One Big Change in Book Publishing Is That It Does Not Require You To Have Much of An Organization To Play Anymore - The Idea Logical Company

7/9/2020 One big change in book publishing is that it does not require you to have much of an organization to play
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One big change in book publishing is that it does not require

you to have much of an organization to play anymore
September 30, 2019 by Mike Shatzkin — 4 Comments
More than two decades into its digital transition, book publishing has evolved so that a capital-
intensive infrastructure is no longer a requirement to successfully develop a book, or a list of
books, and bring the books to market. This has resulted in a self-publishing segment, so far
almost entirely author-driven, that is substantial in reach and readership and which offers
ongoing competition to the commercial publishing business largely because of its ability to price
its ebooks below what would be survival levels for commercial publishers.
What does it take to publish a book?
What publishers do, over and over again, is the business of “content” and “markets”. Each book is
unique content and is individually delivered to its own unique market. So publishers need to
stick to content and markets that they understand in a contextual way. That is usually done by
sticking to genres in ction and topics or “audiences” for non- ction. But people who live in any
of many non- ction “worlds” could well be as well-equipped as any publisher to grasp the
content-and-market equations in those environments.
The discrete tasks are:
1. Creating the content, which requires domain knowledge (the world of the content) and, of
course, the ability to discern good and effective writing and presentation. And a knowledge of
the content world implies a sense of any particular project’s uniqueness and timeliness.
2. “Packaging” the content in a form that is reproducible. That means different things for print
and for digital. And it is more complicated for books that are illustrated or annotated with charts
or graphs.
3. “Marketing”, or making potential readers aware of the book. This takes in what we used to
think of as publicity and advertising, which in the “old days” largely centered around book
reviews and the sections in newspapers that carried them, but which is now much more about
search engine optimization and social network marketing.
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7/9/2020 One big change in book publishing is that it does not require you to have much of an organization to play anymore | The Idea Logical Company
4. Connecting with the avenues of distribution: reaching the sources of printed books their
THE IDEA might
customers LOGICAL COMPANY
use — bookstores, other retailers, or online merchants for consumers and
wholesalers or distributors for those intermediaries, print and e. You have to sell to them and
BLOG
serve them: persuade them to SPEECHES
carry or CONSULTING
list the book CLIENTS bill, and
and then deliver, MEDIAcollect
ABOUT
so they CONTACT
can.
5. Selling rights where you can’t sell books. Because many books, no matter their origin, have the
potential to gain additional revenue and exposure through licensing for other languages or
placing chunks of the book’s content in other venues (what was very simply “serialization” in the
all-print days), rights sales and mangement is another activity that a book publisher has to cover.
How have the avenues for sale to end users changed in the past two decades?
Before digital change arrived, which for trade publishers we could say began when Amazon
opened in 1995, publishers sold most of their books in stores. The books got there because their
sales reps persuaded the stores to stock them. Reps and stores are still a part of the delivery
system, but they are no longer the only path to an audience that can deliver a book’s author
substantial revenue.
In the past 20 years, online sales of print have moved from under 5% of the total units to
certainly 40% of units, perhaps 50%. And it can be much more for some titles.
In addition to print, publishers sell ebooks and those are exclusively online. Twenty years ago,
sales were zero. Now they appear to be 20% or more of the sales for big publishers. Once again,
there is a range across titles and types of titles and there is a whole new segment of digital- rst
publishers for which the percentage of ebook sales is much higher, sometimes approaching
100%.
Twenty years ago was probably the peak of the big bookstore chains — Borders and Barnes &
Noble. Two decades ago, those two retail behemoths were more than 30% of many publishers’
sales. Today, Borders is gone, Barnes & Noble has shrunk, and their sales are less than 10% for
most publishers. The number of chain stores is fewer than half of what it was, but shelf space for
books has shrunk even more.
As a result of the diminishing bookstore space — shrinking and disappearing chains and despite
a recent resurgence of independents the growth from them hasn’t nearly replaced what’s been
lost — the opportunities to put printed books in front of consumers have shrunk. So the shelf
space in mass merchants, like Walmart and Costco, is especially important for the big books
Those are high-volume sales locations, but they are also high-returns. So selling books through
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brick-and-mortar hasCOMPANY
become more dif cult and more expensive.
At the same time, the generalBLOG

