Ingram

One of the most significant pieces of news to come out of Tools of Change is that O’Reilly is going into the distribution business for ebooks. This is indeed, a “tool” of change. It is also a harbinger of times to come that threaten a lot of big companies: major publishers; the big distributors like Perseus, NBN, and IPG; the digital asset distributors including Ingram, LibreDigital, North Point codeMantra, and the fledgling operation at Bookmasters; as well as the digital wholesaling operations at Ingram, Content Reserve, and Baker & Taylor.

The O’Reilly offer is to do whatever conversion is necessary to deliver files to a wide range of ebook channels for free and then to make the ebooks available through that retailing network for a charge of 25% of the dollars received. One prospective client told me that O’Reilly is willing to do a one-year contract.

This both an object lesson and a serious shot across the bow of the legacy giants of the print book business.

We’ve made the point here before that big publishers have a competitive advantage built on print-world capabilities, among them being the ability to get fast printings and reprints; the ability to quickly move books in and out of a distribution center; the ability to ship books according to the receiving requirements of many intermediaries, large and small; and a strong sales network with accounts, mostly brick-and-mortar, that sell printed books. All of these things require pretty massive scale. You couldn’t consider doing them well yourself for a $1 million (in sales) company or a $10 million company and it would be challenging to be competitive doing them with a $50 million company.

The scale required to do effective print book distribution affects both the supply and the demand in the distribution business. It means there are a lot of companies too small to do it well for themselves (creating lots of demand) and very few companies with the scale to do it well (creating a limited supply of providers.) Even so, as the need for scale along with declining overall sales have driven the big publishers deeper and deeper into the distribution business (pushing up the supply of distributors), prices for distribution have fallen steadily for at least the past decade.

Of course, anything that requires expertise benefits from some scale to develop it. And that’s what O’Reilly has in digital distribution. Partly because of the nature of the company’s audience, but largely because they have been aggressive and innovative about exploring every conceivable avenue for ebook distribution and developing a tool set that makes it possible for them to try new channels and opportunities quickly, O’Reilly has more scale, and therefore more expertise, than anybody else in consumer ebook distribution (except, arguably, some publishers in the romance space.) It is quite believeable that they can put ebooks into more channels with more efficiency than anybody else. And that’s an expertise that is largely (but not completely) topic-agnostic.

So we have a real Man Bites Dog story here. In the print world, O’Reilly is distributed by Ingram, which has invested heavily in ebook distribution. But not only does Ingram not get to be the distributor of their client’s ebooks, O’Reilly is issuing what amounts to an open invitation for all other publishers, including their fellow distributees at Ingram, to use them for ebook distribution.

(In his wrap-up talk at Tools of Change, Tim O’Reilly referenced a remark John Ingram had made to him at dinner the night before. On reflection, one wonders how the part of the the dinner conversation about ebook distribution went.)

This new challenge is playing itself out all across the distribution landscape. In the past week I have had two conversations with smaller publishers who have distributors on the print side. One is repped by one of the big independent distributors and the other by one of the Big Six. Both are planning their ebook distribution strategies, and neither of them intends to use their print distributor to help in any way.

The one distributed by an indie distributor is seriously tempted by the O’Reilly offer. This well-established company is quite comfortable taking responsibility for its own sales if they don’t need scale to handle it, so they have already pulled Amazon out of their print distribution deal. They planned to do digital on their own. They’ve had a digital workflow for a while, so their current books are in XML documents that make ebook conversion pretty straightforward. (If the offer of totally free content conversion is correct, then O’Reilly may have developed some tools helping them automate the way to from PDF or epub to XML. And they solve the problem of getting from XML to anything else that comes along for all their books.) But this publisher still have an extensive backlist that needs conversion to XML. This company sees a 1-year contract with O’Reilly as a possible way to get the conversion done and to get a line on a large number of points of ebook merchandising that they might otherwise not have known. In any case, the big print book distributor — with all its sunk costs and infrastructure and years of performance and relationship — isn’t even getting consideration.

The other company, distributed by a Big Six publisher, has also decided that digital distribution through its print distributor is a non-starter. They have been looking at the many Digital Asset Distributors to handle their conversion and distribution and have been close to settling on one. This company also has a legacy conversion challenge. Might they now want to put the deal they’re close to on hold and explore O’Reilly?

I would if I were in their shoes.

Cader wrote Wednesday (behind his pay wall) about the smaller trade publishers who have been slow to enter the ebook marketplace. He springboards from the results of a survey Perseus did of its clients and which formed the basis of a presentation they did at Tools of Change. Cader observes that 2/3 of Perseus’s 300 clients don’t use their Constellation service, their digital publishing assistance program (book distributor as DAD), at all. And, of those that do, he says:

Making ebooks available at all though looks to remain the biggest challenge for the survey group. The largest segment, 33 percent, said that fewer than 10 percent of their titles would be available as ebooks in 2010. Another 26 percent said half or fewer would be available, with just 30 percent expecting to have 75 percent to 100 percent of their titles available.

As ebook sales climb to very desireable levels, publishers of all sizes will pursue the revenue opportunities they represent. Trade book distributors have always lived on the reality that they provide the necessary scale to enable publishers to do what they do well that needs no scale: pick, develop, and deliver books people want. What requires a bit more scale but less to the publisher that specializes, and most small publishers do, is marketing. Distributors have never been much help there, frankly.

This perspective of the distributor was made very clear by the best-delivered presentation at Tools of Change, the one from Skip Prichard, the CEO of the Ingram Content Group. Skip was basically saying to the publishers: you do the content, we’ll do the rest. I know that Ingram’s perspective on a problem I’ve written about before — that publishers will have increasing trouble supporting the big infrastructures they have built for print — is that the publishers’ challenge creates opportunity for them.

