The Subscription Revolution

As anyone who regularly reads this blog knows, I believe that successful authors must do more than be good writers. They must also educate themselves about the publishing industry. Otherwise, they work hard, but not smart. And, in the worst case scenario, they run the risk of being shorn by lamb-fleecing scam artists.

Today, as I cruised the Internet, I discovered a new article by Richard Curtis. For those of you not familiar with him, Curtis is a New York agent. Back in 2004, he wrote three articles on "Publishing in the Twentieth-First Century." On October 7, I recommended the series as a must-read for any new writer trying to understand the publishing industry.

While it's not necessary to read Curtis' series before you read the new article, it does give you the background material. The series explains how the "returns" system that permits bookstores to return unsold books for credit developed. It's Curtis' contention that this system is today strangling publishers.

Curtis says the old system worked while the returns were kept at 10%.
Now that they are at 50% or more, publishers are choking on the losses created by the returns.

The latest article is entitled "The Subscription Revolution," and it describes a new economic model for publishing.

Curtis begins by talking about Amazon.com and its rankings. He draws attention to those books that already have rankings on Amazon although they are not yet in print. This is possible because fans anxious to read upcoming releases are pre-ordering the books. He describes this dynamic as a subscription model similar to that of book clubs.

What's revolutionary about this? The fact that we now have two separate systems: First, the traditional process in which books are shipped to bookstores, and then the 50% of books left unsold are later returned for credit. The second, newer system has books being ordered online and shipped from the publisher to Amazon AFTER THE SALE. No returns and no additional shipping fees are incurred in returning the books.

Which system is the most efficient and least expensive?

Readers of this blog will remember a post entitled "Amazon's New POD Initiative" (May 23rd) in which I described Amazon's plan to use its new POD company, BookSurge, to print books upon receipt of an order from a consumer. Curtis points out that the addition of BookSurge to the equation eliminates the need for publishers to ship the book to Amazon. Now, when the order comes in, Amazon can print the book and ship it--saving even more money. Amazon acts as the middleman for the transaction between the publisher and the consumer.

Curtis points out that an even more efficient system would have the publisher cutting Amazon out of the equation by taking the orders and using POD technology to print the books themselves. This way, they would have no need for warehouses to store books because there would be no excess books. They would only print and ship books when they had an actual order in hand.

He's talking about the death of bookstores. Is this possible?

I've been nattering about delivery systems for months. Delivery systems change. Don't believe me? Think back in time. Fifty years ago, milk was delivered to your door, meat was sold in butcher shops and physicians made house calls. The current bookstore model, which allows for returns,
is inefficient and costly. The new subscription model--virtual bookstores--is more efficient and certainly more profitable. Curtis believes--and I agree--that smart publishers will begin moving in this direction.

To read Curtis' articles, go to:
http://www.bksp.org/secondarypages/articles.htm.

To read my previous blogs on delivery systems, go to 10/30/05, 10/31/05 and 1/2/06.