New Models

Considering the very wide range of digital change topics that should be candidates for discussion at DBW 2016


The challenge for the book business for the past decade has been rapid and less-than-predictable changes in the ecosystem because of digital. There are two underlying shifts that fundamentally alter the ecosystem: people substituting ebook consumption for print book consumption and people substituting online purchase of printed books for buying them in stores.

These two shifts, and a host of corollaries around product type, product creation, and marketing, are what people come to Digital Book World to be enlightened about and to discuss. Our job for the past seven years has been planning the program and booking all the speakers for that 3-day conference. The whole process takes months; there are about 35 or 40 discrete “sessions” and as many as 150 speakers and moderators involved.

Creating a timely and relevant program when we’re leading the target by several months — deciding on topics and recruiting speakers starting now for an event that will take place March 7-9, 2016 — is a challenge. More perspectives on the task add real value; we structure things so we can get a lot of help. We recruit a “Conference Council” — volunteers from publishing companies and their service providers and trading partners — to help advise me in shaping the event. This year we’re going to broaden the outreach for opinions about this and anybody reading this blog can be involved.

Here are the main topic headings we’re considering with a brief description of what we see as the current issues around each. The Survey linked to again at the end of this post allows you to express yourself on how important you think each topic will be to the publishing community next March when we hold the conference.

1. Data. This is a wide-ranging topic. We look for original data about what’s going on in the ecosystem wherever we can find it and we have done sessions in the past (and could again) about “Big Data” and what publishers need to understand about it. With pricing of ebooks becoming an increasingly important financial consideration for publishers and data being such a crucial component of doing that well, this is bound to remain a top-of-mind subject.

2. Global. Publishers used to be pretty much limited to their home market for marketing and sales. That’s why there is a robust international business in territorial and language rights. In the digital world, that limitation is not nearly as confining. US and UK publishers are learning there are big markets for their books all over the world, and global ebook distribution and print-on-demand make it possible for them to work those markets far more effectively than ever before from their offices, wherever they are.

3 Marketing and discovery. This is the topic that cuts across books regardless of topic or format. For fiction or art books or anything in between, whether delivered in print or as ebooks, publishers are embarked on a long journey of learning about how discovery and SEO works in the most complicated consumer product marketplace imaginable. There are a variety of topics that we entertain under this heading and, you could tell from my own checklist in my last post, I could probably build the whole conference around discovery and figure the audience was getting a large percentage of what is most important.

4. Authors and self-publishing. Authors didn’t used to have much alternative to publishers; now they do. As a result, authors have developed marketing capabilities and support services have grown up to help them. This all raises a host of issues for publishers. They have to learn how to capitalize effectively on what authors can do on their own, but they also need to provide great marketing support to authors and be seen as collaborative and as adding real marketing value.

5. M&A and investment. Most publishers, and all big publishers, are looking to acquiring smaller publishers with complementary lists (and, of course, there are different ideas about what that means). And there are a host of start-ups with capabilities publishers want to see available which are also tempting investments. Quite aside from publishing, we live in a moment with a lot of investment capital available for start-ups and acquisition and publishers certainly need to stay aware of investment flows.

6. Is the book morphing into something else? With each new cycle of Moore’s law and each new delivery mechanism — whether hardware or platform — the question of what the “product” should be gets called for reconsideration again. The history of ebooks has been commercially discouraging for those who want see the book concept rethought from the ground up, but the topic never dies and never will as long as capabilities to present stories and information and to interact with content in new ways are put in front of publishers.

7. Managing and exploiting rights. The rights marketplace for books has changed dramatically in the past two decades. In the 20th century, book clubs and paperbacks were the big-revenue rights opportunities, with serialization to print periodicals also very important. Those markets are all dramatically diminished and the rights action today mostly is about foreign languages and territories. Now, even those rights are being rethought as we see the beginings of publishers thinking about controlling multiple languages for the books they acquire themselves.

8. Agents and editors, how they relate in a mutually-supportive way. They share ownership of each author’s personal loyalty, they both might shape the book editorially, and they both will hear the author’s career ambitions and influence him or her about self-publishing and their publishers’ efforts. If publishers are going to start collaborating meaningfully with authors about marketing, that suggests agents and editors are going to be working together differently.

9. Libraries. Aside from being important customers for publishers, libraries are increasingly being seen as a venue for discovery and perhaps even for book retailing. Whatever they will be in the future, it is likely their role will be different than what Andrew Carnegie envisioned a century ago.

10. Bookstores. Since the collapse of Borders, Barnes & Noble has continued to shrink and independent bookstores have appeared to grow. Books-a-Million and Walmart have become mainstays of the US trade, but they don’t replace Borders. The UK bookstore picture is even less diverse. The ebook market seems to be consolidating in the US with Amazon and Apple leading the pack and independents not really in the ebook game at all, at least at the moment. The key skill set of a publisher is to manage a diverse system of retail intermediaries that gets their books to customers. How the intermediary ecosystem will change in the months and years to come is therefore of existential importance to publishers.

11. Standards. There are evolving tech standards around content that live outside the book business. The question for publishers, particularly big publishers, is how much effort they should expend on standards-creation efforts which are, mostly, the domain of other media and tech interests. Can they let industry bodies like IDPF and BISG handle this, or do publishers have to involve themselves in these issues?

12. Outsiders coming in. We are seeing publishing coming from non-publishers and we see non-book retailers starting to peddle books online. These are trends that industry incumbents need to monitor and understand.

13. Millennials. Some believe that the human propensity to be a book reader is changing in fundamental ways as people born into the internet age become an increasing part of the market. There are other data points suggesting that the millennials aren’t so different from their predecessors. How should publishers approach marketing differently to different age groups?

14. Digital production tech and operations. Is there already a “new normal” for integrated print and digital publishing? Do publishers need to continue thinking about investing in technology for creation and delivery?

15. Audio. Audio publishing has gone all-downloads much faster than print. An even bigger technological disruptor may be coming as TTS (text-to-speech) technology gets better and better. What the linkage will be between audiobooks and ebooks in the future is something else every publisher needs to consider.

16. Publishing automation. From content management to product generation, automation has been part of every publisher’s life for the past several years. It might be fruitful to explore how people in publishing houses feel about the automation that has taken place — has it helped? — and get a sense of what needs to be automated in the future.

17. Mobile. Because of mobile, there are shifts in consumption and an impact on search and discovery and where the transactions take place. Many publishers have worked to optimize their websites for mobile use but there’s a lot more to know about the mobile shift that could affect what they publish and how they market it.

18. Video. This topic runs a gamut. Publishers can be tempted by YouTube stars with big audiences as potential bestselling authors. But how reliably can those audience be converted to buy books or ebooks? What do publishers need to know about video production? Do videos really help with book marketing?

19. Privacy. Should publishers or booksellers be doing anything to address potential compromises to reader privacy in the digital age?

And then we have six questions for all publishers that could inform or suggest additional topics.

* What growth opportunities do you see for today’s publishers?

* What potential change in the landscape are you most worried about?

* What “problems” are you trying to solve?

* Where are you investing your capital?

* When you hire today, what skills are you looking for that you might not have ten years ago?

* Can you tell us any topic you think is important that isn’t mentioned here?

This link to our survey is intended to allow you to participate in helping us decide what’s important for DBW to cover. Even a program as extensive as ours has to make choices and your input will help us do that more wisely. In case you’re interested, here is my personal list of what publishers should be thinking about, which is a very-much-abridged version of this post.

Under the direction of our Conference Chair, Lorraine Shanley, and co-Chair Jess Johns, we are following a parallel process for our Publishers Launch Kids show which will kick of DBW on March 7. If you are kids book publishing interests you, the survey for that show is here and you’re welcome to participate in that one as well.

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The utility of examining the text of a book to find search terms for SEO


The first two things to understand about optimizing book copy for SEO that I’ve learned from Logical Marketing partner Pete McCarthy are:

1. Copy always used to be written based on “knowledge of the book”. It should now be written based on “research into the audiences”.

2. Copy from publishers was almost always B2B, intended for intermediaries in the marketing and supply chains. Now all copy ends up being B2C, important for consumers and search.

These are tough hurdles for the most established publishers to jump, because executing on the audience research piece not only requires a change in the workflow and distribution of work among staff, doing that also requires additional effort that employs skills that may be in short supply, if they exist in the publishing house at all.

With all that additional work in front of them, any automated solution that can be offered to publishers to diminish the pain of this transition is attractive. (We’re working on a few of those ourselves.) I’ve recently become aware of the new technology offered by Trajectory, which examines a book’s text for words that should be used for SEO.

Automation is good, but this is still coming from within the book. So I asked my Logical Marketing team to help me understand: is this helpful?

The answer seems to be, “it is a positive step but a very partial one. And it does not help anybody avoid the research we think is fundamental.”

