Publishers Rearranging the Deck Chairs on the Titanic
From Digital Book World, interviewing John Ingram of Ingram Book Group, a very large book distributor used by most large and small publishers:
Jeremy Greenfield: What percentage of your revenue was “digital” in 2011?
John Ingram: I don’t have the exact breakdown. I would say that probably 15% to 20% of our revenue is coming through various and sundry digital channels. It’s going to continue to rise.
. . . .
JG: There has recently been debate on DBW.com and elsewhere about the relevance of publishing companies. What value do you think publishing companies add now to the industry? Will that change?
JI: What strikes me is the difference between what’s theoretical and what’s real life. It’s theoretically an easy step to say, “a name brand author can bypass a publisher and rearrange the pieces him or herself and why do they need a publisher?” In theory, I think that’s correct that they could do that. The problem gets to be in practice.
Seth Godin may have a whole business office and a staff that can take care of all these issues – from designing cover art to editorial to their own promotion and marketing. There could be people who are in position to do most of the core functionality of publishers themselves. But it’s far from everybody.
This is a great moment for publishers to really focus on what are the core reason for their existence, which I would contend is the creation and bringing to market of great content and then helping to find markets to sell that content to.
Now, are there other people who might be able to do that? Yes. Barnes & Noble, Amazon and others have publishing arms, but they’re basically doing the same thing. The core functionality of the discovery and curation and bringing to market really good content is something that’s going to exist whether it’s done by publishers or other people, but that functionality is going to be really relevant.
. . . .
JG: Based on the history of your company and your answers to my questions so far, I’d guess you’d advocate experimentation, even if some of the experiments fail.
JI: There is a big advantage for the publisher that’s willing to be brave and really look at major restructuring. This is potentially self-serving to say, but if you really believe that publishers’ core competence is around curating content and sales and marketing, that would be a very different organization than you see today.
When I think about the trade publisher of the future, I think about a nimble organization that’s focused around content acquisition, editorial and sales and marketing. Most of the rest of what they do could be outsourced. that’s a very different organization than you see today. If you take some fixed costs and turn them into variable costs, then you free up resources for publishers to do all sorts of other things.
The real question is, how do you tell what is rearranging the deck chairs and what is steering out of the ice field?
Right now, their cost structure may need to price hardcovers at $30 or $40 to cover their costs. In a different world, maybe it could be $15 or $20 where maybe the [hardcover] price is not so different from the digital [price]. Maybe it’s a coin toss which one they [the consumer] buy based on their desires. That’s a lot of “what ifs”, but I certainly could see that happening.
Link to the rest at Digital Book World
Passive Guy has worked in large organizations, small organizations and for himself.
One of the characteristics of large organizations is that when something needs to be done, the most common response is to find whatever department in the organization is in charge of doing what needs to be done and getting them to do it. In smaller organizations, there’s a much greater tendency to just do it yourself.
Mr. Ingram’s quote, “Seth Godin may have a whole business office and a staff that can take care of all these issues – from designing cover art to editorial to their own promotion and marketing. There could be people who are in position to do most of the core functionality of publishers themselves. But it’s far from everybody,” is typical of someone who has spent his career in a large organization.
Implicit in this comment is the assumption that if you don’t have a business office and staff, you can’t accomplish those necessary tasks. The freelance world seems to have passed Mr. Ingram by. PG thinks he remembers that Seth had a freelance designer do the covers for his books. Seth’s marketing is mostly blog posts and mentions of his books during one of his many speaking gigs.
On a higher level, this is one of the problems Big Publishing has in dealing with a changing world. They don’t have “departments” for important new things that need to be done and they continue to pay for departments they don’t need any more.
On an another subject, why does a publisher need to pay Ingram to handle ebooks?
Perhaps there’s a perfectly good reason PG doesn’t understand, but Ingram grew to its present size because it could take big shipments of hardcopy books from publishers (or straight off the boat from China) and, via computerized ordering and inventory management, make sure those hardcopy books got to the correct bookstores in a timely manner both for the original rollout and when it was time to restock.
With ebooks, you deliver a file to Amazon once and watch the dollars (many or few) roll in. Ditto for the Nook store. The ebookstore does all the “shipping” Ingram provides with hardcopy books. Inventory management is irrelevant because, with the master copy of the ebook file sitting on a hard drive, Amazon can make as much inventory as necessary about 1/100 of a second after an order appears.
The idea of having Ingram handle ebook distribution for a publisher sounds a lot like a typical big company habit that you have to use Ingram because they are the distribution department.
Again, maybe PG is missing something on this and maybe digital income isn’t coming from publishers, but it seems strange. Ingram is a private company and doesn’t publish its revenue numbers, but if 15-20% of its income is coming through digital channels, that’s a big number.
Great points about Ingram being “the distribution channel” and big publishing not even questioning that assumption. This would perhaps help explain why my “25% of net” e-book royalties have big bites taken out of them, beyond, say, Amazon’s cut.
