Mike Shatzkin

One big change in book publishing is that it does not require you to have much of an organization to play anymore

30 September 2019

From veteran publishing consultant, Mike Shatzkin:

More than two decades into its digital transition, book publishing has evolved so that a capital-intensive infrastructure is no longer a requirement to successfully develop a book, or a list of books, and bring the books to market. This has resulted in a self-publishing segment, so far almost entirely author-driven, that is substantial in reach and readership and which offers ongoing competition to the commercial publishing business largely because of its ability to price its ebooks below what would be survival levels for commercial publishers.

. . . .

What publishers do, over and over again, is the business of “content” and “markets”. Each book is unique content and is individually delivered to its own unique market. So publishers need to stick to content and markets that they understand in a contextual way. That is usually done by sticking to genres in fiction and topics or “audiences” for non-fiction. But people who live in any of many non-fiction “worlds” could well be as well-equipped as any publisher to grasp the content-and-market equations in those environments.

The discrete tasks are:

1. Creating the content, which requires domain knowledge (the world of the content) and, of course, the ability to discern good and effective writing and presentation. And a knowledge of the content world implies a sense of any particular project’s uniqueness and timeliness.

2. “Packaging” the content in a form that is reproducible. That means different things for print and for digital. And it is more complicated for books that are illustrated or annotated with charts or graphs.

3. “Marketing”, or making potential readers aware of the book. This takes in what we used to think of as publicity and advertising, which in the “old days” largely centered around book reviews and the sections in newspapers that carried them, but which is now much more about search engine optimization and social network marketing.

4. Connecting with the avenues of distribution: reaching the sources of printed books their customers might use — bookstores, other retailers, or online merchants for consumers and wholesalers or distributors for those intermediaries, print and e. You have to sell to them and serve them: persuade them to carry or list the book and then deliver, bill, and collect so they can.

5. Selling rights where you can’t sell books. Because many books, no matter their origin, have the potential to gain additional revenue and exposure through licensing for other languages or placing chunks of the book’s content in other venues (what was very simply “serialization” in the all-print days), rights sales and mangement is another activity that a book publisher has to cover.

How have the avenues for sale to end users changed in the past two decades?

Before digital change arrived, which for trade publishers we could say began when Amazon opened in 1995, publishers sold most of their books in stores. The books got there because their sales reps persuaded the stores to stock them. Reps and stores are still a part of the delivery system, but they are no longer the only path to an audience that can deliver a book’s author substantial revenue.

In the past 20 years, online sales of print have moved from under 5% of the total units to certainly 40% of units, perhaps 50%. And it can be much more for some titles.

In addition to print, publishers sell ebooks and those are exclusively online. Twenty years ago, sales were zero. Now they appear to be 20% or more of the sales for big publishers. Once again, there is a range across titles and types of titles and there is a whole new segment of digital-first publishers for which the percentage of ebook sales is much higher, sometimes approaching 100%.

. . . .

Twenty years ago was probably the peak of the big bookstore chains — Borders and Barnes & Noble. Two decades ago, those two retail behemoths were more than 30% of many publishers’ sales. Today, Borders is gone, Barnes & Noble has shrunk, and their sales are less than 10% for most publishers. The number of chain stores is fewer than half of what it was, but shelf space for books has shrunk even more.

As a result of the diminishing bookstore space — shrinking and disappearing chains and despite a recent resurgence of independents the growth from them hasn’t nearly replaced what’s been lost — the opportunities to put printed books in front of consumers have shrunk. So the shelf space in mass merchants, like Walmart and Costco, is especially important for the big books.

. . . .

At the same time, the general interest book clubs have pretty much disappeared. Publishers used to be able to move thousands of copies of big books through those direct mail channels. They’re effectively gone.

And all of the above is really attributable to the fact that the sales have moved to Amazon. Twenty years ago they were probably not as much as 2 percent of book sales. Now, if you include Kindle sales, they are almost certainly 50 percent of the sales. For printed books alone, they are over 40 percent for most publishers.

. . . .

Amazon sales reached a tipping point about ten years ago. Kindle, launched in 2007, grew fast, as the first “direct download” ebook system. (Before Kindle, the ebooks had to be downloaded into a computer and then “synched” to a device.) So when Amazon first offered the self-publishing opportunity through Kindle, they were able to “reach” an audience of sufficient size to enable aspiring authors to actually make some money. When they added their “Create Space” capability for print-on-demand, an author could readily reach half the book-buying audience with one stop.

That was really the catalyst for what has become a tsunami of self-publishing.

. . . .

The much-cheaper [indie ebooks on Amazon] were most compelling for the audiences that consumed many titles: readers of romance, sci-fi, thrillers, and mysteries. It didn’t take long — maybe a couple of years — for a very robust title selection in those genres to become available from many previously-unknown authors.

Whether it was intentional or not, Amazon’s flipping of the time-honored “razors and blades” pricing strategy contributed to their rounding up all those multiple-book readers.

