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THE SUBSCRIPTION REVOLUTION
HOW PRINT ON DEMAND WILL SAVE THE PUBLISHING INDUSTRY
By Richard Curtis
It’s me with another crackbrained prediction
about the future of publishing. (We’ll ignore the fact
that every crackbrained prediction I’ve ever made has
come to pass.) And the one I’m going to make today is
going to come to pass, too.
Let me start with a question or two. How many
of you check on your amazon.com ranking? And how many of you
are aware that unpublished books are also ranked on amazon?
That is, as soon as your forthcoming book is listed on amazon,
it begins getting ranked. Even though it’s not scheduled
for five or six months, an eagerly anticipated book may post
a strong ranking. Now, how can that be? How can a book show
up in the rankings when it hasn’t even been published?
The answer is, people are
ordering it now! They’re putting their money down today
for a book they won’t get for months. They’re
subscribing to it. If you look at the amazon listing for any
unpublished book, you’ll read the following: “This
title will be released on [publication date]. You may order
it now and we will ship it to you when it arrives. Ships from
and sold by Amazon.com.”
Why should we be excited about this? After all,
the stodgy old subscription model has been around for ages,
in the form of book clubs: you pay a minimum fee in advance
and you get a certain number of books. In fact, you’ll
soon be hearing about Zooba.com, an online book club, kind
of Book of the Month Club Meets Netflix. So, subscription
is in the air. Nevertheless, and by a wide margin, we buy
books in brick and mortar stores.
What’s wrong with that model? Well, just
about everything. But for anyone who has not read my slavering
diatribes over the last twenty-five years, let me summarize
why.
Early in the history of publishing in the United
States, publishers made a Devil’s bargain with bookshops.
The booksellers didn’t want to get stuck with unsold
inventory, especially inventory of first novels and other
marginal books. So they told publishers, “We’ll
take those books on the condition we have the right to return
unsold copies for full credit.”
For a long time that system worked fairly well
because returns were held to about 10%. But after World War
II, for many and complex reasons, the return rate began to
rise, occasioning Alfred Knopf’s classic remark, ”Gone
today, here tomorrow.” Though publishing seemed to be
booming in the 1960s, 70s and 80s, the boom was in good degree
illusory. By virtue of printing economics, publishers can
make a profit on a bestseller even if thirty or forty percent
of the copies are returned. But when the return rate continued
to rise to 50%, 60%, or even higher in the 1990s, the chickens
came home to roost and publishers started losing money.
What did the publishers do in response? They
succumbed to the blockbuster mentality, spending heavily to
acquire bestsellers that presumably guarantee profits. And
still they lost money, tons of it, because no one had attacked
the root of all evil, the system founded on the right of booksellers
to return unsold stock for full credit. To better compete
for bestsellers, dozens and dozens of cash-starved publishers,
with classic names like Doubleday and Knopf and Scribner and
Little, Brown were forced to merge with better financed houses
or sell out to global conglomerates, companies that made bathroom
cleansers and pantyhose and other products that fit synergistically
with books. Oops, there I go again.
But look, you don’t have to be a Warren
Buffet to figure out that you can’t make money producing
two units of something and selling one. Has that stopped publishers
from doing it anyway? Look at your royalty statement for the
answer to that one.
Okay, publishers are human, they make mistakes,
we all lose a billion dollars from time to time, right? But
– in 1994 something really important happened: amazon.com.
And we realized there was a new way to distribute books, one
that had nothing to do with bookstores. Publishers shipped
copies of their books to amazon’s airplane-hangar sized
warehouses, from whence they were mailed directly to customers
ordering them online; customers prepaying for them with credit
cards. The rest is history: amazon revolutionized bookselling.
Does that mean the revolution is over? Scarcely. In fact,
it’s just begun. What’s the next phase?
For the answer to that one, let’s return
to those listings on amazon, the ones for books that have
not yet been published. As I prepared these remarks, I visited
amazon to check on the ranking of a Random House book scheduled
for publication two weeks hence: it was # 17,577. This morning,
ten days before its release date, it’s #11,384. How
can an unpublished book be #11,384? Obviously, it’s
being ordered by customers. Now, let’s say for the sake
of argument, five thousand customers pre-order this book on
amazon. How will amazon fulfill those orders? Random House
will deliver five thousand copies to an amazon warehouse,
where they will be dispatched to the people who ordered them.
