Encyclopaedia Britannica, Inc. History

Address:
310 South Michigan Avenue
Chicago, Illinois 60604-4202
U.S.A.

Telephone: (312) 347-7000
Toll Free: 800-747-8513
Fax: (312) 347-7399

Website:
Private Company
Incorporated: 1943
Employees: 390
Sales: $168 million (1999 est.)
NAIC: 51113 Book Publishers; 51121 Software Publishers

Company Perspectives:

Encyclopaedia Britannica's mission is to be the world's best-known, most reliable source of reference content, and by leveraging digital sister company Britannica.com Inc., to deliver it to the public through all possible means of communication. Key Dates:

Key Dates:

1768:
Encyclopaedia Britannica is begun in Edinburgh, Scotland, and is printed over next three years.
1809:
Original publisher Andrew Bell dies; his heirs sell company to Archibald Constable.
1827:
Constable dies; publishing is taken over by A & C Black, Ltd.
1889:
Ninth edition of Britannica is completed and acclaimed as most scholarly to date.
1901:
Britannica is sold to American publishers Hooper and Jackson.
1920:
Sears, Roebuck & Co. buys the Encyclopaedia Britannica Company.
1938:
Annually updated Britannica Book of the Year is introduced.
1943:
Sears sells company to William Benton.
1952:
54-volume Great Books of the Western World series published.
1957:
Spanish-language Enciclopedia Borsa, first foreign edition, is introduced.
1966:
Company name is changed to Encyclopaedia Britannica Educational Corporation.
1973:
William Benton dies.
1974:
The New 15th Edition is published, the most thorough revision in Britannica history.
1980:
Ownership passes to William Benton Foundation, with profits to support University of Chicago.
1993:
Encyclopaedia Britannica is made available on the Internet for subscribers.
1996:
Jacob Safra buys Britannica from Benton Foundation, and he restructures the company.
1999:
Britannica.Com is formed as a sister company to offer free online access.

Company History:

Encyclopaedia Britannica, Inc., has published one of the world's finest encyclopedias for more than two centuries. The Britannica is respected throughout the world for its combination of breadth and thoroughness in its treatment of everything from the Punic Wars to quantum mechanics, and many of its articles, written by outstanding scholars in their respective fields, are masterpieces of compact erudition unlike anything else in the field of learning. Encyclopaedia Britannica, Inc., markets the Britannica in more than 100 countries around the world and is also the parent company of Merriam-Webster, Inc., publishers of the famed dictionaries. The popularity of personal computers and the Internet have had a profound impact on the company, which now relies largely on sales of CD-ROM versions of the Encyclopaedia and the subscriptions of online educational users to stay afloat. Since its purchase in 1996 by financier Jacob Safra, the company has dropped its home sales program and has put the encyclopedia online for free via the advertising-supported Britannica.com, a sister company.

18th Century Origins in Scotland

The Encyclopaedia Britannica was first published between 1768 and 1771 'by a society of gentlemen in Scotland, printed in Edinburgh for A. Bell and C. Macfarquhar, and sold by Colin Macfarquhar at his printing office in Nicolson-street,' as the First Edition's title page informed its readers. The idea of uniting in a single publication all aspects of human knowledge went back at least to Roman times, but it was in the 18th-century, the Age of Enlightenment, that encyclopedias in the modern form began to appear in Europe. The French Encyclopedie, first published in 1751, became the symbol of French radical humanism and generated international controversy for its allegedly blasphemous philosophy, but there is no evidence that the creators of the Encyclopaedia Britannica were directly inspired by the fame of the Encyclopedie (which in fact was begun as a translation of an earlier work by the Englishman Ephraim Chambers).

