April, 2009

While the AAP reports that US book sales are definitely down and my friends in major houses report a decline of 10% or more across the board, that’s not what we’re hearing from Canada and it’s not what we hard from small and midsize publishers responding to our BISG “Shifting Sales Channels” survey.

BookNet Canada reports 665 “same stores” in Canada reported units up 6.7% and dollar volume up 5% year on year in the first quarter! Michael Tamblyn tries to fish for reasons on the BNC blog, but there is no cause immediately apparent. Michael decides that it isn’t a Stephenie Meyer effect because there something like the Meyer effect happens just about every year.

The BISG and Idea Logical survey for “Sales Channels” was nowhere near as scientific, but we did get 245 responses which suggests the results are worthy of serious consideration.

One response in particular blew me away. We asked whether “overall sales for the past 12 months have been considerably weaker than for the two years prior?” Every large publisher we talked to said “yes” to that. Three significant smaller publishers we talked to said emphatically “no”, they just had record years. In the survey, 73% of large publishers said “yes” (sales had been much weaker) and 65% of smaller and midsize publishers said “no”!

We got a similar split on the question “have sales of your books fallen substantially any specific channels or accounts over the past three years?” Only 44.9% of the medium and small publishers said “yes” to that but 63% of the large publishers did!

So sales seem to be stronger for smaller publishers and smaller countries.

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Michael Cader responded to my post on returns yesterday (Tuesday, 4/7) with some ruminations of his own. All of them were thoughtful and useful and triggered some additional thoughts from me. Here is Michael’s commentary with thoughts of my own interspersed. I will remain in italics throughout this post. I have posted Michael’s entire response here, even though I won’t say much about some of it (except to say that I agree.)

Thanks for putting this on the table. I agree that most discussions of returns–and most fantasies of eliminating them–are unrealistically simplistic on many levels. In the spirit of your offering, some questions and other associated ruminations:

* On the biggest books, hasn’t wider implementation of remaindering in place addressed a good portion of the “problem”? And isn’t some form of expansion of remaindering in place/shared markdowns or similar initiatives the logical, efficient solution without harming orders/placements?

Remaindering in place is certainly a solution that has reduced a lot of the waste and cost associated with returns. It works particularly well with trade chains. It is much more cumbersome to manage with independents and that much more difficult with outlets reached through wholesalers. Scale matters here. A big publisher and a big account can employ this technique pretty efficiently and it gets less effective as you go down the line in size. And, despite the “effectiveness” of the technique, almost all publishers still see rising returns.

There’s also remaindering, which diminishes a significant portion of the physical cost of the excess inventory.

Remaindering requires a lot of additional handling so even if the “physical cost of the excess inventory” is recovered, other costs are created. And both remaindering and remaindering-in-place have a negative impact on full-price book sales which is not good for publishers and authors (although I take the point you raise later that it may be essential for stores!)

* By implication most your piece talks about conventional trade accounts, but they now (indies plus chains) comprise a minority percentage of the business at large. For other accounts, publishers are stuck following the practices and needs of those vendors–in more specialized markets, they’re actually fine with nonreturnable (say, an Urban Outfitters buy).

Some non-trade accounts find returns a real chore because they are not a routine part of their business the way they are a routine part of ours. In fact, some non-trade accounts can be sold with returns privileges and will still not return books because they don’t return anything else. I am speaking here of specialty (niche) retail; not of mass merchants who buy and return large quantities per title, as you say here:

But in the big boxes, where most publishers probably now experience their biggest (and fastest) returns when the books don’t work to plan, nonreturnable is likely a nonstarter. And if you can’t change things there, you’re still going to experience significant returns.

Bingo.

Of course to file under Unintended Consequences 1, it’s probably a good thing. Can you imagine the retail selling prices if Costco et al did buy at significantly deeper nonreturnable discounts? (And the even steeper price drops on merchandise they would later dump because it wouldn’t move?) This would accelerate the destruction of full-line bookstores (and the book publishers that need them) even faster.

This provokes two thoughts from me.