And on the print side — the diminishing side — that is definitely true. What is not nearly as clear is whether on the ebook side — the growing side — they will face new, smaller competitors who have built a strongly competitive infrastructure without needing to be nearly as big. If that’s also true, then, one suspects, O’Reilly is not the only relative upstart that will be taking real business away from established players in the very near future.

There is actually a nice extension to this post that ties in nicely with my prior one on title P&Ls and the Motoko Rich piece in the Times about ebook pricing, but I’m going to leave that as a teaser for another one I may write someday because I’ve gone on long enough for now.

While I’m in Florida watching baseball games, as I am now and will be for the next few days, take a few minutes to respond the BISG survey supporting the “Points of No Return” Making Information Pay conference we’re organizing for May 6.

Bookmark It:

Now I swear all this is true. As everybody knows, a very serious food fight broke out between Amazon and Macmillan late Friday night. All weekend Michael Cader led the way in ferreting out additional useful information and I spent most of today (Sunday) trying to write an analytical blogpost. I got it just about finished in the early afternoon, and the bottom line to what I’d written was “Amazon will not be able to sustain this.”

I decided to hold the post until after going to see Crazy Heart this afternoon and, when I came home, Amazon had already folded. But I had written a post that provided a lot of useful information, even if events had stolen my punchline.

So I’m giving it the once-over to edit it for the reality that Amazon has already announced that they will not continue to boycott Macmillan books.

It is received wisdom in Washington that when you have news you have to release but would prefer to have minimum impact, you release it on Friday afternoon. The latest tiff in the Amazon versus Big Publisher brouhaha went that idea one better; it appears to have broken in the middle of the Friday-to-Saturday night.

About midnight that evening, David Wilk alerted the Brantley list to a VentureBeat post that indicated that Macmillan titles were no longer available at Amazon.

By noon the following day, Brad Stone had posted a further explanation to the NY Times blog.

The VentureBeat post had no clue as to what was going on and even carried a link to a post from author John Scalzi suspecting a “glitch.” But Stone pinned down that the disappearance of the Macmillan titles was, indeed, retaliation for Macmillan’s move to the agency pricing model, first revealed by Michael Cader in Publishers Lunch and discussed on this blog last week.

Sometime late Saturday afternoon, Lunch posted a narrative explaining what was going on and including a paid insertion from Macmillan: a letter from Chairman and CEO John Sargent giving Macmillan’s account of what had transpired.

Which, as many people who care know by now (as I write this on Sunday morning and afternoon) is that Macmillan told Amazon about the new agency model, by which Amazon would actually get ebooks at lower prices than now but also by which Macmillan would set the prices to consumers. Amazon retaliated with what is, more or less, a “nuclear option.” Macmillan books are no longer on sale except through third party vendors (extending the ban to those dealers would open up yet another big can of worms for Amazon and they hardly need any more) and that includes Kindle. Most of the third party vendors are selling used books and no Macmillan books are being transacted directly by Amazon at all.

We have said on this blog, repeatedly, that publishers’ discounts to retailers would have to come down and that the windowing tactic (delaying ebooks from being available when the hardcover first comes out) was all about pricing control and nothing else.

What I want to accomplish in this post is to lay out clearly what is happening and then enumerate some key points about what’s going on: paradoxes and prospects.

Before the Agency Model (like “now”), publishers sell ebooks at about 50 off an often ridiculously high established price (”parity” is common; same price as a hardcover on a new book) to retailers who were setting the prices to the consumer themselves and, following Amazon’s lead, always discounting. The publishers are paying the authors royalties that are frequently 25% of net, which amounts to 12.5% of publisher declared retail. Some publishers pay 15% of retail; Sargent, in a previous letter to agents, indicated a desire to move from 25% of net to 20% of net, which would be 10% of retail.

The proposed Agency Model will have publishers setting a price lower than the established retail they had before but higher than the deep discounts Amazon led retailers to sell at. The publisher intends to  pay 30% of that established price to the retailer and 25% of either the full consumer price or of the 70% “net” (still to be determined) to the author. This means that the retailer will get a higher price from the consumer and a better margin than they realize now (even though a lower percentage of the “established” price). The author’s cut per copy could actually be reduced!

The wholesalers, Ingram and Content Reserve, often get the same discount as publishers. They handle the stores and libraries publishers serve don’t want to deal with directly. So those stores and libraries get less margin than the big ones publishers handle without an intermediary. One thing that was new to me that came out on the Ebook Supply Chain panel at Digital Book World is that publishers insisted on vetting the accounts that would be selling their books to make sure they didn’t violate territorial restrictions. So Ingram (and presumably Content Reserve) has to manage a granular control by title by publisher by account.

It is not at all clear how the Agency and price maintenance protocols get applied through wholesalers. Perhaps this means that smaller accounts and libraries just won’t have the newer titles that will only be released on the Agency basis (assuming that the scenario Sargent describes is what is also followed by other big publishers.)

This is a bizarre paradox, really. Macmillan actually proposed to sell Amazon the ebooks at what is, in effect, a lower wholesale price than Amazon gets now and their enforcement of a retail price puts more margin into Amazon’s pocket on every sale made than they earn now! And Amazon is fighting it.

Sargent’s note makes clear that the discount-off-retail pricing that has existed all along will still be offered, but that newer books wouldn’t be included in that offering. Those would be available only on Agency terms. What is not clear is whether Macmillan intends to continue the Agency terms past the nine-month “window” for new books. We’d guess they will for some accounts.

