A prior post described the new structure of the book publishing ecosystem. In the past three decades, we have migrated away from a world where a publisher needed to own a substantial infrastructure to deliver printed books to thousands of retail locations. And “back then” and for most of the time since, most book readers both found the books they wanted and purchased them in those stores.
Both the market and the nature of the infrastructure have changed. Now more than half the book sales and an even greater amount of the “discovery” takes place online and a lot of the discovery and a lion’s share of the purchases happen at a single account: Amazon. You don’t need a big organization to cover a single account nor a big infrastructure to service it. The other half of the sales in the US, and sales around the world, are now facilitated by another single account, Ingram Content Group.
Ingram provides every component of the fixed-cost infrastructure that any book publisher requires and, in fact, provides all or any part of that infrastructure to an ever-growing number of publishers. Many of them are new players enabled by this change of circumstances to create a publishing company with a fraction of the investment that would have been required three decades ago. But many of them are longtime publishers who are shedding fixed costs for variable ones by relying increasingly on Ingram. (And, it should be noted, pure sales and distribution services are also provided by the large publishers who are continuing to do it themselves in a shrinking market.)
And all the things that publishers do that don’t require a big infrastructure: finding and developing books, editing them, designing them, and marketing them (increasingly using digital opportunities to talk directly to consumers) can be delivered by a vast network of freelancers and small company service providers. And many of them gained valuable experience delivering these same services to the large publishers that continue to use them.
Proceeding from this analysis of today’s circumstances, here are some predictions about how the world of publishing will evolve over the next few years.
1. Sales will continue to move to online. The movement of book sales from physical stores to online has been unabated since Amazon began. There is no reason for it to stop. Books have a ton of characteristics that make them perfect for online shopping. You want to shop from a full selection no store has. It is very seldom when you must have a book right now. And books are heavy, so you don’t really want to carry them around if you can avoid it. The view from here is that it will continue to be very challenging to make physical book locations commercially viable.
2. The other big general online retailers will be Amazon’s biggest competitors for book sales. So far, Amazon has been about the only beneficiary of the shift to online buying. That may be changing. Other big retailing brands like Walmart and Costco have built robust online businesses. Ingram now enables them to carry a full line of books as well. There are shoppers who would really prefer to avoid Amazon and there are shoppers with loyalty to some of these other retailers. The guess here is that it will become visible before long that it isn’t bookstores that will cut into Amazon’s book sales, it is other mass merchants
3. The bifurcated book market will continue: like mass-markets immediately post-WWII. There is a whole digital-first publishing world, spawned by self-publishers, that offers (mostly) genre fiction at prices commercial publishers can’t match: $4.99 and under. The net result has been that commercial publishers are finding it increasingly difficult, if not impossible, to compete in the genre fiction market of customers who measure their reading in books-consumed-per-week. This has happened before. Mass-market paperbacks right after World War II became a separate publishing system from “trade” until the two started to blend in the mid-1960s. What brought that prior era to an end was pressure on both sides of the equation. The mass-market distribution system got clogged, returns rose, and it became inefficient, unwieldly, and expensive. And those publishers wanted to be sold in bookstores as well. These effects would not appear to apply to today’s circumstances, so it would seem that the cheap-ebooks market and the commercial market will remain separate for the foreseeable future.
4. Publishers will progressively shed overheads for service providers. As the commercial publishing business shrinks because of reduced shelf space and increased competition from publishers enabled by the new circumstances, the big publishers will find it increasingly difficult to support their overheads. To date, they have mostly addressed that challenge by adding other publishers as sales and distribution clients. That is not an infinitely applicable strategy. The next step would be to start getting rid of costs: sales forces and warehouses being quite replaceable these days by Ingram or another big publisher. We’ll see the number of sales forces calling on bookstores and the number of warehouses shipping to them decline progressively in the next few years.
5. Big publishers will see an ever-growing share of their own sales from their backlist. While it is getting increasingly difficult for publishers to successfully launch new books, there are new opportunities appearing on the radar every day for titles on the backlist. This is true both because digital information sources find and publicize books regardless of their age and because publishers don’t need to position inventory in stores to make them accessible to the public. All publishers are alert to the idea that they have to watch the wider world to see if any of their backlist titles are surfacing and then use their own capabilities to see if they can convert interest and awareness into sales. The net result of harder new title sales and greater backlist opportunities will shift the balance of sales for publishers with big backlists.
6. Amazon Publishing will continue to make inroads signing big authors; only a ruling from courts could eventually stop them. When Amazon launched their book publishing program ten years ago, they probably had about half the market share they have now. Big authors want to reach the whole public, and when indie and chain bookstores combined to effectively boycott Amazon titles, it meant large parts of the consumer base were hard for them to reach. Now their share of the by-the-book purchase market has grown, and on top of that they can play in the Amazon book subscription world painlessly. They could always pay more for each dollar of sales than a publisher that didn’t own its own retailing network; now they fail to reach very few consumers, even if the remaining stores want to boycott big titles to slow them down. From here it looks like Amazon exploits an unfair advantage, being the biggest retailer competing with their suppliers for customers that Amazon owns. But for that to matter, it has to be a court’s opinion, not just mine. Perhaps as the effect of the current market circumstances on competition become clearer, a court will see it that way.
7. “Entity self-publishing” will increase dramatically, presenting more challenges to commercial non-fiction publishing. The pieces are all in place for “publishing books” to become part of any big entity’s marketing strategy. You don’t need to own a book publisher to issue them any more than you need to own a newspaper or magazine to get a story out. Ingram or a big publisher can handle the heavy lifting, the capital-intensive parts of the overhead. And several armies of service providers, most of them well-experienced working for or with established commercial publishers, can do the strategizing, writing, editing, designing, digital and all other marketing, and even handle the rights sales. A smaller army of intermediaries to help big brands of all kinds utilize these ubiquitous capabilities is about to spring into action. Over the next few years, we will see a tsunami of non-fiction publishing from capable entities much like the tsunami we have seen of genre fiction publishing direct from authors. They will have one very similar characteristic: reaching readers will be more important to them than making money. That suggests that the price competition we’ve seen in genre fiction may be about to be replicated much more broadly.
And when that has happened, it will be time for a new set of predictions because we will have had another sea change.
Very appreciative of Kindle Chronicles host Len Edgerly interviewing me for his podcast and giving me a chance to talk about “The Book Business: What Everyone Needs to Know” which I wrote with Robert P. Riger and which was published by Oxford University Press earlier this year.