Are Book Publishers Going the Way of the Railroads?

Over 72% of publishers surveyed on the impact of digitization on book publishing by the Frankfurt Book Fair and the German trade magazine Buchreport said the development of new business models, new multimedia products and effective marketing strategies are the biggest challenges facing publishers as they transition from print to digital.

Duh! The publishers are slow to react to the changing customer demands.

The publisher’s lateness to the party reminds me of the train industry’s reaction to the airplane. Railroad companies ignored the airplane until it was too late, and air travel replaced the railroads for passenger travel and some forms of shipping.

The railroad companies realized too late that they were in the transportation business, not the railroad business. If railroad companies had realized this earlier, we would have had Union Pacific Airlines and Burlington Northern Airlines instead of American Airlines and United Airlines.

The book publishers are in the information business, not the book business. If they had realized this earlier on, they would have made the transition to e-books and other digital forms of communication more easily. Instead, they find themselves wringing their hands and searching for new business models to catch up to consumers’ demands that have already passed them by.

Ingram's Automated Telephone Computer Died This Month

I regret to announce that Ingram's computerized telephone stock & sales system no longer works. The message when you call 615-213-6803 sadly says the telephone number is not on the phone system anymore. I confirmed with an Ingram customer service rep who told me the number no longer works. Sales and stock information must be obtained directly from the publisher or from an Ingram representative.

This telephone number was extremely useful over the years to check a book's sales through Ingram. It was easy to use and anonymous.

If I find a way to gather the same information, I will post it in a future blog post.

Opportunities for Savvy Publishers

In the 20th Century, the American book market grew to be the world’s largest (with over 33% of total books sold) because of superior titles. From Fitzgerald and Hemingway to Kerouac to Tom Peters, publishers produced new titles so compelling that readers had to have them. In the decade of the 2000s, however, more and more books were published (thanks to POD and short-run, digital printing) and quality was negatively impacted. In 2008, over 400,000 new titles were introduced—many of them were not well written or properly vetted. The same hard cover book that sold for $19.95 in 1999 cost $29.95 in 2008, yet the production value and the content were worse than 1999.

When readers rebelled in 2008 and 2009 against paying more for the same or less quality product, publishers were forced to cut costs. Publishers worldwide laid off hundreds of employees and blamed it on the recession.

On closer examination, and with the benefit of 20/20 hindsight, the slow down in book purchases (which should have increased, or at least stayed flat, as people cocooned in their homes) was caused by traditional publishers inability from 1999 to 2008 to provide new, compelling titles. Small publishers poorly informed readers of exciting titles traditional publishers were not providing. And the brick and mortar retailers made the business decision to offer less shelf space to all but the top selling titles. All this forced consumers from 1999 to 2008 to spend money on an increasingly limited set of titles—driving up prices and alienating readers.

Out of chaos comes opportunity. There has never been a better time to publish compelling titles that readers want.

The Future of the Book?

You must see this video from France on the future of the book. It shows some pretty interesting ideas of what that future might be.

http://www.editis.com/pages_html/video_possible02.htm

I'm not sure I agree with the idea that traditional books will become simply objets d'art.

They say there's nothing new under the sun. Compare the French book video to one done by Apple Computer in 1987 (22 years earlier) on the future of the computer. See any similarities?

http://www.youtube.com/watch?v=8mLqJNDWx-8

Margin Erosion for Book Publishers, Booksellers and Authors

David Streitfeld writes in the Sunday, December 28, 2008 NEW YORK TIMES, about the death of the book industry. In an article titled, Bargain Hunting, and Feeling Sheepish About it, Streitfeld notes the effect of online web sites on profit margin erosion for bookstores, publishers and authors. He writes of his experience buying ROOM FOR DOUBT for 25¢ on the Internet. He claims the book retails for $13.95 plus tax in a conventional bookstore.

While the article may be hyperbole (see Tom Campbell's rebuttal on his blog, http://regulatorbookshop.blogspot.com/), authors and publishers should note the trend of online book retailing and its effect on book marketing and distribution.

10 Ways to Maximize Cash Flow & Profits in an Uncertain Economy

1) Start with the end in mind.
Understand how you will sell your book before you sell it. Have a sales plan and stick to it. Selling will be the number one problem in 2009. Clearly identify why anyone should buy your book. Distribution channel expansion is your number one job.

2) Know how to keep score.
What criteria will determine success or failure for your book? Focus more on profitability than sales growth.

3) Analyze your Balance Sheet.
The balance sheet is more important than the income statement during difficult times. Carefully manage your cash, inventory, Accounts Receivable, cash advances to authors and returns. Understand the hidden costs of the business—write-offs. Specifically, manage your inventory write-offs, your returns reserve write-offs and your royalty advance write-offs.

4) Print Fewer Copies.
Inventory is the number one expense for publishers. Print fewer books to keep inventory costs down.

5) Forecast Better; Print Smarter.
Be more conservative when forecasting how many books to print. Base your forecasting on sales of similar books. Package your books better before printing. Better packaging will help save printing costs. You will never fix a book after it's printed.

6) Reprint Smarter.
The hardest print run to forecast is the last one. It is inevitable that there will be books left over. Use Print-on=Demand technology to manage the print runs at the front end and the back end of a book's life cycle.

7) Ask for Terms.
Typically vendors pay accounts receivable in between 105-120 days. Demand faster payment. Ask your suppliers for terms—60 to 90 days. Suppliers may not agree on the first request. Keep asking. It may take up to 10 times before they agree. The, if they do agree, pay promptly on the 60th or 90th day.

8) Ship Fewer Books; Manage Returns.
Ship 60%-80% of what a vendor orders—based on return rates. For most publishers, returns are running around 35% of books shipped. Shipping fewer books may actually make you more money!

9) Collect What You Are Owed.
Control your accounts receivable. Run aging reports monthly. Alter payment terms to various vendors if they are slow to pay you.

10) Manage Your Marketing Budget.
During tough times, you'll read many consultants advising publishers to trim marketing budgets. If you've done a good job of forecasting (step 5), then you'll only need to manage your marketing budget, not reduce it.

Print-on-Demand Book Sales Figures

The average print-on-demand book sells 75 copies, according to Penny Sansevieri, CEO of A Marketing Expert (www.amarketingexpert.com).

Print-on-Demand is a manufacturing process. There are circumstances when Print-on-Demand makes sense as a publishing strategy—at the beginning or end of a book's life cycle or as a bridge between print runs when a book's demand exceeds expectations. For most, however, selling 75, or fewer, copies of a book is unacceptable because most authors want their message to reach a wider audience.

THE ECONOMIST Facts & Figures on Book Publishing in America

THE ECONOMIST reports in the June 7, 2008 edition that 411,000 new titles were published in America in 2007. The adult trade segment of the book publishing market grew at 4.3%. Since 1985, books' share of entertainment spending has fallen by seven percentage points. Books have changed little in the past half millennium, but they may be on the verge of going digital. Unlike digital music or video, however, digital books require consumers to change their consumption habits. Another new technology that is less visible to readers is making itself felt—print-on-demand (POD) which allows books to be printed and bound to order. POD makes million of books available even if they appeal to a narrow readership (see THE LONG TAIL by Chris Anderson).