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24 posts from June 2008

Anthony Policastro on the Future of Publishing

Books2 Anthony Policastro is a frequent visitor to my blog and he also works for Lulu, so he's got a lot of experience with the self-publishing and POD businesses.  I mentioned earlier that I'm interested in expanding Publishing 2020 with more guest posts and Anthony was kind enough to write the following one up for me regarding his opinions on the state of the industry.  Following his article are a few of my own observations on what he has to say:

I recently caught a broadcast on my local NPR station from American Public Media about the troubled book publishing industry.

The most recent trend is that bookstores are ordering more books than they could ever sell because they are trying to compete with online book stores. They fear, according to the report, that if customers cannot find what they are looking for, they will go home and order the book online. Their fear is justified – after all, the average big box bookstore like Borders can stock approximately 100,000 titles while Amazon can list millions.

While book publishers may be rejoicing over increased orders, the orders are really a double-edged sword because the bookstores can return any books they don’t sell after 90 days.

To add to the problem, some bookstores are returning books before the 90-day window, waiting a week and then ordering more books. Now they have another 90 days to pay for the books and whatever they don’t sell they can return without losing a dime, according to the broadcast. More evidence that the publishing industry’s consignment model no longer works. Add to that decreasing book sales and you have a formula for disaster.

An article in Yahoo News on the Book Expo of America held May 29 - June 1 in Los Angeles reported that more than 276,000 new titles will be published this year, according to researchers R.R. Bowker, but the Book Industry Study Group expects the number of books purchased to decrease.

So what is the future of publishing? Whether publishers like it or not, the future lies in digital content and print on demand (POD).  Publishers will be forced to print fewer copies of new titles just from the economics of their business model. They will have to turn to POD printers for the shorter print runs. While most traditional publishers do not embrace POD because of the higher cost per book and quality issues, the reverse is happening.  The cost per book is going down and the quality is going up.

Printing fewer books is in sync with the explosion of digital content on devices like the Kindle, Sony’s Reader Digital Book and the iPhone. With the Internet generation getting older, they may want to read more than an email or a text message and will prefer digital content over printed matter having grown up with computers and the Internet.

Just as the music industry went kicking and screaming into the digital age with the 99 cent per song business model (They are still kicking and screaming over it), the publishing industry appears to be on the same path, inundating bookstores with more books than the market can bear until they realize they need to change.

Anthony S. Policastro is the Senior Business Analyst for Lulu.com, one of the largest POD publishers in the US and one of the few offering free content production.  A former magazine editor and published writer, he currently writes a blog with Michael Neff, creator and editor of the Webdelsol and Algonkian Writers Conference websites, about writers’ issues called The Writer’s Edge. Policastro and Neff have been referred to as the Ebert and Roeper of the literary scene with their point/counterpoint posts.

Although some large brick-and-mortar stores are bursting at the seams with inventory, Borders has made it clear that they want fewer titles, and more copies of them, to focus on merchandising and bestsellers.  That emphasis is clear when you walk through one of their new concept stores, btw.

Also, most publishers, particularly the larger ones, are extremely flexible with retailers on returns.  Whatever terms, limits, etc., that exist on paper are often interpreted with a great deal of leniency for the bookstore; after all, most publishers don't want to allow nitpicking on returns provisions to interfere with their relationship with an important retailer.  It's just common business sense.

I definitely agree with Anthony that POD is going to serve an increasingly larger role at most publishing houses in the future.  Everybody uses it today, mostly to extend the long tail of the older titles, but I can see a world where POD comes into play even earlier.  It all comes depends on how soon a viable POD system can further close the unit cost gap with the traditional printing model.


BusinessWeek Just Won't Stop Coming...

La la la can't hear you I purposely let my BusinessWeek print subscription lapse last month.  Or at least I thought I did.  I talked to a representative on the phone and told them I didn't want to renew.  I'm starting to think the rep I spoke with was playing the "la la la, I can't hear you" game.

