Saturday, June 23, 2007

Distribution Discombobulation

Tony Burton (Guest Blogger)


“Oh, if only I could just publish this novel! Everybody who has read it tells me how great it is—Aunt Mildred, my Sunday School teacher, Gramma Betty! I’m sure it’ll be a best seller, and I’ll be able to buy that new car I want!”

Hmmm. Well, let’s say that your Auntie, Gramma and Miss Jolene are all correct, and your novel is the best thing since sliced whole-wheat raisin bread. And let’s take this lovely fantasy one large step further and say that the acquisitions editor at Big Press, Inc. loves it, too! They’re going to publish A Far Cry from Cleveland! Woo-hoo!

Now… let’s talk about getting the book out there in the hands of John and Jane Reader.

Most authors, and let’s not even think about readers, really don’t know about distribution. Oh, they know it has to be done… just like somebody, somewhere has to put all those naked chickens inside plastic wrap so people can buy them at the grocery store and fry ‘em up at home. But how is it accomplished? And why is it done just that way?

Let’s look at the problem. First of all, most authors want their books to be on the shelf of every bookstore. Hey, it only makes sense! The more people see your book, the more chances you have of selling a book, right? But you have to remember: about 200,000 new titles hit the American marketplace EVERY YEAR. That’s a lot of competition for space on the shelves of the bookstores.

The two largest distributors in North America are Ingram and Baker & Taylor. I think most authors know that—in the same way they know we have a bicameral legislature in the United States. Exactly how they work, however, is often a mystery in both cases.

Actually, let me clarify that: many people consider Ingram and Baker & Taylor to be wholesalers rather than distributors. It’s true that Ingram, for example, does deal with other organizations which it defines as “distributors.” It’s a fine line, and one which I’m not going to debate right here. Either way, they are the primary wholesale source for booksellers in North America. I say this because, when I contact a bookseller, they don’t ask me if the book is available through Atlas or IPG—they ask me about Ingram and Baker & Taylor.

Most of the companies who classify themselves as “distributors” have similar setups to those of Ingram and Baker & Taylor, but many require exclusivity of distribution, and a higher discount. Biblio Distribution, for example, requires a minimum 60% discount plus exclusivity. So, the publisher gets 40% of the retail price, and from that has to pay for production, marketing, storage, shipping, royalties… oh, and hopefully the utility bills for his business.

Ingram is a huge company. They are the 1000-pound gorilla in the wholesale book market in North America. And they also own what is probably the biggest Print-On-Demand company in the world: Lightning Source. (By the way, did you know that Barnes & Noble bought Ingram in late 1998? No wonder that they want books to be distributed through Ingram, to be stocked on their shelves!)

Ingram sells books to anyone who resells them. Baker & Taylor, while also having a wide market, focuses more on the institutional arena. They sell a great many books to libraries, schools, colleges, etc. as well as to book resellers.

Because Ingram and Baker & Taylor are the two biggest players in the wholesaling and distribution game, they can make the publisher jump through quite a few financial and procedural hoops to get their books distributed. Let’s talk about those hoops: if you want your book to be carried by these companies, your publisher must have an agreement in place with them. For example, with Ingram this means the publisher must agree to do the following:
· Pay a non-refundable set-up fee for the privilege ($750)
· Give a minimum 55% discount off retail
· Pay the shipping charges to and from booksellers who order or return
· Pay a per-book fee to have each book considered for distribution by the semiannual selection committee
· Pay another fee for the “New Vendor Title Visibility Program” (over $500)
· Accept all returns [*see below]
· Sell a minimum of $20,000 net after returns over two years [**see below]

(NOTE: this information came from the PMA website.)

* “Accept all returns”—this is a sore spot with most publishers, and most booksellers. Whenever a book is returned, for whatever reason, it affects the bottom line for publisher and author. The book may or may NOT be in a resalable condition, because there are no guarantees to that effect. A couple of small presses were actually driven out of business by big-box retailers deciding to return thousands of copies of books which they over-ordered and didn’t sell. By the way, the publisher has to pay for the returned books and shipping even if the books are not resalable, because it’s an all-or-nothing proposition.

** “Sell a minimum of…”—if the publisher’s books do not sell at this level, the publisher’s status will be reviewed, and they may be offered the chance to stay with Ingram if they offer a larger discount on books to resellers. And “net after returns” means $20,000 after they have subtracted the cost of all the returned books from the figures.

For all this aggravation, what does Ingram provide, besides carrying the book?
· They will pay within 90 days of the month of sale (i.e., books sell on May 10, publisher gets royalty check or deposit on September 1).
· They will assign a specific buyer and an advertising salesperson to that publisher’s account.
· They will list your book(s) in their catalogs, both print and online, so they can be purchased by booksellers.

Baker & Taylor have a similar program, with similar conditions and guarantees. Their set-up fee is a little lower, I believe, and they do not require the publisher to pay outbound freight for books ordered by booksellers. Look here for specifics of what they require from publishers who wish to be vendors/suppliers.