1. I wrote in a speech some years ago that the most dangerous and destructive thing that could possibly happen to publishers would be if Wal-mart decided to expand their selection to 50,000 or 75,000 titles per store. The orders would feel great to publishers as they come in and the printers would be in hog heaven with all the reprints of old titles which would result. And publishers would go out of business when the experiment failed and Wal-mart returned everything six or nine months later.

2. There is a huge hidden cost to the book business that the majority of units of our bestselling product is purchased in non-book accounts. What that means is that the add-on purchase to a Rowling or Meyer or Patterson title is a sweater or a cocktail shaker instead of another book! The bestselling authors definitely benefit hugely from the mass merchants carrying their books. As your point suggests, the publishers not as much because they bear the costs of huge returns (which the authors don’t.) But the publishers and all the authors below the top tier lose because the full-line bookstore is being undercut by a non-bookstore. The bookstore loses the Rowling-Meyer-Patterson sale and we ALL lose the add-on book sales.

* As you imply, if not state outright, physical shelf space is in decline. But new product continues to grow–exponentially. This is a hostile mix. Think of how many “skips” you get already on a fully returnable list. Given these factors, it will in any event remain tempting, if not an outright requirement, for many publishers to continue to offer returnability in the hopes of getting in to stores at all.

Bingo. And worth mentioning that the title explosion is not mostly caused by big publishers. They are mostly cutting title counts. But they are still suffering from the explosion of titles available from smaller publishers.

* Online sales, both physical and now electronic, are by nature low-return or non-return. As this segment grows, it naturally mutes some of the returns issue.

True. The downside of online sales is less opportunity to grab additional sales through impulse. We lose less when a sale moves from a brick-and-mortar bookstore to an online bookstore than we do when the sale moves to a mass merchant or specialty store, but I do believe we still lose.

* As you suggest, real analysis of returns needs to occur on a title-by-title basis. One significant problem is that there are a lot of book for which there is little or no discernible commercial market, so even a “low” first printing can wind up producing a whopping return percentage.

Book buyers are not supposed to buy books with “little or no discernible market.” Of course, they rely partly on the publisher’s assessment. But, over time, they will (or should) stop buying from a publisher who pushes too many of these books on them. They all keep track of returns percentages by publisher. There’s no other way to sort it out, and no publisher or bookseller can get this right every time.

Problemmatically, this occurs across the list: small books (first novels, etc.) but also projects that are supposed to be big (see The Kindly Ones, or The Mighty Queens of Freeville.)

* To file under Unintended Consequences 2, a world without returns is a world without most remainders/bargain books. That, too, is potentially devastating for retailers.

I am so used to seeing remaindering as a Tragedy of the Commons problem for publishers that I don’t take enough cognizance of this point, which is, under present circumstances, a true one. But I often wonder how many sales a big author loses because his/her prior book is on the remainder table at a quarter of its original price competing with it. And how many readers have learned that if you wait a few months, you can get that $25 book for $4.98? 

I see this as analogous to how many people see returns. They may not be a good idea, but the publisher who tries to do something about it all alone will only hurt themselves. I got a note this morning from a publisher who has moved toward “no returns” saying that they see that trying to go to a total no-returns policy on their own would be suicidal.

As Borders has struggled, bargain books have consistently been identified as one of the prime growth areas in their stores. We know it’s big for BN by just looking at where they put the section in the stores, and for many indies smart remainder/bargain buys help drive the stores’ profitability.

Again, take away the remainder market and you could well be putting another nail in the coffin of physical retail. As much as there are complaints about publishers’ margins, retailers make but a fraction of what publishers do.

But retailers make a LOT MORE on remainders than publishers do, and they also make a lot more than authors do. If remainders keep more retailers in business (and I won’t quarrel with the contention that they do), that is the main benefit 0f them to publishers and authors.

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The subject of eliminating returns seems to come up more and more frequently these days. Last week we were interviewing a major independent bookseller for our BISG “Shifting Sales Channels” project and they brought it up. In this case, they were complaining about the new “no returns” policy from HarperStudio. As I understand what the store said, the high discount (61%) only applied to the initial order but the no-returns option, if elected, would apply to the reorders too.