But that leads to another paradox because publishers unambiguously benefit if retailers sacrifice their own margin and discount when hardcover price maintenance and NY Times Bestseller list rankings are not at stake. Lower prices to consumers sell more copies. Presumably retailers will continue to want to compete on price and will do so when sales terms allow. But what does that do to the publishers’ challenge of “setting” prices for those accounts that want that done across the entire list?

Yet another paradox is the position of the agents. On the one hand, we have seen that many of those representing big authors see the same danger the big publishers do of inexpensive ebooks undercutting valuable hardcover sales and Times Bestseller rankings. On the other hand, publishers lowering established ebook prices and reducing their take from their intermediaries could often mean lower royalties for authors. But not necessarily.

If publishers are paying on “net receipts” (and many are) and if a) retail prices aren’t cut by as much as half (which they often won’t be) and b) if the publisher doesn’t deduct the Agency “commission” from its computation of net (sure to be debated), then the basis of the author’s royalty wouldn’t go down.

Quick summary: if you have a $25 list price ebook on which the author’s royalty is 25% of net, the author is now getting 25% of $12.50, or $3.125. If that book becomes a $15 ebook with a 30% commission, the author would get $3.75 (a nice increase) if the commission is not deducted first and $2.625 if it is (a sharp cut.) Of course, the $25 and $15 prices described here are notional and with different prices (as they say) “your results will vary.” If that notional book had been priced at $30 in hardcover, the author’s share would have been $4.50 and the ebook price change would clearly cost them something on every copy.

Author Charles Stross had a very insightful post on his blog, speaking from the perspective a gored ox (he has books published by Macmillan which have been taken down.) Stross makes clear that Amazon is miffed because their competitive strategy of driving away ebook competition through aggressive discounting will be foiled by publisher price-setting. Stross says:

Amazon are going to fight this one ruthlessly because if the publishers win, it destroys the profitability of their business and pushes prices down.

I’m not sure it “pushes prices down”; I think it actually pushes (ebook) prices up, at least temporarily. But the points Stross makes about Amazon wanting to achieve ebook hegemony and the Agency model being part of the publishers’ plan to beat that back and strengthen other players seem right to me.

We had a lot of this conversation last Spring before Sourcebooks’s windowing move with Bran Hambric, followed by Hachette with True Compass and HarperCollins with Going Rogue, pushed this tussle between Amazon and publishers to the forefront. In his analysis at that time, Cader made the point that publishers were actually helping Amazon undercut other retailers with their “parity” pricing; making the ebook retail the same price as the hardcover print retail. His logic was that the high prices increased Amazon’s advantage over other retailers because they could better afford to sell high-profile titles at a loss than their competition. Meanwhile, the publishers (and authors working on “net”) continue to get higher ebook revenues than the consumer spending would really entitle them to.

My first question when all this arose overnight on Friday was “why Macmillan?” Sargent’s note may have answered that question: because John was in Seattle on Thursday officially delivering Amazon the Agency Model news that we only assume is going to come to them from other publishers as well. One presumes that Amazon thinks that taking such drastic action as this might discourage the other publishers thinking about doing the same thing (and the iPad announcement on Wednesday would lead us to think that four of the remaining five Big Six players are indeed working out the details of a similar consumer-price-controlling sales model.)

And Amazon apparently figured out, as I was writing these words, that the only brand blown to smithereens by the nuclear option would be theirs. It is hard to imagine how extensive the brand damage could have been if Amazon delisted even one more major publisher along with Macmillan for even a couple of weeks. For a brand whose principal attributes are dependability and dedication to the consumer, it would have been catastrophic.

Amazon says now that the boycott is temporary and they were candid about the fact that they have no choice but to yield. They take a swipe at the publishers’ copyright-based “monopoly” on titles. But this was a really bungled response on every level. Amazon deserves credit for being smart enough to walk this thing back within 48 hours. Amazon may have to learn something new for them in the ebook space: how to be one of a number of players, not the only game in town.

Bookmark It:

A simple and perfectly sensible suggestion emerged on the Brantley email list yesterday but the conversation around it showed that some stark realities about the book world have not yet been taken on board, even in very sophisticated circles (which this list is.)

The list discussed a suggestion from librarian Josh Greenberg  that publishers take note of the “rental” model built into the iTunes store as an alternative way to collect money from readers for ebooks.

Greenberg’s piece calls out a fact that many people in publishing have a great deal of difficulty with: that all ebook sales must be licensing deals. They can’t be anything else. Greenberg says:

“When we think about iTunes, we think about a basic fee-for-purchase model. We’ll just leave aside the fact that you never truly “own” a digital file, you’re just buying a particularly-structured license to use it…”

He’s right. When you deal in printed books, you have a tangible object. When you deal in ebooks, you only have “code”. The first sale doctrine says you can re-sell the book or lend it or share it. But copyright law says you can’t re-sell, lend, or share copyrighted “code.” Many digerati (and many librarians not named Josh Greenberg) refuse to acknowledge this distinction.

But that’s a legal point, one that can be debated until a court or a Congress makes a ruling (and then beyond, actually, since we continue to fight battles even after courts or Congress have rendered their conclusion.) The challenge to Greenberg’s idea of switching to a rental model is not so debatable. It’s practical.

Implementing new models for book sales requires herding cats. It can never be done fast and many business ideas relating to content have foundered because it couldn’t be done at all.

What should be clear to anybody who has been following developments since the days a decade or more ago whenRocketbook and Softbook and Sprout were trying to get publishers to give them rights for their content propositions is that it takes a very persuasive sales pitch to get publishers to do so. That sales pitch must be delivered publisher by publisher, and then the impressive ability of publishers to discuss a problem to death takes over, and the new proposition might itself die before its owner gets an answer. Or certainly before its owner gets enough answers to get the new idea off the ground.

