The Shatzkin Files

News this week that demonstrates how timely Digital Book World programming can be…and a thought about Amazon bookstores

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There are some days that the news I see just makes me feel so good about the programming we’re doing for this year’s Digital Book World. One of those days was earlier this week when the news pointed directly to three items on our program.

As I wrote in the last post, we have an entire unit on “company transformation”, headlined by John Ingram of Ingram Content Group and Mary Ann Naples of Rodale presenting on the main stage. The six other companies are in three pairs for break-out sessions, structured specifically to allow questions from the audience. One pairing is Dominique Raccah of Sourcebooks and Marcus Leaver of Quarto. Both of those companies made real news yesterday that is relevant to their transformation.

Quarto just announced the acquisition of Harvard Common Press. In the announcement, Quarto’s US president and CEO Ken Fund noted that the acquisition delivered Quarto 25,000 recipes. Why would they be mentioning that? Because the transforming Quarto uses its database of recipes both as part of its QuartoKnows information repository and to add power to its This Is Your Cookbook custom cookbook creation service. Quarto’s transformation has already created a situation where the components of books have value in addition to what is delivered by sales of the book in its published form.

Sourcebooks’s news also comes from its custom book creation capability, Put Me In the Story. The publisher just announced collaboration with Barnes & Noble by which those customized children’s books will be offered at 200 B&N stores. PMITS, which licenses big brand children’s books from across the industry for its unique customization engine, has already been a significant contributor to the company’s bottom line. This partnership, which will fuel discovery and awareness as well as sales, should supercharge the growth.

We also are excited to be featuring Fred Argir, the new Chief Digital Officer of Barnes & Noble, for a main-stage conversation, so this is timely news from that perspective as well.

And, finally, yesterday a story hit my radar that is a couple of weeks old but ties right in to a panel discussion we’ve been organizing for months on “Women at the Intersection of Publishing, Technology, and Finance”. The study it references, called “Elephant in the Valley”, contains some pretty shocking statistics about what the tech world is like for women. Our awareness that this was an important subject for discussion had been piqued by the controversy last Fall when the South by Southwest conference (SXSW) first announced a panel to discuss sexual harrassment in the gaming world, then cancelled it because of…harrassment of and physical threats against the prospective speakers! An immediate protest followed, including some big companies announcing they would boycott SXSW unless they corrected their error. That did it. They rescheduled the panel.

We have always been among those who believed that publishing is a female-friendly environment, but we know that women in publishing have to interact with the tech and finance worlds. So we put together a panel to discuss how the world looks to publishing women interacting with reputedly less-female-friendly industries. Chaired by Charlotte Abbott of Abbott Communications, the discussing group will be Dominique Raccah of Sourcebooks, Susan Ruszala of NetGalley, Joanna Stone Herman of investment bankers DeSilva + Phillips, and Katherine McCahill of Penguin Random House. “Elephant in the Valley” certainly provides plenty of grist for that panel’s mill.

It is always a challenge to put together a program that discusses the future of publishing and tech some months in advance. It is really bolstering to see pieces put into place many weeks ago of such current interest as we count down the last 30 days before the event.


And since I’m posting today, I have a word or two on this.

A Wall Street Journal story has propelled a rumor that Amazon will open 400 or more stores in malls into industry discussion. Nobody really knows whether it is true and, as I write this, Amazon has not commented for the record.

If it is true, then I certainly am guilty of one wrong prediction. When Amazon opened their store in Seattle last year I figured it to be a one-off and a learning experience for them. I have always thought they’d steer clear of bricks-and-mortar for many reasons. One of those reasons, which made more sense when they were much smaller than they are now, is that their stock valuation was based on the fact that they are in future-oriented businesses, not stuck with the pre-internet limitations and cost structures of physical stores.

But, on the other hand, the network of distribution centers they have built could also be a great asset for a retail network. The WSJ story has spawned a subsequent explanation, or rumor, that they’re planning lots of stores, not just bookstores.

