea for it five years ago.

She had written "50 or 60 pages" by the end of 2001, by which time she had also become hot literary property. That made life a lot easier for her agent, the tough-talking American Andrew Wylie, who revels in the nickname "The Jackal". He has offices in New York and London, and a long list of clients ranging from Lou Reed to Salman Rushdie.

The Accidental was sold to Hamish Hamilton, an imprint of Penguin Books, which had also published Hotel World. Smith will not say how much she was paid as an advance (few authors do, unless they're showing off), but she does say: "If you compare it to the normal salaries people earn over the same amount of time as a book takes to write then if you are very lucky indeed it may be roughly in the same ball park."

The bulk of the novel was written in an all-out sprint in 2004. Smith used her partner, a film maker, as the sounding board for the early drafts and presented what she considered the finished version to her editor at Hamish Hamilton, Simon Prosser. Luckily, he agreed.

As usual, the manuscript went to a proof editor who checked the minutiae. Then a typesetter, Rowlands of Suffolk, reproduced the manuscript in a publishable form. This proof copy of the book was checked and sent to Clays of St Ives, a print company whose name appears inside millions of books every year.

The cover of a novel like this is conceived about 10 months in advance of publication, when the editor and the publisher's sales and marketing teams meet with a designer. The Accidental hardback features a stunning work by the late Derek Jarman.

The cover is part of the sales materials with which publisher's representatives approach booksellers, wholesalers and buyers for major players such as Waterstone's and WH Smith.

These buyers are currently considered the most important people in publishing. Richard & Judy can make a book famous by promoting it on their television show, but only the buyers can make sure it is in the shops. They often have more influence over the covers than publishers would like to admit. And they know that being part of one of their big in-store promotions can guarantee a hit - so the chains can ask for money in return for inclusion, as well as demanding the largest possible discount. "You may sell tons more copies," says a senior editor (not at Penguin), "but not make much money at all."

The most influential store buyer of all is Scott Pack of Waterstone's. Credited with (or blamed for) having applied the techniques of the record industry to bookselling, he is said to dictate what every branch promotes. Publishers are said to be in thrall to him, and authors dependent on him for their careers.

Waterstone's disputes this. The company says Mr Pack "does not conduct the day-to-day buying of titles" and that his team buys only 2 per cent of all titles. A spokeswoman says that of the 393,000 titles it sold last year more than 300,000 were ordered by local managers. On the other hand, JK Rowling and Alan Bennett have both urged buyers to boycott chains for their local bookshop. Bill Shephard, owner of Cole's Bookstore in Bicester, Oxon, says: "Waterstone's was once a proper bookseller with choice and knowledge. The modern version is depressingly corporate. It is a retailer that sells books."

But there is a problem with portraying Waterstone's as the villain of the piece. The shops are quite pleasant. The range is quite wide. The staff are quite knowledgeable. This is no evil empire. It is not even McDonald's.

Ali Smith hopes Waterstone's will go on stocking The Accidental, which appeared on the shelves in May. "I am fashionable now, but in five years' time I won't be," she says. But Smith adamantly refuses to worry about that. She knows a secret shared by all the better writers: the only way to write a book of real worth is to ignore the sales reps and promotions, to refuse to think about whether you will get on the right shelves or be nominated for the right awards. Authors who can do that have a chance of producing good books, not bad ones written from ambition rather than talent.

Smith does not succumb to the gloom gripping the industry that depends on talent like hers. Perhaps the new Waterstone's will take on the best, responsive and locally sympathetic qualities of a good Ottakar's. Perhaps the independent bookshops will find a way to make the most of their expertise and idiosyncracy. The author cannot afford to know or care how this plot will unfold, she must get on with devising her own, but does insist, optimistically: "Reading is about intelligence. The reader will not be fooled or dictated to by the shops. The mind will always find a way to work round the market. People will always resist being oversold."

CHAPTER AND VERSE

161,000 different titles were published in Britain last year

296 million books were bought

£2.2bn is what we paid for them

£96.4m is the price Waterstone's has offered to pay for its rival Ottakar's

50 per cent of all bookshop sales would then be theirs, or

23.6 per cent of books sold in the UK, including mail order, internet and supermarkets

The Top 10

The best-selling books in Britain last week

1 The Broker by John Grisham

2 Extreme by Sharon Osbourne

3 Guinness World Records

4 Jamie's Italy by Jamie Oliver

5 The World According to Clarkson by Jeremy Clarkson

6 Next to You by Gloria Hunniford

7 Margrave of the Marshes by Peel and Ravenscroft

8 Untold Stories by Alan Bennett

9 The Da Vinci Code by Dan Brown

10 The Beano Annual

Information from Nielsen BookScan via The Bookseller