What was further made clear by the participation of agents at Digital Book World, and particularly by the opinions expressed by superagent Robert Gottlieb on the ebook “timing” panel, is that the publishers don’t make this decision without consulting with their upstream gatekeepers. Gottlieb made clear that a) it takes a very small number of lost hardcover sales to make an author’s book slip notches on the New York Times Bestseller list, b) he and his authors believe that a much cheaper ebook, or perhaps any ebook at all not reported as a hardcover sale, can make that critical difference between being Number 1 or being much further down the list, and c) the difference in several places on that list is worth losing some sales over.

So just imagine how Gottlieb and his star clients (and all the other agents and star clients) would react to a rental model!

Let’s add one more point before the next great suggestion is made. The same thing will be true of an even better model than rental (which also has plenty of precedent in media even closer to publishers, audio books): subscription sales.

The switch that Apple has made to the “agency model” is not of equivalent complexity from a business perspective. There we’re still “selling the book” (although we’re really licensing access to a file) and the amount of money flowing to the publisher is comparable. But, even there, the switch will not be simple. Publishers have signed contracts governing almost all their ebook sales (which is a further demonstration that this is different from selling physical books, for which signed contracts between publishers and vendors is by far the exception, not the hard and fast rule) which one could imagine the purchasing party (Amazon, Ingram, Content Reserve, Barnes & Noble, Kobo) believes prevents the publisher from changing the rules in the middle of the game.

What Michael Cader reported last week which we expanded on in a blog post and a CNN interview is that publishers can use the new agency model to hold back books from channels where they can’t control the pricing. This very much underreported exchange between Steve Jobs and Walter Mossberg of the Wall Street Journal makes it very clear that Apple expects vendors who would undercut the pricing publishers set for them will be denied access to the content.

We can look forward to continued battles over pricing and over the terms of sale between publishers and the downstream players in the ebook supply chain. But I think it will be a while before real alternative distribution schemes to the public make any appearances. In fact, they’re likely to occur in vertical niches first, where the big agents are less involved and the number of publishers one needs to get on board is something less than “just about all of them.”

A quick thanks to everybody who attended Digital Book World (and there were a lot of you.) I am hoping that the fact that all I’ve heard is praise and enthusiasm for the two day event is not just a result of people being kind to the guy who put the program together. I think we really did generate discussion on some issues that had previously been neglected. But most of all I’m proud of the job we did selecting panelists; everyone I saw presenting was smart, well-prepared and entertaining. Some we had seen in front of audiences before; some we only knew through our interviews in person or on the phone. But picking them carefully and one by one certainly seemed to work and it is the same formula we’ll use putting together Digital Book World 2011. I hope we’ll see everybody again there next year.

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We’re about to see the Next Big Thing in ebooks next month and it’s coming from Baker & Taylor. Baker & Taylor?

For the past ten years, Baker & Taylor in relation to Ingram has looked remarkably similar to Borders in relation to Barnes & Noble. Ingram and B&N are family-owned companies (although B&N has the very significant complication of being publicly traded which, with Ron Burkle as a publicly disaffected shareholder, has been well-reported lately) while B&T and Borders are highly leveraged and controlled by private equity. Ingram and B&N with their long-view management styles have made significant infrastructure investments that the always-looking-for-an-exit B&T and Borders ownerships haven’t matched. Ingram built a great supply chain support structure and digital capabilities and B&N built a well-oiled, customized-to-their-needs internal supply chain. And B&T and Borders have made publishers’ credit managers bite their nails while B&N and Ingram are financially solid.

Over the past couple of years, Baker & Taylor has been cobbling together a team of third party vendors attempting to match the service offering Ingram has bought and built internally. To compete with Ingram Digital’s content conversion and digital repository offering, B&T teamed with LibreDigital. To match Ingram’s ability to set up retailers to sell ebooks, B&T created a partnership with OverDrive’s Content Reserve. And to create a print-on-demand capability like Ingram’s Lightning Print, B&T teamed up with Donnelley, which put a machine in B&T’s Momence warehouse.

All of this made sense to me, but it didn’t add up to B&T presenting any serious challenge to Ingram. But they’ve now developed something that might not only give Ingram food for thought but might have them scratching their heads at Amazon and Google and Apple, as well as ScrollMotion and Vook and anybody else thinking about enhanced ebooks.

On January 7 at the Consumer Electronics Show in Las Vegas, K-NFB  will unveil a new “reading technology.” We in the book business will get to know it as a proprietary ebook platform from Baker & Taylor that has capabilities nothing presented previously can match. The platform is called Blio and creator K-NFB is a partnership of tech visionary Ray Kurzweil and the National Federation of the Blind.

Blio is a software client that can work on “any device with an operating system”, which means computers and iPhones, but not Kindles. Based only on the demo we saw from Baker & Taylor Senior VP Linda Gagnon last week (of course I’d rather be reporting on something I saw on my own computer or iPhone), the presentation is the best I’ve ever seen. The type is crisp and sharp, it has full multiple-media functionality (video, graphics, TTV, links to the web), and it does tricks, my favorite of which is that you can see (on a PC screen) many pages at a time dealt out like a deck of cards. Then you find the ones you want and hone in on them. There are many ways to use that capability, particularly for an illustrated how-to book or a textbook.

The deal B&T is offering the publishing community is pretty compelling. Publishers deliver PDFs, which B&T converts for free to the new format. The publishers get the ebook back with a tool kit that enables totally intuitive functionality that will change styles and layouts, embed links or video or audio and set up the TTV capabilities. If there is a recorded audio of the same text, the toolkit will synch it to the ebook automatically. And users can take notes, or mark up text with yellow (or other color) highlighting.