The article by Jim Bryant of Trajectory on the Publishing Perspectives blog demonstrating the value of their capability is very clear. He used as one example a book called “The Mayo Clinic Diet”. A word cloud Trajectory created from the book showed clearly that there were two big words, “calorie” and “exercise”, which appeared frequently in the book, were important to its thesis, and were not in the copy the publisher created to describe it. That’s the positive step.

But Logical Marketing methodology is to find out what words the consumer uses to describe what is in the book, particularly in search. With a backlist book, this can be easily researched in Library Thing. The word cloud at Library Thing for this very same book says the terms that the consumers use are “diet” and “dieting” (which, being in the title, were already in the descriptive copy), “cookbook” (not in), “health” and “health and fitness” (not in), “nutrition” (not in), “weight loss” (which was in the original copy; hey! it is a diet book!), and “exercise” (in because it was identified by Trajectory.) “Calorie” apparently didn’t figure as important to the consumers on Library Thing as an associated term.

But going beyond the important terms not in the book and therefore never to be found by the Trajectory methodology, were those other prime terms — “cookbook”, “health”, “health and fitness”, and “nutrition”. And a bit more work on our part also identifies longer-tail terms that will be more important for discovery than what Trajectory found: “healthy diet”, and “lifestyle changes” among them. You get that very clearly from Library Thing.

Pete McCarthy did a post for the DBW blog recently that used “To Kill a Mockingbird” to show why the words that are in the book are not sufficient for first-rate SEO. (Pete used a fiction title because it is often said that fiction is harder to SEO than non-fiction. The point is that the methodology still works.) What is that literary classic about that a semantic examination of the text probably won’t tell you? Racism. Civil rights. It is also important Southern Literature. As an aside, you can combine certain of those tags to find comparable other authors for specific aspects of the book that will resonate with certain customers. You know another author who jumps out with that analysis? John Grisham. Will Trajectory’s method show you that? We don’t think so. They have built sophisticated technology to analyze writing style and story structure, but whether that would connect Harper Lee and Grisham is very doubtful. Using the characterizations of consumers connects them very clearly.

We don’t mean to dismiss Trajectory. We might well learn to incorporate it into our methodology in circumstances where it is available to us (if a publisher we’re working with has it), but almost certainly for new titles only. It is not worthless to examine the text of a book looking for clues to good keywords. But it is a mistake to ignore McCarthy’s first rule: that the descriptive copy that serves you best for SEO requires research into the audience, even gaining knowledge as rudimentary as in the example. Semantic examination of the text automates what we’ve always tried to employ manually: knowledge of the book. That’s useful, but it is really the smallest part of a much larger job to create descriptive copy optimized for search.

To modify an old aphorism, knowledge gained from the text is often unnecessary, but never sufficient.

As for backlist, the important terms that the Trajectory examination uncovered are found much more easily and quickly at Library Thing. The tool that was well-built to begin with, has existed and been iterated upon and had data added to it for years, and been underutilized for a long time because it was seen as a “niche consumer” capability, is still the best one. It is populated with terms used by real people not employed by the author or the publishing house. Its data is not based on transactional history, but on reading history. That’s what you really want for SEO. New titles are a bit harder, and Trajectory over time will likely solve pieces of that puzzle, but audience research is still a lot more important than an examination of the book’s text to achieve the desired result of having readers who are unaware of a book but would be likely to want it have it put in front of them for consideration.

We recollect that Amazon had the full text for many books and used to do a semantic analysis of it. (They certainly still do X-ray in Kindle, which is a version of it.) They haven’t emphasized it and they haven’t built on it. That suggests that the commercial value of it is questionable. And Google also identifies “common words and phrases” and provides a word cloud, which you can see here for “The Mayo Clinic Diet” if you scroll down.

And, indeed, we’re dealing with Trajectory 1.0. Over time they may make their analysis increasingly relevant and useful. But no matter how smart and sophisticated you are, you can’t examine the book itself to find out how people reading it react to it and think about it and that is the information that tells you most about who might read it next.

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Four of the big five have new deals with Amazon and only the biggest is still to negotiate one


A reporter called earlier this week focused on what he figures are the upcoming negotiations over trading terms between Amazon and Penguin Random House. I had observed when Amazon was throwing sharp elbows at Hachette during their contractual dispute that Amazon wouldn’t try similar tactics with PRH.

Since then, with HarperCollins and Amazon having announced they’ve reached new terms, deals have been done with all the Following Four US publishers. It would appear that the DoJ’s and Judge Cote’s work to stop publisher-controlled pricing across retailers has been very largely undone by the deals independently arrived at. So it is a sensible question for a reporter to ask, as this one was: can Penguin Random House do better than the others did in these negotiations?

I don’t know the answer to that. And even after a deal is announced, none of us will necessarily know the answer. But this is an appropriate time to consider the power of Penguin Random House’s position in the marketplace. It is very strong. If I were any of the other four major publishers, I would fear PRH more than Amazon as a potential disruptor of my business. When I put that proposition to a UK-based executive of one of those companies at the London Book Fair last week, he readily agreed with me.

When one considers what a segmented business publishing is, the Penguin Random House combination becomes that much more eye-catching. These five companies — PRH, HarperCollins, Simon & Schuster, Hachette, and Macmillan — compete much more with each other than they do with anybody else. Cambridge competes with Oxford and other university presses. Quarto competes with Chronicle and Abrams and Running Press and outside the US with Egmont and other illustrated book publishers. Yes, a bestseller might come from anywhere: Harry Potter came to the US market from Scholastic and the UK market from Bloomsbury. But the publishers who compete for the bestselling authors and the front-of-store slots repeatedly are the Big Five, which were formerly the Big Six.

And when Penguin merged with Random House, that was not just any old merger of the Big Six. It was a merger between Number One and Number Two. It has created a single company that is, in the US market, about twice the size of its next competitor (about $2.5 billion in sales for PRH against about $1.2 billion for HarperCollins). And HarperCollins, in turn, is about double the size of each of the other three.

What that means is that PRH, like Amazon, can make its commercial decisions independently from the rest of the industry. They can take risks that would be very challenging for anybody else. Amazon could afford to get into a dust-up with Hachette that affected the supply of books in ways its customers could clearly see and make it public to try to make a point. Random House, even before the merger, could afford to stay out of the new iBookstore (they wouldn’t play ball with agency terms in the beginning) for a while, which would have seemed a big risk to the others. (Of course, the DoJ and Judge Cote didn’t see it as individually-discernible risk. Their explanation was “collusion”.) That decision by Random House paid off in big ways in 2010 with higher sales per ebook title (because they didn’t go to agency, which reduced the per-title take) and higher unit sales (because agency would have forbidden discounting, and Amazon went to town discounting Random House books against their agency competitors).

In the past year, Scribd and Oyster announced ebook subscription programs. Pretty quickly, HarperCollins and Simon & Schuster announced varying degrees of participation in the services. And then Macmillan followed. But Penguin Random House and Hachette stayed out. Hachette is the most author- and bestseller-driven of the major houses and author brands are the most likely long run casualties if subscription services succeed. But, if they succeed, Hachette will have to go back to them hat in hand. Penguin Random House won’t, necessarily.

Because if subscriptions are actually the wave of the future and the title rosters from Scribd and Oyster are sufficient to make that happen, then PRH could compete with them entirely on their own. They would have as many prominent commercial books from their own reservoir as the other services have aggregated. And they wouldn’t be sharing with a third party vendor.

It is worth noting that PRH has gone into the Scribd service with audiobooks.

When Oyster announced last month that they would now sell ebooks a la carte as well as in subscription bundles, some of the press saw more significance to the move than it warranted. Scribd started out as an a la carte document access site. Amazon itself formed a subscription service (Kindle Unlimited) the minute Scribd and Oyster announced what they were doing. If you have the capability to sell ebooks, why not sell them by whatever commercial arrangement the customer wants?

By the same token, the distinction between publishers and retailers is melting away. Amazon went into publishing very quickly after ebooks enabled self-publishing. Barnes & Noble published proprietary books for years, even before they bought Sterling in 2002. HarperCollins built a retailing capability for themselves in the past year. (The Tor.com imprint of Macmillan said they’d be selling DRM-free ebooks directly from their own site, but we have seen no evidence that they actually ever did.)

So, the reporter trying to understand the possibly-occurring Amazon-PRH negotiations wondered, would PRH become a retailer?

I don’t think so (at least not anytime soon), but I still believe — as I did when I first speculated about all this 2-1/2 years ago — that a store could have a competitive selection of books with titles exclusively from PRH. No other publisher could serve a general interest audience at retail without other people’s books as well.

How else could PRH be disruptive? They could offer a license to schools for their titles. If a school bought one of those to load its students’ digital devices with content, they wouldn’t have everything they might want but they could conceivably have all they need. How hard would it be to sell a competing license with less good stuff in it? How hard would it be to build an aggregation so that a competing license had as much good stuff in it?