. . . .

[F]rom day one, the tiny-but-growing community of Kindle readers bought an outsized number of books.

For those authors who captured readers through the combination of low-pricing and the appeal of the free book “samples” that digital enabled, the Amazon self-publishing ecosystem could be very remuerative.

. . . .

Regular publishing required an agent most of the time but it required a lot of patience all of the time. Finding an agent took effort and could take months. The publishers’ decision-making process to buy also took a long time, often months. The act of publishing took a long time, also often months. It quite often added up to years. And then the share the author got was a fraction of what Kindle would pay them.

. . . .

So by 2010, we had a very different profile of intermediaries between publishers and their readers than we had a decade or so before.

And in the decade since, the total retail shelf space dedicated to books, across chains, independents, mass merchants, and specialty merchants, has continued to decline. The share of sales being taken by online has continued to grow to the level we cited: 50 percent for most titles. All publishers, but particularly big publishers, have taken to heart that they have to market direct to consumers . . . .

. . . .

If you go back to the top to look at the requirements to publish a book, numbers one and two are the creation and designing of a book, and most publishers use freelance capabilities for that which are available to anybody, including individual authors. Number three (marketing) has many components, but there are a plethora of independent services available to deliver most of the capabilities. Number four (connecting with the avenues of distribution) is delivered by Amazon to their customers and by Ingram to the world. And number five (licensing, particularly foreign rights) can be done by a vast network of agents and digital marketing consultants that already exists. You don’t need to own any of it to play.

And, as a result of all of that, many of the structural advantages a being a book publisher have faded in importance. A person with a manuscript, a computer, and a bit of a budget has been able to publish effectively, and sometimes profitably, for the past ten years. That has spawned the current infrastructure of capabilities and services that might suddenly be discovered as a key tool by entities bigger than individual authors. On another day, we’ll explore that might mean to publishing’s future.

Link to the rest at The Shatzkin Files

PG has been hard on Mr. Shatzkin on many occasions in the past. However, over the past several months, Shatzkin has come around nicely (in PG’s occasionally meek and deferential opinion).

If PG were to date this change, he thinks it may have begun when Shatzkin retired (or mostly-retired, PG has no familiarity with anything other than what The Shatzkin Files have disclosed) from his work as a long-time and well-respected publishing consultant based in New York City.

As PG considered this apparent change, he was reminded of Miles’ Law, reputedly named for Rufus E. Miles, Jr., a supervisor in the Bureau of the Budget in the 1940s who told a group of subordinates that, in government agencies, “Where you stand depends on where you sit.”

PG has never been in the traditional publishing business (although he has been exposed to traditional publishers via helping Mrs. PG by reviewing the publishing contracts from the traditional publishers with which she formerly did business).

PG was not alone in recognizing the potential for Amazon and its general pricing practices, but particularly for its aggressive move into ebooks, to completely upend traditional publishing. He had witnessed and participated in the revolution that had significantly impacted the legal profession with the birth of computer-based word-processing and its ability to turn out perfect, custom-fitted documents of all sorts very quickly and inexpensively. When he was still practicing retail law, PG made a lot of money by building software programs that could start printing out sophisticated wills and trusts or divorce petitions and related documents while the client was still in the process of writing a check and handing it to one of his legal assistants.

Even more importantly, PG had absorbed significant amounts of the thinking and writing of Clayton M. Christensen, Harvard Business School professor and well-known author of The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, a book that Jeff Bezos and Steve Jobs have each said had a major impact on how they built Amazon and Apple.

The early moves of Bezos into providing self-publishing tools for the masses were extraordinarily disruptive, especially for ebooks, putting Amazon’s promotional power behind making some of those indie ebooks into big sellers and, even more important, on a per-ebook basis, paying authors far more than they would receive from the sale of an ebook via a traditional publisher through Amazon.

When you add the tools Amazon has provided for author to exercise broad control over ebook pricing plus author access to the Amazon-based advertising and marketing tools for selling books, Amazon has effectively set up an online laboratory that permits authors to experiment with all sorts of marketing/pricing strategies in an ongoing search for the best way to sell a lot of ebooks. Perhaps more important even than the money Amazon earns from selling indie ebooks, it is in a position impossible for any traditional publisher to equal, where it can watch and learn from all the various pricing/marketing/product design experimentation going on among thousands of individual authors, including some who are selling a huge number of ebooks.

PG suggests that, while good editors, nicely-formatted books and skilled cover designers are very important for most indie authors, paying for those services separately (or doing them yourself, particularly in the case of book formatting), instead of offloading those jobs to publishers and giving up far more income than even the most expensive editor or designer would charge just doesn’t make sense.

If you’re writing in a niche that benefits from quick-to-market strategies to take advantage of something that’s happening right now or soon will happen, a traditional publisher is most definitely not a smart strategy. You can make it all happen much faster (and probably  much better – most publishers’ employees are generalists, not specialists in particular market segments or sub-segments, plus everything at a publisher is subject to bureaucratic time lags) by doing it (or hiring specialists to do it) yourself.

