The first part of our coverage of the Book Industry Study Group's annual meeting last Friday is here.
Dane Neller, CEO of Shakespeare & Co., New York City, and co-founder of On Demand Books, said for his store, the book supply chain is "great in some areas and is broken in others." For bestsellers and frontlist, it works, getting the books to the store when they're needed. But for many other titles, supply and demand often aren't matched: "Twenty times a day I have to tell a customer I don't have a book and can get it in two or three days." In today's world, where online ordering allows customers to expect instant gratification, that means "I've lost that customer."
|Shakespeare & Co.'s Espresso Machine
Shakespeare & Co. has an Espresso Book Machine, but "format and file issues" and unavailability of many titles in digital form for POD has limited its use as a printer of frontlist. However, as "big box stores decline and indies grow, it's a big opportunity for having content POD in stores."
Neller emphasized that despite some supply chain problems, "we're very bullish on the retail market.... There's a renaissance going on in bookselling; it just has to be reengineered."
Joe Matthews, CEO of Independent Publishers Group, noted that IPG has a POD partner, and does POD with Ingram, Baker & Taylor and Amazon--and there are problems having print-ready PDFs work with all of them. He emphasized that publishers in general need to reconsider how they view the costs of printing, because the economics have changed as the backlist potential of titles has changed.
Steve Potash, CEO of Overdrive, which primarily supplies digital books to libraries and other institutions worldwide, outlined his company's enviably high-margin, no-returns business, noting that major growth right now is occurring in education and internationally. "Luckily, we're all dealing in the English language," he said. Potash put in a plug for libraries, which have suffered funding cuts in the U.S. and especially in the U.K. "We need to support libraries for our quality of life," he said.
Eric Green, cofounder of Bibliographic Data Services in the U.K., called consolidation a problem in some areas, noting that the country has just two general book wholesalers. In the library market, which once had 25-30 wholesalers, there are now "two and a half." Besides hurting his margins, this has led to a brain drain from the book business as "tremendously knowledgeable people inevitably lose their jobs and move on."
For IPG's Matthews, there are pros and cons to consolidation. "We used to have a much wider net of regional wholesalers and stores. I feel like we're one of the only ones left." He worries about infrastructure and economies of scale: trucks need to be filled up, for example. On the other hand, "there's less competition, so we get more business." At the same time, many publishers seeking economies of scale are outsourcing warehousing. A benefit of being smaller is being "more nimble, having fewer layers of management, being more reactive."
Metadata is a major concern of many BISG members. Kent Watson, executive director of Publishers Association of the West, noted that "there is no one place to go to fix information." He also observed that "we all want to find out more about our end customers."
Stephen Day, senior v-p, supply chain, global operations at Pearson, offered a general supply chain specialist's view of the eccentricities of the book world supply chain, saying that returns are "an unbelievable cost.... We shove inventory into the channel and get some chunk of it back not knowing why. It's unimaginable to me." He called for the industry as a whole to work solutions for the problems caused by having returns.
Watson said he doubted returns would go away, because "unfortunately it's how the business is built." Digital products have helped the returns situation somewhat, but at the same time another problem has recurred: a shortage of paper is proving costly and disruptive for some publishers.
Peter Balis, v-p, strategy, planning and development at Wiley, advised that blockchain is going to be "a critical piece of the supply chain.... It's coming up in places where you would not expect beyond cryto-currency." He also called for more retailers to be involved in BISG and its efforts, noting that "so much of our business is intermediated today that so many of our intermediaries are proxies for retailers."
Piracy and protection of copyright continue to be major problems for publishers, particularly those selling courseware abroad. Balis warned that there are "so many people in the value chain" abusing copyright. "The reality with DRM is that within 10 minutes [of releasing a product], someone has broken it, and it's all over BitTorrent sites." The matter is urgent because "if we don't properly pay authors royalty for the work they're doing, then we won't have content."
From the audience, Michael Healy, former BISG executive director ("I used to be the vicar of this parish") and now executive director of the Copyright Clearance Center, said that the "greatest threat to the future of the industry and not realizing its potential is the full-frontal assault on copyright." He called for the industry to come together and develop "an arsenal of copyright protection" that includes copyright education and the creation of easy-to-use licensing tools. --John Mutter