interestSPEECHES
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have pretty much MEDIA
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Publishers CONTACT
used
to be able to move thousands of copies of big books through those direct mail channels. They’re
effectively gone.
And all of the above is really attributable to the fact that the sales have moved to Amazon.
Twenty years ago they were probably not as much as 2 percent of book sales. Now, if you include
Kindle sales, they are almost certainly 50 percent of the sales. For printed books alone, they are
over 40 percent for most publishers. (I know no hard gures to precisely document this; you
learn what you can anecdotally publisher by publisher.)
Amazon, eBooks, Self-Publishers
Amazon sales reached a tipping point about ten years ago. Kindle, launched in 2007, grew fast, as
the rst “direct download” ebook system. (Before Kindle, the ebooks had to be downloaded into
a computer and then “synched” to a device.) So when Amazon rst offered the self-publishing
opportunity through Kindle, they were able to “reach” an audience of suf cient size to enable
aspiring authors to actually make some money. When they added their “Create Space” capability
for print-on-demand, an author could readily reach half the book-buying audience with one
stop.
That was really the catalyst for what has become a tsunami of self-publishing.
The economics Amazon could offer looked very attractive to authors. Following on the
publishers’ formulation from “agency pricing” that the content owner got 70 percent and the
retailer 30 percent of an ebook sale, Amazon created an ecosystem where authors could clear
$2.10 on an ebook priced at $2.99. That was equivalent to what an author would get for a $15
hardcover or a $20 paperback. So, if they’d read digitally, a reader could get more money into the
hands of their favorite authors at a price that was a fraction of what they paid for print.
The much-cheaper books were most compelling for the audiences that consumed many titles:
readers of romance, sci- , thrillers, and mysteries. It didn’t take long — maybe a couple of years
— for a very robust title selection in those genres to become available from many previously-
unknown authors.
Whether it was intentional or not, Amazon’s ipping of the time-honored “razors and blades”
pricing strategy contributed to their rounding up all those multiple-book readers. When they
launched the Kindle, they took a big risk by “paying for” the dial-up connectivity (no ubiquitous
THE
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November COMPANY
2007) required to load content into the device. But since they also gave out
free samples, enabled searching the title base, and even allowed some pretty crude web
BLOGthat Kindle
browsing, Amazon took the risk SPEECHESowners
CONSULTING CLIENTS
would use that dial-upMEDIA ABOUTebooks.
and not buy CONTACT
That couild have gotten expensive for them.
So they put the device out at a high price: $400. But because they priced the ebooks themselves
low from the beginning (often taking a loss on what the publisher was charging for them for the
le, although they always claimed they retained a positive margin across the total sales of
content), the Kindle was an attractive nancial proposition for the consumer only if they would
buy a lot of books. So from day one, the tiny-but-growing community of Kindle readers bought
an outsized number of books.
For those authors who captured readers through the combination of low-pricing and the appeal
of the free book “samples” that digital enabled, the Amazon self-publishing ecosystem could be
very remuerative.
But it was also attractive that Amazon made publishing both easy (just upload your le) and fast.
Regular publishing required an agent most of the time but it required a lot of patience all of the
time. Finding an agent took effort and could take months. The publishers’ decision-making
process to buy also took a long time, often months. The act of publishing took a long time, also
often months. It quite often added up to years. And then the share the author got was a fraction
of what Kindle would pay them.
Sony Reader, which required the synching with a PC to get content, was in the market before
Kindle, but Amazon’s superior technology, reach (to readers), and title count (because Amazon
had the relationships and leverage to get titles digitized that hadn’t been before) blew past them
pretty quickly. In short order, Barnes & Noble brought out the Nook and Canadian retailer Indigo
delivered Kobo to compete. Google got into the ebook game. And when Apple introduced the
iPad in 2010, they opened the iBookstore to put ebooks onto their devices. But largely because of
self-publishing, especially of low-priced genre ction, Amazon took a lead in ebook title
selection that none of the other players, all of which had “other sh to fry” had the motivation or
capability to match.
Living in a different world with more changes to come
So by 2010, we had a very different pro le of intermediaries between publishers and their
readers than we had a decade or so before.
And in the decade since, the total retail shelf space dedicated to books, across chains,
THE IDEA LOGICAL
independents, COMPANYand specialty merchants, has continued to decline. The share of
mass merchants,
sales being taken by online has continued to grow to the level we cited: 50 percent for most
BLOG
titles. All publishers, but particularly SPEECHES
big CONSULTING
publishers, have taken CLIENTS MEDIA
to heart that ABOUT
they have CONTACT
to market
direct to consumers (even if they don’t actually execute the book sale).
Perhaps the most signi cant single development is that Ingram has extended the infrastructure
they had which spawned Amazon in the rst place and offers it “by the drink” but also by the
case or the carload to any book purveyor from the one-book author (through IngramSpark) or
for a publisher of literally any size (through a number of discrete distribution lines). So, while
Amazon offers direct access to their customer base, Ingram can get an ebook or one printed-on-
demand to any bookstore or library in the world. Neither Amazon nor Ingram require the
“publisher” to provide anything but the content.
And individual entrepreneurs and small companies, many staffed by recent departees from a
shrinking commercial industry, are ubiquitously available to help with all the discrete tasks it
takes to execute effectively.
If you go back to the top to look at the requirements to publish a book, numbers one and two are
the creation and designing of a book, and most publishers use freelance capabilities for that
which are available to anybody, including individual authors. Number three (marketing) has
many components, but there are a plethora of independent services available to deliver most of
the capabilities. Number four (connecting with the avenues of distribution) is delivered by
Amazon to their customers and by Ingram to the world. And number ve (licensing, particularly
foreign rights) can be done by a vast network of agents and digital marketing consultants that
already exists. You don’t need to own any of it to play.
And, as a result of all of that, many of the structural advantages a being a book publisher have
faded in importance. A person with a manuscript, a computer, and a bit of a budget has been
able to publish effectively, and sometimes pro tably, for the past ten years. That has spawned
the current infrastructure of capabilities and services that might suddenly be discovered as a
key tool by entities bigger than individual authors. On another day, we’ll explore that might
mean to publishing’s future.
*********************
Here’s a PS. At least partly because I am a hearing-challenged person, I have never listened to an
audiobook. But the surge in their sales over the past 20 years (but especially in the past year or
two, when penetration may have doubled) is also a big part of the story of the shifting markets,
acknowledged thought leader