The discovery of truth is prevented more effectively, not by the false appearance things present and which mislead into error, not directly by weakness of the reasoning powers, but by preconceived opinion, by prejudice.

~ Arthur Schopenhauer

Bureaucracy defends the status quo long past the time when the quo has lost its status.

~ Laurence J. Peter

In any bureaucracy, there’s a natural tendency to let the system become an excuse for inaction.

~  Chris Fussell

Bureaucracy is a giant mechanism operated by pygmies.

~  Honore de Balzac

A lot has changed in book publishing in the last ten years

23 July 2019

From veteran publishing consultant Mike Shatzkin:

I am returning this September to speak at Digital Book World.

. . . .

The new DBW is well aware of “corporate” publishing, a term they use to describe the increasingly frequent occurrence of non-publishing companies and entities issuing their own books (and not necessarily with the primary objective being to make money doing so).

This inspired me to make a list of Big Changes since 2009. It did not take long to come up with quite a few.

The arrival of the IPad and ubiquitous smartphones and tablets
Pretty universal broadband
Apple iBookstore
Nook: big arrival on the market, large uptake, fairly rapid sunset
Successful, as in producing dollars and reaching readers, self-publishing
Disappearance of Borders
“Resurgence” of independents (and its limits)
Diminishing of B&N
Growth of Amazon from less than a fifth of sales for most publishers to over half
Through Ingram, a full POD and distribution infrastructure available to anybody
Audio has become ubiquitous (fastest-growing segment; smartphones; Audible)

. . . .

Ten years ago: Pub date was the key organizing point for the assignment of a publisher’s budgeted and conscious efforts on a book. Generally, publishers marketed six months around pub date.
Today: Any book can pop at any time. This has had a very visible impact on budgeting and marketing resource allocation, but it also adds a new challenge: monitoring the world to make the best decisions about what books to put effort into right now.

TYA: “Direct marketing” to consumers was the work of specialists.
TOD: Every publisher builds and maintains email lists, with widely varying degrees of expertise applied to using them.

. . . .

TYA: Popular reference books were enduring backlist for book publishers. I know, because in the 1980s I created a compendium of baseball biographies called “The Ballplayers”, trying to appeal to the same audience of the perennial bestseller, Macmillan’s “Baseball Encyclopedia”.
TOD: You wouldn’t think of going to a book for either of these things. “The Ballplayers” had a life online as BaseballLibrary.com before Wikipedia mooted it. And the encyclopedia was effectively replaced long ago by baseballreference.com.

. . . .

TYA: In order for a book to sell, it really needed to be distributed by a “legitimate” publisher, because it was a requirement to be on sale in bookstores to move the needle and only a publisher could get books stocked across a wide range of outlets.
TOD: There are big categories of books (mostly genre fiction) that have a vast number of crowd-curated self-published titles that are available at prices no commercial enterprise can consistently match. And anybody with a worthy title can buy their way into full distribution without having to persuade a publisher to give them a contract.

Link to the rest at The Shatzkin Files

The Sale of B&N Again Calls the Question of the Future of America’s Bookstores

18 June 2019

From veteran publishing consultant Mike Shatzkin:

The most important question in the world of trade publishing is “what will happen to the book trade”, meaning, primarily, the bookstores (but also the other retailers that sell books, the libraries and the wholesalers that supply them).

. . . .

[I]t was announced that Barnes & Noble was being sold to Elliott Management, which also owns and has reconditioned the Waterstones chain in the UK. That acquisition caught everybody’s attention and made two reporters call me as part of the research for their stories. (ReaderLink emerged as a late possible alternative acquirer of B&N, but that did not come to fruition.)

They wanted to know, “will Elliott save B&N?” The announced strategy, by James Daunt who will run both chains and who engineered the changes at Waterstone’s, is to repeat what appears to have worked in Britain. Diversify the stores from each other. Give more local autonomy for title selection and merchandising. Make them as different from each other as independents are different from each other.

My hunch is that it will take much more profound change to make the “big chain bookstore” model commercially viable in the US anytime in the future. What surprises me a bit is that this conversation about the future of bookstores, and just about every one I’ve seen, just doesn’t acknowledge the history of how we got to where we are.

The Barnes & Noble store network that exists today was spawned by investor enthusiasm in the late 1980s, which also financed the growth of B&N’s longtime competitors, Borders, which closed in 2009. When the book consumer of that time either wanted a specific book, particularly one that was not a current bestseller, or wanted to “shop” a category or topic to see what was available, it was a natural instinct to go to the store with the biggest selection, the most titles.

The fact that selection was a magnet became the driving reality the superstores were built on. The biggest independents had long carried a very large number of titles and now the chains, which had previously specialized in 20-25,000-title stores in malls, started building freestanding destination stores that carried 100-125,000 titles. The national wholesaler Ingram also kept expanding their title base, so both the chain stores and the independents could get rapid resupply support for most of what they carried.

