06 February 2004

Between the Lines

Yesterday's Publisher's Lunch included a fascinating item on the realities of book inventories, fulfillment, print runs, etc. With apologies to Mr. Cader—I think his analysis is good, but doesn't go quite far enough—I'm going to quote a significant part of the story, along with my comments.

Perhaps Baker & Taylor senior vp of merchandising Jean Srnecz underscored the importance of the topic at hand the best, proclaiming, "Supply chain people are 'the new gods.' In some cases, power has shifted from sales to the supply chain people." In a climate of "shorter life cycles, higher consumer expectations, and technological changes," Srnecz believes "The operations part of the industry is what will take us to the next level."

Her plain-speaking advice underscored a host of simple inefficiencies in standard practices: "Many publishers have taught buyers to buy a lot of upfront because you won't get it later." But when print runs are oversubscribed they reduce all orders equally. "What a dumb strategy…. Unfortunately publishers have taught customers to play the game theory and lie, and they get a payoff."

Other advice include [sic] "Acquire what is saleable" and don't replicate titles that already exist. Slow turn-around time on orders is a real hazard, and "We [the industry] really suck at this." In particular, she urged children's book publishers to find "a way of turning reprints around quicker," suggesting more standardized trim sizes and North American suppliers. "If you can't reprint them, you can't sell them."

Comment: You can probably guess by now that the last paragraph is the nub of this argument. It all depends on what you mean by "what is saleable." If it means something like "something that we've already proven we can sell"—which, under "modern" American management theory, is the most-probable meaning—the shape of the industry is going to change pretty radically. The divide between the "big five" (or however many are left after the next wave of consolidations) and the rest of the industry will grow even greater, because the biggest publishers will no longer have an incentive to take risks on anything that doesn't look just like everything they already have in print. Innovation will be pushed down to smaller presses. For example, FSG would not publish Presumed Innocent; instead, that would have fallen to Grove Atlantic, or perhaps someone smaller. Come to think of it, that's not too far off discernable trends as is…

*  *  *

Mike Shatzkin of the Idea Logical Company gave concrete examples of his firm's analytic process for taking Barnes & Noble sales data compiled by Bookscan and revealing "very particular details in an actionable way." Echoing the theme of many participants—that "Context is everything; sales data without inventory data is hard to make sense out of"—Shatzkin's process reveals countless examples in which the numbers can show when the chain is undersupplied on backlist titles that are turning quickly (and oversupplied on backlist titles that are not). Notably, his analytics don't apply to the top of the list, which everyone is watching closely, but rather ones like "the eighty-ninth best performing title" from big company and its peers. He characterizes these "books underneath the very top layer" as "the band of opportunity."

Comment: The basic idea here is interesting and worthwhile; but, as someone with more than a bit of scientific background, I find the stated source for data downright offensive. A focus on B&N data from Bookscan is so underinclusive that one cannot draw a statistically valid inference from the results, unless one's target audience is exclusively B&N. By my count, that's less than 30% of the market in books, even throwing in B&N's online site, and much less so for fiction and serious nonfiction.

Between the Lines: The common thread in these two excerpts, and in the rest of the writeup, is a drive for prepublication certainty. This should not surprise anyone who has watched the industry over the last couple of decades. It is also extremely dangerous, because drawing conclusions from it depends upon one huge, easily disprovable assumption: that past purchasing and inventory records predict the future in a time of constant changes in media types, mixes, purchasing habits, and uses. For example, Joanne Rowling was not predictable. More to the point, the follow-on effects of her success would have had an insufficient statistical base for analysis for almost two years after publication of Philosopher's Stone (to hell with your dumbing-down of the book, Scholastic—the kids got it, even if you didn't). This then becomes a self-fulfilling prophecy.