A Gamble that Really Paid Off

As a businessman myself, I was most interested to hear an interview on one of BBC Radio 4’s financial reports this week with Mark Smith, the CEO of independent British book publisher Quercus. He was responding to news that his house’s release over the last three years of the late Swedish author Stieg Larsson’s “Millennium Trilogy” has significantly boosted Quercus’ bottom line. From Marketwire:

As a result of this strong trading, [Quercus’] unaudited management accounts for the six months ended 30 June 2010 show:

• Revenue of £15.0 million (compared with revenue of £5.55 million in the same period in 2009).

• Group operating profit for the period rising to £3.40 million (against a loss of £0.10 million in the same period in 2009).

• Improvement in Group margins, despite the continued decline in the UK book retail market and the wider economic and financial issues.

Mark Smith, chief executive of Quercus said: “Our results continue to be driven by double-digit growth across the business and, most significantly, by the continued success of Stieg Larsson’s Millennium Trilogy, for which we own the global English language rights. These books represent the three best selling fiction titles in the UK over the last six months, and Larsson is the first to have sold more than 1 million Kindle e-books through Amazon.”

This is a very solid result, considering the general condition of the book-publishing world right now and the far less-optimistic news recently about bookseller Barnes & Noble being put up for sale.

Meanwhile, The Independent’s Nick Clark looks back at Quercus’ short history but dramatic growth as a player in publishing, and the role Larsson’s fiction had in its success:

“Before Larsson, we were constantly having to prove ourselves. As a new start-up we weren’t high up agents’ lists and had to work really hard to convince authors to sign. It was difficult,” Mr. Smith says. “Everyone dreams of signing the next blockbuster, the next Harry Potter--and we did. I’ve had colleagues who have been waiting 25 years for such a hit.”

The Millennium Trilogy, which started in 2005 with the release [in Sweden, of what would become The Girl with the Dragon Tattoo], has sold millions of copies and made Swedish author Stieg Larsson a household name. ... Movie deals, including an upcoming English remake set to star Daniel Craig, have helped turned Quercus into Britain’s fastest-growing publisher, emulating the success of Bloomsbury, which rocked the industry when it signed J.K. Rowling and the Harry Potter books.

Quercus started life modestly in 2004 after Mark Smith and Wayne Davies defected from Orion Publishing Group. Suitably, for a company that would later publish a phenomenon in crime fiction, they rented a small office round the corner from the fictional premises of Sherlock Holmes on Baker Street.

“I wanted to start my own business and foolishly thought it would be easy,” Smith recalls. The company focused on non-fiction books that could be nicely illustrated. Its first success [in 2008] was Universe [by Nicolas Cheetham], followed by Speeches that Changed the World [by Simon Sebag Montefiore].

But Smith had an appetite for risk and two years after launch moved into fiction, signing 10 titles from first-time authors. One of its early successes was The Tenderness of Wolves by Stef Penney, a mystery set in the snowy wastes of Canada in 1867. The novel won the Costa Book Award in 2007, driving it up the bestseller charts and allowing its publisher to expand. What had been a staff of 15 people has since grown to 40.

The turning point for Smith came when he recruited Christopher MacLehose, who had a reputation as a master at finding foreign fiction by writers such as Henning Mankell and Haruki Murakami and turning them into English-language hits.

MacLehose’s first signing was a Swedish crime thriller called Men Who Hate Women written by a journalist who had died in 2004. The deal handed Quercus the global English-language rights for the book that would turn into The Girl with the Dragon Tattoo. Larsson’s books had already “gone crazy” throughout Scandinavia, Mr. Smith said, with sales hitting 3 million in Sweden and outselling the Bible in Denmark.

But British publishers got cold feet. “That Larsson had passed away was a problem, as publicity is very important in getting a new book off the ground,” Smith explains. “There are tough themes in the book and many were put off by the title. It’s also rare that a European success translates into the English-speaking market.” While he regrets never meeting the author, he admits that “if he was alive, we probably would never have snapped up the rights.”

The hardback edition of The Girl with the Dragon Tattoo failed to cause much of a stir when it was published in January 2008, selling around 8,000 copies. “The paperback that followed in the summer did okay but was nowhere near as popular as elsewhere in Europe,” Mr. Smith added.

The publisher failed to get the books into prominent positions in the shops, and some refused to stock it. One prominent retailer, who Mr. Smith declined to name, said its customers “don't like authors with funny names.”

Who’s laughing now, huh?

You can read The Independent’s full article here.