The situation started to change when Amazon arrived in 1995 with the ability to deliver just any available book to any customer in as much time “as it took” (varied by the book and publisher, of course), with a “promise date” to tell the customer when to expect it. Since most needs for most books by most people are not immediate, over time online shopping, rather than looking for the biggest in-store selection, became the logical default for anything you weren’t sure you’d find. And in a multi-million title world of books (to which we have evolved over the past 20 years from the quarter-million title world we lived in before Amazon), that’s by far most of the shopping and has become most of the purchasing.

In addition to the shopping reality, the marketing reality has also changed. It used to be that word of mouth was a slow thing, taking the time it did to travel from person to person through conversation and personal interaction. The internet changed that; social media changed it on steroids. Now word of mouth can spread like lightning, and stop nearly as quickly as it starts. Social media can make a book, or a meme, very ubiquitous for a week or a month, and then disappear.

That means that there is a high premium on having a book available in as many places as possible for the period of its great fame, but it also means those books need to be rotated quickly. To maximize sales, they need to show up right away when they’re hot, and they have to relinquish their place of prominence to make room for the next thing that comes along.

What that all added up to is that the retail sector that is needed in the area of rising online sales is very different from the one we needed before. A massive selection is not an effective magnet anymore.

. . . .

[I]t will take more than diversification of the title selections and merchandising emphases to make the pretty large B&N stores thrive again. They need more smaller stores, not so many very large ones. Making the title selections more local is well and good, but the information that drives that has to be deep, sophisticated, digital, and reacted to very quickly.

. . . .

Britain is culturally and physically different enough from the States that it is hard to know whether a strategy that worked for Waterstones there can work for Barnes & Noble here.

Link to the rest at The Shatzkin Files

PG is familiar with the incoming CEO of Barnes & Noble, James Daunt, only through a variety of articles written about him that include quotes from Daunt.

PG’s general impression is that Daunt is British in a way that can lead to parochial views of the world and the United States in particular. From a brief scan of biographical information, Daunt’s father was a British diplomat and Daunt was educated at a 1300-year-old private (in the US sense) boarding school prior to completing his education at Cambridge. One profile mentioned that he presently owns three different homes.

Daunt’s only extended exposure to the United States that PG could discover was when he worked as an investment banker in New York City for four years in the 1980’s right after he graduated from college.

PG has no doubts that Daunt’s business instincts are well-attuned to the sensibilities of a typical British book purchaser, particularly in the upscale locations where he sited Daunt Books stores prior to being named CEO of Waterstones.

PG has his doubts about whether Daunt’s instincts will work as well for a Barnes & Noble in Omaha or Mobile as they do for a Daunt Books in Marylebone however.

At present and in most locations, working in a Barnes & Noble store is pretty close to a dead-end job. It’s a half-step above flipping hamburgers for working conditions, but Shake Shack isn’t on anyone’s list of public companies most likely to show up in bankruptcy court either. PG suggests that a Shake Shack manager is more likely to have his/her job five years from now than a manager of a Barnes & Noble is. And a Shake Shack manager may be earning more money as well.

PG suggests Daunt’s most important task will be to make the employees of Barnes & Noble’s retail stores feel like they are part of a business that is worth caring about and isn’t likely to lead to unemployment during the next few years.

Customers sense when the store staff feels like they’re in dead-end jobs.

The best ways to use Lightning are not widely employed yet 20 years in

29 November 2018

From The Shatzkin Files:

The 20th anniversary of Lightning Source, the digital service provided by Ingram that supplies both printed-on-demand books and ebook file distribution services for publishers, was recently noted in a tribute piece in Publishers Weekly. The growth of the file repository at Lightning was reported to have reached 15 million titles.

Those represent books that might not have copies for sale in anybody’s inventory but which can be delivered in the next 24-48 hours by Ingram to any bookstore, library, or consumer in the country (and many more around the world).

John Ingram was quoted suggesting that publishers would only get the full benefits that Lightning has to offer them if they have every title they own archived with the service and ready for delivery. The story doesn’t unpack that idea, but it is a very powerful one.

The value that almost all publishers now recognize in Lightning was summed up very well by Steve Zacharius of Kensington Books.

“We use it for short runs to cover books temporarily out of stock or to keep the book available when there’s not enough demand to do a full offset printing. We also, of course, use it for ARCs.” (ARCs are “advance reader copies”, sometimes called “bound galleys”, which are usually pre-publication samples of a printed book.)

But there is another way to use Lightning which only a few publishers have employed so far but which could become one of its most valuable capabilities in these times. Ingram now has what they estimate is “several tens of thousands” of titles within the catalog that sell thousands a year, so they wouldn’t be obvious candidates. But they are set up “Just in Case” (as opposed to for “Just in Time”) and they make use of Lightning in ways most publishers still don’t.