Of course, Random will also be distributing
copies to bookstores and chains, and we hope for the author’s
sake that the stores sell every copy. But if history is any
guide, after some months about forty or fifty percent of the
stock will be returned to Random House, a shameful waste of
paper, fuel and manpower. By contrast, how many copies will
amazon return to Random House? Does the word Zero resonate
with you? Now let’s see, zero returns versus fifty percent
returns, which one is better…?
Now you can understand why the prospect of a
subscription-based bookselling model is so alluring. But wait
– it gets more alluring than that. Last year, amazon.com
acquired a modest little printing company called BookSurge.
The news didn’t make much of a splash, except in my
brain. Because BookSurge is not just any printing company,
it’s a print on demand printing company. Do we all know
how print on demand works? You create an electronic file of
your book and store it on a server. If someone wants to buy
it, they order it online. They prepay for it with a credit
card; it’s then manufactured and shipped directly to
the customer, shipped without ever touching a bookstore.
I pondered – why would amazon buy a print
on demand press? I didn’t have to wait long for the
answer. A few months ago, they launched a service aimed at
helping publishers keep their books in print. When the stock
of a book runs low, amazon takes the publisher’s file
and reprints the book at amazon’s own plant and fulfills
back-orders. How do publishers feel about outsourcing their
printing and fulfillment? What’s not to be thrilled
about? They’re making money at no cost to themselves
whatsoever. It’s all done virtually, and everybody makes
money, including you the author.
But remember, so far, all we’re talking
about is a service aimed at helping publishers keep books
in print when stocks run low. But why stop there? Let’s
let our imaginations run wild. Let’s revisit that Random
House novel. Right now, in order to satisfy those subscription
orders on amazon, Random House has to print five thousand
copies at its printing plant and, ship them to amazon’s
warehouse. Well, that’s perfectly fine if you’re
in the twentieth century. But this is the 21st, and publishing
is becoming virtual. How about this alternative: amazon prints
all five thousand copies at its BookSurge plant in Charleston,
South Carolina. Booksurge then ships the books directly to
the customers who pre-ordered them months ago.
Pretty sexy, yes? Neither Random House nor amazon
are out of pocket for the printing cost, because it’s
covered by the price of the book; nor is there any shipping
cost to the publisher, because shipping is paid by the customer.
Nor is there any warehouse cost, because there are no warehouses!
I used the term “virtual;”we know that in a digital
world, all middlemen become impediments. I say unto you categorically
that direct bookselling to the consumer, with no middlmen,
is the way of the future. And here’s something more
to think about: as stupendous as amazon is, it is only a middleman
for book publishers. Is there any reason why publishers have
to outsource their fulfillment to amazon? None that I can
think of. Once the Random Houses of the world see the profitability
inherent in the subscription/print-on-demand model, if they’re
smart -- a condition we cannot always take for granted –
but if they’re smart, they’ll realize they can
do it themselves.
Actually there are impediments to the Random
Houses and HarperCollinses and Penguins selling books directly
to consumers. One is internal: their books are sold by commissioned
sales reps whose noses tend to get out of joint when their
companies cut them out of opportunities to make commissions
on store orders. The other impediment is external. Direct
bookselling cuts out the major bookstore chains, and Barnes
& Noble tends to get cranky when publishers go into competition
with them in the retail marketplace. (That hasn’t prevented
B&N from competing in the publishing marketplace –
the retailer publishes its own books, and its “store
brand” often undercuts similar titles supplied by traditional
publishers.)
Those obstacles notwithstanding, selling directly
to customers is the only way that the book industry will find
its way back to profitability. And just think how profitability
will liberate publishers and enable them to return to their
core competence: publishing books of lasting cultural value.
Like, THE APRHODISIAC COOKBOOK. And HOW TO MAKE SOCK MONKEYS.
And I HATE MYSELFAND WANT TO DIE: THE 52 MOST DEPRESSING SONGS
YOU’VE EVER HEARD.
Thank you.
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