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.