The executives I’ve spoken with at PRH — and I have high personal and professional opinions of all of them — have consistently disclaimed any interest in most of what I’m suggesting. And, indeed, they haven’t started a subscription service and they’ve shown no signs of rolling out a program to create PRH-only bookstores. There are reasons, aside from altruism or short-sightedness, why they might resist these solutions. After all, PRH publishes about half the most commercial titles in the US book trade. Subscription services and retail competition would weaken the existing bookstore network, and PRH benefits from its existence in proportion to its relative size, which is to say “much more than anybody else”.

In fact, I’ve discussed the possibility that they could be so disruptive with the CEOs of two of the other Big Five, and neither executive (unlike the one I met with in London last week) expressed much concern. One said “they don’t want to do that”, meaning “they don’t want to destroy the competition in the trade” (which is a point of view that is actually supported by what the executives at PRH have said to me, as counter-intuitive as it seems). And the other one believes that having PRH in the game to negotiate with Amazon and B&N helps keep the terms of trade in check for everybody else as well. That executive likes having PRH there, with all its size and clout.

I had the conversation with the reporter that was the catalyst for this post on Wednesday morning and it was mostly drafted on Wednesday afternoon. Penguin Random House’s new consumer-centric web site was unveiled Thursday morning and underscores their support of the trade (they’re trying to push sales to retailers, not sell directly themselves). The site appears to give a page for every book they’ve got, which could well prove very useful as they build embellishments.

They refer the sales over to a robust choice of retailers for all formats. One thing I noticed was that a particular ebook I looked for — Napoleon, A Life by Andrew Roberts — is $45 in cloth, $20 in paperback, and the ebook is listed at $29.99! Running through the list of retailers to which PRH links directly, we can see that Amazon and Google Play discount the book down to an identical approximately 14.4% off $25.65 (with Amazon touting the massive saving over the hardcover price!) but the others listed — Apple, B&N Nook, Books-a-Million, and Kobo — offer it at the $29.99 list price. Close observers of the changing state of agency pricing will be watching whether the pricing or the discounting profile changes when PRH concludes that next round of negotiations.

And, incidentally, this also jibes with something we were told very recently by an ex-Nook employee, who said that the DoJ and Judge Cote effectively stopped B&N’s ability to compete with Amazon in its tracks when they opened up discounting of agency. Not only did they strip out margin that B&N desperately needed to compete, competing then effectively required price-monitoring capability to keep up with Amazon that was beyond their capabilities. Google has no problem doing that and maybe nobody else can keep up, but it would take looking at a lot more than one title to prove that.

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Pete McCarthy shows how audience research can be done quickly and efficiently


I keep learning about “marketing today” from Peter McCarthy. There are two first principles about descriptive copy (a part of what is referred to as “metadata”, but a tricky part because, unlike trim size or price, it isn’t always obviously “right” or “wrong”) that all publishers need to take on board and adjust their workflows to accommodate. As far as I can tell, none of any substantial size have.

1. Descriptive copy has always been written by somebody who really knows the book, which often meant an editor (sometimes a marketer) involved with it well before publication. Now the copy needs to be written with knowledge gained through research into the audience. That takes both time and capability that hasn’t previously been required.

2. Descriptive copy has overwhelmingly been intended for a B2B purpose — catalogs and title-information-sheets for accounts — and now all copy, whatever its original intent, is likely to end up being seen by the consumer and, more importantly, it will be influencing the search engines that respond to consumer queries.

This is a change that is difficult for a big company to cope with because of their size. But it is hard for everybody because of the uniqueness of each book compared to others. The research methodologies have to scale on one hand but also be right-sized and tweaked for each book, author, and brand. Books aren’t soap. Knowledge of the book itself is generally limited to the editor(s) involved until they push it out to the rest of the company. So it is natural for editors or their assistants to draft descriptive copy. But these people may not have either the time or the skills for audience research.

But if the audience research is seen as a separate activity that should “feed” the copy-drafting, then the challenges are to figure out who on the team should do it, how they acquire the skills and knowledge of the tools to execute, and — trickiest of all — how to budget for the additional time and effort required (which across a large list is substantial).

And then there’s the problem of making sure the copy is consumer- and search-engine-friendly, which is another set of skills that haven’t been resident at publishers but that must be employed today.

This morning, Pete has a post at the DBW blog which really tackles the first part of the challenge, spelling out a set of starter tools and techniques are necessary to do a quick-and-dirty assessment of a book’s audience(s). He describes a step-by-step exercise in audience research that can be done in an hour, once the array of tools he describes are mastered.

We used to say 10 and 20 years ago “the Internet changes everything”. I think that is now thoroughly grasped. Today publishers need to accept that “search and the multitude of other means of digital discovery, both observable and dark, change everything about how we create copy”.

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Seven key insights about VMI for books and why it is becoming a current concern


Vendor-managed inventory (VMI) is a supply paradigm for retailers by which the distributor makes the individual stocking decisions rather than having them determined by “orders” from an account. The most significant application of it for books was in the mass-market paperback business in its early days, when most of the books went through the magazine wholesalers to newsstands, drug stores, and other merchants that sold magazines. The way it worked, originally, was that mass-market publishers “allocated” copies to each of several hundred “independent distributors” (also known as I.D. wholesalers), who in turn allocated them to the accounts.

Nobody thought of this as “vendor-managed inventory”. It was actually described as “forced distribution”. And since there was no ongoing restocking component built into the thinking, that was the right way to frame it.

The net result was that copies of a title could appear in tens of thousands of individual locations without a publisher needing to show up at, or even ship to, each and every one.

To make this system functional at the beginning, the books, like magazines, had a predictable monthly cycle through the system. The copies that didn’t sell in their allotted time were destroyed, with covers returned to the publisher for credit.

Over time, the system became inefficient (the details of which are a story for another day, but the long story short is that publishers couldn’t resist the temptation to overload the system with more titles and copies than it could handle) and mass-market publishing evolved into something quite different which today, aside from mostly sticking to standard rack-sized books, works nothing like it did at the beginning.

My father, Leonard Shatzkin, introduced a much more sophisticated version of VMI for bookstores at Doubleday in 1957 called the Doubleday Merchandising Plan. In the Doubleday version, reps left the store with a count of the books on-hand rather than a purchase order. The store had agreed in advance to let Doubleday use that inventory count to calculate sales and determine what should then be shipped in. In 18 months, there were 800 stores on the Plan, Doubleday’s backlist sales had quadrupled and the cost of sales had quartered. VMI was much more efficient and productive — for Doubleday and for the stores — than the “normal” way of stocking was. That “normal” way — the store issues orders and the publisher then ships them — was described as “distribution by negotiation” by my father in his seminal book, “In Cold Type”, and it is still the way most books find their way to most retail shelves.

After my Dad left Doubleday in 1960, successor sales executives — who, frankly, didn’t really understand the power and value of what Dad had left them — allowed the system to atrophy. This started in a time-honored way, with reps appealing that some stores in their territory would rather just write their own backlist orders. Management conferred undue cred on the rep who managed the account and allowed exceptions. The exceptions, over time, became more prevalent than the real VMI and within a decade or so the enormous advantage of having hundreds of stores so efficiently stocked with backlist was gone.

And so, for the most part, VMI was gone from the book business by the mid-1970s. And, since then, there have been substantial improvements in the supply chain. PCs in stores that can manage vast amounts of data; powerful service offerings from the wholesalers (primarily Ingram and Baker & Taylor, but others too); information through services like Above the Treeline; and consolidation of the trade business at both ends so that the lion’s share of a store’s supply comes from a handful of major publishers and distributors (compared to my Dad’s day) and lots of the books go to a relatively smaller number of accounts have all combined to make the challenge of efficient inventory management for books at retail at least appear not to need the advantages of VMI the way it did 60 years ago.

And since so many bookstores not only really like to make the book-by-book stocking decisions, or at least to control them through the systems they have invested in and applying the title-specific knowledge they work hard to develop, there has been little motivation for publishers or wholesalers to invest in developing the capability to execute VMI.

Until recently. Now two factors are changing that.

One is that non-bookstore distribution of books is growing. And non-bookstores don’t have the same investments in book-specific inventory management and knowledge, let alone the emotional investments that make them want to decide what the books are, that bookstores do. Sometimes they just simply can’t do it: they don’t have the bandwidth or expertise to buy books.

And the other is that both of the two largest book chains, Barnes & Noble and Books-a-Million, are seeing virtue in transferring some of the stocking decisions to suppliers. B&N, at least, has been actively encouraging publishers to think about VMI for several years. These discussions have reportedly revolved around a concept similar to one the late Borders chain was trying a decade or more ago, finding “category captains” that know a subject well enough to relieve the chain of the need for broad knowledge of all the books that fall under that rubric.