Andrew Bell, a prosperous engraver of Edinburgh, and printer Colin Macfarquhar were convinced that the English-speaking world could use a reference work featuring substantial treatises on the arts, sciences, and trades combined alphabetically with shorter entries defining important terms and concepts. The two men engaged William Smellie, a 28-year-old scholar at the University of Edinburgh, as general editor of the First Edition of their proposed Encyclopaedia Britannica, which was published and sold in 100 parts between 1768 and 1771. The Encyclopaedia contained 2,659 pages, including articles borrowed from such luminaries as Benjamin Franklin (on electricity) and John Locke (on human understanding). The editors themselves wrote many of the shorter articles, while the longest pieces ('Surgery' and 'Anatomy') were treatises of well over 100 pages each. The new encyclopedia sold well, and its editors began immediate preparations for a second, much larger edition.

James Tytler succeeded Smellie as editor of the Second Edition, which was published between 1777 and 1784 in ten volumes totaling 8,595 pages and 340 copperplates engraved by Bell. The Second Edition was among the first encyclopedias to include articles on history and biography, two subjects which have since become standard. It was followed by a Third Edition of 18 volumes completed in 1797, edited by Macfarquhar and George Glieg, later a bishop and Primus of the Scottish Episcopal Church. (Macfarquhar died in 1793 at the age of 48, 'worn out,' as later publisher Archibald Constable put it, 'by fatigue and anxiety of mind.') By this time the Britannica was well known and widely sought after; the Third Edition sold between 10,000 and 13,000 copies and is said to have returned the substantial profit of £42,000 to Andrew Bell, its sole proprietor after the death of Macfarquhar.

Bell remained the owner and manager of the Britannica until his own death in 1809, after which his heirs sold the company's stock and copyrights for £13,500 to Archibald Constable, an Edinburgh publisher. Constable was an able promoter and manager, and under his direction the Britannica made important advances in the quality of its writing and increased sales both in Great Britain and the United States. Constable's Fifth Edition of 1817 was criticized as little more than a reprint of Bell's Fourth, but soon afterward a six-volume Supplement appeared which cemented the reputation of the Britannica as the premier encyclopedia of the English-speaking world. Constable was the first Britannica publisher to solicit new articles from the leading scholars and artists of his day, and among the contributors to the Supplement and the Sixth Edition, both completed in 1824, were such distinguished men of letters as William Hazlitt, Walter Scott, David Ricardo, and Thomas Malthus. Constable died in 1827, before he could make a start on the planned Seventh Edition.

The 1800s: The A & C Black Era

Copyrights to the essays were bought at auction by Adam Black, an Edinburgh bookseller, who collaborated with his relative Charles Black and their sons to publish the Britannica for the next 70 years as A & C Black Ltd. The Seventh Edition, edited by Macvey Napier, appeared between 1830 and 1842 and included a set of introductory essays intended to describe the progress of human knowledge since medieval times in four fundamental classifications: metaphysical, moral, and political philosophy; mathematics and physics; chemistry; and zoology, botany, and mineralogy. Similar attempts to organize all knowledge under a handful of rubrics had been common among encyclopedists, but the increasing scope and complexity of science in the 19th century discouraged the Britannica from making any further efforts in this direction. Indeed, so rapid was the progress of scientific and historical knowledge in the age of Charles Darwin and Karl Marx that by the 1860s the children of Adam Black were eager to publish a totally new Britannica in tune with the startling changes of their age.

The resulting Ninth Edition (completed in 1889) has since been acknowledged as one of the most impressive collections of scholarship ever produced, its articles written by outstanding experts in every domain of the arts and sciences. Thomas Henry Huxley, the distinguished biologist, served as general advisor for the scientific articles; typical of the contributors' excellence was the example of Prince Pyotr Kropotkin, the famed Russian political theorist, who wrote his essay on 'Anarchism' from his prison cell in Clairvaux, France.

The Ninth Edition sold about 10,000 sets in Great Britain between 1875 and 1898, but it found a far larger market in the United States, where its authorized publisher, Charles Scribner's Sons, sold no fewer than 45,000 sets during the same period. Unfortunately, international copyright laws had not been agreed upon between the two countries, and several hundred thousand other, pirated Britannicas were sold in the United States, many of them incomplete or mutilated. Such marketing problems discouraged the Black family, which in 1897 agreed to turn over promotion of the Britannica to an American company led by Horace E. Hooper and Walter M. Jackson. The two men negotiated an agreement with the Times of London whereby that paper--the most respected in England, but also in financial trouble--would advertise, sell, and receive commissions for the latest reprint of the Ninth Edition. Although the scheme appeared improbable to many Englishmen, it succeeded in keeping the Britannica alive until Hooper and Jackson could purchase all copyrights and plates of the encyclopedia in 1901, thus bringing the symbol of England's cultural dominance into U.S. hands at about the same time as the Empire lost its economic and political leadership to the United States.

