News & Trends: How to Adapt to the Shifting Market
Facing Threats Head On
Mike Shatzkin, founder and CEO of consultancy The Idea Logical Co., worked with BISG to survey 250 publishers and conduct 15 interviews in preparation for Making Information Pay. He presented highlights from the findings, focusing on threats facing the industry and what publishers are doing about them.
He first outlined where the industry is seeing decline, namely brick-and-mortar stores, book review media, literacy and large advance orders—though the silver lining, he said, is that large advance orders mean large returns, so if orders decline, returns will likely decline as well.
Overall, he said, “Smaller publishers … did not see things as … bleakly as larger publishers.” The segments mentioned most frequently as “slipping” were travel guides, hardcover books and trade paperbacks.
Some areas of growth, he said, are:
- Children’s books;
- E-books—“with growth rates of 100 percent annually expected for awhile,” though still a “very small base [of sales]—1 percent”;
- Amazon.com sales;
- Direct-to-consumer sales;
- Custom publishing sales;
- Digital content sales;
- Mass-merchant channel, which is “growing, but troubled.”
The “sobering reality,” said Shatzkin, is that “what is diminishing is much more substantial than what is growing,” and the revenue potential from the digital realm is still an unknown. Publishers, therefore, are making significant changes, including:
- Eliminating printed catalogs;
- De-emphasizing sales conferences;
- Reps’ focus beyond bookstores;
- More focused lists (moving toward verticalization);
- Reduced travel, reduced presence at trade shows;
- Broader participation in social networking;
- Cutting traditional print advertising.
In order to adapt, Shatzkin said publishers need to:
- Build stronger direct channels;
- Embrace digital sales and distribution;
- Increase custom publishing efforts;
- Analyze mass-merchant and non-book-outlet buyers who don’t live and breathe books;
- End or curtail returns;
- Get closer to authors and customers;
- Develop alternate revenue streams;
- Tighten controls on spending and overhead.
Who Is Reading Books?
Kelly Gallagher, general manager, Business Intelligence, for R.R. Bowker and chair of BISG’s research committee, presented insights into “Who Is Today’s Book Consumer?” “We really have not done a very good job of getting to know our customer,” he said. Customers today are “evading point-of-sale data and buying all kinds of places,” he said.