Tag Archives: ebook distributors

The Trouble with eBooks: A Recap

Most of the blog posts put up in this space over the last two months have circled around three very major issues in regard to eBooks. Here they are, together with an account of what if any progress has been made in resolving each of them.

eBook Distribution: What’s the Deal?:
No one who is really privy to hard information about what is going on is able or willing to speak out.

Non-disclosure and Confidentiality Agreements, Most Favored Nation Clauses in distribution contracts, and then out of nowhere, the Department of Justice restraint of trade litigation against most of the biggest houses—all these things conspire to silence any informed debate about the issues. And to be blunt about it, most independent publishers feel abject terror at even the thought of confronting Amazon’s enormous market power. This part of the problem has not improved at all.

Market Share: You’d Be Surprised What the Big 6 Controls:
“The Big Six publishers, who control about half of the entire market for trade books, have been able to drive a better bargain with Amazon than the independent publishers could.”

A structural difference of that magnitude (roughly 20 points of discount) would put the independents out of business in short order (See also At What Discount Should Publishers Sell Ebooks to Resellers). This part of the problem may have eased a bit. The Department of Justice’s litigation could have the effect of largely taking away the discount advantage briefly enjoyed by the Big Six which would level the playing field. We will see.

The Oxymoronic Notion of Digital Content: Part II:
“The 50% plus take that Amazon insists on for distributing eBooks from independent publishers bears no relation at all to the cost of delivering that service.”

A free market and real competition would squeeze out excessive margins wherever they might be found in the supply chain from author to book consumer. So far we have not had anything like a free and competitive market for eBooks. On this issue, however, there is some very good news on the horizon. Microsoft’s investment in Barnes & Noble’s eBook programs is very welcome. Two other eBook programs, which look to be robust and publisher friendly, are well in the works. Of course for the reasons explained in point one above, I can’t tell you a thing about them.

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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Book Distributors in the Age of Electronic Publishing: Part II

This post is the follow-up to the previous, which addressed what distributors do now at a time when printed books still dominate book sales, and will describe the role of distributors as the industry transitions to eBooks.

The advent of the eBook changes everything. Distributors are about to be disintermediated (a fancy way of saying put out of business) along with publishers, and booksellers. Authors will self-publish and sell directly to their readers, eliminating all those parasitic middlemen. Except for Amazon.

Or maybe not. The world of e-everything requires more investment in technology, not less, and distributors once again will be able to pick up the check when indie publishers cannot. And it turns out that the sophisticated IT capacities that distributors have had to develop over the last few years to handle print books at a high level—especially databases that can seamlessly share information in-house and with client publishers and customers—has made the technical challenges of eBooks seem not especially daunting. We are used to shooting metadata and book files all around the book industry, and eBooks are just a subset of that activity.

Also, there are new opportunities for distributors that completely bypass the big e-retailers. IPG’s sales of books directly to consumers—from our own website, through the shopping cart we supply (for free) to our client publishers, to affiliated special interest groups on the internet, and to the thirty-five or so eBook resellers we work with—are growing exponentially. These expanded sales methods, and others not yet thought of, will require new technological investment and innovation, but we are ready and able to provide it.

Moreover, it seems to me, on one essential front the electronic booksellers are highly vulnerable. They have been unable to solve a gigantic problem with their business model, the problem of quality: What is good and what isn’t? Non-professional reviews posted on e-booksellers’ web sites are by now completely compromised, scammed, useless. You cannot fool all of the people all of the time. Last year over a million new titles were “published,” the great majority of them incompetent. How are readers supposed to navigate through this sea of mediocrity?

One of the most important functions of publishers, distributors, and booksellers (book agents and reviewers too) has always been to assure a certain level of quality, not necessarily as high a level as we might want, but at least a baseline far higher than the abysmal standard—in fact the non-existent standard—set by the new electronic vanity presses.

Good distributors are appreciated by their customers almost as much for what they refuse to sell as for what they do sell. IPG takes on a very small percentage of the publishers who apply. We know that weak titles will dilute the sales of strong ones. Satisfied customers come back for more. Does this mean that IPG takes on only large, well established publishers? Certainly not. Some of the best books we handle are published by start-up presses and self-publishers, and over the years IPG has helped many such ventures to grow and prosper.