Hooper and Jackson formed companies in both the United States and England to market their unique product. Both men were experienced publishers and booksellers, and in their efforts to find outlets for the Britannica they were aided in no small measure by the genius of Henry Haxton, a freewheeling advertising executive who devised all manner of ad campaigns, games, and contests to generate popular interest in the formerly staid Britannica. After the publication in 1902 of a revised and supplemented version of the Ninth Edition marketed as the Tenth, Horace Hooper began work in earnest on a completely new Eleventh Edition. His enthusiasm was not matched by Walter Jackson, and the two men gradually dissolved their partnership, but the Eleventh Edition sailed on under the editorial guidance of Hugh Chisholm in London and Franklin Hooper (the brother of Horace) in the United States. To reassure London bankers of the new edition's salability, Horace Hooper negotiated an arrangement with Cambridge University by which the latter would lend its prestigious name to the encyclopedia in exchange for a degree of editorial control and royalties on sales. Suitably impressed, London financiers provided the capital needed to support publication of the 29 volume Eleventh Edition in 1910 and 1911. Among its contributors were Matthew Arnold, R.L. Stevenson, and Alfred North Whitehead, and, like the Ninth Edition, the Eleventh would be long remembered as a treasure of world scholarship. The edition was the first to be dedicated to the U.S. president as well as the British monarch, and the first to be printed by the large American printing firm of R.R. Donnelley and Sons. Despite its wealth of distinguished contributors and the imprimatur of Cambridge University, sales of the Eleventh were slowed by World War I, and the Britannica found itself once again in severe financial difficulty.

Changing American Owners in the Early 1900s

U.S. marketing provided the solution again, this time via the retailing giant Sears, Roebuck & Co. Horace Hooper had long been the friend and golfing partner of Julius Rosenwald, the president of Sears and a well known philanthropist in his own right. Rosenwald took an interest in the fortunes of the Britannica, and in 1915 Sears agreed to market a new, less expensive version of the Eleventh Edition designed to appeal to the middle-class buyer throughout the English-speaking world. Sales remained weak, however, and in 1920 Sears bought Encyclopaedia Britannica Company outright, retaining Horace Hooper as publisher and his brother Franklin as editor in New York, with Hugh Chisholm remaining London editor. Sears's purchase of the Britannica was a philanthropic gesture rather than a business decision, as it was clear by this time in its history that the encyclopedia would be chronically short of cash. Indeed, after three years of operation Sears reported a loss of $1.8 million at the Britannica and in 1923 sold the company back to the widow of Horace Hooper (who had died in 1922) and her brother, William J. Cox.

The Twelfth and Thirteenth editions were published in 1922 and 1926, but these were merely reprints of the Eleventh edition along with supplementary material. Since the publication of the Eleventh edition in 1910, the shape of western civilization had been profoundly altered by World War I, and in the late 1920s William Cox began the laborious process of raising the $2.5 million needed for a completely rewritten Fourteenth Edition. Rosenwald and Sears offered to contribute a million dollars if the University of Chicago could be persuaded to take over the role of general editor formerly filled by Cambridge. Chicago--and later Harvard--refused, however, and Sears was saddled with nearly all of the new Edition's cost, resuming ownership in 1928 just prior to publication. Sales were good until the Great Depression paralyzed economies around the world; it became obvious that the Britannica would require radically new marketing techniques if it were not to prove a permanent liability for Sears. After the death of Julius Rosenwald in 1932, the company replaced William Cox as president with Elkan H. 'Buck' Powell, a Sears secretary and treasurer.