Because, more than ever before the Internet changed communication, our collective attention is briefly grabbed and we see a “spike”. A sudden and unpredicted surge in interest in a topic (which often means a book) is suddenly driven by an event in the news or public sphere. These surges can be extremely brief but the boost in demand they can deliver for any book can also be extremely powerful. And, of course, the body of thought contained in a book could actually further sustain the interest, if the book is available for media exposure and public consumption at the moment of opportunity.

. . . .

Because if there’s a news break on a Monday morning that could promote interest in a book, even a publisher with ample inventory in its own warehouse is unlikely to be able to get copies to Ingram to place on sale any earlier than Wednesday. Those two days could be two major days for sales, perpetuating a chain of interest into the book-buying public.

Turning on Lightning printing for that book could mean thousands of copies in stores and libraries by Wednesday. This is the potential magic of the Lightning-Ingram connection. Ingram is shipping books to just about every bookstore and library that matters just about every single day. The newly hot book could be in all the shipments to stores that want it almost from the moment of the news break by employing Lightning. In our times, delaying the book’s real distribution into the marketplace by even 48 hours could be the difference between a book that catches fire and one that misses its opportunity.

Link to the rest at The Shatzkin Files

PG will note that an agreement between a publisher and Ingram for Lightning service could arguably provide a basis for the publisher to claim none of its books would never go out of print. Under language commonly used in publishing contracts all rights revert to an author if the author’s book goes out of print, but most publishers don’t do much to clarify when a book will go out of print.

For those authors who wish to enter into publishing contracts with traditional publishers, PG suggests that out-of-print provisions be triggered at the author’s election whenever royalties paid to the author for a particular book drop below a specified dollar amount. For example, if the publisher fails to pay the author at least $1,000 in royalties for a book during any royalty reporting period, the author can cause rights to the book to be reverted because the book is selling so few copies, it is effectively out of print.

As far as the OP is concerned, it’s hard to believe that anyone with an internet connection will be interested in waiting two days to go to a bookstore to buy a hardcopy book instead of reviewing all the online information on the topic that would appear much sooner  (which online info could easily include excerpts from the book).

Much of the value of Lightning also assumes that the publisher doesn’t already have an ebook for sale on Amazon.

Imprint consolidation at big houses is a sign of changed times

26 October 2018

From veteran publishing consultant, Mike Shatzkin:

I had reason to learn recently that Ingram has 16 million individual titles loaded in their Lightning Source database ready to be delivered as a bound book to you within 24 hours, if not sooner. So every book coming into the world today is competing against 16 million other books that you might buy.

That number — the number of individual book titles available to any consumer, bookstore, or library — has exploded in my working lifetime. As recently as 25 years ago, the potential titles  available — in print and on a warehouse shelf ready to be ordered, or even to be backordered until a next printing — was numbered in the hundreds of thousands. So it has grown by 20 or 30 or 40 times. That’s between 2000 percent and 4000 percent in the last quarter century.

This has, like the Internet or CO2 in the atmosphere, changed everything. And it seems like the organizing structure of the major publishers is also changing in response.

On Monday morning, Simon & Schuster became the second major house in a week to announce that it was consolidating two imprints, effectively reducing by one the number of discrete publishing units within the conglomerate empowered to decide what to publish and how to promote it. They folded the Touchstone imprint into Atria and Gallery; last week Penguin Random House collapsed their Crown imprint into Random House (sometimes referred to as “Little Random”.)

The title explosion is part of a sea change in the world of book publishing that has taken place over the past quarter century. At the same time, sales have shifted in two dimensions: a big chunk of the books now bought and consumed are digital, not printed, and more than half the books consumers buy are not bought in brick-and-mortar stores. And the share for physical stores continues to shrink. Indeed, these trends are linked. The fact that books can now be delivered without inventory, without a sales force, and without a warehouse has made it possible for just about anybody to publish a book.

. . . .

Commercial publishers bring books to market to make money for themselves and their authors. But today, book publishing is a idea-dissemination or brand-extension tool for many originators, and making money on the publication is a secondary consideration.

That means that commercial viability is no longer an effective check on the number of titles. One wealthy and digitally-smart author we know is reluctant to engage with a publisher because he wants to be free to give away his content. And in another case we found and discussed in a recent post, because the originator was so enamored of the idea of giving it away through web streaming, they ignored the opportunities through commercial ebooks that would have required setting some price a bit higher than zero to work in that channel. Anybody doing this more than once will figure out ways to increase their distribution.

It wasn’t very long ago that nobody would think seriously about publishing a book unless they had the infrastructure — a sales force, a warehouse, a way to process shipments and returns — to put books on many bookstore shelves. Now those services are ubiquitously available for variable, not fixed, costs (you can reach the whole world through Ingram Spark or a big chunk of the world through Amazon Kindle and CreateSpace).

. . . .