“So you’ll do all your reordering from Ingram, right” I asked.

Of course they will. But they’re happy with 61%. They’d much rather buy everything non-returnable at 61%.

Returns were invented, some say by Viking and others say not, in the 1930s as a proactive response to the stores’ reluctance to take risks during the Depression. It became a widespread practice pretty quickly. Since I came into the business in the mid-1970s, there have been two big changes in returns:

They didn’t have returns as a routine matter in the UK when I began my career; they do now.

Publishers have chipped away at returns credits, so that it is not uncommon that returns result in a small margin for the publisher. The most common device is that all returns credits are calculated at maximum discount, even though some books may have been purchased at lower discounts. 

The commercial logic for returns is that offering them helps the publisher persuade the retailer to buy more aggressively: both more titles and bigger quantities of some titles. The ethical justification is that the publisher knows all about the book and the store only knows what the publisher tells them until it comes out. Such things as a marketing plan, and follow-through on a projected marketing plan, are entirely in the hands of the publisher.

In my experience, the flawed, misleading, or downright erroneous analysis of returns is common. A longtime publishing sales director at three of the biggest houses (now long retired) had the practice of computing returns percentages for his biggest accounts every month. It was amazing how high the returns percentage was every February, when few big new books had initial shipments and the returns from Christmas hit the warehouse.

In fact, the returns in any time period are not from the sales in that time period but result from sales made at some earlier time. So when you think the returns percentage for any period is too high, you might just be saying that the sales in that period were too low. Any time you have a year when sales are low relative to the year before, odds are the returns that year will also be computed to be high. Let’s hope nobody makes a strategic choice on that basis.

Shrinking shelf space at retail would result in higher returns percentages. Two ways. The books on those shelves come back. And no new books head out to replace them. Bigger numerator, smaller denominator, higher returns percentage.

Here’s another instance where more refined thinking about returns is needed. When a title has sold for a very long time (at any level of sales), its overall returns percentage will be very low. After a while, the overall returns percentage for a title is a meaningless number. What a publisher should be measuring is their success in bringing a title’s inventory down in the supply chain without excessive returns. But you’d measure your success against that objective by measuring returns against what was in the supply chain when you start retiring the title, not against all the copies that have sold in 12, 18, or 24 months when the book was being constantly reordered with almost no returns.

These examples make a central point: returns percentages are the inverse of reorder activity. If you have a lot of reorder activity, you will ultimately have low returns. If you don’t, you will almost certainly have high returns.

Returns are also not uniform across any publisher’s list. Frontlist has a higher returns percentage than backlist. Heavily promoted titles risk huge returns, both as a percentage and in absolute numbers. When booksellers ask publishers to sell the backlist at a higher discount non-returnable, they’re asking publishers to give away margin for little gain because solving returns on the backlist doesn’t solve the returns problem for most publishers.

The biggest experiment with no-returns selling by a large commercial house was by Harcourt Brace Jovanovich around 1980-81. They offered discounts up to 58% (if memory serves) when the standard most indies bought at was in the low 40s. There were a lot more independents back then and they rejected the experiment emphatically. It lasted only one season.

Today, independents are not enough of the market to make the call, but many of them would actually support no-returns buying at high discounts. I think the chains might too, but most big publishers would probably be nervous about selling the chains that way. They’d be afraid they wouldn’t be able to get the big promotional advances that drive the top end of their business. They’re right, or at least the non-returnability — or some shared markdown concessions — would get negotiated away on a title-by-title basis. And that creates the complication of having to offer the same deal to everybody.

Some publishers who offer a non-returnable option feel it is successful, but they don’t really know how important it is that returnability is still available for their customers: through the wholesalers (and those non-returnable publishers still take returns from the wholesalers themselves!)

Managing returns rather than eliminating them also has the payoff to publishers of making it easier to keep backlist titles alive at full price. If retailers started marking titles down when they got impatient about their sale (and if higher no-return discounts gave them the margins to do it relatively painlessly), then the stores successfully selling those titles at full price would be hurt. Or at least they’d look bad.