You don’t have to think too hard to come up with disruptive things Amazon could do if they made this move. Heres one example. They have a print-on-demand capability. They try hard to get publishers to give them files for that so that they don’t have to rely on publisher supply from press runs. Publishers are highly resistant to that idea, which is understandable. They figure that if Amazon can print their own, they won’t buy from the press run. That reduces the runs and makes all their other business less efficient, as well as probably costing them margin on their Amazon sales.

But think about the implications of POD if Amazon has stores. POD books have never been intended for bookstore shelves. They are in a repository to be manufactured “on demand”. They are often non-returnable because publishers don’t want to pay the (higher) POD unit costs and face returns as well.

But what if Amazon said “make your books available for our POD and we are more likely to put them on our shelves”? Why would they do that? Because the “cost” of that inventory would be a lot less than the wholesale price; it would be their print cost.

That would be a truly disruptive rock if they threw it into the publishing ecosystem pool. It isn’t a reason for them to open up stores, but it would surely be a benefit they could capitalize on if they did. With their infrastructure and resources, Amazon almost certainly could open “profitable” retail stores that would put pressure on other retailers and their suppliers. Whether they’ll see that as an opportunity worth pursuing is what we’re going to find out.

There’s an early-bird pricing deadline for Digital Book World coming up at the end of the day Monday, February 8. For the best discount, use the Publishers Lunch code: LUNCH. The 7th DBW program looks at the Four Horsemen (Amazon, Apple, Facebook, and Google), company transformation, and modern marketing in great depth. And we’re really proud of our Mostly Marketing Masterclasses, running alongside our Publishers Launch Kids conference on Monday, March 7, the day before the “official” DBW. Check out the whole program on the DBW website.

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  • Is there really any consumer interest in store-level POD books? From what I have read, the answer is no.

    Also, this is not a worthwhile trade off for publishers:

    But what if Amazon said “make your books available for our POD and we are more likely to put them on our shelves”?

    Amazon won’t ever have a large number of bookstores, and they’re not going to carry a lot of titles (especially not in comparison to Amazon’s online POD catalog).

    In your proposed situation, the potential upside to having a book in an Amazon store is very small because there will be many many POD books competing for a limited amount of space.

    • Nate, as both Amazon and Ingram will tell you, there is hardly any discernible difference between a press-run book and one printed on demand for straight text books. There would be no way to measure “consumer interest in store-level POD books” because a) they’re not there, b) most consumers aren’t aware of any particular difference between POD and press run books, and c) there’s no sensible way to frame the question. Whatever number of stores Amazon creates are an equivalent number of opportunities for in-store discovery. Publishers will want their books there, just like they want them in all other stores now. The Seattle experimental store indeed carries few titles; that may or may not be the model in the future (if there is any model employed in the future…) But IF Amazon creates even 50 stores, the ploy I’m suggesting would have some impact. And anything that gets more books into their CreateSpace database is desirable from Amazon’s point of view. I don’t mean to suggest this is a *reason *to pursue the strategy of opening stores. But it would be a *benefit *if they went in that direction for other reasons.

  • iliad1954

    Or maybe they are not rolling out physical bookstores at all but rather:
    Espresso Book Machine locations
    Dispatch points for same-hour delivery on popular books
    Hardware showrooms
    Amazon Locker locations

    • It wouldn’t be Espresso Book Machines. They’re a very inefficient way to deliver POD. And I don’t think they need retail locations to create droneports. But the other things you mention? Sure. They could be motivations.

  • InklingBooks

    Amazon already has one foot in the door for print on demand at these stores. All they’d need to do is to get Creativespace publishers to agree to the idea. The same PDF files that work for one should work for the other. Nothing new there either. Ingram’s Lightning Source already offers Expresso printing as a Lightning Source option.

    That said, promising to put POD titles on store shelves makes no sense. Book typically come out POD because there’s not enough demand to justify traditional publishing methods. Placed on shelves, they’d just sit there.

    What Amazon could do is offer a kiosk that’d let those who’re in the store search for such a book, pay to have it printed on site, and pick it up just a few minutes later. That’d give those stores access to hundreds of thousands of Createspace books and, if Amazon is willing to do a deal with Ingram, those in Lightning Source too. That small Amazon store would have an inventory comparable to that of a B&N megastore. Only books selling in the middle between bestselling and POD wouldn’t be available within minutes.