Powell completely restructured Britannica. On the sales side, he scrapped the attempt to market the encyclopedia via Sears outlets and instead built a nationwide network of sales representatives who went door to door and also staffed booths at conventions, shopping centers, and the like. Of greater importance was Powell's decision to publish the Britannica continuously by revising a portion of its articles each year, thus keeping the entire work in print and relatively up to date at the same time. Previously, the financial health of the encyclopedia had been made unpredictable by its long publication cycle, which over a 15- to 30-year period called first for a massive editorial effort with virtually no sales, followed by an intensive sales program with no need for editors, until the growing obsolescence of the current work made a new edition necessary and the cycle began again. Powell recognized that such a pattern was inherently inefficient and in 1938 introduced the new system of continuous revision and publication, which has remained in effect ever since.

Although sales picked up during the 1930s under Powell's leadership, Sears chairman General Robert E. Wood was not comfortable with the company's ownership of the Britannica. In 1941 a vice-president of the University of Chicago named William Benton suggested that Sears again try to interest the University in running the Britannica. Benton was the remarkable co-founder of the advertising agency Benton and Bowles; after amassing a comfortable fortune he retired in 1935 (at the age of 35) and soon became active at the University of Chicago. Believing passionately in the importance of the Britannica, he urged the University to accept General Wood's offer to give it the company's stock, but the University's board of trustees balked at the financial risk. Benton thereupon offered to put up needed working capital if the University would agree to lend its name and editorial advice to the venture. An agreement was reached in 1943 by which Benton acquired two-thirds of the stock in a new company, Encyclopaedia Britannica, Inc., of which he became chairman, while the University received one-third of the company stock, a royalty on sales, and an option to buy another third of the company. Robert Maynard Hutchins, president of the University of Chicago, was named chairman of the Board of Editors of the Britannica, but the University assumed neither financial responsibility nor managerial control of the company.

1950-90: New Products and Acquisitions

In 1938 Britannica had begun publishing the Britannica Book of the Year (later called the Britannica World Data Annual), a yearly synopsis of world events, and in 1952 it brought out the 54-volume Great Books of the Western World. Edited by Hutchins and Mortimer Adler, who also wrote its two-volume index known as the Syntopicon, the Great Books attempted to trace the development of Western thought from the ancient Greeks to Sigmund Freud by collecting 443 critically important texts by 74 different authors. Britannica revised the Great Books in 1990 to include many 20th-century authors as well. In 1943 Britannica branched into the world of film with the acquisition of ERPI, a division of Western Electric that owned the nation's largest collection of films for the classroom. Known first as Encyclopaedia Britannica Films, Inc., the company became Encyclopaedia Britannica Educational Corporation in 1966 and eventually expanded into filmstrips, video, and laserdisc technology as well as conventional films and reference books for school markets.

Under the continued leadership and financial support of William Benton, Encyclopaedia Britannica, Inc., was able to buy out the University of Chicago's share of stock in 1952 and begin

preparations for the radically new Fifteenth Edition that would appear in 1974. Not only did Encyclopaedia Britannica survive, but thanks to the generosity of Benton it became the parent company of a host of other reference publishers, including Merriam-Webster, publisher of the famous dictionaries by that name, and F.E. Compton Company, fellow makers of encyclopedias. Encyclopaedia Britannica, Inc., went international in 1957 with the publication of the 16-volume Enciclopedia Borsa in Spanish, a joint venture that would later distribute Britannica products throughout Latin America under the name Encyclopaedia Britannica Publishers. Britannica went on to publish native-language encyclopedias in countries including Japan, the People's Republic of China, France, Italy, and Korea, all of them after 1974 under the management of Encyclopaedia Britannica International. The latter oversaw all of Britannica's foreign business, which by 1990 included offices in 130 countries and operating companies in 17 countries.

