Monday, June 22, 2009

Evolving from the 20th Century Book Publishing Ecosystem, part 1

Evolving from the 20th Century Book Publishing Ecosystem, Part 1 Booksellers
I’d like to add to the growing body of commentary about the way publishing may adapt to the challenges it faces as it evolves from a 20th century ecosystem into the 21st century. First of all, I find that 20th century publishing had 6 major roles that impacted the lion’s share of the business as listed in the table below.
20th Century Book Publishing Ecosystem Roles
Author Write books, promote as needed Success = large royalty advance
Agent Select book/author, sell rights Success= negotiating large advance
Publisher (Trade) Acquire book/author, publish Growth and profit is key
Wholesaler 1 stop shop for retail, selection Same day shipping, high fill rates
Booksellers Merchandise to consumers stocking, word of mouth, hand sell
Consumers Buy from booksellers, read Media influenced (Oprah), wom

As we move deeper into the 21st century, almost every role is in flux, threatened by current developments or undergoing major change due to technology, culture, overall business trends, etc. But the first role I’ll explore in more depth is that of the bookseller.
As the 20th century retail evolved in the 1980’s and 1990’s, so did bookselling. What had been a diverse assortment of independently owned and operated bookstores across the country became a big box chain category. The growth of Barnes and Noble through merger and acquisition, as well as the parallel growth of Borders changed the face of bookselling. The superstore became the ultimate bookselling tool, a vast expanse of tables and shelves for almost all current frontlist and backlist titles from every publisher, and the rapid expansion of the number of superstores across the country fueled demand for category backlist titles to fill those shelves. Publishers and wholesaler benefited enormously from these opening orders, and developed more efficient ways to inventory the necessary titles and handle the order fulfillment challenges.
By the mid 1990’s, during the height of the superstore boom, emerged and created the etail category. In 10 years, has grown to become perhaps the most influential bookseller in the US, with the volume and buyer power that comes with the territory. At the same time, the independent booksellers that dominated the business until the 1980’s declined rapidly. Both the superstores and etail devastated the independents. While some of the best still survive today (Tattered Cover in Denver), their overall number and sales volume has diminished to a rounding error.
One of the consequences is that the role of the “professional” bookseller, a human paid for their knowledge of books and their ability to match books to readers, has been disintermediated. While the chains may claim that they employ many booksellers, staffing cuts have reduced most superstore staffing to levels that provide only the most basic services. And the chains do not typically pay a living wage to their “bookseller” store employees.
But perhaps even more significant in the virtual extinction of the professional bookseller is the emergence of web 2.0 technologies. Look at Amazon as the supreme example. The function of the bookseller has been replaced by a combination of several factors. First, the ability for consumers to rate the items that they’ve bought (books they’ve read) and then store that information in a database. Second, the ability of Amazon to utilize that information, as well as their record of your purchases and browsing path, to provide recommendations to you replaced the most obvious role of the bookselling professional. And third, the enthusiasm of other customers in providing “user generated content”, their ratings and reviews of books, gives the Amazon consumer an amazing amount of supplemental content to validate their choices. Together, these factors provide a consistent customer experience no matter where that consumer is located.
The best 1970’s bookseller understood the tastes of their customers, what they had already read, and which other books might appeal. Their brains were the recommendation engine of the time. Yet that skill was hard to teach and required much time and dedication to acquire. In the virtual world of Amazon, the software that provides the recommendation learns to improve results by closely tracking how the consumer responds. It is a self-improving loop that will continue to evolve as more information is provided to fuel it. And it has rendered the professional bookseller almost extinct.
Next, part 2.

Tuesday, June 9, 2009

Today's publishers should look at 1950's publishing thought leaders

Reading Mike Shatzkin's blog ( about his father(Leonard Shatzkin)'s innovations in 1950's book publishing at Doubleday motivated me to write today's posting. I vividly remember reading "In Cold Type" by Leonard Shatzkin ( ) in the mid-nineties while I was Director of Inventory and Reprints for Harcourt Trade. Shatzkin's descriptions of both the way print quantity decisions were made, and how statistical techniques like regression analysis could be applied to fill in missing information and improve the results of the decisions presented a promising alternative to the smart but underinformed, visceral, and emotional approaches that I saw daily. As we progressed on the path to being a profitable business at Harcourt Trade, I was able to apply the spirit of Shatzkin's experiences to help inspire analytical, decision-making, process, and strategy reforms that led to reducing our inventories by over 50%, while sales grew 100%, and fillrates increased to exceed the goals we set.
It is true that quantitative analysis by itself has limited utility, but coupled with an improved decision architecture so that the insights and/or predictive information culled from the analysis can be best incorporated into the final decision-making, it is part of a potentially impactful improvement engine. This requires that the organization be willing to tackle the people/structural issues that impact the problem at hand, from who sits at the decision-making table and what roles they play when, to who implements and communicates the decision, to how results are tracked and communicated to those who need to know.
As book publishing struggles in the early 21st century, while new digital platforms dominate a lot of the industry's thought leadership, I'd make the case that publishers can more directly impact their current cost structures and balance sheets by looking back at the 1950's and Leonard Shatzkin's example of thought leadership at Doubleday.

Monday, June 1, 2009

Essence of Wholesale is lost in the current ebook marketplace

Last week's news of reorg at Ingram and new partnerships for B&T triggered me to try and crystallize some unstructured thoughts I've had floating around. In the physical book world, wholesalers and distributors had distinct, well-understood roles, and success in one business didn't guarantee success in the other.

Wholesalers dealt with a variety of publishers, non-exclusively, as many as they could reasonably do sensible business with. That gave wholesalers the ability to compete on their title selection and availability, and fill a vital role in the 20th century book supply chain. They still do function in this way, but the vitality of their role continues to shrink as the bookseller base shrinks.

On the other hand, Distributors worked with a fixed list of publishers and essentially replaced the warehousing and order fullfillment function (along with sales for most) of those publishers. Distributors occupied a place one notch higher than wholesalers in the supply chain in that they would ship to wholesalers as well as booksellers.

In the ebook world, the plethora of delivery systems and formats have, so far, eliminated the wholesale function. The vertical plays of both Amazon and Sony mean that they occupy the functions of distributor (for format/device), wholesaler and bookseller, going directly from publisher to consumer. The relatively new iPhone distribution channel may be the only place where ebooks can be content-centric rather than device or format-centric. As such, we've seen Amazon now occupying a new role, straddling bookseller (Kindle) with distributor (Kindle titles to iPhones).

Where is the role for Ingram or B&T in this world? So far, despite the attention they've gained and the resources invested, they do not have a vital place in the supply chain comparable to their role in the physical world.