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One big change in book

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and the relatively competitive position of the publisher-without-organization. I shouldn’t leave

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The explosion of audiobooksBLOG

rides theSPEECHES
back of theCONSULTING CLIENTS
explosion of networked MEDIA ABOUT solved
phones. They CONTACT
the problems of presence and delivery in one fell swoop. This has delivered a bonanza to the big
publishers, who had very large backlists that had never been exploited in audio. For most of its
history, audiobook creation has had signi cant tech and cost barriers that eliminated a lot of
books from consideration. Those barriers are down because of technology changes and service
offerings. Of course, they are just another big chunk of the business that takes place online. And,
just to be a bit more disruptive, they are sold largely on a subscription model, a continuation of
the disruption Amazon introduced in ebooks with Kindle Unlimited.
And Amazon owns Audible.
If you are not yet acquainted with “The Book Business: What Everyone Needs to Know”, which I
co-authored with Robert Riger and which was published by Oxford University Press earlier this
year, you’re likely to enjoy it if you’ve read this all the way to the end.
Filed Under: Authors, eBooks, General Trade Publishing, Licensing and Rights, Marketing, New Models,
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Tagged With: Amazon.com, Apple, Audible, Barnes & Noble, Borders, Costco, eBooks, Google, iBookstore,
Indigo, Ingram, Ingram Spark, iPad, Kindle, KindleUnlimited, Kobo, Nook, Sony Reader, Walmart
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Thomas Greanias • a year ago
Exactly. Another outstanding piece of big picture analysis from you, Mike. The trends are unmistakeable, the
timing and players uncertain. I think we might see more securitization of publisher libraries ahead—like the
Hollywood studios—along with backlist swaps and consolidations as some of the bigger entities attempt to better
differentiate themselves in the marketplace. Although what worked for Hallmark in television failed for
Harlequin in books as indie authors apparently usurped that genre.
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Atlantis Media • a year ago

Exactly. Another outstanding piece of big picture analysis from you, Mike. The trends are unmistakeable, the
timing and players uncertain. I think we might see more securitization of publisher libraries ahead—like the
Hollywood studios—along with backlist swaps and consolidations as some of the bigger entities attempt to better
differentiate themselves in the marketplace. Although what worked for Hallmark in television failed for
Harlequin in books as indie authors apparently usurped that genre.
rrhersh • a year ago

The low price of the self-published book is key to the commercial genre fiction market. It lowers the stakes for the
reader, and is a large part of the solution to the "paying to read the slush pile" problem. I have my doubts about
the model expanding too far beyond commercial genre fiction.
Mike Shatzkin Mod > rrhersh • a year ago
I agree with you. The pricing strategy is only really effective for "commodity" books. But the paths to
readers will work for anything, even if it takes a different approach to get the readers to buy and consume.
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7/9/2020 One big change in book publishing is that it does not require you to have much of an organization to play

zation to play anymore | The Idea Logical Company

THE IDEA LOGICAL COMPANY

BLOG SPEECHES CONSULTING CLIENTS MEDIA ABOUT CONTACT

One big change in book publishing is that it does not require

What does it take to publish a book?

The discrete tasks are:

At the same time, the generalBLOG

Amazon, eBooks, Self-Publishers

That couild have gotten expensive for them.

Living in a different world with more changes to come

acknowledged thought leader

The Book Business: What

Get The Shatzkin Files posts by

Search this website

Both the supply chain and book

The supply chain for book

What is causing the uptick in

2020 Zero year thoughts about

Should Barnes & Noble rethink

7 ways book publishing will

One big change in book

A lot has changed in book

The sale of B&N again calls the

BLOG SPEECHES CONSULTING CLIENTS MEDIA

Digital Book World

Enhanced ebook university

General Trade Publishing

Licensing and Rights

Publishers Launch Conferences

BLOG SPEECHES CONSULTING CLIENTS MEDIA

RECENT POSTS PAGES

Both the supply chain and book marketing are Blog

Search this website

Copyright © 2020 · eleven40 Pro Theme on Genesis Framework · WordPress · Log in

and the relatively competitive position of the publisher-without-organization. I shouldn’t leave

The explosion of audiobooksBLOG

And Amazon owns Audible.

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Atlantis Media • a year ago

rrhersh • a year ago

Mike Shatzkin Mod > rrhersh • a year ago

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