Traditional booksellers are outraged by the phenomenon called “show rooming.” Customers browse the books in a bookshop and then order what they want from a web bookseller, who gets a free ride because he has paid nothing toward of the expense of providing that highly curated selection of titles. The bookseller’s taste and experience go unrewarded.

Many electronic booksellers, however, don’t think they have any obligation to their customers to separate the sheep from the goats. Since the customers who buy books from them almost always come to their sites already knowing what they want, they are free riding on the publishing professionals who do provide this essential service.

If all a web bookseller needs to do is throw everything that quacks like a book up on its website and then mindlessly process orders—will that be enough to justify its continued existence? Will customers learn to love trash if only it is cheap enough? The electronic booksellers may be the ones who in the long run get disintermediated.

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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Book Distributors in the Age of Electronic Publishing

Will there be a need for book distributors in the age of electronic publishing?

This post will cover what distributors do now at a time when printed books still dominate book sales overall. The next post will describe the role of distributors as the industry transitions to eBooks.

For most of the forty years that book distributors have been around, our major function has been to gather together many independent publishers, thereby creating an entity that booksellers can deal with just as easily and profitably as they deal with the major publishing houses.

IPG, for instance, now actively markets about 50,000 different titles, and another 10,000 eBook titles, to consumers, wholesalers, and resellers down every viable sales channel for books. This marketing effort involves a combination of in-house and commissioned reps that adds up to a sales force of over 200 people, a plethora of sales materials, and a state of the art warehouse that turns out most orders in under 24 hours.

There is never any haggling with our customers over discount or returns because our terms of trade are clearly stated and consistently applied. Our accounts are clean and complete. Our service to our customers is as good (sometimes better) as the largest players in the book marketplace provide.

Many participants in the book business understand the important functions of distributors which I have just described. There are, however, other less obvious yet crucial benefits that distributors bring to the table. Here are three of them:

  1. Independent publishers are independent in more than just one sense. They are independent thinkers down to the soles of their feet, and they do not suffer received wisdom, or fools, gladly. They certainly are not in this game just for the money. The cross-grained mind set of most indie publishers is exactly why they are indispensable to our culture, and why they are often extremely interesting people. No middle of the road for them; they beat the bushes. But working with these interesting people one-on-one takes time and can therefore be expensive. Distributors cheerfully undertake this work because it is an essential part of our job. The other players in the book business are happy to leave this to us.
  2. In addition, there is a very large educational component to what distributors do. Good distributors offer their client publishers solid advice, all of it free, on titles, covers, print runs, publicity, business strategies, and much more. Even the most accomplished authors need editors; even the most sophisticated independent presses can benefit from informed feedback.
  3. And finally, the major distributors have made major investments in the technology that increasingly drives success in the book business. EDI, ASN, and ONIX metadata feeds weekly to hundreds of customers; data mining, POS information gathering and analysis; reorders generated by algorithms trolling through huge databases—these are just a few of the competencies distributors have had to master in order stay competitive with the big publishers. It is certainly no longer just the shoeshine and the smile that brings in the orders. IPG, for instance, now has an IT staff of thirteen highly-trained people working feverishly on new ways of storing, sharing, and interpreting data; and an IT budget of almost a million dollars a year. Very few independent publishers could afford anything like this level of expense, and very few would want to master a technology which is, after all, not what brought them into the book business in the first place. Yet without this sort of technical support at their backs, independent publishers are unlikely to thrive in this changing environment.

For all of these reasons distributors no longer think of themselves just as a conglomeration of publishing companies. Many of the difficult and expensive services we offer our client publishers greatly benefit our customers because these services improve the quality of the books we sell to them, and because our IT expertise makes us a profitable trading partner for them.

Distributors will continue to have an important role to play in the print book business. But will this role disappear as the book business shifts from “tree” books to eBooks? I should say not.

Photo: Curt Matthews, CEO, IPG/Chicago Review Press, Incorporated. Courtesy of The Chicago TribuneCurt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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