Writing Business – who “owns” the customer

In a previous life, I worked for IBM. More than ten years, in fact, at that icon of the technology world. One of the skills I learned was sales and one of the expressions I recall was “owning the customer”, an arrogant expression for sure, but that’s the way IBM sales management spoke about clients. If you were in sales, you had to find ways to “own the clients” in your territory so they would buy from IBM almost 100% of the time.

What’s Mary babbling on about now, you ask? Mike Shatzkin, a publishing industry guru, has recently written Four players in the book business with the power to rewrite some of the rules – and I thought you might be interested in a synopsis and a bit of commentary but first, a diagram. Diagrams help me think.

Four-Dominant-Players

According to Shatzkin, the US market is dominated by four players (those with the red stars): (1) Penguin Random House is almost the size of the four other Big Five publishers combined; (2) Barnes & Noble is the leading book store chain; (3) ReaderLink has recently purchased Anderson News thus becoming by far the dominant distributor to mass merchants like Target, Walmart and Sam’s Club; (4) Amazon is far and away the dominant online retailer. Or to use the IBM terminology: Amazon owns the online consumer; Barnes & Noble owns a significant portion of the book store customer market; ReaderLink owns the mass merchandiser relationships; Penguin Random House owns a huge whack of content readers desire.

Dominance = power. For the most part, writers have no power.

Other aspects to consider. Each step in the process of producing content and delivering it into the hands of readers costs money. Each organization has to make a profit.

But consider what’s happening in the publisher space.

 

Amazon-Publishing-ScenarioAmazon now has at least seven publishing imprints. (Full disclosure – my latest novel Time and Regret will soon be published by Lake Union, an Amazon publishing house.) Collectively, the organization knows what consumers buy and has a powerful database of reader information. The link from Amazon Publishing to Amazon Retail is represented by a dashed line to demonstrate that it is more seamless – and thus less costly – than connections between disparate organizations.

Will this new publishing dynamic deliver more compensation to writers? Will Amazon grow its physical store presence to be a serious threat to Barnes & Noble? How will Penguin Random House (PRH) use its leverage? Mike Shatzkin suggests that PRH could create a direct relationship with mass merchants and thus cut ReaderLink out of some of the action and he has previously suggested that they could “create their own ebook subscription service”. We shall see.

Other posts on the publishing industry: Follow the Money, Lifetime Value of an Author, Facilitate Connections Between Writers and Readers.

FOR MORE ON READING & WRITING HISTORICAL FICTION follow A WRITER OF HISTORY (using the widget on the left sidebar)

M.K. Tod writes historical fiction and blogs about all aspects of the genre at A Writer of History. Her latest novel, LIES TOLD IN SILENCE is set in WWI France and is available from Amazon, NookKoboGoogle Play and iTunes. Her debut novel, UNRAVELLED: Two wars. Two affairs. One marriage. is also available from these retailers.

Mary can be contacted on Facebook, Twitter and Goodreads.

5 thoughts on “Writing Business – who “owns” the customer”

  1. Interesting post, Mary. One thing I’m not seeing (unless I’m missing it) is: “Writer C ——> Amazon Retail”. No steps in between; writer goes direct to reader via Amazon KDP or CreateSpace. This is the independent self-publishing model that has everyone excited (and which alisonmorton mentions above). That model skips ALL the other entities and can—POTENTIALLY—leave them in the dust. Which is why those legacy entities are running scared.

    And that model does two things germane to your post:
    1. Gives writers their power back. With traditional pub, very few ever had it.
    2. Gives writers the ability to truly “own their customers,” i.e., readers.

    The downside of independent self-publishing is that little thing called MARKETING. Sometimes referred to as “Discoverability.” It’s hard, no doubt about it, but it can be done. And once a writer has built a cadre of their own customers/readers via smart marketing, then they OWN those customers (readers) forever. Which is the primary reason writer coaches and consultants always advise: start your own email list. You own it. Not Facebook, not Twitter, Pinterest, et al. You own the customer (reader). And that’s a good thing.

    P.S. The definition of Marketing is: “Getting and Keeping Customers.” That’s it.

  2. I snorted when I read your “Dominance = power. For the most part, writers have no power” line. But consoled myself with the potential of self-publishing – the pitfalls of which are put forth by Harald. No Easy Street here.

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