    • The “within minutes” thing for Espresso is a canard. It’s only true if the experiment fails and nobody uses it. If anybody does use it, you’re on line behind others whose book will take 5 minutes or more to deliver. It isn’t instant. And the generalization about POD books being low-demand is correct but there are commercial reasons for that. It isn’t inherent in the books themselves or in the POD technology.

      And you’re eliding what I said. I didn’t suggest “putting POD titles on store shelves”, suggesting long-tail books go on stores shelves. I suggested putting what are now *pressrun *titles into POD! And using the store shelves as a goad to get permission to do it. And then making the point that it would change the stocking economics for Amazon. You lost the thread on the way to the criticism.

      Every bookstore in America already has access to millions of titles — more than are in any megastore — with next-day delivery from Ingram. The additional time-saving by having in-store printing would only be substantial if very few people used the in-store delivery service. But the nasty (for stores) fact is that most people shopping for a book that is not likely to be in a store already just go to Amazon to buy it. And, yes, sometimes that book will be manufactured by Lightning (Ingram) and Amazon will get it from them for delivery. Already happens every day. The point to a *store *is that people want something right now and will shop from what is shown to them. Since they would almost certainly not be able to tell which title they were looking at was pressrun and which was POD, the opportunity to be displayed would be an obvious value to any publisher.

      • Peter Turner

        Mike, forgive me, but have you ever waited in line for a low-fat tall, mocha latte at Starbucks?–five minutes is nothing and still they line up.

      • You’d never wait half-an-hour for a coffee and you’d never wait half-an-hour for a book. If they don’t have a queue of six or more people at their busiest hours, they don’t have a business that works. AND the number of titles the Lightning POD can handle is a multiple of Espresso, which is more limited in trim sizes and number of pages and, I believe can’t do color at all. AND it requires somebody to run it who knows what they’re doing.

      • Peter Turner

        Forgive me, but isn’t it possible that the natural evolution of time and cost barriers could make at retail POD a viable alternative to Lighting POD that requires shipping time.

      • Right now, the barrier to using POD to fill probably backlist but actively published titles that are in demand — which is, I presume the use case you are talking about — is that those rights just aren’t granted. So the technical questions at the moment take a back seat to the business challenges.

        But there are two reasons why what I think you’re envisioning won’t happen for a very long time. One is that no matter how you drive the tech, making one machine do many different kinds of books with decent quality is not only devilishly difficult, there’s no demonstrated or likely demand to make anybody invest in solving the problem. (See first graf.)

        AND the percentage of times where tomorrow is unacceptable delivery time for something you want is minimal, particularly if “right now” means “in 15 minutes” (or worse.) But even if it were 5.

        I think we’re more likely to have lots of people printing books at HOME than that it will make sense in a bookstore. In a few years.

      • Peter Turner

        I agree with your conclusions but not the causes. (1) Apart from Harper, no major publisher has “permissioned” (I love that term of art) their catalog to be printed via any POD service (either in-store or via distributor, like Lightning). Why? I don’t know. I suspect there is a lot of concern about losing control of the print supply chain when so much $ is invested in warehouse, inventory management, etc. (2) There is a fundamental challenge to marketing books in physical locations that are available only via POD (or, for that matter, via eBook). If there is a solution to this challenge, and I say IF, it is in some new application of in-store merchandising of digital products.(DISCLOSURE: I have done consulting work for On Demand Books, the folks behind the Espresso Book Machine.)

      • Then you can confirm (or dispute) my understanding that most of the stores that have tried it and see any sort of success can attribute that to local self-publishing and Tommy’s 12th birthday books, right? And I’ll bet very few of them are printed the minute the person walks into the store.

      • Peter Turner

        Agreed, but to what extent is that due to the fact that the Espresso Book Machine book catalog is extremely limited. Trade pub’s don’t seem to want to sign on to the program though there is no apparent downside. You tell me why they’re not willing to support a POS-POD solution. It’s above my pay grade.