This is compelling. Finding that you are managing business that could be made more efficient with a system to help you while at the same time some of your biggest accounts are asking for services that could benefit from the same automation are far more persuasive goads to pursue an idea than the more abstract notion that you could create a beneficial paradigm shift.

As a result, many publishing sales departments today are beginning to grapple with defining VMI, thinking about how to apply it, and confronting the questions around how it affects staffing, sales call patterns, and commercial terms. This interest is likely to grow. A well-designed VMI system for books (and buying one off-the-shelf that was not specifically designed for books is not a viable solution) will have applications and create opportunities all over the world. Since delivering books globally is an increasingly prevalent framework for business thinking, the case to invest in this capability gets easier to make in many places with each passing day.

VMI is a big subject and there’s a lot to know and think through about it. I’ve had the unusual — probably unique — opportunity to contemplate it with all its nuances for 50 years, thanks to my Dad’s visionary insight into the topic and a father-son relationship that included a lot of shop talk from my very early years. So here’s my starter list of conceptual points that I hope would be helpful to any publisher or retailer thinking about an approach to VMI.

1. Efficient and commercially viable VMI requires managing with rules, not with cases. Some of the current candidates to develop a VMI system have been drawn into it servicing planograms or spinner racks in non-book retailers. These restocking challenges are simpler than stocking a store because the title range is usually predetermined and confined and the restocking quantity is usually just one-for-one replenishment. We have found that even in those simple cases, the temptation to make individual decisions — swapping out titles or increasing or decreasing quantities in certain stores based on rates of movement — is hard to resist and rapidly adds complications that can rapidly overwhelm manual efforts to manage it.

2. VMI is based on data-informed shipments and returns. It must include returns, markdowns, or disposals to clear inventory. Putting books in quickly and efficiently to replace sold books is, indeed, the crux of VMI. But that alone is “necessary but not sufficient”. Most titles do not sell a single copy in most stores to which they are introduced. (This fact will surprise many people, but it is mathematically unavoidable and confirmed through data I have gotten from friends with retail data to query.) And many books will sell for a while and then stop, leaving copies behind. Any inventory management depending on VMI still requires periodic purging of excess inventory. That is, the publisher or distributor determining replenishment must also, from time to time, identify and deal with excess stock.

3. VMI sensibly combines with consignment and vendor-paid freight. The convention that books are invoiced to the account when they are shipped and that the store pays the shipping cost of returns (and frequently on incoming shipments as well) makes sense when the store holds the order book and decides what titles and quantities are coming in. But if the store isn’t deciding the titles and quantities, it obviously shouldn’t be held accountable for freight costs on returns; that would be license for the publisher or distributor to take unwise risks. The same is really true for the carrying cost of the inventory between receipt and sale. If the store’s deciding, it isn’t crazy for that to be their lookout. But if the publisher or distributor is deciding, then the inventory risk should be transferred to them. The simplest way to do that is for the commercial arrangement to shift so that the publisher offers consignment and freight paid both ways. The store should pay promptly — probably weekly — when the books are sold. (Publishers: before you get antsy about what all this means to your margins, read the post to the end.)

Aside from being fairer, commercially more logical, and an attractive proposition that should entice the store rather than a risky one that will discourage participation, this arrangement sets up a much more sensible framework for other discussions that need to take place. With publisher prices marked on all the books, it makes it clear to the retailer that s/he has a clear margin on every sale for the store to capture (or to offer as discounts to customers). And because the publisher is clearly taking all the inventory risk, it also makes it clear that the account must take responsibility for inventory “shrink” (books that disappear from the shelves without going through the cash register.)

Obviously, shrink is entirely the retailer’s problem in a sale-and-return arrangement; whatever they can’t return they will have paid for. But it is also obvious that retailers in consignment arrangements try to elide that responsibility. Publishers can’t allow a situation where the retailer has no incentive to make sure every book leaving the store goes through the sales scan first.

4. Frequent replenishment is a critical component of successful VMI. No system can avoid the reality that predicting book sales on a per-title-per-outlet basis is impossible to do with a high degree of accuracy. The best antidote to this challenge is to ship frequently, which allows lower quantities without lost sales because new copies replace sold copies with little delay. The vendor-paid freight is a real restraint because freight costs go down as shipments rise, but it should be the only limitation on shipment frequency, assuming the sales information is reported electronically on a daily basis as it should be. The publisher or distributor should always be itching to ship as frequently as an order large enough to provide tolerable picking and freight costs can be assembled. The retailer needs to be encouraged, or helped, to enable restocking quickly and as frequently as cost-efficient shipments will allow.

5. If a store has no costs of inventory — either investment or freight — its only cost is the real estate the goods require. GMROII — gross margin return on inventory investment — is the best measurement of profitability for a retailer. With VMI, vendor-paid freight, and consignment, it is infinity. Therefore, profitable margins can be achieved with considerably less than the 40 to 50 percent discounts that have prevailed historically. How that will play out in negotiations is a case-by-case problem, but publishers should really understand GMROII and its implications for retail profitability so they fully comprehend what enormous financial advantages this new way of framing the commercial relationship give the retailer.

(The shift is not without its challenges for publishers to manage but what at first appears to be the biggest one — the delay in “recognizing” sales for the balance sheet — is actually much smaller than it might first appear. And that’s also a subject for another day.)

6. Actually, the store also saves the cost of buying, which is very expensive for books. The most important advantage VMI gives a publisher is removing the need for a buyer to get their books onto somebody’s shelves. The publisher with VMI overcomes what has been the insuperable barrier blocking them from many retail establishments: the store can’t bear the expense of the expertise and knowledge required to do the buying. It is harder to sell that advantage to existing book retailers who have invested in systems to enable buyers, even if some buyer time can be saved through the publisher’s or distributor’s efforts and expertise. But a non-book retailer looking for complementary merchandise that might also be a traffic builder will appreciate largely cost-free inventory that adds margin and will see profitability at margins considerably lower than the discounts publishers must provide today.

7. Within reasonable limits, the publisher or distributor should be happy to honor input from the retailer about books they want to carry. It is important to remember that most titles shipped to most stores don’t actually sell one single unit. Giving a store a title they’re requesting should have odds good enough to be worth the risk (although that will be proven true or not for each outlet by data over time). Taking the huge number of necessary decisions off a store’s hands is useful for everybody; it shouldn’t suggest their input is not relevant. Indeed, getting information from stores about price or topical promotions they are running, on books or other merchandise, and incorporating that into the rules around stocking books, will help any book supplier provide a better and more profitable service to its accounts. After all, having a store say “I’d like to sell this title for 20 percent off next week in a major promotion, would you mind sending me more copies?” opens up a conversation every publisher is happy to have.

Of course, in a variety of consulting assignments, we are working on this, including system design. It is staggering to contemplate how much more sophistication it is possible to build into the systems today than it was a decade-and-a-half ago when we last immersed ourselves in this. In the short run, a VMI-management system will provide a competitive edge, primarily because it will open up the opportunity to deliver to retail shelves that will simply not be accessible without it. That will lead to it becoming a requirement. As I’ve said here before, a prediction like that is not worth much without being attached to a time scale. I think we’ll see this cycle play out over the next ten years. That is: by 2025, just about all book distribution to retailers will be through a VMI system.

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Starter thoughts for publishers to develop new author marketing policies


In a prior post, we suggested that the time has come for publishers to have clear policies around what they should require from author web presences for an effective publishing partnership. This is a really complex and multi-faceted challenge for every publisher. The purpose of this post is to discuss that proposition in more detail, with a focus on how a publisher should approach developing those policies and the potential contractual relationship changes that they imply.

1. The first step is for a publisher to articulate their minimum standard for an author’s online presence. We have found that the role of web presences an author controls in helping Google and other search engines understand an author’s importance in context is routinely underappreciated. In addition to a properly-SEOd web site, publishers will want to make sure authors fill out their Amazon author page, their Google Plus profile, and their Goodreads page as well. All of this verbal metadata — along with images including photos and book covers — builds a strong foundation for discovery.

Obviously, Facebook, Twitter, LinkedIn, Medium, Instagram, and Pinterest (among others) could also be a constructive part of the web presence for many authors. A publisher’s thinking should include them too, taking cognizance of the fact that they are more important for some authors and topics than for others and that it is hard and cumbersome to do anything about them if the author doesn’t do it for him- or herself.

2. Although many, if not most, authors will have a website or the intention to create one, many others don’t. In that case, the publisher will want to have a fast, inexpensive, and effective way to put one up on the author’s behalf. (The non-website components of the foundation don’t lend themselves as readily to publisher assistance.)

For authors who either don’t have the skills to put up their own WordPress site or the budget to pay for a unique one to be designed and built for them, the publisher should provide a templated interactive process to create a site inexpensively. They also will have to do the research into key words, topics, and phrases to inform the SEO. We believe that for a publisher who will operate at scale, building dozens and perhaps hundreds of these sites per year, the cost should come down to $2,000 or less per site, perhaps $1,000 or less for first-time author sites that have minimal needs for unique book pages.