I had an issue with this:
“This is a great moment for publishers to really focus on what are the core reason for their existence, which I would contend is the creation and bringing to market of great content and then helping to find markets to sell that content to.”
Actually, the AUTHORS create the content, mister publisher. Sometimes editors are involved, and sometimes not at all, as I’ve seen in my own and others’ trad pub careers. Which means I got formatting and copy-editing support on the ‘creation of my content’ – woohoo.
In the digital age, “bringing to market” is very easy if one isn’t doing print distribution (which is only viable for about 3 months anyway, and then it’s all online after that).
The one thing I haven’t yet seen as a (fairly newer) author moving from trad into self-pub is any interest from foreign publishers. BUT I’ve made digital sales and hit the Apple bestseller lists in France and Australia, sold a couple books in Germany, and lots in the UK. So controlling my own world rights is giving me some benefit vs. the publisher just sitting on them.
Agree, agree, agree.
One way publishers could remain relevant is to provide creative marketing programs that are outside the skill set and pocketbook of the average author. They could also provide a strong PR operation aimed at getting ebooks reviewed in high-visibility publications (online and off) and booking their authors on radio, TV shows, and blog tours. In other words, they need to stop offering such goodies to only their best-selling authors (the ones who need it least), and instead make use of those goodies to turn unknowns into best-selling authors, too.
How shocking that publishers would ever forget authors, Anthea.
I didn’t understand the 15-20% of Ingram’s income coming from thru digital channels. Could it be he’s including audio books in that number? That could make sense because they’re likely to be distributed to stores in the same way books are.
Another thing that struck me in the remarks was Ingram’s notion that hardcovers and ebooks should be priced the same, with the consumer simply making the selection per his or her format preference. That’s a sure sign Ingram doesn’t understand the ebook consumer.
One of my books was reviewed on Amazon today. The reviewer wrote at the end of the review: “Between them, Patricia Sierra and John Philpin have done a top notch job in bringing out the characters in this novel. If delving into the mind of a serial killer is your thing, then this book is well worth the purchase price.” That ebook is priced at $12.99 by the publisher (outrageous, in my view). If the publisher had priced it at, say, $5.99 or even $7.99, I doubt a reviewer would feel a need to tell other potential readers that they won’t get stung by the price. Had the reviewer been required to pay $12.99 for the book, I doubt she would have done so. She won the book in a drawing sponsored by a book blog.
Many people have told me they’d buy the book if it didn’t cost so much, but they’re not willing to plunk down that much money for a digital file. What they don’t know is that the $12.99 price represents a concession on the part of the publisher. The book used to cost $18.99 until I sent multiple pleas to Random House begging them to lower it. Although they did drop the price, they didn’t drop it enough. Not nearly. RH still doesn’t get it. They don’t realize how many more sales there would be if they priced ebooks at a level the market will tolerate. As a result, they’re hurting the authors and they’re hurting themselves.
Like P.G., I was a freelancer for many years. He’s right: Ingram has no clue how freelancers operate. The freelance community represents the parts that make the whole, and they can bring a project together a helluva lot faster than a typical corporation can. The one thing I see that Ingram brings to the table is the distribution of DTBs, but for ebooks there seems to be nothing they can add to the mix.
There was a quote, from someone who had run a small publishing company, on one of JA Konrath’s blogs. The distributor he was dealing with was fine at first when they were shipping trades and stuff through them. But when he started putting out ebooks they required him, on titles they were also physically distributing, to share some of the ebook money he made. It’s only 1 comment but I wonder if big publishers have deals like that with Ingram.
Whew, that’s an interesting revelation, Wayne.
Big Publishing is being investigated for antitrust violation. I wonder if the big book distributors should have their own little antitrust investigation.
It’s only one comment I noticed in passing. Maybe he meant that if you distribute a hardcover with a major distributor they will only do it if they distribute the ebook?
I just tried googling some searches but didn’t find anything terribly useful.
In a (somewhat) similar sense, Barnes & Noble have said they will only stock physical editions of books from Amazon imprints if they can stock the (epub, obviously) ebooks too.
I was talking with the head of a small publisher, and from the way he was talking, it seemed like they were having someone else set up their ebooks as well as collect their monies. At the time I thought they were just outsourcing it, but now I wonder if that was Ingram?
There are lots and lots of companies out there offering that service: scanning, formatting, uploading, distributing to all the many different retailers (and there are lots and lots that indies can’t get into, or struggle to, like Overdrive), as well as taking all the spreadsheets and sorting them out etc. etc.
They usually do it for a small set-up fee/monthly fee plus a percentage.
The question all the entrenched publishing entities seem to be asking is, ‘how can we convince everybody that what we do is valuable to them in the new digital world?’ The question they need to be asking is, ‘what can we do in the the new digital world that actually is valuable?’
A lovely distinction, Sherri.