“But,” you may ask, “why don’t the booksellers just order from the publishers?” Good question! Here is what booksellers told me when I asked:
· “I can write a single check each month instead of writing fifteen or thirty to different publishers.”
· “Ingram/Baker & Taylor will give me minimum 90 day terms.”
· “Ingram gives me better discounts when I order more books from them.”
· “It’s cheaper to pay for two big boxes of books to be shipped from Baker & Taylor than to pay for 10 smaller boxes to be shipped from a lot of different publishers.”
· “I know if a publisher has Ingram (or Baker & Taylor) distribution, they must have some financial stability.”
· “Having the book available through Ingram gives me some assurance of the quality of the book and the writing.”

Each of those points makes me nod my head and say, “Um-hmm,” except for the last one because, hey, I’ve read some real stinkers distributed by Ingram.

There are other independent distributors, of course, but none of them have the reach and cachet of Ingram or Baker & Taylor.

Something I’ve noticed: many authors seem to be real numbers junkies. They find out about the toll-free number to check sales at Ingram, and go bananas. (It’s 800-937-8000, option #4, extension 36803 if you want to get your part of the fruit salad.) There you can learn about stocking numbers and “sales” for any book, if you have the ISBN. Problem is, the sales numbers mean very little. They are the wholesale sales, those going out to resellers. So, since the reseller may or may not sell the books and may ultimately return them, they are not realistic indicators of how much money you, as the author, are making.

Wolfmont Publishing and my second imprint, Honey Locust Press, are small presses. I have one full-time employee: me. I do cover design, bookmark design, page layout, book teaser video creation, etc. It’s all me. I’ve had some success getting books shelved in stores, but not as much as I’d like. For the most part, it really requires personal contact by authors, not by the publisher.

Also, because I/we are a small press and operate close to the bone, I don’t offer as large a discount as some of the larger houses do (my discounts range between 35% and 45%). I can’t do it and still pay decent royalties to authors. I don’t accept across-the-board returns, either. I can’t take the risk. However, I will negotiate returns with independent bookstores if they order directly from me.

Yes, these things limit my market. I know that. But I’ve only had one author complain about the discount issue with me. And I do offer this option: if the author will sign an agreement to be completely financially responsible for all returns of their book, I’ll accept returns. Strangely enough, even though some authors want me to accept returns, none of them want to shoulder that burden.

Even with these limitations, I have books shelved in a Barnes and Noble in Texas, simply because one of the authors (it is an anthology) went there and had a very successful signing where they sold all the copies they had ordered within the first hour. They now stock the book.

I have books shelved in some Hastings stores, but again it’s only because the author of that novel went to those stores and made personal contact with the store managers. I have books shelved at some independents because, as the author or the editor of the books, I made contact with the owners and established rapport. Personal contact made the difference in each case, whether chain bookstores or independent.

While all these details may make your head spin, it’s good for authors to have at least some idea of how it all works. One, it allows you a better understanding of why publishers may do some of the crazy things they do. (Such as hold your royalties for months, or pay royalties that you consider miniscule.) Two, it helps you to understand better how to market your book. And like it or not, authors have to market their own books, one way or another.

In my earlier days, before I knew the value of having national distribution, I walked into some bookstores and asked them about stocking my books. The first question they asked me was, “Are they carried by Ingram?” or “Can I get them through Baker & Taylor?” At that time, I had to tell them no. And they said they wouldn’t carry the books, even if I did the fulfillment myself and I was local.

I’m not saying every bookseller is that way, but quite a few are. That being said, some independent booksellers are getting accustomed to the idea of going through distributors other than the two major players. But in my experience most want some sort of distributor or national wholesaler rather than going directly to the publisher, even if the publisher offers favorable terms.

I know that’s a lot of information. And even with that, it doesn’t cover everything about distribution. But it’s a good start, and maybe can help you as an author to recognize some of the hurdles faced by your publisher when she is trying to get A Far Cry from Cleveland onto bookstore shelves.

8 comments:

Sharon Wildwind said...

I knew some of these individual facts, but it's great to see the whole picture at once. Thanks for putting this all together.

Annette said...

Thanks for all the great information. Fascinating post.

Larry said...

Well, I knew very little about this end. A most informative post.

Jamie Saloff said...

According to this link and others, B&N never bought Ingram, though they tried to.

http://www.holtuncensored.com/members/column76.html

Keri said...

Thank you so much for this comprehensive post! I'm agented/unpubbed, and trying to learn as much about the business as I can.

Beirdd said...

TO Jamie Saloff and others:
You know, you're right. They announced that the acquisition was going through, and then late in November they announced that the merger was being called off.

My apologies! I didn't research that deeply enough. I only read the news release that said the merger was a fait accompli, not that it had later been cancelled.

But you know, I think the mere threat of that happening had a somewhat salutary effect on the industry. Wholesalers looked at each other and said, "We have to be more competitive!" Both Amazon and B&T increased their warehousing capacity in response. There was also a bit of boycotting of Ingram by many distributors and independents during that time, which probably had something to do with Ingram and Barnes & Noble backing away so easily.

My apologies again for that bit of misinformation.

Tony

Pam Skochinski said...

Thanks for the succinct picture of the process Tony.

Patricia Harrington said...

Tony,

You've provided excellent information and it serves as a reality check for authors. Now,the BIG question is why are there so many small, independent publishers, such as yourself? Love to hear the answer.

Best to you,

Pat Harrington