3. The sites should be seen as author sites which have pages for the individual titles on them, not book sites. That means the publisher has to accept the idea of putting all of an author’s work on the site, which definitely enhances the author’s online authority even though it may promote books from other publishers. Making a site that ignores an author’s whole output is superficially self-serving for a publisher, but it is actually counter-productive if the objective is to promote the author’s online presence and discoverability.

4. Of course, in more cases than not, the author will already have a site. In that case, the publisher won’t be building one but does need to assure itself that the existing site meets the SEO standard. The means an SEO check is necessary, using much of the same knowledge and techniques as the publisher would use to establish the right key words, phrases, and topics they’d use if they were building the site themselves. In addition, publishers should evaluate the site for user experience, including the speed of loading. We’ve seen many author sites which failed on that scale.

5. The publisher should also be giving authors advice about maximizing other opportunities. If the author might blog, suggestions about length, frequency, and topics are worthwhile as are very specific ideas about maximizing the other platforms like Facebook. The publishers should be giving authors a Wish List, making absolutely certain that no opportunity for author-based promotion is ignored because of a lack of awareness on the author’s part. By the same token, knowing what the author is doing enables coordinated marketing, such as the publisher’s own social presences being used to “like” or “favorite” or “recommend” what the author is doing. Doing these things will add to the publisher’s online authority as well as giving boosts to authors on a regular basis.

6. A number of publishing service companies and independent entities have created rosters of freelance service providers that can help authors with their publishing efforts. A lot of these — like cover designers or line editors — are not necessary for an author lucky enough to have a publisher. But we know that authors sometimes want help with ongoing content generation, from blogs to tweets. Although authors should obviously avoid handing over their online identities to surrogates they don’t even know (and that is not what is being suggested here), we know that busy authors can use help with what can be time-consuming social media. Publishers would be much smarter to develop their own list of trusted helpers for this kind of work, perhaps even instructing or training them in order for them to qualify for publisher referrals, than to allow these things to happen by accident or chance. (By the way, this might be a useful way to allow an employee who is on maternity leave or any other sabbatical to stay active from locations other than an office.)

7. Looking across a number of websites enables a publisher to see the impact of Google algorithm changes, which very few authors can do. (This will be particularly important on April 21, when Google starts “punishing” the ranking of sites that aren’t mobile-friendly.) Seeing the behavior of Google for different sites, those “whacked” by a change and those that aren’t (and changes to the algorithms occur all the time, not usually as dramatic or heralded as the one around mobile), allows insight into what needs to be done to benefit from the change, or at least avoid being punished. One person in a publishing house could be helping literally hundreds of authors stay optimized and avoid the need for each of these authors to know enormous amounts about SEO themselves. (Of course, it is also true that an author who is especially brilliant at SEO might not want a publisher focusing on the landing page she created that boosted traffic and teaching other authors to compete with it. Those authors are the exception, not the rule.)

This is not a capability we’ve seen publishers create for themselves, even though they can. We’d argue it is a great benefit for an author to be published by a house that has thought through these requirements and is providing an SEO check and research into search terms. Publishers should be doing this. The early movers will gain a temporary, but substantial, competitive advantage for themselves with authors and for their authors against the field.

8. What should be clear is that the author is being given a choice: they can build their own website (or do the tweaking necessary to one they already have to bring it up to standards) or they can have one built for them by the publisher from the templated choices the publisher offers.

9. This leaves two very large commercial questions for the publisher and author to negotiate, both of which should rise to the level of being covered in the contract. The first one revolves around the investment in and “ownership” of the author’s website and, perhaps the investments needed for ongoing marketing on the author’s behalf. Of course, there is nothing to discuss if the author builds and maintains her own site and social presences. The publisher should still provide all the help they can — SEO research at the beginning and analytics help all along — but there would be no reason for any compensation or publisher ownership.

However, if the publisher invests the dollars to build the author’s site or pays for any of the ongoing efforts by freelancers, there is definitely a negotiation to take place and there are a few moving parts to that negotiation. One way to address this might be for the publisher to advance the money for this work but have the opportunity to recoup it out of proceeds, as though it were part of the advance. Or the publisher could just render the author a bill for the site creation cost (remember, we’re positing $2,000 or less) which the author could simply pay. Another possibility is that the publisher might “own” the author’s website. That is not an end result we would recommend and, if it is necessary, there should be a “buy back” clause that enables the author to recover that ownership if, for example, they move on to another house. In any case, the point to these new elements in the author-publisher agreement is that they assure that what is necessary to optimize 21st century book publication is in place. Both partners in this arrangement — author and publisher — should want that to occur. It really should not be beyond the negotiating capabilities of the two parties to come to a fair agreement about how the necessary investments are compensated.

An approach that could evolve would be that houses have a “web site allotment”, making the sites they create “free”, but then they should pay that same amount in support of authors who create their own sites.

10. The other knotty element that should be negotiated is around the use of email lists that these optimized author sites will generate. It is self-destructive for either the author or the publisher to simply say “they’re mine!” Email list use has a lot of history, but best practices in cases like these are necessarily still evolving. For example, a publisher might build a mammoth email list by working with 10 authors with similar audiences for a promotion going across their email list base. Each author will benefit from being exposed to many readers of the other authors. Most authors will want that to happen if the opportunity is presented to them. Another possibility is that a house does a promotion and each author involved sends a personal note to his/her list letting them know about the promotion which, perhaps, could be a book signing or a webcast. The point is that the house has lists and the authors have lists, each can benefit from collaboration with the other and the house can create synergies by building joint efforts among authors.

These questions are complex but, while time passes, they are not getting any simpler. The value of the web and email list assets that can be optimized with cooperation is increasing, which means the cost of not doing this right is also increasing. It is simply not acceptable for every author and every publisher to avoid the discussion, leaving us with tens of thousands of entities operating in siloed vacuums. That’s the status quo. It isn’t satisfactory.

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No author website rules of the road in publishing contracts is a big fail for the industry


The topic of author websites and what the relationship between publishers and authors around them should be is a big “fail” for the publishing industry at the moment. Nobody seems to have thought this through. Publisher policies are all over the lot, even within houses, and that demonstrates that agents haven’t figured out what policies and publisher support an author should require. When they do, there will be much greater uniformity across publishers. (Note to conspiracy theorists about often-alleged Big Five “collusion”: that’s how it actually happens. They’re bullied into it by agents or accounts.)

Although we have been thinking about this for a while, it has been hammered home to us, once again, by events in our own shop this past week. On one hand, we have supplied an agent who asked for one with a proposal to build a website for a key author. The agent is talking to the publishers on both sides of the Atlantic (different divisions of the same big house), trying to get some financial support from them for what the author wants to build and own. Each of the two imprints is lobbying to build the site themselves. We’re not privy to the details of that conversation, so we’re not sure exactly why they want to build it themselves or what other considerations — like domain name ownership, list ownership and management, outbound links, and day-to-day attention to the site — might be motivating the publisher side of this conversation (in addition, we’d assume, to legitimate concerns about the quality of the site and its SEO).

Last week we did a seminar at another house. As we usually do in those sessions, we gave the house the benefit of some of our research into digital footprints for some of their own books and authors. What we found, as usual, is that the author website deficiencies were handicapping their sales and discovery efforts, sometimes by their total absence. That is, on occasion we found no author website at all.

As far as we know, there is no clear policy in either of these big houses concerning author websites. The decisions around how much to help or intervene or invest are, like so many decisions in publishing, left to each imprint to negotiate with each agent for each author. In yet another big house where we have had live meetings and this question came up, it was clear that the marketers understood the author-owned website SEO issues much better than the editors did, and everybody was hamstrung by the editors’ widely varied ability and willingness to engage with their authors or their agents on this subject.

From where we sit, not having contractual policy around a host of questions that involve an author’s web presence is as big an omission as it would be not to have clearly-defined subsidiary rights splits. In fact, we’d argue that, for most authors, the commercial value of the assets around the web presence are more valuable than subsidiary rights are! No publisher or agent would accept a contract that didn’t cover subsidiary rights. It is a sign that the industry is not keeping up with the new realities that the website policy is so far from being worked out.

This is a big challenge on both sides: for agents and for big houses. Most agents don’t operate at a scale that would enable them to gather the expertise and the knowledge to set their authors up properly or to inform what the demands on the houses should be. But the biggest publishers have a hard challenge too. They’ve all structured themselves around clear delineations between what’s big, requires scale, and should be handled centrally (warehousing, sales, IT) and what’s small, requires an intimate relationship with the author, and should be handled in decentralized imprints (title acquisitions, creative decisions, individual title marketing and publicity). This is a really tricky balance to strike from an organizational perspective. It is reflected in job descriptions and in each staff member’s bonus structure. That is, it is really complicated stuff to mess with and requires attention from the very top of enormous businesses to affect and change.