I figured all BW's content is freely accessible on their website, so why pay for the subscription?  I'd have to change my habits, grab all their RSS feeds and read through them at least once a week, but still, it's better than paying for the subscription.

I was supposed to be cut off after the 5/26 issue.  I've received 3 more since, including the 6/16 one that just showed up on Saturday.  My 5/26/08 subscription termination date is still printed on every cover.  I wonder when it will end.

Better yet, I, along with probably every other BW subscriber, recently received an e-mail invitation to sit on "an exclusive BusinessWeek Market Advisory Board."  The e-mail was from "Keith Fox, President, BusinessWeek."  I couldn't resist sending a reply noting that I recently canceled my subscription and asking him if they don't check subscriber status before sending invitations like this.  I haven't heard back, nor do I expect to.


Even Amazon Has Down Days

Out of service I'm sure it's happened before but I've never encountered it.  I did yesterday though.  I'm talking about the Amazon outage.  I was on a conference call, tried to look up a title but got a cryptic error message instead.  I thought maybe our Internet connection was down so I asked a colleague in the Hoboken office to check -- sure enough, he got the same message.

The AP story above notes the outage lasted a couple of hours.  Yikes.  Imagine what it would be like for every outlet of a brick-and-mortar chain to be out of commission for two hours during a peak business period.  By my unscientific estimates, that's between $2 and $3 million of revenue per hour that may have been lost.  Yes, some customers would have come back 3 hours later to make their purchase, but others probably gave up and went elsewhere.

More importantly, does this outage in any way compromise Amazon's ability to sell their EC2 web services?  I realize nothing is 100% bulletproof and outages do occur, but I guess I just figured there had to be so much redundancy and back-up at Amazon that we'd never see something like this in the middle of a business day.  Go figure.


HSE School Board -- Part 2

Dunce corner My personal frustration with our local school board hasn't improved since I made this earlier post.  In short, it's a group of people who somehow feel they're accountable to no one.  They need to be voted out.  I did what I could to vote out the one incumbent who was up for re-election last month but it's clear there are too many cronies who will continue as board members because their terms aren't up...yet.

There's a new development in the district that will give this board a chance to redeem itself.  It seems a group of teachers at one of the junior high schools is unhappy with the management and leadership style of their principal, Shari Switzer.  Just by coincidence, my youngest daughter currently attends that school and I've heard Ms. Switzer speak.  I've also exchanged a bit of e-mail with her over the past year.  Why?  The first time I heard her speak (at an orientation session) I was so impressed that I wanted to thank her for being such a passionate, caring school administrator.  I've never reached out to any other teacher/principal like this in the past, so that should give you an idea of how much she wowed me (and much of the rest of that crowd) at that session.

It amazes me that teachers can gang up like this and put pressure on a superior.  Wouldn't it be interesting if it worked that way in the business world?!  It would be one thing if there was truly a problem buried in all this, but based on my personal experience and what I've heard from other parents, this is an unfair criticism of one of the best administrators in this school district!

HSE School Board Members: Please show some spine on this one and support this outstanding principal.  Anything short of that would be yet another failure by the entire board, and the third in the last six months.


Why TOC is a "Must-Read" Blog

Toc blog Just yesterday I was whining about how I'm spending less time reading blogs today than a year ago and here I am today touting one blog in particular that always offers outstanding insight.  Go figure.

My point is, if you've only got time to read one blog about the publishing industry, your best bet is the TOC blog.  I just finished reading Mac Slocum's interview with Peter Kent called Treating Ebooks Like Software and it was one of the most interesting articles I've read in quite awhile.  You should definitely read the whole post, but here are a couple of excerpts that really jumped out at me:

It's no longer a gentleman's game in which everyone hands over their books to a bookstore, and then they all compete on the same level. In the future the more aggressive publishers are going to go out and find book buyers even before the buyers have thought about buying!

[Regarding new methods of distribution...] What may save the publishers is that new distributors will come on the scene: distributors who understand the new landscape and go out and push the books.

Very thought provoking, and a great example of the quality material you'll find on the TOC blog -- highly recommended.