I have no office, I have no staff, but I had $5,000 and Createspace. My part was the creative work to write the book, paint the artwork, and make sure the book was edited, designed and assembled the way I liked it. Now my part is marketing it. So far my book Arboregal is pushing 3,000 copies in the US and abroad.
Congratulations, DG.
“When I think about the trade publisher of the future, I think about a nimble organization that’s focused around content acquisition, editorial and sales and marketing.”
What could possibly be more nimble than the army of people like me who are selling thousands of e-books from their kitchens?
I love how his idea of a radical strategy for publishers is to aggressively price hardcovers. That might have been a good idea. In 2008. These guys are so far behind, it’s not even funny.
Yeah, Konrath seems pretty nimble, too (especially for a self-described “real fat ass”). He says he’s made $100,000 in the past three weeks on his self-pubbed books on Amazon. $2.99 of that was from me (or rather $2.09 for his 70% cut). His lack of departments doesn’t seem to be hurting him. He has been able to connect up with other free-lancers for all that stuff. And then gives them free publicity on his blog.
LOL
To embroider on the need for a staff…..
First he says that an author would need a business office and staff to do all these things that he then says that publishers will OUTSOURCE. Hmmmm.
Hmmmmmm, indeed…. But I bet you need an Outsourcing Department with Official Outsourcing Staff in order to outsource stuff….
Your assessment is largely right-on. I think you assessment of the value of Ingram is a little narrow. You work directly with Amazon if Amazon is your channel. If Amazon is a part of your channel, you need other options. Do you want to sell through multiple outlets? Maybe it’s easier to go through distribution. Updating copy for multiple listings? Maybe you sell through not just the biggies (Amazon, BN, Kobo), but lots of small trade-specific points of distribution. Or direct to consumer as well. Handling distribution for less technically adept outlets can get complicated due to the lack of standardization and acumen on their part. Protecting against channel related conflicts or snafus (such as Amazon pricing dropping to $0 due to their misinterpretation of a promotion elsewhere) could be better monitored by a distributor who focuses on managing a channel and aggregates that work.
I have no idea whether Ingram is any good at any of these things, but there are reasons to outsource some of that help.
Rich
Those are good points, Rich.
These all sound like good material for a well-designed software package, however. A distributor might be better-positioned to spread the cost of development over a bigger ebook income stream than a publisher.
I absolutely agree on the opportunity for automation. The distributor role is clearly about delivering the service rather than specifically having a person deliver the service.
[...] seem to be asking 12 January 2012 Goto comments Leave a commentFrom Sherri in the comments to Publishers Rearranging the Deck Chairs on the Titanic:The question all the entrenched publishing entities seem to be asking is, ‘how can we convince [...]
John Ingram’s answers to DBW’s questions are so vague to be meaningless. That in itself is indicative of someone with nothing useful to say trying to fill the air. Someone with nothing to say on the subject of “the relevance of publishing companies,” his very bread and butter, is a man in deep trouble.
The attitude and answers of the interview are very typical of big corporation thinking. Anything outside their model, is a fluke, or must be exactly what their model is yet better.
I first wrote the book. ( Me, Author)
Then, I got freelance editing ( paypal, or check)
Re-worte the book, made my own dealines ( used excell)
Cover art, freelance outsource. ( I got lucky with Carl Graves fire sale,)
Here is the big one. I discovered through an internet search the agency that most of the freelance editors come from that the big six outsource contract through. I got a quote from best editor I could find who has the experience with my topic.
So, here is one of the most imporant “value adds” that publishing talks about, and I was able to buy it on my very own, set up the date with the editor, to make sure the book is high quality.
Formater, freelance.
And now for Marketing. If I go traditional publishing and somehow get a contract, for say $5000 advance, paid out over three installments minus 15% for agent, the expectation is that I am going to have to roll this back into marketing anyways. That is what they want of authors these days. They have figured out a way to cut their own marketing cost by bundeling it within the advance.
But the most powerful marketing is the social media, the blogs, and book reviews, etc, and word of mouth due to the social circle of the author.
Why do I need these people? What if, instead of self publishing being the last option an author takes, it becomes the very first option authors turn to? What if the tables turn completely around on these people until they are now holding on to the very short end of the stick. Even if say an author wants to go traditional, why would they not use E-Books, and blogs to promot sales first and by-pass the whole querry letter thing, agent thing and just get discovered in the kindle store. There now have been many cases of just that happening.
If I had stock in these publishing companies I would be selling it fast, and shorting the market. They are in complete denial. They cannot think of a circumstance where a good author would intentionally by-pass them and go direct. They continue to think it is just loosers getting lucky. They believe they are entitled to always have the crack at buying the rights of a book.
PG, have you read Rework, by Jason Fried and David Heinemeier Hasson, the guys who brought us the awesomeness of Basecamp?
If not, I think you would like it.
http://37signals.com/rework/
I know a little about Basecamp, Maril, but haven’t read Rework. Thanks for the tip.