Tuesday, April 08, 2008

Book Wars

According to the Bookseller Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer. Shock, horror, amazement! How unfair of the publishers to want to retain some control of their book sales.

This is the another phase of an argument that has been bubbling away for a good long while now. Publishers find themselves being squeezed by the retailers, both online, the big high street chains and supermarkets. The retail sector is arguing for bigger and bigger discounts making the publishers put up the published prices higher and higher to give them a larger number to discount off. It’s very little different to the airline business who before the advent of airline’s own web sites offered massive discounts to ‘bucket shops’ to sell their seats. They also did this to travel agents who in many cases were little more than thinly disguised bucket shops. No more, the business is now largely controlled by the airlines who sell direct. How long before Amazon starts publishing and becomes the easyJet of the book trade?

There is a difference between the airline and the publishing business; for one thing an airline seat is a perishable product that no longer exists after the flight has departed. In the crazy world of publishing of course the book still exists even after the retailer has returned it to the publisher as an unsold ‘return’. These overstocks are then sold off by the publisher to ‘remainder’ book businesses that sell them onto retailers at a fraction of the cost of the original book. These books then compete with the ones that the publisher is still trying to flog at its normal level of discount. It’s just one ingredient in an otherwise crazy business.

Back to the Amazon scenario. There has never been any doubt in my mind that eventually publishers will get better at their own on line retailing; they will start to understand what marketing is all about, right now if you ask most publishers about their marketing plan they will describe their sales plans. Marketing is not sending books out to newspapers, with declining circulations, in a forlorn hope of a review. Amazon do a good job of telling people what’s out there and most publishers could learn a thing or two from them. Some of the direct emails I've had from publishers trying to sell their books through their own web sites are pathetic. Their imagination usually extends to the possibility of winning a prize if you buy something. Added to that searching most publishers web sites is a trial in itself.

According to reports there are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. Unlikely I would say, as contracts are a little tighter than that. But it’s clearly an absurd situation. Publishers produce the books and should be allowed to sell them wherever they like at whatever price they like. Meanwhile there is talk of Amazon becoming more aggressive in its dealings with publishers; what’s happening here? Well I would assume that the big book chains are getting squeezed by Amazon and the supermarkets where high volume sales of a very few titles is upsetting the delicate balance of things. Book shops have no divine right to exist and big chains like Waterstones have a difficult business model; not least because they compete very heavily with themselves with their online model Waterstones recently introduced a loyalty card, a sure sign that times is hard. They may well find there is little loyalty from book buyers and it is just another reduction in their revenue stream.

One final thought. Publishers need to understand they are not a brand. With very few exceptions the public have no name recognition of a publisher, so that makes their selling direct a difficult task. The brands are, in a few cases, the author and more often the book title. However for the most part it’s all about interest areas in nonfiction in particular. They need to get their marketing on a surer footing, which in turn will most likely affect the way books are bought and sold in the future. The answer lies somewhere between treating a book as art and as a product. At the moment publishers are confused and it shows that it’s an industry in transition. Not for much longer though....back to writing that bestseller!

p.s. e-books are not the answer.


r morris said...

Very interesting post. Another thing that I never realized till I became a writer is that the writer's royalty on a book sold by Amazon is considerably less than a retail royalty--so when people save money by buying online, their savings is probably taken out, in part, of the miniscule profits of the author of the work. This doesn't really matter is you're JK Rowling or John Grisham, but for a blue-collar writer like me, it hurts the wallet.

ScotsToryB said...

Amazon are already forcing POD(print on demand) publishers to use their subsidiary printers. The fear is that this will be extended to small publishing houses.

Follow the logic and Amazon could soon be demanding that all publishers use the in house facilities.


Semaj Mahgih said...

Publishers have the right to do as they please.

jmb said...

e books certainly are not the answer.
An interesting post here Richard.
Amazon in the publishing industry. That's a thought.