“Enterprise self-publishing” is coming

From Mike Shatzkin at The Idea Logical Company:

The book business is in the early stages of its third great disruption in the past quarter century. The first two both changed the shape of the industry and created winners and losers across the entire value chain: touching every step from how authors got money to how readers got books. Significant institutional players were lost in both prior disruptions, and all the ones who remained had to change their models and practices significantly.

The cause of the disruption on both prior occasions and now was the introduction of asymmetric competition. Before 1995, publishing and retailing were the province of entities that did it in a businesslike way, usually for profit but always within an organizational structure dedicated to their publishing or retailing activity.

Amazon changed that in the 1990s when they were able to sustain virtually profit-free retailing, employing two points of leverage which they uniquely discovered. One is that they used book retailing as a customer acquisition tool: they always had the intention to make profits in other ways on the customers they sold books to. The other is that they persuaded Wall Street that their profit-less growth was valuable and that it was worth increasing their share price based on sales growth that didn’t (yet) produce profits. (Wall Street might also have been seduced by another unique feature of their model: positive cash flow on sales. Amazon would sell you a book today and take your money and they didn’t have to pay Ingram for the book they’d get and ship you tomorrow or the next day for another month or more!)

The second great disruption was spawned by Amazon’s Kindle, which was the big driver needed to galvanize what is a robust capability for authors to publish themselves. In this case, the asymmetry didn’t come from Amazon, but from the massive horde of independent self-publishing authors they have spawned. They have collectively crowd-sourced millions of titles into a market which was previously supplied pretty much exclusively by publishers. And authors often, if not usually, deliver their competitive titles with pricing strategies that a publisher paying royalties and rents and salaries couldn’t begin to match.

And now we are at the dawn of a third reordering of publishing’s structural and commercial landscape. The infrastructure capabilities spawned by the past dozen years of author self-publishing are now industrial strength. Ingram is the heart of this. It is literally the case today that all you need to be a publisher is a manuscript and a checkbook to pay freelancers; all you need to be a book retailer (print and digital) is customers. Ingram can provide all the rest, mostly with transaction-based pricing, so there are no large up-front investments required. Service organizations that handle details from copy-editing to cover design to press release copy for books, one of which I am helping to build now, are ubiquitous.

What I believe we are on the verge of seeing is that waves of entities will discover that they can clearly benefit from publishing books. Think of this as enterprise self-publishing. Every law firm, accounting firm, consulting firm, retailer, political campaign, cause organization, charity, and church, synagogue, or mosque is only a bit of imagination and effort away from books that can promote any variety of missions. These will be books delivered by a vast unaffiliated network of entities doing publishing as a “function”, not publishing as a “business”.

Across what will be many times the number of titles as are now being published, making money will sometimes happen. But in most cases the payoff from the publishing “investment” will be expected to be realized in other ways. The new players who are doing “publishing as a function” will also band together in countless opportunistic ways. But, once again, that asymmetry of economic purpose will be poison to people trying to publish books as a rational, stand-alone economic enterprise.

. . . .

The first big disruption — Amazon as a retailer — completely remade the retail network in less than two decades. The second — easily-enabled self-publishing — unleashed a tsunami of titles in competition with the ones delivered by the commercially-minded players. The combination has spawned two trends, neither of which has any end in sight.

The first trend is that the sale of books is increasingly online. If you add ebooks and books sold via customer-generated web ordering of print, it is well over half the business. Bookstores are less and less important to the overall sales profile, only three decades after they were the only player in many sales profiles. Mass merchants are paying somewhat more attention to books, but the biggest remaining chain dedicated to selling books, Barnes & Noble, is still shrinking.

The second trend is that the share of all book sales that is delivered by “real” publishers is also shrinking. That has been true for the many years since authors were empowered by Amazon, and then by IngramSpark, to put their books into the marketplace effectively without working through a publisher. But if I’m right that every business with a marketing or business development or client relations budget will explore how books can help their business, what the authors have spawned will be dwarfed by what enterprise self-publishing will do in the coming decade.

Link to the rest at The Idea Logical Company

Ingram: the global infrastructure for the book industry

From veteran publishing consultant Mike Shatzkin:

The global infrastructure for the book business that is not Amazon is owned and operated by the Ingram Content Group. In fact, a lot of the global infrastructure of the book business that is identified as Amazon is actually Ingram. And on top of that, there would probably have been no Amazon, certainly not the one we have, if Ingram hadn’t been innovating for more than two decades before Jeff Bezos left Wall Street to became an entrepreneur.

Ingram has been rewiring and repaving the book business since it was expanded beyond its roots in the 1960s as the Tennessee School Book Depository by its new owner, Bronson Ingram, who made his fortune in the oil business in the decades after World War II. His investment in the book business, which would reconfigure and redefine the industry in many different ways, began as a pure act of kindness. As it turns out, that was a very suitable and appropriate genesis.