The setup and tool kit for the publishers is without cost; Baker & Taylor plans to make its money on the transactions. They’re “wholesaling”, on whatever the established terms are with that publisher. B&T will also host and provide ecommerce support to bookstores and publishers who sell direct. There are potential devils in those details but, to start, it is obviously hard for any publisher to resist incremental revenue for no setup cost.

So it is not surprising that Gagnon says B&T has 180,000 titles already committed to Blio, at least 50,000 of which will be available at launch.

If the ebook rendering and toolkit put to shame everything that has been done so far (and they do), the same is true of the retailing presentation. The virtual books look look like physical books on a shelf. They have spines. You click on one and pull it down, rotate it, open it, and flip through the pages. Unless you’re on a PC and want to look at 50 pages at once, that is.

If what I saw on Gagnon’s computer is matched in the actual platform launch, I’ll be shopping and reading on this platform on my iPhone starting immediately. But what is even more intriguing is what publishers — and authors — are going to do with the toolkit.

We’ll assume the Baker & Taylor K-NFB platform works as well in distribution as it worked in the demo I saw this week; then we’re about to see an even richer and more complex ebook world in 2010. We know Google Editions is arriving in the first half of the year. We know the bookseller owners of Kindle and Nook are now engaging every serious book reader in the conversation about reading on devices. We know that the iPhone is a book platform that works for many people, and we know that Android-system phones will be too.

B&T’s Blio system is raising the bar for all of them by combining simple authoring tools with a delivery platform that enables enhanced editions. It won’t take long before many books, and, one would assume, all books that have large audiences will be available in something far more interesting than just a digital rendering of what appeared in print. It will create enormous new opportunities for many of the players, particularly authors, publishers, and the retailers without the scale to push their own devices. And it will put a lot of pressure on all the existing players to take their game up to the next level.

In the spirit of full disclosure I should reveal that over the years both Ingram and Barnes & Noble have from time to time been clients of The Idea Logical Company; Baker & Taylor and Borders never have.

And, of course, we’ve booked Baker & Taylor to talk about Blio at Digital Book World. They’ll appear on the schedule shortly.

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There is considerable concern among the trade publishing establishment about the future of brick-and-mortar stores. As well there should be. Retail stores provide the most efficient promotion opportunities for books: putting them in front of people poised to buy. They give clear signals about sales appeal by positioning and piles of stock of varying sizes; they make it possible to “look inside” of illustrated books in ways that no online presentation can match; they enable discovery through serendipity; and they put more different book choices in front of any person faster and more efficiently than any web page or smart phone screen possibly can.

But they’re troubled. Same store sales, or what the Brits call “like-for-like”, have been declining. That may be partly due to the recession, but it is also due to factors that won’t go away: shifts of sales to the Internet, to ebooks, and perhaps to substitutes in other media and the Web.

The magic that grew Barnes & Noble and Borders into behemoths was large store size and title selection. My first experience with this effect was a lesson from my father, Leonard Shatzkin. He took over executive responsibility for the Brentano’s bookstore chain as a vice-president of Crowell-Collier (later called Macmillan, a company subsequently bought by Simon & Schuster and not connected to the company now called Macmillan) in the early 1960s. The store in that chain that was doing least well was in Short Hills, New Jersey. They doubled the number of titles the store carried and it soon was the best-performing store in the chain.

But the “size as a magnet” concept took a back seat to mall store expansion by Walden and B. Dalton in the 1970s. As shopping centers were built across the country, the mall developers favored national chains, which were “bankable”, for their leases. Walden and Dalton rode that wave and added hundreds of stores. Meanwhile, partly assisted by the expanding wholesaling services offered by Ingram, independent stores thrived and grew their title selections beyond what the space-challenged mall stores could offer.

In the late 1980s, Bookstop, a discount chain in Texas, pioneered the “superstore” concept: a massive selection of 100,000 or more titles under one roof. This was the Brentano’s Short Hills effect writ large. By that time, Borders and Barnes & Noble, which already had larger stores than the mall stores, had bought Walden and B. Dalton, respectively, giving them critical mass to support robust central operations and provide leverage in their relationships with publishers. The new superstore concept suited Wall Street, and the two big chains were bankrolled to roll out superstores nationwide.

This was great for everybody except some of the larger independents which, up to that time, had the large title selection field to themselves. For publishers, it meant lots of additional shelf space for their backlist. For consumers, it meant a large increase in choice at hundreds of locations around the country. The attraction of 100,000 or more titles under one roof was compelling; these superstores didn’t need malls to bring them traffic. They were destinations worth traveling to on their own.

But then came the Internet, and Amazon. As we used to remind ourselves quite often ten years ago, “the Internet changes everything.”

And what the Internet did was to seriously dilute the attraction of so many titles under one roof. Now “unlimited” choice was available online: not a hundred thousand titles, but millions. Not just the books presented by active publishers and chosen by buyers, but all the books, in or out of print.

By the turn of the 21st century, it seemed to me that the powerful attraction inherent in the massive superstore selection was muted. I advised a client to “leverage your infrastructure to figure out how to make the small store work.”

But, by that time, both the big chains were phasing out their mall stores. This was not entirely a matter of store size, although it might have been seen that way. The malls the stores were in were often in suburbs from which prosperity had moved on. The effect of the Internet wasn’t just being felt by bookstores, but also by department stores, which were the “anchors” that brought traffic to the malls. So footfall at the mall stores fell, quite aside from any negative impact of a limited title selection.

In 2009, the mall store era has officially come to an end. First Barnes & Noble announced it was closing all the remaining B. Dalton stores. Then, this week, Borders announced it is shuttering more than half of the remaining Walden stores, which will leave only 130 operating, in January.