William Benton died in March 1973, just before the Britannica's new Fifteenth Edition was published. Britannica 3, as the new edition was christened, incorporated the most radical changes in the encyclopedia since its founding 200 years before. Britannica 3 was composed of a ten-volume Micropaedia for handy reference use, a 19-volume Macropaedia for reading in depth, and a one-volume Propaedia, or guide to the encyclopedia's use. This hybrid creation was the subject of a front page article in the New York Times and caused considerable debate between those readers who preferred the traditional format and those who favored the innovative Fifteenth Edition. In 1985 a two-volume index was added, as well as other refinements. Britannica launched an extensive public relations campaign to promote its experiment; the results were excellent as measured by sales, but dissatisfaction with the Britannica 3 was more widespread than the parent company would likely admit.

Succeeding Benton as publisher and chairman of Encyclopaedia Britannica, Inc., was Robert P. Gwinn, a University of Chicago graduate, member of the board of directors of Encyclopaedia Britannica, and at that time chairman of Sunbeam Corporation. It was Gwinn who decided on the division of the company's operations into Encyclopaedia Britannica USA (later EB North America) and Encyclopaedia Britannica International in 1974, in addition to the Merriam-Webster, Compton's, and Educational divisions. Under the leadership of Gwinn, Encyclopaedia Britannica, Inc., increased total revenues every year between 1974 and 1990 (with the single exception of 1980), with sales more than doubling during the 1980s alone. A large portion of the parent company's revenue was contributed by Encyclopaedia Britannica North America, which sold the Britannica in thousands of display booths located at shopping malls, fairs, trade shows, and rail terminals, among other venues; its representatives also visited private residences upon appointment.

In 1980 all shares of Encyclopaedia Britannica, Inc., were transferred to the William Benton Foundation of Illinois, created as a non-profit supporting organization of the University of Chicago. By placing Encyclopaedia Britannica, Inc., in the hands of a foundation, the Bentons hoped to ensure the company's long-term independence, both in its editorial philosophy and as a financial entity protected from hostile takeovers. Robert Gwinn was also named chairman of the Benton Foundation.

In 1985 a revised version of the Fifteenth Edition (with the number of articles in the Macropaedia reduced from 4,200 to only 681) was published. Subsequently, Britannica Software (later Compton's New Media, Inc.) was formed as a separate division to work on the design of educational computer programs. The company also acquired two reading skills enterprises, American Learning Corporation and Evelyn Wood Reading Dynamics, and in 1990 published a revised and expanded Great Books of the Western World, including six additional volumes and 20th-century authors. The year 1989 saw release of Compton's Multi-Media Encyclopaedia, a version of that encyclopedia transferred to CD-ROM. Encyclopaedia Britannica, Inc. also created a new Far Eastern Pacific Region in its international division, and in 1990 announced that it was embarking on a joint venture with Soviet publishers to produce a Russian-language encyclopedia. Sales for the year peaked at $650 million, with nearly 120,000 encyclopedia sets sold in the United States alone.

The 1990s: Falling Sales and Unique Solutions

The early 1990s saw sales of encyclopedia sets plummet, however. The U.S. economic downturn and increasing competition from cheap CD-ROM versions took a heavy toll. In 1994 Encyclopaedia Britannica's sales were reported at $453 million, with only some 51,000 bound sets sold in the United States. That same year the cash-starved company sold its Compton's interests to The Tribune Company.

Britannica responded slowly to the changes brought by the new technology. An online subscription-based version was launched in 1993 for institutional users, and the company belatedly introduced a CD-ROM version of its encyclopedia at the unrealistic price of nearly $1,000. The increasingly bleak financial picture soon led the University of Chicago to seek outside investors or a buyer. Before one could be found, it was announced that more than 70 percent of the company's 91 U.S. sales offices would be closed, forcing layoffs of several dozen employees.