In the new marketplace, where most of the sales don’t require the expensive-to-engage distributed bookstore infrastructure, established publishers no longer automatically dominate. So we’ve gone from a marketplace where only truly professional publishers could effectively get books to customers to one where their size, their lists, their sales forces, and their operational efficiencies give them much less competitive advantage. That new marketplace and the competitive set means that publishers can no longer count on a reasonably substantial minimum sale for every title they publish.

. . . .

For as long as I’ve been in the industry, I have heard publishers complain “there are too many titles” while the smartest ones also saw that their own profitability was improved by increasing their own company’s title output. But over the past two decades, the title glut has hit home and even the biggest and most powerful publishers need to exercise restraint about what they try to publish profitably. Because they really can lose money publishing a book, which two decades ago was actually a rare occurrence in a major house unless they had wildly overpaid for the rights.

Publishers have also found it sensible to redeploy resources from “sales” — working with intermediaries to reach a book’s customers — to “digital marketing”, which often leads to a direct sales appeal from the publisher to the consumer. (Although the sales themselves might be executed through Amazon or another retailer, the publisher’s effort is driving the specific sale to the specific customer.)

This has, inevitably, made publishers more “audience centric”. They build topic- or genre-specific websites, apps, and — critically — email lists. The email lists of book purchasers are of increasing value, if the publisher can continue to feed it choices from which it will find things to buy.

Link to the rest at The Shatzkin Files and thanks to Nate at The Digital Reader for the tip.

PG suggests that, not long ago, publishers would not have considered direct sales efforts to readers via mailing lists, etc., because bookstore owners would have objected. The OP suggests to PG that publishers have mentally written off Leonard Riggio/Barnes & Noble and no other bookstore chain is big enough to intimidate them.

At a time when real digital marketing talent is widely recognized as a valuable skill, PG also wonders what sorts of digital marketers are willing to go to work for a publisher instead of a tech startup or digital marketing agency with potential for some real upside.

For authors, signing a standard contract with a traditional publisher looks like something akin to an extraordinarily expensive exclusive contract with a digital marketing agency which you can’t fire for incompetence or failure to respond to your emails.

And where’s the nurturing in that sort of relationship?

Words-to-be-read are losing ground to words-to-be-heard, a new stage of digital content evolution

14 June 2018

From veteran publishing consultant Mike Shatzkin:

“Words-to-be-read” must now become a content category, along with still images, video, and audio. Audio includes “words-to-be-heard”. We are in what must be the early stages of a reordering of primacy among these varieties of “content for delivery and consumption”, which is distinguished from “content for interaction”, or the world of “gamified content” along with who-knows-what-else.

In a post three months ago, I observed that I had been fortunate enough to have been taught to type when I was a little kid, so producing written words was relatively fast and easy for me. That led to great “experience” with the practice of narrative word creation at a young age, a great competitive advantage in school and the workplace (quite aside from enabling the writing of several published books). That piece also made the point that words-to-be-read were, until some very recent moment, the cheapest and easiest form of content to deliver and distribute. Still pictures required film and processing. Audio and video required controlled (and often expensive) circumstances for recording and a variety of skills to deliver professional content. And beyond that, delivery by cassettes and CDs was expensive and also failed to reach large numbers of the potentially interested people.

. . . .

What really rang a large bell for me was the recent New York Times article about the rise of audio, which focused on big-earning writers whose fortunes and reputations had been earned through “words-to-be-read” (in what we can now see was really a different content era), but who were now switching to audio. One such author, John Scalzi, was moved to reconsider his publishing strategy when a recent book sold 22,500 hardcovers, 24,000 ebooks, and 41,000 audiobooks. Author Mel Robbins responded to her self-help book “The 5 Second Rule” selling four times as many audios as print by making her next creation an audio original.

. . . .

So while we have been recently living through an era where audio pioneers like Don Katz of Audible have had to make the case (and offer the tools) to enable creation of good audio content that was originally intended as “words-to-be-read”, that may be about to flip. More and more, we’re going to find that extra effort is required to make content accessible to the word-reading population, who otherwise will not be able to enjoy a variety of fiction and non-fiction content that will only be professionally rendered to be seen and heard.

Link to the rest at The Shatzkin Files

The dominance of Amazon needs to be addressed but it is far more attributable to natural circumstances than it is anybody’s fault

8 May 2018

From veteran publishing consultant Mike Shatzkin:

As things evolve in an era of rapid change, it is human nature to assign credit or blame for any drastic alterations in circumstances. And so we have the book business, with its last remaining chain store behemoth, Barnes & Noble, in a period of obvious decline and presenting the clear possibility that the book publishers’ single biggest brick-and-mortar account might suddenly disappear.

This is a very unpleasant notion to contemplate for all publishers and, perhaps surprisingly, to Barnes & Noble’s erstwhile competitors among independent bookstores. Today, the head of the trade association that represents bookstores (mostly independents), Oren Teicher of the American Booksellers Association, is quoted in The New York Times saying, “It’s in the interest of the book business for Barnes & Noble not just to survive but to thrive.”

