The Crystal Ball

When anybody talks about the future of publishing, the impact of the digital world is always front and center. There’s nothing wrong with that, of course. It is having and will have a massive impact. Tom Woll acknowledges as much in the conclusion to his book Publishing for Profit, as well. But what is really interesting, I think, are his predictions for brick and mortar stores, which many prognosticators ignore.

Eventually, he says, superstores will find that stocking a wide array of inventory that doesn’t sell won’t make economic sense–and therefore having 50,000-square-foot stores won’t make sense either. In a few years’ time the superstore strategy will revert to the mall chain strategy.

When that happens, surprise! The independents will return to the scene. Those, he believes, will tend to be more focused on certain genres like history or mystery or travel.

Is his crystal ball clear or cloudy? I’d be interested in what you think.

Small Returns Are Beautiful

Publishers like to complain about returns, but few seem to do anything about them. How do I know? Return rates keep climbing, costing the publishing industry over $7 billion a year.

Why do books come back to publishers from stores, distributors and wholesalers? The reasons are many. Tom Woll offers a dozen in Publishing for Profit. What I find fascinating, however, is that he lays responsibility for ten of the twelve reasons right at the feet of publishers. Only two of Woll’s reasons have anything to do with those who return the books–and even with those two, publishers bear some responsibility.

Most publishers, I would guess, would assign responsibility for returns primarily to others, not to themselves. So where does Woll see publishers creating the returns problem? Among other things,

* Large advances–if they are excessive and therefore require larger sales (and therefore larger print runs) to make the project work financially, books come back.

* Overpricing–this tends to be more true of publishers tied to conglomerates that are margin driven.

* Lack of promotional and marketing support–often only the highest-profile books get backing. Many others are expected to sell on their own. Often they don’t.

* Reprinting too soon and too many–a book that is selling well can generate automatic reorders that may not be justified.

Don’t accounts bear some responsibility? Yes, if they succumb to excessive publisher enthusiasm and overbuy. Yes, if they pay for new books with returns of old ones instead of money. But you can see that publishers bear some responsibility even in these dynamics as well.

Is there a silver bullet for the returns problem? No. It takes discipline and hard work to solve. But the returns on that investment are well worth it.

What Does That Amazon Sales Rank Mean, Anyway?

One of the most convenient “real time” views of how a book is doing is to check out Amazon’s sales rank. It’s simple (the lower the number, the better the sales), it’s convenient (just a click away), and it’s empirical (gotta love those numbers). Alas, as Aaron Hierholzer says, “the Amazon sales rank is a fickle mistress.”
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Observe, Don’t Explain

“Show, don’t tell.” That advice has been given to writers as often as laptops have been turned on. Robert McKee repeats the advice in Story, his classic text on writing screenplays. Following Aristotle’s advice in Poetics, he says, “Why a man does a thing is of little interest once we see the thing he does. . . . Once the deed is done his reasons why begin to dissolve into irrelevancy” (pp. 376-77).
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Electronic Reality Check

Every couple of months our neighborhood book club gets together. This last week we discussed Devil in the White City. We were interested in the book because of its Chicago connection.

Electronic books came up in the course of the discussion and I mentioned the Kindle. I was met with a roomful of blank stares.

Now, these folks do not have their heads in paper bags. They are informed. They listen to NPR. Some are educators. Heck, they are in a book club, for goodness’ sake. But something that is all the buzz in the publishing industry was something they had never heard of.

It reminded me that I live in a big country and a small industry. Even when a book sells millions of copies, most people have probably never even heard of it. So if Amazon has sold one- or two-hundred thousand Kindles, it’s really small potatoes.

Certainly for those of us in publishing it is our job to stay on top of trends and new developments, and plan effectively for the future. But a dose of perspective can help us do that too.

“Scram, Kid. I’m Reading a Book.”