And because there really is no “house policy” on these things anywhere, any agent except the very biggest would get nowhere trying to handle these issues within a contract.

This is a problem that can’t possibly be solved in a big house without CEO-level involvement because it cuts across too many lines: central and imprint, marketing and editorial, author and agent relationships and contractual terms.

There should be no doubt about the critical importance of an author’s web site (and no, a page on the publisher site isn’t an adequate substitute). The author site serves three absolutely essential purposes that will not be adequately addressed without one.

1. It gives an author the capability to make it crystal clear to Google and other search engines precisely who the author is. All SEO efforts are hobbled without it. An author’s website is a central hub of data (a Pete McCarthy point: “data” isn’t always about numbers, in SEO “data” is often words) about the author, to which both fans and search engines can go for authoritative information.

2. It gives the author an extensible platform from which to engage more deeply with fans, some of whom are megaphones and media from whom the benefits of deeper engagement are substantial. An  author can use it to gather email signups and really only with a site can an author reliably and systematically build and own direct relationships.

3. It gives a logical place for anybody writing about the author to link. That’s why author websites often score so high in search. (Inbound links are SEO gold.) And if an author doesn’t have a website, the next logical place to link might be the Amazon author page, or the Amazon product page (the book). The next choice would be a primary social presence, like Twitter or LinkedIn.

This last point is not registering in many places. At one big house, we know that their policy is to avoid linking to Amazon if they can; they’d rather link to B&N. But they also don’t highly value author websites, and they certainly don’t routinely make sure they exist. The omission of author sites means they’re creating links to Amazon, whether they like it or see it that way, or not. The contradiction is apparently not evident.

Let’s kill the thought once and for all that it doesn’t matter whether an author has a website. We’d maintain that if it’s worth the investment to print the books, it’s worth the investment to have a website. Yes, you can do all sorts of useful things in social media, but the website is the only platform the author can own. Everything else is a rental, and the landlord can change the rules about what you can or can’t do at any time. We note that indie author expert Jane Friedman agrees and is helping guide authors to set up their own sites.

There is one more over-arching truth publishers and agents need to understand. And this one goes to the “what’s big and what’s small” paradigm around which big houses organize themselves.

Superior website management, particularly of SEO, is supported and enabled by knowledge of a lot of author websites. In fact, Logical Marketing partner Pete McCarthy has been noodling the process for a publisher-operated Google Analytics capability across multiple author sites that would, if implemented, apply learnings that would improve the performance of all of them. This is a Logical Marketing project still in its conceptual stages, but what we envision is that authors would get great benefits from allowing the publisher to put Google Analytics (or something else to serve that purpose) on the author site around the publication of a book or longer because they’d get better insight than they could get running it on their own. Publishers can help authors do this better than they could do it alone. To date, they don’t (that we know of), but they can and they should.

If you accept it as a fact that there should be at least a rudimentary website for just about every author, a little thought makes it clear that there is a lot a publisher and author should negotiate agreement on as part of their contractual arrangement.

At the very least, this includes site ownership, design, ongoing maintenance (including content creation), and to what extent it promotes author activity not related to the house (which could be other books). The site will gather email addresses; how can the publisher and author work collaboratively to get the most value from them? (Now, there is a question that has hardly been explored!) The site could well earn affiliate income from sales made through referral links to retailers; is that divided in any way?

The site ownership should logically be with the author, but ownership usually goes to whoever makes the necessary cash investments. That’s the tricky bit our agent client is dealing with right now. The agent wants the author client to own the site but also wants some financial support from the publishers. The publishers apparently are willing to pay for it, but they also apparently want to own it.

The design of the site touches three things: tech competence, SEO competence, and aesthetics. The house should be able to provide important expertise around tech and SEO, but the author will frequently want a voice in the aesthetics. And despite scale advantages that provide a real edge, no house we know of has clearly established that they can provide the tech to make something solid and extensible, or that they have the chops to really deliver the SEO.

The ongoing maintenance of the site opens up a number of questions, particularly around content creation. And content creation questions go beyond the site. Is the author, or the author’s staff, able to write the blog posts for the site, the Facebook posts, and the Tweets (let alone create what is needed if Instagram or Pinterest is being employed)? Or should the publisher or a freelancer be providing that help?

And how does that help, beyond the design and creation of the site, get paid for? It could be any combination of author pays, publisher pays, or publisher advances and recoups.

It is my plan in a subsequent post to lay out a scenario or two for a sensible House Position on these questions. It is my hope, but one not supported by any evidence I have in hand, that the Big Five houses and the biggest literary agents are already working on this problem.

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Asking whether Amazon is friend or foe is a simple question that is complicated to answer


I’ve been invited to join a discussion entitled “Amazon: Friend or Foe” (meaning “for publishers”) sponsored by the Digital Media Group of the Worshipful Company of Stationers (only in England!) and taking place in London next month. I think the answer must be “both”, and I suspect that my discussion-mates — Fionnuala Duggan, formerly of Random House and CourseSmart; Michael Ross from Encyclopedia Britannica; and Philip Walters, the moderator for the conversation, will agree. This is a simple question with many complicated answers. I am sure that Fionnuala, Michael, and Philip will introduce some perspectives I’m not addressing here.

The first thoughts the question triggers for me are three ways I think Amazon has profoundly changed the industry.

Although just about every publisher has headaches dealing with Amazon, very few could deny that Amazon is their most profitable account, if they take sales volume, returns, and the cost of servicing into consideration. This fact is almost never acknowledged and therefore qualifies as one of the industry’s dirty little secrets. Because they’ve consolidated the book-buying audience online and deliver to it with extraordinary efficiency, Amazon must feel totally justified in clawing back margin; it wasn’t their idea to be every publisher’s most profitable account! But since they are effectively replacing so many other robust accounts, the profitability they add comes at a big price in the stability and reliability of a publisher’s business, which feels much more comfortable coming from a spread of accounts. Publishers strongly resist Amazon’s demands for more margin, partly because they don’t know where they’ll stop.

It is also true that Amazon just about singlehandedly created the ebook business. Yes, there had been one before Kindle was introduced in November, 2007, but it was paltry. It took the combination that only Amazon could put together to make an ebook marketplace really happen. They made an ereading device with built-in connectivity for direct downloading (which, in that pre-wifi time, required taking the real risk that connection charges would be a margin-killer). They had the clout to persuade publishers to make more books, particularly new titles, available as ebooks. And they had the attention and loyalty of a significant percentage of book readers to make the pitch for ebooks. With all those assets and the willingness to invest in a market that didn’t exist, Amazon created something out of nothing. Everything that has happened since — Nook and Apple and Google and Kobo — might not have worked at all without Amazon having blazed the trail. In fact, they might not have been tried! Steve Jobs was openly dismissive of ebooks as a business before Amazon demonstrated that those were downloads a lot of people would pay for.

The other big change in the industry that is significant but might not have been without Amazon is self-publishing. The success of the Kindle spawned it by making it easy and cheap to reach a significant portion of the book-buying audience with low prices and high margins. Amazon added its skill at creating an easy-to-use interface and efficient self-service. Again, others have followed, including Smashwords. But almost all the self-publishers achieving commercial success have primarily Amazon to thank. It appears that, in the ebook space at least, self-publishers among them move as many units as a Big Five house and, in fiction, they punch even above that weight. Without Amazon, this might not have happened yet.

So, in the three ways Amazon has really changed the industry — consolidating the bulk of online book buyers, creating the ebook business, and enabling commercially-viable self-publishing, publishers would really have to say the first two are much to their benefit (friend) and the last one they could have done without (foe).

The second big heading for this Amazon discussion is around the asymmetry between what Amazon knows about the industry and what the industry knows about Amazon. Data about the publishing industry is notoriously scattered and because of the large number of audiences and commercial models in the “book business”, very hard to interpret intelligently. Amazon, on the other hand, has its own way of making things opaque by not sharing information.

The first indication of this is that Amazon doesn’t employ the industry’s standard ISBN number; they have their own number called an ASIN. So whereas the industry had a total title count through ISBN agencies that required its own degree of interpretation, the titles published exclusively by Amazon, which only have ASINs and not ISBNs, are a total “black hole”. Nobody except Amazon knows how many there are or into what categories they fall.

Another piece of Amazon’s business that has critical relevance to the rest of the industry but is totally concealed from view is their used book business. There is an argument to be made that the used book marketplace Amazon fosters actually helps publishers sell their new books at higher prices by giving consumers a way to get some of their money back. But it is also pretty certain that people are buying used copies of books they otherwise would have bought new, with the cheaper used choice being offered to them from about the first moment a book comes out. One would intuitively assume that the effect becomes increasingly corrosive as a title ages and the supply of used copies keeps rising as the demand for the book is falling, inexorably bringing the price of the used books down. But none of us outside Amazon know anything about this at all, including how large the market is.