Meanwhile, it only takes a visit to a B&N or Borders store today to see that they are hardly stuffed with books; the ones I’ve been in lately appear to have more space than they need, and this is when stores are relatively full of merchandise.

Of course, larger stores can be more cost-effective than smaller ones for other reasons beyond the attraction of the title selection, even if that attraction is working well. There are per-store costs, of store management and central management attention, that don’t readily reduce with store size. And while the effect of a massive title selection at a retail location might not be what it was 20 or 40 years ago, more titles will certainly attract more traffic than fewer.

Meanwhile, the other big change in the book retailing scene in the past 20 years has been the growth in sales at mass merchants: Wal-mart, Costco, and the price clubs and supermarkets. These stores leverage existing traffic (one would think that few, if any, customers go there for the books) and deep discounting to make significant book sales with a very limited selection of titles, usually well under 5,000. They’ve been part of the problem for full line book retailers. Their pricing and ubiquity bleed off sales of the highest-profile bestsellers. In the 1970s, bestsellers pulled people into bookstores where they might buy lower-profile books. Today bestsellers are presented to the public at cut prices where people buy their groceries or school supplies, leaving the bookstores with the customers who still consider them a “destination.”

Both of the big bookstore chains, but particularly Barnes & Noble, own unmatched infrastructures to deliver a curated selection of books to dispersed retail locations. They found it impossible to make the small stores they owned in the mall locations profitable, even with those capabilities. (In fact, Borders, which doesn’t have a supply chain to match B&N’s, outsourced some of its shelf-stocking at Walden to wholesalers in recent years. It is inconceivable that B&N would ever do something like that.)

But bookstores are going to be getting smaller; we know that intuitively and the stock we see in the current superstores confirms it. And smaller bookstores, if they were planned to be smaller, would require less space, less traffic, and less sales to be viable.

Of course, smaller stores wouldn’t be a magnet for traffic; that’s what turned the Short Hills Brentano’s around and that’s what fed the whole superstore revolution.

So it would seem the combination for the future might be a B&N or Borders mini-store inside another large retailer. Remember, many other retailers are going to be having the same problem; figuring out to deal with having too much space, so there should be potential collaborators on the other side of the partnership. This will require a different kind of inventory management than the chains exercise now; more of a rack-jobbing approach. But their capabilities: to source books, select books, organize books for presentation, and to deliver books all over the United States, will have more consumer demand than they’ll be able to satisfy with only their own very large stores.

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Every time I read a story about why newspapers are failing that doesn’t mention the role of aggregation and curation in their troubles, it reminds me that something very fundamental is being missed, even by very sophisticated observers.

Aggregation is one of the core concepts of content presentation and commercialization. Any analysis of what happened to the record business, what is happening to newspapers, or the future of books and bookstores and magazines and TV that does not feature this concept prominently is almost certainly flawed.

Aggregation, of course, simply means pulling together things which are not necessarily connected.

Curation is a term that has always referred to the careful selection and pruning of aggregates, such as for a museum or an art exhibition. But the concept in the digital content world means the selection and presentation of these disparate items to help a browser or consumer navigate and select from them. Aggregation without curation is, normally, not very helpful. Curation creates the brand.

No content makes its way from its creator to the public without aggregation. Agents are aggregators, pulling together the work of many writers to present an (agent-) branded offering to publishers. The business would be considerably more inefficient and expensive if agents didn’t aggregate the work of writers to present to publishers.

Publishers are aggregators, pulling together lists of books to present a (publisher-) branded offering to bookstores, libraries, and various review media. Bookstore buyers would find it much more difficult to purchase tens of thousands of new books each year without this branding.

Bookstores are aggregators, and their curation is reflected in front tables and shop windows and store sections that create a (retailer-) branded offering that consumers can navigate.

In the music world, record companies aggregated 10 or 12 or 15 songs by a single artist into a single offering (called an “album”, nomenclature that goes back to when it took a collection of 78 rpm records to deliver a concerto or a symphony, and those were delivered inside the sleeves of a bound volume.) When long-playing technology (33 rpm records) was perfected, the longer form became more cost-efficient than the single, on a pennies-per-minute-of-sound calculation, so the longer form took over.

Or it took over until it wasn’t more cost-efficient anymore, which it wasn’t when the Internet happened. Aggregation and curation into 40- and 50-minute offerings no longer served the purpose that it used to. And since the unit of appreciation always had been the individual song, the aggregated album lost its sales appeal. It wasn’t just piracy that downloading enabled; it was the ability of the listener to curate for herself!

Newspapers are obviously aggregators and curators. The differences in their curation create their brand. The New York Times leaves out the comics. The New York Post leaves out the multi-syllable words. The Daily News beefs up its sports section and, for years, was known for having the best pictures. But one thing has been common to all of them and to all other newspapers: they cover the waterfront. (I have called that being “horizontal.”) They aggregate news of the world, the nation, and the city with sports, weather, stock quotes, advice to the lovelorn, and many other things. They sell almost all their advertising against the aggregate and against the brand, not against any specific item or interest being aggregated. And the competition for each paper is against other curated aggregates.

Newspapers can sell the curated aggregate to people who don’t want most of it because the total price is a good deal for the parts they want, just like the album was a good deal even if you only liked some of the songs. Or they could.

But now they are suffering precisely the same fate as the record album. The unit of appreciation is smaller than the whole. And for each unit of appreciation — each ball score, stock price, report from Washington, or political cartoon — there is a whole host of new competition.

