Bagwell, Sheryle. "WiGBPd About Harry," Australian Financial Review, 19 July 2000

Besides making millions out of her schoolboy hero, Harry Potter, author Joanne Rowling has achieved the near impossible: she's got children reading books again. Sheryle Bagwell reports.

At the Hogwarts School of Wizardry and Witchcraft, young Harry Potter often turns to his wise headmaster, Albus Dumbledore, for advice and support. In real life, JKRowling, the creative genius behind the Potter phenomenon, would seem to owe a lot to another grey-haired wizard her London agent and chief dealmaker, Christopher Little.

Little was among the first to spot the potential of Harry Potter as a best-seller when Joanne Rowling's first manuscript landed on his desk some four years ago. And it is he who now manages the multi-million-pound business empire that this literary blockbuster has spawned.

"Everything is controlled from here,'' says Little, referring to his small office in south-west London, in an interview sandwiched between conference calls. "Every single contract we deal with on a direct basis. It doesn't matter where it is, whether it is Japan or Korea ... everything has been negotiated from this office.''

But even Little couldn't envisage back in 1996 the phenomenal success that Harry Potter would become. Rowling recalled last week how Little told her after she had completed the first draft of the first Harry Potter book: "Now remember, Joanne, this is all very well, but it is not going to make you a fortune.''

Rowling's first three Potter books have gone on to sell about 35 million copies worldwide, netting her GBP14.5 million ($37 million) in earnings last year a reported GBP11.5 million in royalties, GBP2 million in advances and a further GBP1 million from the sale of film rights. (Last year, Warner Bros bought the film and worldwide merchandising rights to the first four Harry Potter books.)

Those earnings placed Rowling third in the list of top UK women earners last year, well ahead of even the Spice Girls. Not bad for an out-of-work teacher and single mother who famously wrote her first book in an Edinburgh cafe to save money on heating.

But you ain't seen nothing yet. Rowling's earnings are set to take off once again with the launch of the fourth book in her seven-book series, her weightiest tome, Harry Potter and the Goblet of Fire, and the release next year of the first Harry Potter film. Early estimates of Rowling's earnings over the next decade have been put at an additional GBP30 million, but even Christopher Little last year described that figure as conservative.

Certainly, Harry Potter Inc seems to know no bounds. Warner Bros has already struck licensing deals for the manufacture of Harry Potter dolls, sweets, electronic games and bedsheets which are estimated to net the film company a further $US100 million in advance royalty payments alone.

What is unique is that the product at the heart of the hype is not a Hollywood summer blockbuster or a new edition Gameboy but something as old-fashioned as a book, something which has excited parents as much as Harry's young fans. Parents figure that anything that can get their kids to turn off the TV and read a book again is fine by them even if the marketers have gone a little overboard this time around.

While the previous books managed to capture childrens' attention by mostly word of mouth, the publishers, Bloomsbury in the UK and Scholastic in the United States, decided to leave nothing to chance with the fourth book. Aware of the anticipation building among Rowlings' young fans for her latest instalment, the publishers decided to keep the book and its title under wraps until the moment it went on sale 12.01am on July 8 to be precise to heighten demand. Rowling also dropped her famous reclusiveness to board a red steam engine renamed Hogwarts Express for a national tour and a succession of interviews to promote the book.

The hype worked: a record-breaking 372,775 copies of Goblet flew off the shelves (and internet sites) in Britain on the first day of publication alone, a mass-purchasing phenomenon more akin to first-day releases of Beaujolais wine or Star Wars movies. Even before hitting the shelves, about 400,000 copies of the 640-page hardcover edition had been pre-sold worldwide by the US internet retailer (Amazon, which teamed up with Federal Express to deliver the books under heavy security on launch day, described it as the biggest e-commerce distribution event in history.)

Such was the confidence in Goblet that the publishers have given it an unprecedented initial print run of 1.5 million books in the UK and Australia and 3.8 million in the United States or about twice the number for a John Grisham novel.

"There has been no publication like it since crowds waited impatiently for the stagecoach and steamer to deliver the latest instalment of The Pickwick Papers,'' the London Times editorialised last week. "Like Teletubbies, Gameboys, films by George Lucas, and the new racing mini-scooters of stainless steel, Harry Potter has become a cult and a craze for children.''