As a leading businessman in Nashville, Ingram was involved with Vanderbilt University’s business school. So when Jack Stambaugh retired from a career at Vanderbilt, he accepted Bronson’s offer of an office at Ingram to be a base for his post-University endeavors. A few months later, Ingram observed that Stambaugh did little except read the Wall Street Journal each day and offered to put up the money to buy a business for Stambaugh to run.

And that’s how Ingram bought the Tennessee Book Company. The School Book Depository it operated was a low-risk, stable but no- or low-growth business that enabled local school districts in Tennessee to get textbooks in quantities smaller than publishers wanted to deal with. So the sales were pretty assured — new textbooks in some subjects were acquired every year by some school districts — and the customer base of schools were reliable payers.

Thus begins the story told in “The Family Business”, a history of Ingram by Nashville journalist Keel Hunt, a great storyteller who has known the Ingram family for almost all of its just over five decades of operation. “The Family Business” is being published tomorrow, April 20, by West Margin Press in Berkeley, CA.

Having a part in creating this project has been among the most enjoyable experiences of my career. Working with Hunt, publishing veteran Bruce Harris, and editor Karl Weber has been a voyage of rediscovery of my own time in the business. 

. . . .

The Ingram of today reaches every corner of the global book business. It is more accuracy than hyperbole to say that every publisher, every bookseller, and every library in the world does business with Ingram. As a wholesaler, they carry the books of all publishers and are the primary distributor (the originating source) for those published by hundreds of them. Their CoreSource digital asset repository, which dispatches the digital files for books to deliver ebooks or print books all over the globe, is the single biggest. Their “third party distribution” capability delivers books to more American homes than anybody else, in boxes identifying the customer of Ingram’s — which could be any bookstore including Amazon — that transacted the sale as the source for the book’s purchaser.

. . . .

I have met dozens of people from Ingram. I have consulted with them for years as well and introduced them to projects they have taken on board. I have never met a single person from Ingram who wasn’t smart. I have never met one who was in any way difficult to work with. And what was always most impressive throughout all these decades, they conducted their business without a hint of the bullying (even gentle, polite, subtle bullying) that is endemic in all businesses when large accounts deal with small suppliers.

They are relentlessly efficient and they value operational excellence. They are also very civil and they also value just being nice.

Ingram’s growth was accelerating when I met them. The company did about $1 million in business in 1970 and over $100 million in 1979. (Hitting $100 million is another great story well told in the book.) This growth was fueled by the expansion of retailers enabled by the vastly streamlined supply chain that for the first time allowed booksellers to know, through the microfiche, that they were ordering books they’d reliably have in a few days. That level of certainty in the supply chain had never existed before and it suddenly made bookselling a much better business to be in than it ever was previously.

. . . .

At almost the precise moment that Ingram’s operational efficiency was enabling the invention of the phenomenon of Amazon (clearly detailed in “The Family Business”), the torch was being passed to the next generation of the Ingram family. Bronson’s premature death led to his son, John Ingram, coming back from building Ingram Micro in Europe to take over the family enterprise in 1995.

The late 90s were a prelude to the new digital realities that mark the book business today, and Ingram’s hallmarks — operational excellence, focus on delivering value for their trading partners, and the patient money that only a very private business can invest — both shaped the change and assured the central place Ingram has in the global world of books today.

It was in that period, while Amazon was building their own behemoth, brilliantly leveraging the capabilities that Ingram gave them, that John Ingram launched two initiatives that are still central to the company’s success.

One was Lightning Print, the capability to print a single copy of a book at a commercially acceptable price on short notice. The other was the previously-mentioned “third party distribution”: the capability to ship to the end consumer with the book appearing to come from the Ingram customer using the service. The latter capability enabled any bookstore or web site to sell any book Ingram had as though they were sending it themselves. The former extended that capability beyond the hundreds of thousands of titles Ingram actually stocked to the many millions (now approaching 20 million) in the Lightning database.

In 2021, all you need to be a bookseller is customers and a relationship with Ingram. And all you need to be a publisher is a manuscript, a checkbook to hire some freelancers, and a relationship with Ingram.

Link to the rest at Mike Shatzkin

Both the supply chain and book marketing are forever changed by Coronavirus

From veteran publishing consultant, Mike Shatzkin:

Just before the world changed, about five months ago on February 18th, we wrote in this space about two initiatives that made sense for all publishers to employ to raise revenues and profits.

One was Ingram’s Guaranteed Availability Program (GAP), which connects their Lightning print-on-demand capability to their ability to ship within 24 hours, delivering just about any quantity of books to justabout any account in the world. With just about any return address you want on the package. By mid-April, it was clear that the supply chain was already adjusting.

The other was Open Road’s “Ignition” marketing program, a highly automated way to sharply improve the performance of ebook titles. The tactics employed include metadata improvements, pricing adjustments, search-optimized discovery that brings in tens of thousands of new readers every day, 8 unique newsletters touching millions of consumers (about whom more and more is known every day), and an array of genre-specific websites that funnel readers to books they love. Building this capability involved many thousands of ebooks tracked across millions of consumers for more than five years.