And, by the same token, we have no idea how big Amazon’s proprietary book business is: the titles they sell that are published by them exclusively. Beyond not knowing how many there are or what categories they’re in, the rest of us can’t interpret how the sales of Amazon-published titles might affect the prospects for titles a publisher might be signing up. Amazon has that perspective to inform their title acquisition, their merchandising, and to gauge the extent of their leverage in negotiations with publishers.

Going back to the original question, except for the possibility that some new book sales occur because the purchaser is confident of a resale, this is all foe!

In retrospect, it is clear that Amazon’s big advantage was that they always intended to use the book business as a springboard to a larger play; they never saw it as a stand-alone. This was an anticipation of the future that nobody inside the book business grasped when it was happening, nor was it imitated by book business pure players. But it was the key to Amazon’s economics. They didn’t need to make much margin on books; they were focused on “lifetime customer value” and they saw lots of ways to get it. Google and Apple have the same reality: books for them are in service to larger purposes. But they started with the larger purposes and, for that and other reasons, have never gotten as good as Amazon is with books. (One big deficiency of the Google and Apple offers is that they are digital only; they don’t do print books.) And B&N and Waterstone’s never thought beyond books; it appears that Waterstone’s scarcely thought beyond physical stores!

But it could well be that Amazon is approaching its limits in market share in the book business. What they did worked in the English-speaking world — for printed books two decades ago and for ebooks almost a decade ago — because they were first and able to aggregate an enormous customer base before they got any serious challengers. They will not find it as easy to dominate new markets today, particularly those that have rules that make price competition harder to employ. Language differences mean book markets will remain “local” for a long time and strong local players will be hard for Amazon to dislodge.

Amazon has powerful tools to keep their customers locked in. PRIME is the most effective one: once customers have paid a substantial fee for free shipping, they’re disinclined to buy elsewhere. Kindle is another one. The devices and the apps have broad distribution and, because of self-publishing, Kindle remains the ebook retailer with the biggest selection.

The marketplace is changing, of course. Amazon’s big edge is having the biggest selection of printed and digital books in one place. That’s been known for decades to be the best magnet to attract book buyers. But now a lot of book reading is done without the title-by-title shopping in a bookstore that it always used to require. We are at the beginning of an age of “distributed distribution”. Many different tech offerings — Aerbook, Bluefire, De Marque, Page Foundry, and Tizra among them — can make it easy for publishers to sell ebooks directly (and Aerbook enables that and promotion in the social stream). The subscription services Scribd, Oyster, 24Symbols, and Bookmate (as well as Amazon’s own Kindle Unlimited) are pulling customers away from a la carte ebook buying and Finitiv and Impelsys make it easy for any entity to offer digital reading by subscription. All of these sales except Kindle Unlimited come primarily out of Amazon’s hide, since they are the dominant online retailer for books. Publishers mostly see this dispersal of the market as a good thing for them, even though some of the same opacity issues arise and, indeed, the big general subscription services are a new group of potentially disruptive intermediaries now being empowered.

For the foreseeable future — years to come — Amazon will remain dominant in most of the world as the central location where one shops online for books a la carte because they have the best service, the biggest selection, and they sell both print and digital books. But they now have their own new challenge dealing with the next round of marketplace changes, as what they dominate becomes a smaller portion of the overall book business in the years to come. Publishers face the same challenge presented a somewhat different way.

The event that gave rise to this post takes place the night before the London Book Fair opens. The entry fee is nominal. If you’ll be at LBF and want to attend, please do! I will, typically, have no real base of operations at LBF, but I’ll be there all three days with some time available to meet old friends and new. Email to [email protected] if you want to set something up. 

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Better book marketing in the future depends a bit on unlearning the best practices of the past


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A few years ago, publishers invented the position of Chief Digital Officer and many of the big houses hired one. The creation of a position with that title, reporting to the CEO, explicitly acknowledged the need to address digital change at the highest levels of the company.

Now we’re seeing new hires being put in charge of “audiences” or “audience development”. I don’t know exactly what that means (a good topic for Digital Book World 2016), but some conversations in the past couple of weeks are making clearer to me what marketing and content development in book publishing is going to have to look like. And audiences are, indeed, at the heart of it.

I’ve written before about Pete McCarthy’s conviction that unique research is needed into the audiences for every book and every author and that the flow of data about a book that’s in the marketplace provides continuing opportunities to sharpen the understandings of how to sell to those audiences. Applying this philosophy bumps up against two realities so long-standing in the trade book business that they’re very hard to change:

How the book descriptions which are the basis for all marketing copy get written
A generic lack of by-title attention to the backlist

The new skill set that is needed to address both of these is, indeed, the capability to do research, act on it, and, as Pete says, rinse and repeat. Research, analysis, action, observation. Rinse and repeat.

I had a conversation over lunch last week with an imprint-level executive at a Big House. S/he got my attention by expressing doubt about the value of “landing pages”, which are (I’ve learned through my work with Logical Marketing; I wouldn’t have known this a year ago) one of the most useful tools to improve discovery for books and authors. I have related one particularly persuasive anecdote about that here. This was a demonstration to me of how much basic knowledge about discovery and SEO is lacking in publishing. (The case for how widespread the ignorance of SEO in publishing has been made persuasively in an ebook by British marketer Chris McVeigh of Fourfiftyone, a marketing consultancy in the UK that seems to share a lot of the philosophy we employ at Logical Marketing.)

But then, my lunch companion made an important operational point. I was advocating research as a tool to decide what to acquire, or what projects might work. “But I could never get money to do research on a book we hadn’t signed,” s/he said, “except perhaps to use going after a big author who is with another house.” (Indeed, we’ve done extensive audits at Logical Marketing for big publishers who had exactly that purpose in mind.) “But, routinely? impossible!”

The team Pete leads can do what would constitute useful research which would really inform an acquisition decision, for $1000 a title. If the capability to do what we do — which probably requires the command of about two dozen analytical tools — were inhouse, it would cost much less than that.

Park that thought.

I also had an exchange last week with Hugh Howey, my friend the incredibly successful indie author with whom I generally agree on very little concerning big publishers and their value to authors. But Hugh made a point that is absolutely fundamental, one which I learned and absorbed so long ago that I haven’t dusted it off for the modern era. And it is profoundly important.

Hugh says there are new authors he’s encountering every day who are achieving success after publishers failed with them. It is when he described the sales curve of the successful indie — “steadily growing sales” — that a penny dropped for me. An old penny.

We recognize in our business that “word of mouth” is the most effective means of growing the market for a book. If that were the way things really worked, books would tend to have a sales curve that was a relatively gentle upward slope to a peak and then a relatively gentle downward slope.

Of course, very few books have ever had that sales curve. Nothing about the way big publishers routinely market and sell would enable it to happen. Everything publishers do tries to impose a different sales curve on their books.

A gentle upward slope followed by a gentle downward slope would, in the physical world, require a broad and very shallow distribution with rapid replenishment where the first copy or two put at an outlet had sold. But widespread coordination of rapid replenishment of this kind for books selling at low volumes at any particular outlet (let alone most outlets) is, for the most part, a practical impossibility in the world of distributed retail.

In fact, distributed retail demands a completely out-of-synch sales curve. It wants a big sale the first week a book is out to give it the best chance of making the bestseller list and, even failing that, the best chance of being worthy of continuing attention by a publisher’s sales staff, and therefore, the marketing team. Books in retail distribution are seen as failures if they don’t catch on pretty quickly, if not in days or weeks, certainly within a couple of months. And if a store sells two copies, say, of a new book in the first three months, it probably doesn’t make the cut as a book to be retained. If they bought two, they’re glad they’re gone and not likely to re-order without some push by the publisher or attention-grabbing other circumstance. If they bought ten, they’ll want to get their dollars back by making returns so they can invest in the next potentially big thing.

But that’s not the case online, where there is no need for distributed inventory (especially of ebooks!) If the first copies sold lead to word of mouth recommendations, the book will still be available to the online shopper. And there will be nothing in the way it is presented — it won’t have a torn cover hidden and be hidden in the back of the store, say — to indicate it isn’t successful. People can buy it and the chain can continue, building over time. Three months later, six months later, it really doesn’t matter; the book can keep selling. And, by the way, this will be true at any online retailer with an open account at Ingram (including for print-on-demand books), not just at Amazon.

But, in the brick and mortar world, the book will effectively be dead if it doesn’t catch on in the first three months. And the reality of staffing, focus, and the sales philosophy of most publishers means it won’t be getting any attention from the house’s digital marketers either.

If you live in the world of indie success like Hugh Howey does, you are repeatedly seeing authors breaking through months after a book’s publication, at a time when an experienced author knows a house would have given up on them.

Now park that.

