Chip MacGregor

April 8, 2008

As the Page Turns


Lots going on in publishing these days…

First, Borders may or may not be in trouble. It would seem incredible that the nation’s second largest bookseller, in the midst of a growth phase with smaller "boutique" bookstores going up in malls, would suddenly be facing a financial crisis. But they say it’s caused by the tightening credit rules, debt, and the cost of money. They had to refinance a huge debt load at a very high rate — never a good sign for a business. And rumor has it Barnes & Noble is sniffing around, hoping to try and snap them up on the cheap. Nobody in publishing wants that to happen. Competition is always good for business, and B&N would have very little competition in the brick-and-mortar book business if they were to purchase Borders.

Actually, I’m not sure the government would allow it. Borders and B&N combined account for 55% of all retail book sales in this country, and surely the government would see that consumer prices would be bound to rise if the two companies merged. However, if you take into account Amazon and other online booksellers, B&N could claim the two chains only amount to about a third of all book sales…so perhaps a permissive federal regulator would allow it to happen. But I hope not. Having two companies creates competition, which is always a good thing.

Second, HarperCollins made big news with the announcement they were creating a new imprint that would rely on very different business practices than most publishers. Robert Miller, the longtime boss at Hyperion, has moved to HC to head up the new venture. The imprint will offer lower-priced books (word is they’re trying to keep hardcovers at $20), won’t pay advances to authors (instead relying on a profit-sharing plan), won’t buy display space in stores (instead relying on their online marketing efforts), and will sell books outright to retailers (rather than allowing unsold books to be returned by stores for a credit). It’s ambitious. And it’s a risk. Publishers tried the "no return" policy in the 80’s and had to abandon it largely because bookstores refused to stock their titles. But publishers feel a need to try something different — they’re being squeezed by the increasing demands of authors for advances that equal a living wage, the overall flat sales of books, the lower margins offered by big-box retailers like Wal-Mart, and the increasing cost of paper and printing. The internet has brought about significant changes in the distribution of books — now the publishers are trying to determine how that will play out in terms of the production and sale of their titles. This is a fascinating effort on the part of HarperCollins.

Third, people in the industry are seeing new publishing companies get started… making a lot of folks wonder what the trouble is with the established houses. The thinking goes like this: "If people are starting new publishing businesses, they must see the potential to make money with books… so why would the established book publishers and book sellers not be making money?" It’s an excellent question, and the answer probably lies in the transition from a brick-based economy to an ether-based economy. The new startup companies are planning to build their organizations largely through internet sales and marketing, they’re using profit-sharing plans with authors, and they’re trying to get ahead of the curve with things like distribution and niche-marketing. Summerside Press, a new company formed by some former employees at Barbour, is creating a line of romance novels based on American cities with interesting names. They offer a fair contract for their market, are establishing a marketing and sales channel, and have a plan that is based on an economy in the new millennium. Similarly, I’m told former CBA editor Jeff Gerke is setting up a line of speculative novels based on a profit-sharing plan. We’re going to see more publishing companies like this get started in the near future — and history tells us that some of them are going to break out and establish themselves in the market. That’s good news for authors.

Fourth, it was revealed that several of the New York houses have distributed Sony Readers (the digital book created by Sony) to their editors. Upon hearing it, I knew it made perfect sense — instead of lugging home a bag of books, they’ll just have to carry one book-sized Reader. Of course, nobody could have been more dismayed at the news than Jeff Bezos, the head man at Amazon. His Kindle e-book reader is a better product, but costs $100 more than the Sony, AND they’ve had problems fulfilling orders (some customers claim they’ve waited six weeks to receive a Kindle).

I much prefer the Kindle to the Sony Reader, but I’ve seen Sony Blu-Ray defeat standard DVDs, and Sony Beta technology become the standard in the film industry… so something tells me they’re making a push to establish their product as the #1 e-book reader. I’m on record as saying we haven’t seen the perfect e-reader yet (the Kindle feels plasticky and doesn’t do graphics; the Sony screen is hard to read and doesn’t have the features I’d want). I’ll bet the folks at Amazon wish they’d thought to send free Kindles to all the publishers. If you want to get readers on your side, convince the editors first.

Fifth, there’s a hue and cry going up among those that self-publish. Amazon, the nation’s largest e-tailer of books, announced that print-on-demand titles must now be created through their own POD service, BookSurge. You can look at this one of two ways: it’s either a business being a business, or it’s a huge power grab by a company bent on dominating the little guy. Let’s say you’re a speaker, who uses POD books to support your organization with back-of-the-room sales. Normally you’d shop around to find the best balance of quality printing with reasonable prices, then you’d let everyone know the book is available at Amazon. No more. If you’re going to sell your book through Amazon, you’re going to have to use their BookSurge division, which means paying their established prices. (And things can’t be terribly chummy between the folks at Amazon and the people at Ingram, the mega-supplier who has worked with numerous POD authors through their LightningSource program. I wonder how this will play out.) The reason this is important to you is that it reminds us that the best thing for authors is to have multiple vendors and alternatives — not to have everything run through one company.

I’ll get back to writing and questions next time, but I thought it was important to note the significant changes going on in our industry. Would love to know what you think.

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