The most effective way to cut way back on returns is to increase the frequency of replenishment. If you restock every day, then very few titles need to be carried in a quantity larger than one to avoid losing sales to out of stocks. That focuses the problem on building and then selling down platform quantities, which is where the “problem” really is.

The returns from books you put out and just don’t sell are an inevitable cost of doing business for publishers and for booksellers. There will be a failure rate. The trick is to make failure cheap, and you do when you put books out in small quantities to find they don’t sell.

That strategy works when you get reorders, keep a book going (and growing). 

But the big returns come from putting out the numbers you need to give a book retail “presence”. If you isolate those and calculate them, maybe it would be more accurate accounting to treat them as a marketing cost?

Ingram has offered the fast-turnover daily-replenishment stocking model to retailers for years and even at the expense of the middleplayer’s cut of the sale, it has been a good practice for many retailers. Almost all independents order from Ingram and/or Baker & Taylor every day and most have relatively low returns rates.

Another thing that has changed about returns in my time — and which argues for eliminating them — is the percentage that are actually ultimately recycled and resold. Many things mitigate against putting a return back in stock, including that it probably takes a human review to certify that the book is in condition to be sold as new. And these practices all began when the ratio of hardcover sales to trade paperback was much greater than it is now. If the book is not going to be recycled, it makes a lot more sense to accept either a shared markdown or affadavit that the book was destroyed than to require the return for credit.

It is hard to debate the green logic that shipping the same book around several times in 2009 is idiotic. (Green logic also should tout used books, but we’ll leave that inconvenient truth aside.) Returns restrictions and no-returns offers will likely become more widespread. As they do, there will be a complicated commercial problem to work out with Ingram and other wholesalers (who ultimately can’t take returns from stores if publishers don’t and who can’t be the back-up on a conservatively ordered “big” book if they can’t return to publishers). And it will put increased pressure on publishers to routinely process all orders within 24 hours.

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Michael Tamblyn of Booknet Canada made a series of provocative proposals for publishing, some of which he and his organization are involved in. I commented on 5 of them in a prior post; today I want to explore the one nearest to my personal interest: Michael’s suggestion that an intelligent data-connected electronic catalog would enable reps and stores to make better decisions about advance orders.

Michael has identified a promising area for industry improvement, since it is certainly true that advance order creation is among the least scientific components of book inventory management. But I’d frame the challenge a little differently than he has.

Michael’s presentation of the problem is to show how few books — of all those put on offer — achieve an ultimate sale of any particular number of copies. So the concept — similar to a sort-of rotisserie baseball game that Booknet Canada has organized — is to pick the eventual winners. The implied logic is that if you know the number of copies a book will sell in its lifetime, you know (or at least know better) what a store’s initial order should be. Michael also envisions pulling data on what a comparable title had sold in that store over its initial stocking period, which is a big step in the right direction. Trying to get to the right number by predicting the ultimate sale is not.

There are three critical factors a store should consider when determining its intial order for a title:

1. How many copies are needed to present the book properly at retail? Does it need to be faced out? Does it need to be displayed in more than one place in the store? Does it need a “presence” in windows or table displays? This is what I call “platform inventory” and what some publishers and retailers refer to as “minimum display quantity.” This is the most component of a new title stocking decision most likely to create returns. It is also properly looked at as a promotion expense (by the store and/or by the publisher.)

2. How many copies is the store likely to need right out of the box on the title? How many are needed to cover the first week or two or three (or six) of sales (depending on the answer to the third point below.) This separates the books on which there might be high anticipation from customers, such as a follow-on Rowling or Meyer title, or one that might create a large newsbreak, such as last summer’s book by George Bush’s press secretary.

3. How fast can the store get replenishment inventory? This combines two factors: the speed of the fastest-possible resupplier (wholesaler or direct from publisher) and the danger that the publisher will be caught out of stock (generally speaking: a bigger problem in Canada than in the US and a bigger problem with smaller publishers than larger ones.) If you can’t get replenishment inventory fast, you might have to gamble on a larger initial buy. (This is a bit unfair because it would appear to “reward” a publisher for lousy service, but things even out when that publisher gets the inevitably higher returns this tendency to over-ordering will produce.)