It would be easy for a relatively new author to lose control of such a juggernaut, but Christopher Little claims to retain an iron grip over the business process on behalf of his client no doubt motivated by the 15-20 per cent cut he gets of all Rowling's earnings.

Although her initial advance from Bloomsbury for her first book, Harry Potter and the Philosopher's Stone, was said to have been less than GBP10,000 (Scholastic in the US, however, upped the ante by paying a $US100,000 advance for the same book in 1998), Rowlings now commands a 15-20 per cent royalty fee, more than double the industry standard.

Little says that as part of the film deal with Warner Bros, Rowling will also get a cut of the box office. The author, who admits to being very posessive about the characters she has created, will also have a "large amount of say'' in the films and the merchandise.

"[Rowling] has more control than I think possibly most other people have ever had,'' says Little. "The first movie [due to be released next May] is being made with British actors, it's been loyal to the book and it is being shot in the UK which was her request. It's been wonderful team work and everybody is very happy with the way everything is going.''

Well, perhaps not everybody. One of the reasons American director Steven Spielberg is said to have pulled out of the film project in February was a wrangle with the author over casting. Spielberg had wanted an American boy to play the lead role. But Spielberg's withdrawal has not stopped Warner Bros revving up the marketing machine around the film. Earlier this year, it signed licensing deals with toy groups Mattel and Hasbro, which plan to develop a range of Harry Potter merchandise from dolls, electronic games and vehicles to Pokemon-style trading cards and sweets in time for Christmas.

The Danish company Lego has also jumped on the Harry Potter bandwagon, signing a multi-million-pound deal last week to create nine construction sets based on the first movie.

"It could be worth billions of dollars to [Warner],'' Michael Wolf, a media and entertainment analyst at managing consultancy Booz, Allen & Hamilton in New York told the US Entertainment Weekly in March." And remember: they don't just have one book. They have a whole bunch. It can keep on giving.''

But Warner doesn't have the rights to all the books which, if the world's children do not tire of Harry Potter's magical exploits, means there may still be some mega-deals left to be done. Rowling has committed herself to writing seven Harry Potter books one for each year Harry is at school and already is getting online orders for the fifth, which Rowling hasn't even begun to write yet.

Little may even consider offers from other publishers for the next three books. Although reports have long suggested that Bloomsbury and Scholastic have a contract for the whole series, Little says this is not the case: "I negotiate on a book-by-book basis,'' he says.

It would be hard to imagine, though, that the publishers would let such a gold mine slip from their grasp.

Pottermania has pushed the share price of both Bloomsbury and Scholastic to new heights Bloomsbury, at around 837 pence this week, has risen nearly tenfold over the past two years. One of the last independent mid-sized publishers left in Britain, Bloomsbury also saw its pre-tax profits leap by 66 per cent to GBP2.6 million last year, with some analysts estimating that Potter earnings now represent about 20 per cent of the publisher's total turnover.

Bloomsbury, which took on the first Harry Potter book in 1996 after other publishers, including Penguin, TransWorld and HarperCollins, had passed on it, nevertheless tries to downplay the significance of Rowling's books to the company's bottom line, lest perhaps it all disappears with a wave of Little's wand.

"Publishing is always a gambling game and you have your successes and you have your failures Bloomsbury, like anybody else, has had several of both over the years,'' Rosamund de la Hey, Bloomsbury's head of children's sales and marketing told The Australian Financial Review. ``We've always been fiercely independent, so Harry hasn't changed that in any way but he has obviously reinforced our position. It really hasn't changed the company in any way fundamentally other than all of us really enjoying it it's been great fun to work on.''

Presumably, it remains fun for the woman at the eye of the storm, Joanne Rowling herself, who says she dreamt up Harry Potter while on a train journey 10 years ago. She remains remarkably composed if not a little put out by all the publicity and request for interviews Rowling granted just one Australian interview, to the television program Sixty Minutes. She appears to have come to terms with her new-found wealth despite feeling, she says, some moments of guilt.

Last week, the Edinburgh mum reportedly spent GBP4.5 million on a new six-bedroomed house in ritzy Kensington, in the same mansion block where Madonna recently rented a GBP7,000-a-week property.

"There's no doubt I made a lot of money out of it, and some of it's been absolutely wonderful,'' says Rowling in an interview broadcast last week on Bloomsbury's Harry Potter website.

"But I often think that I was temperamentally better suited to being a moderately successful author. I didn't have the faintest idea what I was walking into, but nor did anyone else.''