The op-ed in which Teicher’s quote appears is a piece by columnist David Leonhardt basically blaming the US Department of Justice for Amazon’s growth and the consequent reduction of market share available to all other retailing competitors. There is a lot of history and context not discussed in this piece but I have a nominee for the single most glaring omission. At just about the turn of the century, Barnes & Noble made a deal to buy Ingram, the biggest book wholesaler and distributor in the world, which was shot down by an activist Department of Justice. This is not mentioned.

And, in 1998, when the purchase was announced and B&N specifically cited its need to strengthen its ability to sell online as part of the reason for the purchase, the American Booksellers Association was vigorously opposed!

. . . .

It has long appeared from here (here’s a piece from 2012) that the existential issue in the book business in the 21st century has been “when does Amazon’s share growth stop, and who will be left standing when it does?”

Although definitional and data ambiguities make this an imprecise statement, it is likely that we’ve reached a day when more than half of the printed books sold through retailers are sold online, not in stores. Ebooks added into the mix for the narrative reading portion of the published material constitute a further erosion of the brick-and-mortar store sales base.

The shift of habits from buying in stores to buying online is not restricted to books, of course. Because of Amazon, it largely started with books. But books also have other characteristics that make them better than most things for online purchase, from a consumer point of view.

. . . .

So buying a specific book that you know you want online just makes sense to most people. Of course, Barnes & Noble has had its own online bookstore operation since the 1990s. They have steadily lost online purchasing share to Amazon for decades.

It is true that Amazon cut prices below what many brick retailers charge. And I even think I identified the moment when that strategy kicked in. See the same piece linked above. If I’m right, then they did it specifically to discourage independent stores from using the same Ingram capabilities they used to launch an online sales effort. (In fact, discussing the “low price” challenge that exists for publishers in 2018 without mentioning the self-publishing world which is the primary price restraint mechanism in the market, assuming no disingenuousness, displays serious ignorance of the marketplace realities.)

But the way things looked in then 1990s, with online retail in its infancy, was that it didn’t constitute a threat to brick-and-mortar. Many physical retailers ignored the opportunities and threats of online competitors. Borders, at about the same time that the Department of Justice was killing the deal by which B&N bought Ingram, was partnering with Amazon to deliver its online offering!

With those realities, does it make sense to be blaming the DOJ for not seeing the threat?

Much is made of Amazon’s pricing practices and the possible fallacy inherent in looking at consumer prices as the be-all and end-all indicator of whether a marketplace is working right. But even that argument is just not so simple. More than a decade before Amazon was launched, the retailing chain Crown Books (not to be confused with the then-indie publisher now an imprint of PRH) was aggressively discounting bestsellers. They grew fast in the 1980s. Until the superstore era began in the late 1980s, and the massive selection in the big Borders and B&N stores became the “killer” consumer attraction, this variation of the Amazon strategy (using bestselling books as loss leaders to pull in customers, to whom Crown sold remainders and bargain books to generate the margin to operate) was upsetting the old order.

. . . .

It is not hard to support Leonhardt’s idea that Internet monopolies, even if they result at least partly from the natural power law forces of Internet economics, will have to be regulated, as I suggested in another forum recently. (I publish the stuff that is not mostly about books in other places.) Perhaps the first step with Amazon is to ban them from the publishing function. And because they are a vital path to the consumer for all publishers, it would be helpful for the government to be sure that their sales terms are fair among the publishers competing for their customers (a concept that wll get increasingly tricky as Amazon’s physical store footprint expands).

. . . .

So while it is absolutely true that Amazon is gaining a level of market share, and therefore a level of power and control, over the book business that is frightening for those of us in it and not a good thing for society, this does not make them evil or make everybody who failed to stop them stupid. Through a remarkable series of brilliant moves — the first ones putting books online with a huge master catalog and providing “promise dates” for each individual title so the customer knew when to expect delivery but then continuing onto Prime and Kindle and harnessing their own print-on-demand and, most of all, enabling self-publishing by individual authors that delivered meaningful revenue — they have achieved what sometimes looks like imminent hegemony.

Link to the rest at The Shatzkin Files

Large market share and dominance is something Amazon is developing in a variety of different fields besides books.

From MarketWatch:

Amazon.com Inc. may already be the largest apparel retailer and could still grow to sales between $45 billion and $85 billion by fiscal 2020, according to Instinet analysts.

Instinet analysts led by Simeon Siegel estimate overall apparel and accessories sales at above $1 trillion with “above average” online penetration and “leading gross margin” compared with other categories.

“We believe Amazon has the largest [total available market] TAM (ever), doesn’t carry socio-economic retailing stigmas, can stock a limitless number of goods on its virtual shelf and knows customers better than they do,” Instinet wrote. “Amazon’s path to book dominance provides a potential road map for apparel success, with its fiscal 2007 media progress sharing similarities to its fiscal 2017 apparel achievements,” the note said.

PG notes that the “socio-economic retailing stigmas” refer to Walmart, previously the largest apparel retailer and now generally regarded as #2.