Michael’s suggestions for how the electronic catalog might work contains a lot of ideas already incorporated in a tool being developed by Above the Treeline called Edelweiss. Edelweiss, which will launch a beta version for the Fall 2009 season including most of America’s top publishers, is an electronic catalog with many of the features Michael suggests. Because Edelweiss is not offered by a BookScan equivalent (which Booknet is), it does not contain global POS data for the market. But it does have data from Treeline’s roster of stores (which includes Borders and many independents) and it does have the store’s own data. One large independent we spoke to was particularly happy about Treeline’s ability to populate the store’s own title database, relieving them of many hours of tedious, expensive (and error-creating) data input.

The overall message from here is that prompt and sensible reordering is actually much more important than guessing right on the initial order quantity to make sure any store gets its fair share of most big titles. If Booknet (or Edelweiss) reported the recently-published titles with the most widespread reorder activity as a flagged item every week (or every day), that would be the most valuable frontlist tool any store could have.

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This is a post about “no post today”. Or maybe this is a Seinfeld post. Its about nothing.

A particular number of years ago that my friend Lorraine Shanley of Market Partners could tell you and I can’t — but I would say about 15 — she confided that she thought it would be smart for her company to start a newsletter. And I said, “what do you want to do THAT for? A monthly deadline? To go along with all the other deadlines?”

Lorraine was smart enough not to take my advice and she and her partner (and also my friend), Connie Sayre, are still putting out Publishing Trends monthly and it has been a success, financially and otherwise, from about Day One.

So, 15 (or whatever) years later, totally voluntarily — with nobody forcing me, nobody even suggesting it was a good idea! (and the few that were asked actually telling me it was a bad idea) — I gave myself a daily deadline for this self-publishing effort (to go along with all the other deadlines, which rather inconveniently have refused to diminish to make way for the blog.) And I don’t think anybody noticed when I cut back from the six days I posted the first two weeks to the five I have maintained since.

This “no post today” post is the signal that I now consider four a full week. And I might not make a full week every week.

Richard Charkin (also a friend) wrote a daily blog when he was MD at Macmillan in the UK. I told him it blew me away that he could come up with something every day. He saw as his advantage that he could “always talk about a book” they were publishing. Those stories were always there to tell. Charkin stopped blogging when he moved over to Bloomsbury a couple of years ago; I suspect he’s relieved not to have the daily burden any more (even though at Bloomsbury he’s still got plenty of books to talk about.)

The indefatigable Mr. Cader (uh, yeah, we also know each other) was smart enough to build “except when not” into his promise of a daily newsletter when he started Publishers Lunch. My dad (yup, knew him pretty well too) used to get a newsletter called Winners and Sinners that was “published occasionally from the southeast corner of the New York Times newsroom” by a managing editor named Theodore Bernstein (whom I never met).

So, I’m making a very unconventional move when I say that any implied promise of a daily post is now officially withdrawn.

Which isn’t to say I don’t have a list of things I’m working on. It’s just that I am planning ahead to not work on any of them this weekend. (Baseball pool draft all day Saturday and hanging out with friends not in any way connected with publishing — I have some of those too — all day Sunday and I might not be doing any writing…)

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There was a lot of lore in our family but one of my favorite bits of it was my father’s great pride at having hired the first two black office workers at Doubleday in the 1950s. This was particularly cheeky for the guy who was the only Jew in top management ranks. The way I always understood the story from him was that after the second one was hired Doubleday management said, “ok, Len. That’s enough.”

Dad died in 2002. In September, 2006, I was at a party with my two sisters and my mother. I didn’t know it then, but this was going to be the last party I would go to with my mother. She was diagnosed with pancreatic cancer about two weeks later and she died in January 2007. So what follows is a story very fortunate for the timing of its telling. I almost didn’t know it.

