More from BISG's Making Information Pay conference, held last Thursday in New York City:
In his presentation, Mike Shatzkin of the IdeaLogical Company discussed the results of an online survey to which 250 publishing executives responded. A group of 15 of them were interviewed at length in followup sessions.
Executives at larger publishers expressed "more gloom" than medium- and smaller-sized publishers. Perhaps not coincidentally, smaller publishers are less dependent on the book trade for sales.
There was "a strong consensus" that "bricks-and-mortar sales and shelf space are reducing," although some difference of opinion on "whether chains or independents are declining faster." Advance orders for big books from big accounts are down. (The only positive aspect of all this: it's good for cutting returns, which many publishers continue to cite as a major concern.)
Publishers with in-house sales forces are looking at having them cover "more than bookstores."
Amazon sales are growing "robustly." One publisher, Shatzkin noted, said that sales at other online bookselling accounts can be grown "if publishers make an effort to work with the account."
Mass merchandising channels are "mixed." Some publishers report growth with these accounts; others bemoan "sky-high returns." One publisher pulled out of this channel because staff cuts at the company's wholesaler "resulted in poorer stock management" in the stores.
The respondents believe that constrained library budgets will lead to cuts in purchases by libraries.
As for how various genres, topics and formats are faring, opinion was "all over the lot." Still, there was some consensus. For one, travel was "most frequently mentioned as down" because so much travel information is available on the Internet and the recession has hurt travel. And children's is "a bright spot all around": sales are rising in all children's segments.
Some publishers are "trimming and refocusing their lists," aiming to "dominate a category or abandon it." One publisher is using BISAC subject codes to bring focus to the house's list.
E-book sales are up "a lot" but still represent probably less than 1% of sales for most large trade publishers. Growth rates are more than 100% annually, but are from a very small base.
Another growth area is custom publishing, which besides premiums and giveaways includes creating books for retail accounts. "One publisher," Shatzkin said, "started a custom publishing department two years ago with one person and now has six because it's been so successful."
Shatzkin reported "the beginnings of publishers selling digital content to websites," which he called "a hard game to play." Publishers need a lot of content about a subject for this to work; "niche publishers are seeing a lot of action here."
Many publishers are interacting directly with consumers via websites and believe they need to do more to connect with readers. Publishers also said they need to do more "to get closer to authors" as well.
Some publishers are cutting travel, trade show and conference expenses.
"Everyone is aware of social networks," Shatzkin noted, even though this is "very labor intensive."
A general problem for book publishers that mirrors--although less dramatically so--the dilemma of newspapers, is that "what is diminishing in sales is much more substantial than what's growing." There is "no certainty about how fast e-book sales will grow, and no certainty about margins. Where digital revenues will come from is not known."
Among other possible "threats to the business in general" are free content on the Net, consolidations of retailer and wholesaler channels, downward pricing pressure for e-books, a reduction of review media for libraries and illiteracy.
Dominique Raccah, founder and head of Sourcebooks, described changes that she and others having been making at Sourcebooks in an effort to create "the next iteration of a publishing company," something she began thinking about three years ago.
Sourcebooks has "returned to the value of niche publishing," she continued, which is a major change because she had considered the company an "anti-niche publisher." Among the reasons for this shift: many retailers are cutting back on inventory and "giving customers only the top two or three things" in a category. Perhaps more important, the Internet is "an incredible proselytizer" of the niche market. She emphasized that publishers should go deeper than broad categories in looking at niches. Thus instead of cookbooks, publishers should specialize in, say, vegan cookbooks. Or instead of parenting, consider autism or ADD. "Category leadership is mandatory for success," she said, stressing, too, that this is "not the long tail."
The "new" Sourcebooks is "competing harder in fewer categories" and "organizing internally around categories and category users," Raccah continued. The company is simultaneously aiming to "get to know readers better" and become partners with authors.
In fact, at Sourcebooks, "we publish authors, not books," Raccah said. The company is planning longer term and intends to make authors leaders in their categories. "We have to communicate with authors and not just deal through agents."
To help communicate with its 1,200 authors and help authors in a variety of ways, the company recently launched what it calls the Author Toolkit. Among other things, the site has information about social networking, media training resources and events listings. Sourcebooks offers to host authors' blogs and will help authors create e-cards using their book covers. "Our only job as publishers is to find new approaches to content and new ways for authors to reach readers," Raccah said.
She stressed that in the future, book readers will "tell us how they want to buy something." They won't just take material in the forms in which publishers prefer to offer it. As a result, publishers will have to "unbundle our services" and make material available in a variety of way, something that's been "seen a little with self publishers and e-publishers."
As an example of focusing on a category and expanding the franchise, she pointed to The Complete Book of Baby Names by Lesley Bolton, a Sourcebooks title that now has a mass market form, a "gift package" form with the price of $19.95, an iPhone app and an e-book version. Raccah said that the company wants to continue to grow in the baby name area although it's not sure in what directions. "Perhaps baby name consulting?"
Raccah stressed that for now "digital equals e-books, but I don't think it will stay that way." E-books, she continued, are "just another format," and one issue is the multiplicity of digital platforms.
Enhanced e-books or digital books will become more important. Sourcebooks has had experience with such books, she said, such as with Country Music: The Masters by Marty Stuart, a title that includes 400 photos, audio narration of the photos and music videos.
Considering the debate over e-prices and the prevailing feeling that most digital material should be free, Raccah urged publishers to "communicate what we do." Too many readers believe that "all we're doing is printing a book."
Like other speakers, Raccah said that Sourcebooks has changed major aspects of the publishing process. "The in-person sales conference is gone," she said, replaced by web conferences. Likewise catalogues and ARCs are going online, and the company just took "$200,000 out of the trade show budget." Some marketing money is being devoted to "better support our bookseller partners."
Marcus Leaver, president of Sterling Publishing, described the kind of fundamental change the house is going through. "We question everything and do things entirely differently," he said. "It's what we have to do in publishing today." One measure of the extent of the change: there are three phrases he no longer accepts during in-house discussions: "'But we promised the author.' 'We've always done that for this kind of book.' And 'We have the budget.' "
Sterling has cut its list 25% across all imprints because like "the whole industry," we were "simply doing too many books." At the same time, the company has increased its "marketing spend title by title by 33% year on year and by 66% over the last two years."
For Sterling, "vertical [publishing] is the way forward. Horizontal is road kill." The company is becoming "more of a category publisher." Like Raccah, he emphasized that publishers need to go beyond broad categories so that "it's not about parenting, but cutting parenting into little sections."
The company has gone even farther than Sourcebooks in trimming some traditional sales and marketing efforts, taking "$1 million out of trade shows, sales conferences and more."
In the past year, the company had one sales conference via webinar and one in person. ("It felt good having the physical sales conference to jazz up the troops a bit.") It is also replacing author tours with "virtual tours through author sites." The company is making its catalogues digital--the fall 2009 edition is Sterling's last printed catalogue. All blads are now digital. And Sterling is cutting back on trade shows. "The trade show is over," he declared.
At the same time, Sterling has "increased the sales team ad budget for going out and seeing accounts." In addition, more editors are visiting salespeople.
Sterling is shifting spending "from print to digital." Sterling gives away more content for free than in the past. Once it was 500 words and a photo; now it's 1,000 words and as many photos as wanted. "It's been good for getting stories in magazines and newspapers," Leaver said.
The company is constantly trying new things. For example, Sterling tried several unusual promotions for I Can Make You Thin by Paul McKenna, including displaying posters for the book at toll booths, which had "fantastic results," and running radio spots in "the most obese cities." (The most obese city, he said: Topeka, Kan.)--John Mutter