I also had a chat last week with a former colleague of mine now at a periodical. He was explaining that one major conceptual challenge for his publication in the digital age was to see their readership as many pretty small and discrete audiences, not one big one at the level of the “subscriber”. No story in his publication is intended for “everybody”; what is important is for a newspaper or magazine to know whether particular stories are satisfying the needs of the particular niche of their audience that wants that topic, that kind of story. Talking to this former colleague about digital marketing and publishing was a variation on the themes that are topics with Pete.

One thing I learned in this conversation made another penny drop. Let’s say you have a story on any particular topic, from theater to rugby, my friend posited. Your total “theoretical market” within the publication’s readership is every person who ever read a single story on that subject. But your “core market” is every person who has read two stories on it. If a high percentage of those read it, the story succeeded. If not, the story failed.

And a further implication of this analysis is that seeing your audiences that way, and growing them that way, will also ultimately allow monetizing them more effectively. This wouldn’t be advertising-led, so much as harvesting the benefits of audience-informed content creation, but it is totally outside the way editorial creation at newspapers and magazines has always occurred.

And now park that.

We had a meeting two weeks ago with a fledgling publisher whose owner has a great deal of direct marketing expertise. As he heard Pete explaining what he did, looking for search terms that suggested opportunity (lots of use of the term and relatively few particularly good answers), he wondered if we could tell him through research what book to write. We’ve gotten some publishers in some circumstances to do marketing research early enough to influence titling and sub-titling. McVeigh in his ebook makes the same point under the rubric that SEO should be employed before titling any book.

Of course, we don’t sell that kind of help very often or we haven’t so far. It would require getting marketing money invoked early to pay for research like that. But we know it is useful.

And all of this together brings into sharper focus for me where trade publishing has to go, and how the marketing function, indeed, the whole publishing enterprise, needs to be about a constant process of audience segmentation, research, tweaks, analysis, and repeat. A persistently enhanced understanding of multiple audiences can productively inform title selection and creation. And systems and workflows need to be built to systematically apply what is being learned every day to every title which might benefit. Audience segmentation and constant research are really at the heart of the successful trade publishing enterprise of the future, even if we are only lurching toward them now with a primitive understanding of SEO, the occasional A-B test for a Facebook ad, and the gathering of some odd web traffic and email lists that don’t relate to any overall plan.

A publisher operating at scale ought to have the ability to provide those authors that want to build their audiences one reader at a time better analysis and tools than they would have to do it on their own.  Publishers have always depended on the energy of authors to sell their books; the techniques just have to change. Instead of footing the bill for expensive and wasteful author tours, publishers should be providing tools, data, and helpful coaching to be force multipliers for the efforts authors are happy to extend on their own behalf. The publisher’s goal should be have their authors saying “I don’t know how I could possibly be so effective without the help I get from my publisher.”

Publishers should also be doing the necessary research to examine the market for each book they might do before they bid on it. They should have audience groups with whom they’re in constant contact, and they also need the ability to quickly segment and analyze audiences “in the wild”. The dedicated research capabilities need to be applied to the opportunities surfaced by constant monitoring of both the sales of and the chatter about the backlist.

Size, scale, and a large number of titles about which a lot is known should give any publisher advantages over both indie authors and dominant retailers in building the biggest possible audience for the books it publishes. But getting there will require both learning the techniques of the future and unlearning the concepts and freeing themselves of the discipline of “pub date” timing that have always driven effective trade publishing.

The publishers creating new management positions with the word “audience” in the title would seem to be very much on the right track. It is worth recalling that my father, Leonard Shatzkin, carried the title of Director of Research at Doubleday in the 1950s. Research would be another function to glorify with a title and a budget assigned and monitored from the top of each company. Note to the CEOs: a budget for “research” for marketing and to inform acquisition should be explicit and it should be the job of somebody extremely capable to make sure it is productively invested.

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Alternative paths to publishing proliferate but the path for authors most likely to be lucrative is still the oldest one


The Guardian reports that Big Five British publishers are aggressively courting authors to come directly to them rather than through agents. The specifics cited make this sound more like “toes in the water” than “a change in the value chain”. The Tinder Press division of Hachette is holding an “open submissions fortnight”. The editorial director of Random House imprint Jonathan Cape tweeted a request for submissions one time and got 5,000 of them. And HarperCollins’s new Borough Press imprint is holding its second annual “open submission”. They got a single publication out of 400 submissions last year.

The same story also acknowledges that agents are changing their processes too (and have been, as we’ve noted, back in 2011), specifically pointing to a creative writing program operated by the Curtis Brown agency which has “found 15 debut novelists” (presumably meaning they got them publishing deals) “in two and a half years”. It is also true that many self-publishing successes, including Hugh Howey, use literary agents to help them reach publishers outside their home market or language.

The writer featured in the story, Andrea Bennett, was picked up by HarperCollins after getting nowhere submitting to “a dozen” agents and getting nothing but rejection letters, some of which came so quickly after her submission that it felt to her like her material was not even read.

The publishers quoted in the story, not surprisingly, indicated that their interest was in getting to promising talent that the agents might be weeding out. But with one of the houses working its way through 5,000 submissions (“three have real promise”, the publisher says, and I have no idea if they see the irony in that statement that I do) and another repeating the exercise when last year they published one out of 400, the data suggests that the curation the agents are doing is a valuable service for the publishers.

Of course, there is a compensating financial element for publishers who do the work to find unagented books worth publishing. They can almost certainly make a more advantageous deal than they’d make with an agent. Not only can they almost certainly secure the book for a smaller advance (a point amply made in the piece), they are also more likely to get world rights. A picture caption suggests that the Bennett novel HarperCollins picked up has been sold to six markets. If they’re not all English, that’s an opportunity most agents would have denied the publisher.

An unagented author is not without cost and complication to a publisher, who would have to take on the agent’s function of explaining the lengthy and sometimes complex process of publishing to the author every step of the way. This posting from HarperCollins, saying that only their new digital-first imprint accepts “unsolicited manuscripts” is typical. It contains language protecting themselves by explicitly rejecting any responsibility to read, comment on, or even return the unsolicited manuscripts sent to them. (This is almost certainly less of a problem than it was in the past when all submissions were paper, not files. One friend recalled an author who wanted to sue a major house 15 years ago because the author foolishly submitted his only copy of his manuscript and it was “lost” by the publisher.) The exception HarperCollins cites for its digital first imprint is mirrored in an apparently much older posting on the Penguin site which excepts DAW, their science-fiction imprint.

But even if a house would process its “slush pile” (the long-standing term for the unagented and unsolicited submissions) efficiently, and few, if any, do, it couldn’t be a big winner for the publisher to spend much time with it.

Nothing in the Guardian piece suggests to me that my advice to aspiring authors should change. I always tell them to get an agent if they possibly can. (And I also tell them to use the deal database in Publishers Marketplace to find the right agent.) No agent works with odds as long as 1 in 400 or 3 in 5000 with their submissions. Some of the submissions that got lost in those numbers might have been looked at differently if they’d come from an established agent. It is also extremely likely that those submissions that were agented would have been improved somewhat by the agent before submission. Agents don’t just curate. They also edit.

Even the lead author in the Guardian story doesn’t prove the case. Yes, she got a deal with HarperCollins after having had a few agents reject her. But might another handful of agent submissions have gotten her representation that would have resulted in a better deal than the one she got? Or, put another way, what are the chances that a competent agent would have failed to submit to HarperCollins? And then, what are the chances that as an agented author she would have gotten a better offer than what she got?

Patience here might have been remunerative.

Because there are self-published books achieving commercial success, publishers are well aware that the funnel for projects managed by the agents is not delivering them every book that might sell. It almost certainly never did, but, without self-publishing, the books they missed never got the chance to prove themselves in the marketplace without them. Now they do.

This is a great thing for authors. Self-publishing can be a path to a publisher or an agent as well as a way to reach readers directly. For those authors comfortable taking on the tasks beyond authorship — editing, creating a cover, cleaning up the text file, setting up their metadata, and publishing through the various portals — the new paradigm can be a valid alternative to the time-honored, and laborious, process of finding an agent and then letting the agent get the publishing deal.

And it is clear that both publishers and agents recognize that there are alternatives to the historical standard and that they’ll miss good projects from extremely capable authors if they don’t make themselves more accessible to aspiring writers.

But even an exponential increase in the number of self-publishing successes or, now, in the number of authors going directly to publishers without an agent, doesn’t change the realities of book publishing. The big money almost always goes to the agented author whose work is sold to a big house. The rest of it is, from an overall industry perspective, still a sideshow.

Due to many inadequacies of Feedburner email distribution, including that it seems to be locking up Outlook for some of our subscribers, we’ll be switching to a new delivery mechanism shortly, perhaps with whatever (and whenever) will be the next post. So those of you who get these posts by email should be aware that the format and look of what we put in your inbox might change next time or the time after. Presumably all changes will be improvements.

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