I was telling somebody at the party about Dad and the first two black employees of Doubleday in the 1950s. My sister Karen thought she noticed something wrong with the way I was presenting the story (I can’t now remember what) so we went off to find Mom to get it retold.

“Mom, what was the story with Dad being told by Doubleday that he couldn’t hire another black employee?”

My father’s memory used to have a lot of holes in it. Mom’s had none. She gave you the details like yesterday.

“You remember the summer we went to Cape Cod with the Tiloves and the Popkins?”

I’m pretty good, too. “Yes, that was 1959. Dad was reading an advance copy of Advise and Consent, which was just about to come out and he knew it was going to be a bestseller.”

“Your father did want to hire another black employee. And just before we went up to Cape Cod, he offered another young man a job. Then, while we were up there, he got a call from Louise Thomas, who was in charge of personnel at Doubleday telling him he had to rescind the offer.”

I had never heard this part. My sister Karen had never heard this part. My sister Nance wasn’t standing there at that moment but she had never heard this part either.

“So, Mom, what did he do.”

“Well, you know your father. He would never agree to something like that. He said he had made the offer and he absolutely would not rescind it.”

There was something very literal about my Mom. She had answered the question. So she stopped. We waited.

“Mom. What HAPPENED?”

“Oh, the young man turned down the offer. He didn’t take the job. So, nothing happened.”

My father was the luckiest guy on the planet. He didn’t have to compromise his principles and he didn’t have to go to war with his employers.

I actually met both of the men Dad hired before I knew any of this. The second of the two is Charles Harris, who has had a long and distinguished career in publishing. Charlie was the longtime director of Howard University Press and founder of Amistad. He was able to remind me that the groundbreaker was a man named Ed Simmons, who later owned a printing operation on Long Island. Charlie was able to provide a lot more detail that I didn’t know.

Simmons had an MBA from Harvard and was a veteran of World War II. (My dad wasn’t; he spent the war working on the Manhattan Project, but that’s another story.) Dad was in charge of manufacturing when he hired Simmons in about 1954 or 1955. Simmons left to buy the printer in 1958.

Harris was hired in 1956 to work in what was called the Operations Research Department (of DOUBLEDAY!), which my father headed as Director of Research. (And that’s anotherstory.) George Blagowidow was the manager of the department, but Dad (George’s boss) hired Charlie while Blagowidow was off on vacation (Dad wasn’t much of a respecter of protocol.)

Harris reports that Dad and Blagowidow encouraged him to go to NYU Graduate School and major in statistics and Doubleday paid the tuition.

I asked Charlie if he knew he was “pioneering.” He said no, but he realized it after a few months. My father never discussed it with him; not did anybody else. Charlie had arrived in NY, just discharged from the U.S. Army where he had been one of the few African American officers to graduate from Infantry School at Fort Benning. Charlie said that my father had recruited through Ray Rivera of The Urban League and Rivera arranged the interview for Charlie with Dad. After the interview, Dad walked Charlie down to Personnel and told them he wanted to hire him.

Charlie said, “that was August 12, 1956. I reported to work the next day.”

My father left Doubleday in 1961. Harris became an editor there about the time Dad left, but was encouraged for the next several years by Nelson Doubleday and John Sargent. And one job later,  Harris went to Random House and was working again with former Doubleday colleagues Jason Epstein and Dick Kislik. It was nice to get this ending to the story. The fact that Harris’s career thrived at Doubleday for several years after my father left speaks well for everybody.

I am a student of baseball history and while pulling together my thoughts for this piece I really thought for the first time about what Dad did in the context of Branch Rickey and Jackie Robinson. This was all happening while Robinson was still an active player, before any civil rights bills had passed, at a time when public segregation was the practice in a quarter of the country.

I spent more hours in conversation with my father than I have with anybody else in my life, except possibly my wife. It’s really too bad we didn’t talk about this more.

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I was talking to one of the smart C-level people from a major house at a party last June at BEA in Los Angeles. He was very excited about what his company had accomplished.

“We’ve set up a database and CMS so we can deliver a web page for every book a web page for every author, and a web page for every subject showing all the books we have on that subject.”