In January 1996 Jacob Safra stepped in to purchase Encyclopaedia Britannica. The reclusive Lebanese banker led a group that reportedly paid $135 million for the company, less than half its estimated value. He immediately called for a restructuring, with layoffs of more than 120 people including many of the company's top administrators. Encyclopaedia Britannica Educational Corporation was also put up for sale. Soon afterwards the home sales force was completely dismantled, with 140 additional employees losing their jobs along with 300 independent contractors. An attempt was made to sell encyclopedia sets through bookstores, with a cheaper, slimmed down version introduced when initial sales proved slow. The public remained largely uninterested, however, given the wide availability of inexpensive CD-ROM encyclopedias such as Microsoft's Encarta, which was often included for free with new computer purchases. Britannica quickly began cutting the price of its own CD-ROMs, eventually reaching a low of $85 for a disc that included the entire 44 million words along with illustrations and hypertext links between subjects. The company's Web site was also overhauled and offered to the public for a fee, with some unique information added that was not in the print or CD-ROM versions. A free site, Britannica Internet Guide (later eBlast), was created that offered other information and links to recommended sites.

Finally recognizing the need to seriously compete with the growing multitude of ad-supported free information sites, the company launched a new Internet service in 1999 called Britannica.com. Safra set up a separate company to operate this Web site, which was introduced in October. The site contained the complete Encyclopaedia Britannica and again added unique articles such as biographies of pop culture figures not available elsewhere. Britannica.com also served as a sales site for Encyclopaedia Britannica CD-ROMs and the company's other publications, including the still-available print version, which was now being offered on the installment plan for the first time ever. The largest advertising campaign in Britannica history was created to announce the site's launch.

When an estimated ten million users attempted to access Britannica.com on its opening day, it crashed repeatedly, and after several days of continued problems it was shut down. Restarted a few weeks later with upgraded capacity, it functioned more smoothly, but usage leveled off after the original barrage. A company executive bravely stated that he hoped it would be profitable by 2002, but analysts were not quite so optimistic. Just one year after being formed, Britannica.com laid off 20 percent of its work force and sought further ways to cut costs. Meanwhile, the subscription-only Britannica Online was continued as a separate operation aimed at educational users.

Stunned by the changes brought on by the computer revolution, Encyclopaedia Britannica struggled to find its niche in the information-rich 21st century. The company continued to offer expensive sets of printed books for sale via the Internet, but its CD-ROM, now priced at less than one-tenth of the bound version, was by far the better seller. With the complete text available for free via the Internet, and fierce competitors such as Microsoft on the attack, it was hard to predict what the future would hold for this venerable institution.

Principal Subsidiaries: Encyclopaedia Britannica North America; Encyclopaedia Britannica International; Merriam-Webster, Inc.

Principal Competitors: Franklin Electronic Publishers, Inc.; Grolier, Inc.; Harcourt General, Inc.; Havas SA; Houghton Mifflin Co.; The McGraw-Hill Companies, Inc.; Microsoft Corp.; Pearson plc; Random House, Inc.; Simon & Schuster, Inc.; The Thomson Corporation; Time, Inc.; Tribune Company.

Further Reading:

  • Atkinson, Dan, 'US Recluse Saves Britannica,' Guardian, December 20, 1995, p. 2.
  • 'Britannica.com Arrives, Belatedly: Encyclopedia Seller Bets Future of Brand on Ad-supported Web Site,' Advertising Age, May 10, 1999, p. 24.
  • Edwards, Cliff, 'Now: A `Micropaedia' Britannica,' AP Online, June 1, 1998.
  • ------, 'Roadkill? Britannica Nearly Flattened on Info Highway,' St. Louis Post-Dispatch, May 15, 1996, p. 8C.
  • Haase, Roald H., The Story of Encyclopaedia Britannica, Chicago: Encyclopaedia Britannica, Inc., 1990.
  • Jones, Tim, 'Venerable to Vulnerable: Encyclopaedia Britannica Trying to Survive in the Age of Technology,' Newsday, November 26, 2000, p. F8.
  • Ollove, Michael, 'Turning the Pages,' Baltimore Sun, January 10, 2000, p. 1E.
  • Parr, J., 'Low Tech Lives,' Forbes, November 17, 1986.
  • Reid, Calvin, 'Britannica.com Fires 75,' Publishers Weekly, November 27, 2000, p. 12.
  • Whiteley, Sandy, 'Hard Times: Encyclopedia Publishing in the 1990s,' American Libraries, July 1, 1995, p. 640.

Source: International Directory of Company Histories, Vol. 39. St. James Press, 2001.