The Bookseller.com

13th October 2008

Andrew Crawford is m.d. of online retailer The Book Depository.

ROUTE ONE

01.05.08

Like it or not, the whole book trade has only one goal: matching authors to readers. Every step, from agent to retailer, adds value along this path.

During the last 30 years, the companies that have excelled have concentrated on their core competencies. Publishers have focused on commissioning great books and have left sales and distribution to third parties. Wholesalers and distributors are relatively new arrivals, operating on razor-thin margins; they add value through consolidation and efficient logistics. Even über-conglomerates such as Bertelsmann have divided their business into strictly separate entities.

The internet has shaken this up, and once again we are seeing a trend towards vertical integration. In part this is due to the increasing closeness of “originator” to consumer. Diversification is again being seen as a good thing, or even a survival mechanism. Industry dynamics are changing, but we should watch for monopolistic control.

Hachette and Random House are among the UK publishing groups selling direct to consumers. Although only on a small scale, this shows that publishers are prepared to cross over into retail. What should worry retailers is that publishers are the market makers: they filter, spot trends, create demand and even support retailers to promote their products. Large publishers are in a position to become better booksellers than some retailers, and this will be increasingly apparent with the take-up of electronic content.

Amazon, too, is creeping back up the supply chain with the recent acquisition of Audible, the launch of Kindle and the revival of BookSurge. Their recent aggressive approach to print-on-demand sourcing means that some 10,000 US and European publishers who have 500,000 p.o.d. titles will need to reconsider their printing and distribution arrangements. Many smaller publishers have been using Amazon’s Advantage programme as an alternative distributor for years. And indie bookshops sometimes buy stock from Amazon as well as Tesco and Asda.

Amazon has the power to connect an author to a large number of readers directly. Publishers truly add value, but it is not unfeasible for Amazon to acquire publishing talent to really beef up BookSurge’s proposition. Remember that Barnes & Noble bought Sterling Publishing and Spark­Notes, and now has a thriving classics line.

Then there are the wildcards of Apple and Google. Whether we believe e-books will take off in the short term, it is undeniable that we read more and more on screens, and both these companies have the ability to facilitate this. Ultimately they could match author to readers as efficiently as any who’ve come before them.

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