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The Industry Is Sick

[Note: Alan Canton has been writing A Saturday Rant for the past nine years.
It is a weekly bird-cage liner of notes and ramblings on the book publishing
industry. All rights reserved. Copyright 2004 by Adams-Blake Company, Inc.]


A Saturday Rant 3-13-04
It seems that no one is making much money in the trade book publishing
business, with the exception of a few authors. While you don't hear much
about it, my mail tells me that most of the large houses are getting killed
by returns.

The small houses are getting killed by huge discounts required by the few
distributors that will take their products. The distributors and wholesalers
(with exception of Ingram) are hurting from the disappearance of independent
stores. Independent stores are being killed by the superstores, as are the
mall branches of the big retailers. Everyone is working harder and harder for
fewer and fewer dollars.

WHY IS THERE NO "CALL" FOR CHANGE
There is no real leadership in the trade publishing industry. There are over a
two hundred large firms and thousands of tiny ones. There is no "Bill Gates,"
or "GM" of this business. And those that might assume leadership have a
vested interest in not rocking the boat (Ingram, ABA, AAP, PW, PMA, SPAN,
etc.) Ingram is doing well. They don't want change. A few of the very large
houses are also doing well. They would like to see an end to the "easy entry"
that others have to the publishing business.

B&N and Borders are doing well, but hate each other so much that they would
rather fight it out for market share than try to reshape this industry.

AAP, Publishers Weekly, ABA, PMA, SPAN, etc. has a vested interest in having
more and more people enter the industry as small publishers as it means more
memberships, more mailings, etc. They help perpetuate the "big lie" (see
below) [Can you imagine the SPAN or PMA charter reading something like "We
will do our very best to show and tell people that this is a sick and
profitless industry for the vast majority of our members."]

Bottom line, those who have stuck it out are seeing how the income (profits)
are being concentrated and are trying to make sure that they will be part of
the concentration.

WHO IS GOING TO WIN?
On the "big time" publishing side, the line I receive from my e-mail is that
in the next 36 months you will see more mergers of the large publishing
houses from about 200 large ones to 50. Some will go under, some bought, and
some merged. This will represent some 90% of all trade book sales.

While there will be a few specialty distributors who will survive (law,
medical, etc.) Ingram will continue to be the overwhelming distribution
entity. Midpoint, New Leaf, IPG etc. will all either go under or merge.

Three things will happen.
First, due to the high discounts distributors want, fewer and fewer publishers
will be able to afford to go with them.

Second, Ingram will expand its capacity. It will be very difficult to compete
with Ingram and most won't be able to do it.

Third B&N and Borders are lazy. If Ingrams does not have it, than the hell
with it. They are not going to bother ordering from the current list of some
20 distributors / wholesalers.

On the bricks/mortar retail side, it will be a B&N and Borders world. They
will divide the market leaving only the "minor markets" to the Towers, and
Tattereds of the industry. Running an independent bookstore will become a
"boutique hobby" business, like owning an antique store; a second income for
the spouse with a wife or husband who has a "real" job or business.

Most small publishers will fail. The market forces will prevail. Easy entry to
the business (a computer and a good idea) will be tempered by high production
costs and a clogged distribution channel.

The only chance the small publisher will have is from the Internet and selling
direct to the reader. And the only way to do that is for small publishers to
specialize in a specific (small) niche that is overlooked by a large house.

However, once a niche is "discovered" by a large house, they can and will
flood the market on any given topic and destroy the small publisher. Authors
are not stupid. They know that Random House can sell more copies of "How to
Whatever" than can any self-publisher or any small press and these authors
will be submitting to Random, not YOU. It will become harder and harder for a
small house to build a list of quality material, unless they can write it
themselves.

Just like owning an independent bookstore, small publishing will become a
"second" business, not a primary one, for most who enter the industry.

WHAT ABOUT EXCEPTIONS?
Of course there will be exceptions. The big houses can't publish every book
every reader wants or is looking for. There will be flash in the pan success
stories. However, in the next three years, there will be fewer and fewer such
examples.

Most small publishers will either lose money or make such meager
profits that they won't be able to continue without dipping into either family
savings or a line of credit. If you make 7 % after taxes, but Data Repro or TS
increases your printing bill by 15% there is no way you can survive.

THE BIG LIE
In the next 36 months we will see the end of the big lie, propagated by so
many pundits, organizations, consultants, etc.: You Can Make Big Money In
Your Own Small Publishing Business.

Right now, the only people who are making good profits in the industry ARE the
associations, the consultants, the lawyers, the seminar leaders, and the
publicists. The producers, distributors, and retailers are being killed. It
can't continue. And it won't. In the weeks to come I will use this space to
talk more about this industry and what we must/should do to help change it
and to survive in it.


BACK IN 1997 MAYAPRIYA WROTE....
"....when PMA membership ranked printers, the head of sales at Data
Reproductions who I use for most of my printing called me to ask me if I could
read him the results. He heard there had been a survey and wondered how they
did. I think this shows that vendors DO care what we think as a group and
where we spend what must amount to many, many thousands of dollars. Every day
someone posts something about being courted by this distributor or that
distributor, so they must care also. Maybe Ingram doesn't have to care as
much, but certainly there has to be a fair amount of power in the membership
as a whole."

--Mayapriya Long
Bookwrights Press

Mayapriya made a point back than and it still stands. I have yelled about this
for the past hundred and twenty years. PMA has far more power than they
realize. If they saw it as part of their charter, PMA could bring tremendous
pressure on vendors as well as distributors.

But Jan thinks differently. I sometimes wonder what it will take to get PMA to
get up off of its butt and vocally stand up for the rights of the members. I'm
not saying that Jan has to get in anyone's face. But you can't roll over and
let "them" walk all over us. PMA often fails to realize that if we don't
succeed, if we don't make a profit, the need for a PMA will cease to exist.
I'm PMA's biggest fan. But I think PMA's attitude has been love it or leave
it; PMA, right or wrong. My corollary is when right, to be kept right. When
wrong to be set right!

Or maybe it's time for PMA to go gently into the night and for a new
organization, led by "us" to take it over... one that will not be afraid to
kick some ass.

It's something to think about.

Alan Canton, President
Adams-Blake Company
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