Both of these capabilities required tens of thousands of titles, millions of dollars of focused investment, and laboriously constructed system support to build. Ignition required a commitment to build an automated marketing effort that works across many thousands of titles. This is not a good fit with a publishing business model that has always focused on a few new titles, not the thousands on the backlist, with dedicated efforts that are largely driven by hands-on human marketers.

It is not likely that any publisher, even the very biggest ones, could build what Ingram and Open Road have created. But beyond whether they could, it is even less likely that they would.  It took Ingram seven years to make Lightning Print efficient and tie it to “third party distribution”, the ability to ship the book “as” coming from somebody else. And Open Road, by dedicating massive marketing resources to build an automated capability that hardly connects at all to the marketing that publishers have always done, built something that it is almost impossible to imagine any of the biggest publishers shifting their focus to attempt.

The timing of the February 18 piece was accidentally prophetic. The world of publishing pretty much shut down less than a month after it was written. It is evident to many publishers that Ingram’s GAP capability has been a lifesaver. In a recent week, five of the top ten New York Times paperback bestsellers were being printed by Lightning. Those publishers know that they wouldn’t have been able to grab those sales with the normal book supply chain.

. . . .

Indeed, sales at Ignition are up 75% in the four months since we published that first piece. Forced lockdowns are good for online sales, and especially good for ebook sales.

. . . .

Publishers market manually. They use humans to examine their metadata and change it. They assign titles to marketers, who are charged with making them more visible to buyers and today that means online visibility for online buyers. They are experts at “publicity”, which means getting their titles featured to other people’s audiences. They have, to varying degrees, built lists of book consumers they can address directly with newsletters and emails. Some have “vertical” websites that give them billboards to feature their books.

But all of those devices are applied book-by-book by human marketers who are directed, intentional, intelligent, and extremely limited in how many moves they can make and how many titles they can touch. And, therefore, very expensive.

This is a very poor match even for a publisher with 5,000 or 10,000 titles on their backlist. The publishers’ standard approach is not at all useful for lists of 20,000, 30,000 or 50,000 titles. And that’s why what Open Road has created, the only truly automated book marketing program in the industry, is of such extraordinary value. And unless two or three very big publishers get together to build something that will require millions of dollars and years of work as a joint effort, that will not change.

. . . .

For a variety of reasons, the biggest publishers have been the slowest to join the party. For one thing, Ignition is designed for large and difficult-to-manage backlists. Even though it works for new titles as well, it performs a function — marketing backlist — that publishers with enormous lists built over decades always got along without. The reflex reaction of a publisher seeing the virtue in marketing backlist (and, in the online sales era, everybody does) is to do it the time-honored way: allocating scarce (for backlist) marketing resources where they would seem to provide the most benefit.

Link to the rest at The Idea Logical Company blog

PG will lay out the problem with big publishers.

They don’t really want to change.

And, if a Big Publishing CEO takes a wiggle toward change that costs any significant amount of money, the large international conglomerates that own four out of the five largest US publishers (ViacomCBS, which is all about TV and video, owns the fifth), will shut down that foolishness in a New York Minute or a Gütersloh Minute (Bertelsmann), Paris Minute (Lagardère), Stuttgart Minute (Holtzbrinck) or a New York Minute with an Australian accent (News Corp).

In these conglomerates, publishers play the strategic role of cash cows (not terribly fat cash cows, but, still cash cows). If conglomerate management wants to take a flyer on risky booming growth and capital appreciation, it will invest in something in Silicon Valley through its separate venture capital investment arm. No book persons will be involved.

Furthermore, to the best of PG’s knowledge, none of the five conglomerates which own the Big Five US publishers have made even baby waves in the tech world. The founders of next Google or next Amazon are not looking for money in Stuttgart. Palo Alto, Menlo Park and San Jose are just a few freeway exits away and everybody there is already fluent in geekspeak and moving very fast is how those investors thrive and survive.

PG hadn’t heard about Open Road’s “Ignition” marketing program as mentioned in the OP.

However a quick look gave him the impression that the organization is primarily a collection of book-oriented e-newsletters – see Our Portfolio.

The company touts:

Ebook Promotions

Feature your books in a newsletter that reaches over 1 million book lovers looking for their next favorite read.

Content Marketing

Showcase your brand, product or creator on one of our targeted digital properties. Smart, search-first, audience-focused opportunities.

Maybe there’s some magic juice happening behind the scenes, but Early Bird Books, the company’s largest email newsletter with a claimed circulation of 2.6 million doesn’t seem too special:

Early Bird Books provides a great service to ebook aficionados looking for free and discounted ebooks written by authors they love—and by others that they’re willing to try at a special price.

The Early Bird Books web and social channels provide fun articles, book lists, product recommendations, and other highly relevant content to keep consumers engaged on all of their devices.

Email newsletters, social media marketing and search-engine optimization are standard vanilla services, provided by any number of internet marketing agencies. Analyzing the results of such activities typically comes with the package as well.

But this may be news for New York publishers.