So the long story short on newspapers is this: a business model of selling a horizontal (many-subject) aggregate, curated by something other than subject, was based on the economics of a physical world where aggregation produced efficiencies of production and distribution. The Internet changed that. It is no longer necessary for an aggregator to provide news to deliver me sports, or to provide a whole newspaper to deliver me the weather or a stock quote.

Horizontal aggregation was more efficient in a world of physical delivery. Vertical aggregation makes more sense in a world of digital delivery. And enabling the customer or user to have some control over the curation is possible in the digital world but hardly is in the physical.

What are the takeaways from this?

1. Don’t blame newspapers for not being ready for the new world. Their strategy of aggregation and curation was created for a physical world and it does not port to a digital one. This is not about whether the content is free or behind a pay wall. It is about the Internet rewriting the rules for what constitutes sensible aggregation and curation.

2. Booksellers must also take the new realities on board. Until the Internet, aggregating the largest possible selection under one roof had enormous customer value because the difficulty of obtaining what was not under that roof was high. It isn’t anymore. Amazon, Barnes & Noble, and any retailer served by Ingram has a nearly-universal selection available for delivery within days, if not hours. So the gap between what’s in the store and what’s not has narrowed dramatically. The relative power of the large aggregate has been diminished.

3. The importance of curation becomes more prominent. If having lots and lots of books in a store doesn’t have the power it used to, having the right books becomes more important.

4. Publishers’ aggregation and curation created their brand, and their brand (in most cases) was intended to communicate meaning to retailers, librarians, and reviewers, not to the public! In a world where the powerful intermediaries are becoming more responsive to subject than to format, publishers need to rethink what they publish and how they present the collection that they choose.

5. Recommendation engines aside (”based on what you bought before, have we got a book for you!”), online book retailers have a long way to go to enable the customized curation that seems both possible and desireable in the digital age. Even as sophisticated a retailer at Barnes & Noble will present multiple duplicate entries of a public domain scan from Google to an ebook search for a Shakespeare play. And even as sophisticated a retailer as Amazon will sell you a Kindle ebook that is a self-published tome in a way that is indistinguishable from a book from a legitimate publisher. These are failures of curation.

Except for the writers, all of us in the book value chain are part of the effort to aggregate and curate the offerings of writers to others. Every editor and publisher, every bookstore and agent, got to where they are by aggregating and curating writers’ work in ways that made commercial sense in a physical world. Some of those assemblies are challenged; I’ve been saying that the more horizontal is the collection, the less likely it is to work in the digital world.

But, remember this: when you are looking for reasons to explain why a winner in print media is losing on the web, it almost certainly starts with aggregation and curation and how it needs to change to be optimal in the new digital environment.

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The New York Times had a story on Tuesday morning about an advantage the Ford Motor Company had over its competitors at GM and Chrysler: it is still family-owned. As the Times explained, the family ownership was able to take a longer view than their competitors. In fact, we still don’t know whether the re-tooling the family has ordered up will work in the long run. But we do know that they have had a steadier and more far-sighted management because the family cared about the long-term health of the business, not just the next quarter’s profits.

This recalled to me a conversation that I had with Peter Wiley, currently the Chair of the Board of John Wiley & Sons, over dinner 15 or more years ago. Peter said then that he believed Wall Street undervalued family ownership. As Peter put it, “just about all our competitors are focused on quarter-to-quarter results. Mike, my family has owned this company since 1807. I am not thinking quarter-to-quarter.” Wiley’s financial results (even though they have suffered in this recession along with everybody else) over time have certainly vindicated Peter’s opinion.

Family-controlled businesses have been  been ubiquitous in publishing through my whole career. When I was young, there were Scribners at Scribners, Doubledays at Doubleday, sometimes two Roger Strauses at Farrar, Straus & Giroux. When family-controlled but publicly-traded Barnes & Noble acquired Sterling in 2002, they acquired it from the founding families: the Hobsons and the Boehms.

I have consulted with several family-owned or -controlled businesses. Wiley, Barnes & Noble, and Ingram are distinguished by how well managed and basically competent they are as organizations. They really do the “blocking and tackling” well. A big part of the competitive edge of all three companies is in the quality of their operations.

They make the investments, particularly in infrastructure, that are critical to the business. I once asked Peter Wiley why it was that his company’s travel web sites were so much more commercially successful than those of other publishers with equivalently-strong travel brands. “Constant, controlled experimentation,” he said. “What worked for us was on the third try. We didn’t get it right the first two times.” Family ownership — with belief — can make those kinds of investments and stay with them. And it can support a second and third attempt to make a good strategy that is tricky to execute succeed.

John Ingram, the member of the owning Ingram family who runs the book industry-related businesses, got a clear vision of the potential in print-on-demand a little over a decade ago. Very few other owners, and almost certainly no publicly-traded owner, would have made a bet of the scale, in relation to the size of the company, that he did with Lightning Print. But John could see that POD would become extremely important and that Ingram, because of its position in the supply chain, was in a great position to apply the technology. And although it took a few years for him to be proven right, the family had the commitment to see it through and, as a result, Lightning occupies an increasingly central place in the US supply chain and is the linchpin of Ingram’s plans for future growth as the traditional book wholesaling business contracts.

What most distinguishes the successful and still-profitable Barnes & Noble from its once equal and now reeling competitor, Borders, is the quality of B&N’s supply chain. That required investments in warehouses and systems that Borders, long ago sold by its founding family, didn’t have the long-view management to make.

Now I’m working with another family business called BookMasters, in Ashland, Ohio. BookMasters started out as a printer in the 1960s. Their operations have grown in both directions along the value chain from printing. They have a business, BookMasters Digital, that provides an XML workflow from concept to the press. And they have another division, BookMasters Distribution, that takes the output from the presses and provides warehousing, sales, fulfillment, and collection. The Wurster family that owns BookMasters has many business characteristics in common with the Wileys, Riggios, and Ingrams. They have a high degree of loyalty with many long-standing employees. They have a persistent commitment to operational excellence. And they have a high degree of strategic consistency: they are willing to build things over a long period of time.

