Evolving world of publishing

I’ve followed Mike Shatzkin for years. Mike offers strategic consulting to the global book publishing business and posts every 4-6 weeks on happenings in that world. His latest post, which considers the end of the general trade publishing, got me thinking.

Mike’s premise is that “General trade publishing will be soon be recognized as an artifact of a trade that no longer exists. It doesn’t make sense any more for the organizing principle for title acquisition and marketing to be “if it works in bookstores, and we are confident we can convince them it will, we can do it”.”

Mike Shatzkin’s article compares the publishing world of the 1990s with today’s environment. I love making diagrams to reflect what’s going on and have attempted to highlight the differences Mike Shatzkin described in the following diagram.

  • It’s no surprise that Amazon is the elephant in the room. We’re all aware of its reach and influence. It operates as a home for writers who self-publish or are hybrid authors and as a publisher with at least 7 imprints. Through its electronic delivery and marketing machine, Amazon bypasses – and reduces the influence of – distributors, wholesalers, bookstore chains and small bookstores. In two earlier posts, I’ve also looked at how Amazon manipulates its best seller lists to feature its own authors. See here and here.
  • Self-publishing is an increasingly viable alternative for authors. In addition, for authors published by the ‘Big 5’, self-publishing offers an alternative source of revenue for books declined by their publishers, a more lucrative option in the face of declining advances, and/or a way to promote their backlists once they regain rights to those books. An increasing share of books are self-published.
  • Self-published authors along with Amazon reach readers directly. They bypass wholesalers and distributors, are infrequently sold through bookstores, and are less likely to be on library shelves.
  • Today, bookstores are roughly 25% of book sales. This means that it’s increasingly difficult for publishers to make the same margins they did in the past publishing a new book.
  • Audience-specific and topic-specific markets – particularly for non-fiction but also for fiction – are the way of the future. Publishers need data and marketing mechanisms to reach them.
  • General trade publishers who created profitable businesses based on selling 80% or more of their titles through bookstores must find, and are finding new mechanisms to reach readers. Unfortunately, Amazon has such a head start that this is a severe uphill climb.
  • E-books have upended the old world. With e-books more than 18 million titles are available at the click of the mouse. As a result older titles are taking a big share of revenue away from new titles.
  • Print on demand changes the need for large print runs. Print-on-demand also means that older titles that might have gone out of print under the 1990s model can in concept remain in print forever.
  • Today, a news event can trigger immediate marketing and sales from the backlist. The emphasis here is on backlist. Such sales undercut the sales of new releases.

Let me add a few of my own thoughts:

  • Bookclubs – remember the book of the month club? – are much less significant than in the past.
  • Between the 1990s and now, several book chains and many small bookstores have disappeared.
  • With the proliferation of cheap books, either through services like BookBub or self-published authors or tools like Amazon Prime, libraries do not have the prominence with readers that they did in the past.
  • Big Box stores sell books at discounted prices. They are one distribution channel Amazon uses to sell print copies of their authors.
  • Through its own pricing strategies, Amazon is training readers to expect cheap books.

According to Mike Shatzkin, all of this means that the notion of ‘general trade publishing’ is almost an anachronism.

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M.K. Tod writes historical fiction. Her latest novel, TIME AND REGRET was published by Lake Union. Mary’s other novels, LIES TOLD IN SILENCE and UNRAVELLED are available from AmazonNookKoboGoogle Play and iTunes. She can be contacted on FacebookTwitter and Goodreads or on her website www.mktod.com.

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.