I have always been a slow reader. I’ve written here before about the anguish of trying to read a book in elementary school for a book report. Winnie-the-Pooh was simply beyond my capability. I tried to fake a report based on having read only one chapter. But I turned into an avid reader. Why?
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Culture Shift

A friend was asking about our office culture. Corporate? Family? Other?

While we’ve never been a family-owned business, we’ve always had a family feel. Probably that’s because we started small and have grown slowly and steadily over the years. So changes in corporate culture did not come in wrenching jerks and jolts that can occur with fast growth or sudden downsizing. But as my friend and I talked, one change came into focus.
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The Outsource Question

Celebrate logistics, as I’ve said before, because logistics make the romance of publishing possible. A publisher can also outsource its logistics so it can focus on the sides of publishing it loves best and does best—probably editorial, sales and marketing. But just because you outsource doesn’t mean you can forget about operations, fulfillment and accounting. You just need to be involved in a different way at a different level.

Tom Woll has a number of suggestions for taking some (but not all) of the pain out of these functions.

* Outsourcing Accounts Receivable.
The pain of accounts receivable (AR) is that trade and other large accounts don’t pay in 30 days. “The average collection period in the book industry is between 90 and 120 days from the time of invoice. . . . The difficulty of collecting accounts receivable is, indeed, one of the primary reasons publishers use distributors . . . to cope with this job of collection.” (pp. 276-77) But you still have to monitor closely what the distributor owes you. And if the distributor goes bankrupt, you’ll likely see little if any of your money.

* Doing AR Yourself.
If you handle your own collections, it is vital to “monitor your accounts receivable every day” (p. 277), focusing on accounts that are more than 90 days overdue. As I’ve said before, it’s all about cash flow, baby.

* Outsourcing Warehousing and Fulfillment.
Customer expectations these days are that an item ordered will be shipped within twenty-four hours. Again, this is not an easy task, and many choose to outsource warehousing and shipping. But be careful.
    1. Don’t put your entire stock with one distributor. Again, if the distributor goes bankrupt, “your entire stock of books will be frozen (locked up) by the bankruptcy court and unavailable to you for some length of time” (p. 278). So you may want to handle some yourself or hire a second service to handle, for example, book clubs, premium sales and review copies.
    2. In any case, make sure the fulfillment service you use understands the fragility of books. A torn cover can make a book unsaleable.

Outsourcing was all the rage several years ago. And it can be very helpful for small or large publishers. But there are always drawbacks with every choice, and the industry is full of horror stories about outsourcing gone very wrong. Publishers should consider the pluses and minuses carefully when deciding how to handle logistics.

Go Directly to Direct

Maybe you thought this was old news, but Brandweek reports on a survey by Direct Partners that found “e-mail is now the most popular form of direct response marketing. . . . E-mail is used primarily by 35% of companies compared to 25% which use traditional direct mail and 21% who use package, statement stuffers or free standing inserts.” We’re not talking spammers here. This was a survey of large U.S. corporations.

Other findings:
– 68% market to their prospect database
– 82% market to their customer database
– 57% said their direct response budget will remain the same this year compared to last, while 23% reported their budget would increase by 10% or higher
– 47% said that less than 10% of their marketing budget went to direct response media

With rocky times for retail, many book publishers are looking more closely at direct response. Tom Woll devotes a chapter to direct response marketing as well in Publishing for Profit, which I’ve been reviewing here chapter by chapter. His word to the wise comes in two basic points:

* Results must always be quantifiable.
* Results must be constantly tested and refined against a control.

Woll offers fairly detailed help in how to plan and analyze direct response (which can include e-mail, mail, telephone or other programs). He even thinks that

once you start tracking your sales and promotional efforts, you’ll become addicted to the numbers. Just because this method of marketing is so calculable and analytical it is a refreshing change from the vagaries and sometimes whimsical nature of trade sales. (p. 272)

Every publisher needs to find its own mix of trade, direct and special market sales that makes sense for its editorial program and its readership. For some, that might mean going directly to direct.