Correction and a Closer Look
I must apologize for an error in my interpretation of BISG data in my May column, of which this month’s column is a continuation. I inadvertently included direct sales to colleges in total publisher sales to retailers. So, here is a revised re-cap that also provides a more complete picture of the industry:
• Total sales to general retailers (including chains) are $12.7 billion, or 35.5 percent of the total $35.8 billion in publisher book sales.
• Sales to libraries and institutions are $3.5 billion (9.5 percent of total), direct to schools are $5.5 billion (15.4 percent), and to colleges $5.9 billion (16.5 percent).
• Since master-distributor, publisher-alliance and commissioned-rep sales consist almost entirely of retail and library/institution sales to a total market of $16.2 billion, my estimate of their $1.4 billion to $2 billion in sales would account for 8.6 percent to 12.3 percent of the $16.2 billion.
•The estimated $400 million to $500 million in master-distributor sales alone (not including distributor-owned imprints) would account for 3.3 percent to 4.2 percent of the total $16.2 billion.
• Publisher sales to wholesalers of $4.2 billion going to the retailer and library/institution channels would account for 25.9 percent.
The figures for master distributors still appear to be counter-intuitive on the low side. I would love to hear from readers with supporting data to the contrary.
—GS
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Piecing Together the Distribution Puzzle
If distribution means getting books into the hands of sellers, circulators or readers, then a true profile of the distribution business would cast a wide net, beginning at the binding line and continuing through to the ‘long tail’ of online portals, used bookstores and curbside pushcarts.
However, if distribution, from the publisher’s view, means getting books to generate sales revenue, we can overlook all of the aftermarket, recirculation and reselling channels and focus solely on reaching stores, libraries, online and catalog warehouses and—increasingly, thanks to the Internet—direct marketing from the publisher to the consumer.
In the article “Deconstructing Distribution,” in Book Business’ May issue, I presented a profile of the industry, quantifying the number of publishers at various sales-revenue levels. I also estimated the overall revenue share of outsourced distribution (e.g., sales and fulfillment) and wholesaling as intermediaries for publishers. (See the “Correction and a Closer Look” box at right.)
But, other important questions to explore are: How significant is the reach of wholesalers and master distributors as gatekeepers to the market and to the revenue streams of the U.S. publishing industry? What other choices are available to publishers? What factors should publishers consider when choosing to reach their market through these gateways?
According to the Book Industry Study Group’s (BISG) “Book Industry Trends 2006” report, retail, libraries and institutional channels account for about 40 percent of industry sales. Using the estimates from my last column, the wholesalers who serve those channels account for about 26 percent of that 40 percent, and master distributors account for about 8 percent to 12 percent (including what, for some, is a commonly accepted overlapping 25 percent of their sales to wholesalers).
These gatekeepers are very important to the estimated 12 percent of 62,815 active publishers with annual revenues of $100,000 to $1 million—as well as to a portion of the estimated 6 percent of publishers with annual revenues of $1 million to $50 million (mainly those closer to the $1 million mark)—that rely on a general trade market and do not have an effective way to reach significant target markets (e.g., fiction, travel, self-help, parenting, etc.).