Wow. Good.

“The very first morning we had the site up, we got our first direct order from a consumer at 11 am. We were able to see that this woman had googled for “crochet” and gotten delivered to our selection of crochet books. She bought two — full price plus postage and handling. She apparently never thought about the fact that she could have bought them cheaper by clicking over to Amazon.” Or to BN.com.

Readers of this blog know where I went with that right away. I figured: this will teach them about niche, about verticals. They’ll see over time that their crochet page and their cooking page (or whatever…) are getting a lot of traffic and, after a while, somebody will say “hey, let’s put some content up there for that traffic.” And, over time (I wish I could say “before you know it”, but that would be too much to expect), they’d develop verticals. Just the mere fact of setting up this capability for their web site would lead them into the future.

Nice thought. But there was more.

“So, we thought, why stop with just our books! Ingram is our partner for other activities. We can just use them and sell everybody’s books. As long as we have that buyer on our site with their order book open, why not sell them anything we can?”

Better, I thought. Using everybody’s books will teach you about niche even faster! In fact, depending on how you merchandise it, you could learn about niches for which you don’t (yet) have any books! Cash-flow positive market research! What could be better than that?

Over the next couple of months, I thought about this some more. After a while I realized, hey, this will happen to all the publishers. They’re all setting up databases of their own catalogs so that they’ll be able to deliver web pages on the fly to suit any search. They’ll all start selling direct to consumer; digital downloads sort of force them to start and then it’s just silly not to offer your own books. They’ll all learn about niche in an orderly and organic way.

And once you start doing that, as this executive surmised, why not sell everybody’s books. You have a customer, they’re buying. You want margin and you want information. You get more of both if you can take orders for everybody’s books!

Then the epiphanic part: this would be the “Amazon antidote.” Publishers worried about Amazon hegemony online (and all the big ones, and many of the small ones, are) would all be participating in a “solution”. If a dozen or a score or a hundred publishers were all selling the books of all the publishers, and each one was merchandising according to what worked best for them — free content with this one, a free audio download with that one, a copy of the author’s last book for a dollar with another one — then price comparison gets difficult. All of these publishers, each grabbing its own sliver of the market (for everybody) would chip away at the giant aggregator whose ability to call so many of the online sales shots right now is making its suppliers nervous. (What do I mean? Think ebook pricing…)

Obviously Amazon would remain the biggest part of the online sales market, but at least publishers would have some leverage (where now they have none.) 

What an insight! What a game-changer! I had visions of publishing a piece on this in both Publishers Weekly and  The Bookseller to emphasize what a brilliant insight this was: one that needed to be shared on both sides of the Atlantic simultaneously for maximum impact. I was drafting; I was thinking; I was talking to editors.

Then I told this to a friend who has run big distribution operations and worked at a couple of major publishers. He laughed. Forget it, he said. The publishers’ web sites have no traffic. They don’t have anybody on their staffs that can handle the merchandising. This is an idea that will never happen, never work. 

He’s right, of course. The publisher that had the idea in the first place hasn’t gotten hooked up yet to sell everybody’s books nearly a year later. Every big publisher I talk to is disappointed with their own direct sales. And I’m the one who keeps saying that these big “catalog on steroids” web sites can’t garner much in the way of consumer traffic.

Publishers do need to establish direct relationships with customers because they have to market directly, regardless of how the sales is consummated. But they need to leave the horizontal work to the aggregators: Amazon, Barnes & Noble, BN.com, Borders, Borders.com, and all the chains, independents, and online booksellers they can possibly find. They need to help rewrite the rules of engagement, particularly on how names and customers can be shared constructively between publishers and intermediaries in the digital world. But they need to focus their customer contact on people with whom they can establish a relationship. And that surely isn’t every person that stumbles into a horizontal web offering.

It is getting harder and harder for a general trade publisher to do the right thing.

And, note to self: it’s great to be an out-of-the-box thinker and creative enough to see what isn’t there and maybe ought to be. But you can’t beat having smart friends who won’t hesitate to put the pin in an overinflated idea.

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