John Ingram saw over a decade ago that the book wholesaling business Ingram was in was living on borrowed time. He saw Lightning as a bridge to the future. Dave Wurster knows that printing is not a growth industry and he’s building his bridge to sustainability with service offerings that expand his importance to his customer base. Over time, both of these family owners can see the possibility of a totally transformed businesses. Their focus primarily is on how to make sure their business survives a long time, not on immediate profit. In a time of great change, I believe it’s a competitive edge.

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We are working on a project in this office to “grid” the ebook world. We’ll have a hard time doing it in fewer than four dimensions. What we see as “major headings” are: 1) hardware/readingdevices, 2) software/platforms, 3) file formats, and 4) ebook retailers. And after we get that sorted out, we’ll start thinking about the various commercial terms. I surprised a reporter this morning (who is probably less well-informed than most readers of this blog) when I told her that Apple gets paid for what goes on an iPhone out of the App Store, but not on what goes on an iPhone from the Kindle store. (And that’s just an example…)

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The question of how to plug the independent bookseller into the digital revolution is a knotty one. Nobody has really “solved” it. 

Two of the smartest guys in the UK, Francis Bennett and Michael Holdsworth, tried to tackle this question in a report for the Booksellers Association in a report published in 2007. While they touched on a whole host of issues, including that publishers are likely to sell digital downloads direct, they really didn’t manage to come up with an action plan for the individual bookseller. Rather, they focused on the need for booksellers and publishers to join collaboratively to solve the problem: start with a public conference, create standards, form a joint trade working party. This is, at best, a path to an answer.

From this I conclude there is no ebook-centric answer. If there were one, these guys would have found it.

Then, three weeks ago, PW did a story headlined “Indie Booksellers Debate the E-book Conundrum”. This article introduced a product/technology called Symtio, which stores (among them Tattered Cover) use to back into ebook revenues. Symtio is a plastic card, sold at a retailer, which entitles the bearer (gift recipient) to download an ebook, an audiobook, or both from Symtio’s web site. If this strikes you as something less than the perfect ebook solution for retailers, you’re seeing it the way I do.

The ABA plans to work ebooks into Indiebound. Len Vlahos calls it a “focus for the immediate future” in a white paper presented to the ABA Board. Ingram Digital offers access to 150,000 ebook titles to independent stores. And stores such as Vroman’s are quoted as enthused about the potential for them with ebooks.

Dick Harte, however, who runs BookSite, which provides Web hosting for booksellers and librarians, doesn’t agree. Not only were ebook sales low on the BookSite platform, often they were erroneous purchases (people thought they were buying a printed book!) which then required a customer service intervention. One particularly far-sighted bookseller quoted in the article is David Didriksen who sees ebooks as very low-margin transactions not worth the effort.

I agree. What distinguishes what independent booksellers offer: local taste and judgment, personalized service, intimate customer knowledge — these things just don’t provide much competitive advantage in the ebook space. And the competition isn’t just Amazon and B&N either.

So independent booksellers need to look elsewhere to participate in the digital revolution. I tried to sketch out a strategy in a previous piece:

1. Set yourself up (probably with Ingram) in the simplest way you can to be able to sell as many titles in as many formats as you can. That is, get the maximum choice you can for your customers with the minimum hassle and investment for you.

2. Don’t expect to make money selling ebooks: consider it an accommodation to your customers to keep them buying physical books from you. Restrain yourself from investing large amounts of labor improving your ebook presentation past the point of acceptable. If the margin from your sales starts to amount to something, you can do it then.

3. Spend all of energy that you might have wasted perfecting the sale of ebooks on social networking, trying to be in direct contact with your customers through Facebook, Twitter, and through postings on popular and well-read blogs in subject matters your store specializes in. Particularly focus on the opportunities to promote to specific groups, such as through hashtags (#s) on Twitter, which identify groups of people interested in a particular thing.

I neglected to add a fourth, very important element of an indie bookseller’s digital strategy, although it is hinted at in the marketing suggestion above. This one is the same as it is for general trade publishers: get vertical!

The bad news about digital change is that it brings the biggest companies in the world — Amazon, B&N, Apple, and every phone company — into the indie bookseller’s back yard. But the good news is that it also brings every customer in the world into that back yard. So a bookseller with a vertical specialty can build a global market. This was the pre-Internet strategy of CEO-Read (originally 800-CEO-Read; if Bezos had invented Amazon ten years earlier he would have chosen a 7-letter name…) They’re business book specialists and their customer base is truly international.

Independent booksellers need to build a reputation within vertical niches. That’s a matter of having the stock, having the knowledge of the vertical subject, and then getting involved in the vertical communities — blogging, commenting, tweeting, reaching out. The bookseller’s web site, if it has good content properly tagged, can rapidly be discovered for relevant searches. Tattered Cover may not be able to beat Amazon at everything, but they should beat them on searches for Pike’s Peak. A northeastern store that specialized properly could come up ahead of Amazon in a search for “autumn leaves colors” or “historical sites Boston”. (By the way, I just checked, an no bookstores come up in the first ten pages of “historical sites Boston”!) 

In just the same way that general trade publishers need to use the time they have left when “general trade” still works to build vertical presences that will last beyond that time, so do general trade bookstores. It will work for Barnes & Noble to be “general” for far longer than it will work for any local store. The trick is to be World Class at something, most likely something that has a local root will make the most sense.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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