PG includes the apparel dominance Amazon has built as evidence Amazon is very good at understanding what customers want and how to deliver it to them at a reasonable price.

Amazon didn’t start selling books online with the goal in mind of becoming a publisher. However, in the face of illegal price-fixing by major publishers and other anti-Amazon activities calculated to bolster an outmoded, inefficient and expensive (for consumers and authors) publishing industry, Amazon innovated.

Prior to KDP, the self-publishing business was dominated by shady operators like Author Solutions and its companions whose business model focused on exploiting would-be authors. Instead of exploiting authors, KDP offered them much higher royalties they could earn in the traditional publishing business – 70% of the amount received by Amazon for KDP ebooks is a prime example.

Unlike traditional publishers that use a long and opaque supply chain which substantially reduces the amounts received by the publisher and thus the amounts received by authors, Amazon sold directly to consumers. Author royalties were quite close to 70% of the amount readers paid for author ebooks. (PG notes that some traditional publishing contracts {although fewer than in former days} calculate author royalties based upon the suggested retail price of the author’s printed book. Ebooks, books sold at a discount to discount retailers like Costco, Sam’s Club, etc.,  and some or all types of paperback sales are typically calculated based on the amount received by the publisher. Royalties calculated on the amounts received by publishers are virtually always much lower than royalties calculated based upon the suggested retail price of a book.)

For readers who really want to support authors they like, buying ebooks or CreateSpace books through Amazon is a much more effective means of doing so than buying books from a bookstore that takes its cut and acquires books from a wholesaler who takes its cut who acquires books from a publisher who takes its cut and passes a relatively small amount of the retail price of a book to the author.

Indeed, if we consider the annual incomes of all the people involved in the traditional publishing supply chain, it is quite likely that the author is the lowest-paid individual working in that business, even including clerks at Barnes & Noble.

PG suspects the traditional publishing practice of paying royalties to authors every six months may subtly influence authors to feel they’re earning more from their writing than they really are. Receiving a $6,000 royalty check in the mail feels psychologically like a larger amount than a $500 salary check every two weeks, particularly after taxes, social security and other deductions.

PG just did some quick calculations and discovered that a worker earning the US minimum wage of $7.25 per hour working 40 hours per week is earning more money than an author who receives a royalty check of $6,000 twice per year. If the author isn’t receiving a royalty check of over $7,500 every six months, the author would be financially better off working in a convenience store.

PG is not going to perform the calculations, but will note that the minimum-wage convenience store employee only pays 6.2% of wages for Social Security and 1.45% for Medicare (with the employer paying the same amount) while a self-employed author pays twice as much because she’s obligated for both the employee’s and the employer’s portions of those taxes.

Quick internet research didn’t disclose the average income of an author in the US, but in 2015, The Guardian calculated that the median earnings of professional authors in the UK fall below the minimum wage.

Do the median earnings of publishing executives fall below the minimum wage? Other employees working for publishers? How about median earnings of employees of book wholesalers? Delivery drivers that bring books to bookstores? Bookstore clerks?

So exactly why should the federal government take action to protect the traditional book publishing and selling industry at the expense of Amazon if that industry consistently fails to pay authors a living wage? Why penalize Amazon when it consistently pays authors more than traditional book publishing does?

The written word is losing its power and will continue to

22 February 2018

From veteran publishing consultant Mike Shatzkin:

If there were a futures market in literacy, it would be dropping. It is a sad fact that the value of written words, in relation to spoken words and still and moving pictures, is sinking like a stone. Changes like this happen for structural reasons.

Since the invention of moveable type and the printing press, printed words have been advantaged for creation and mass distribution. Printing pictures first required “engraving” and then shooting half-tones (showing the picture as smaller and larger black dots to add “shades of gray” to black and white) while type just got set, locked up, and printed.

And the primacy of words continued into the early years of digital information as well. Keystrokes choosing from among letters and punctuation marks instructed computers. Rendering words was easy for them.

Between the era of ubiquitous personal computers (starting in the mid-1980s), through the era that brought us ubiquitous laptops (from the 1990s forward), words could be delivered on smaller and ever-more-widely-distributed devices: personal digital assistants like Palm Pilots and cell phones. Still images didn’t really render well on either of them and moving images were a non-starter.

But all of that has changed in the past ten years. Most people now have smart phones and tablets that show images beautifully through broadband connections. On top of that, the same devices will record the images or videos, so everybody has “creation” capability in their hands as well. And the process 20 years ago had to begin on film and then somehow or other get to a digital form. Now all the images are born digital, cutting out a whole lot of complication and cost. And nobody has to learn a keyboard — or how to spell — to use the capability effectively.

. . . .

Being able to craft good prose quickly has been my personal competitive advantage for my whole life. Meanwhile, I’m not so facile with images. Writing a better sentence is something I’ve been practicing for more than 60 years. Framing a better image is something most people can do much better than I can.

Link to the rest at The Shatzkin Files

 

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