      • Peter Turner

        Let’s frame it another way. I you could walk into any bookstore and get them to print out any book you wanted in 3 minutes, would that seem like a viable business model.

      • Conceivably. But it is also a pipedream. Ask Ingram or Amazon what it takes to build up the digital file inventories they have now. Then ask either of them to tell you what it would take to fulfill your vision. If they could do it, they’d have done it already. And they’re not close.

      • Peter Turner

        Again, a caveat: I don’t represent ODB or Espresso. I’m just an interested party in how in-store retail might–in the future, mind you–gain some competitive advantage of delivery speed on top of existing customer loyalty by offing 3-minute in-store availability of any book. Ingram and Amazon were able to build a book metadata infrastructure based (initially) on a print distribution model.

        I have no idea why publishers don’t want to permission their PDF files for in-store POD. And, FYI, it’s not my vision–I’m just a curious bystander. As you know the SB was the brain child of Jason Epstein.

      • Well aware of Jason Epstein. This vision can’t be realized.
        Been saying that for more than a decade now.

      • Here are three. 1. No quality control. 2. Very few cases where they believe the sale is made with 5 or 10 minute delivery but lost with 1-day delivery. 3. Reduced margin on sales, both to the store with the machine and to every other store which would draw from the print run inventory.

      • Peter Turner

        A minor point, maybe, but publisher margins are actually the same; that was part of the pitch to publishers to permission their book files–or at least that’s my understanding. You may need to take up the details with ODB. I am not a spokesman for the them, only a consultant who in the past was interested in their biz model.

      • Even if they make the publishers whole on the transactions with the stores that are affected, the publishers would lose money on sales to OTHER stores because those sales would be lost from their print runs. And it is a bit hard to see how this all works out since the book costs more to print with the Espresso machine, and presumably they charge the publishers *something *for the printing of the book. I can’t see the store and Espresso absorbing that entire cost and having this work for them.

  • Marshall Wilen

    For those who can’t imagine Amazon successfully opening brick-and-mortar stores, let’s recall that Amazon’s original business plan was based on NOT having expensive stock and warehouses but having distributors drop-ship their books. Now, their distribution centers are actually a profit center. No consumer interest in store-level POD books? A generation raised on e-books may not care about the heft and feel of a well-made print edition, but would care about convenience and price. If Amazon can create an enticing shopping experience and keep prices down in their bookstores as they did in the virtual world—and to sacrifice profits for marketshare—what’s to prevent them from dominating the brick-and-mortar retail industry?

    • Marshall, you make a lot more sense to me than the naysayers do.

  • bbmm18

    Distribution centers, storefronts, vans–it is all about end to end control of delivering physical products to your home or organization.
    Most people and organizations really are ok w receiving something next day or going to a location near work or home to pick it up same day if they live or work in or near urban or suburban shopping locations. Let alone purchasing the ebook version for a quick download. Amazon also has vans for drop off and I’m sure the fleet will continue to grow as well as increase in the distribution center locations large and small, centered around urban areas. I imagine if an order had a rush POD a premium could be paid for ASAP delivery.
    When I try to imagine the cases for this need I see– last minute gift, lost/replaced book when traveling, needed for a meeting, needed for a class–out of stock or out of print or just because I can, I want it now!
    Opening the stores in malls indicates they may not be headed to more rural outposts where folks were used to mail order and now online shopping.
    These folks may need drone delivery, but honestly a van in an area carries more merchandise for delivery than a drone. I think the complementaty revolution in this case is their entry into a fleet of vans for delivery, disrupting that business now too. Practicing for next Christmas perhaps?

    • All makes sense. Once you have put products all over the country in distribution centers. how they make that last mile (or fifty mile) journey to the final destination doesn’t have to be one particular way or thing.

  • bbmm18

    Hi. That last comment is mine. Haven’t used Disqus in ages–forgot I had initials, not my name on it. Rarely have time to comment lately on publishing sites or LinkedIn, but still continue thinking about the issues and evolution of the business. So much so that I was questioning an Amazon van driver next to me at a red light last week. Barbara Miller