Publishing 3.0

I've quoted Mike Shatzkin on this blog several times before.

Mike is the CEO and founder of Idea Logical, a consulting company that, according to its website, provides insight into how the "print publishing world can address the many challenges posed by digital change."

As I've reported before, on May 31st, Mike addressed the Book Expo America. His entire speech can be found here.

I was particularly interested in this comment he made:

I would hope everybody is aware of a recent reorganization announced by perhaps the most “general trade” of the religious publishers, Thomas Nelson, whereby they have ditched all their previous imprints in favor of organizing around BISAC codes . . . I think [Michael] Hyatt and his Nelson team have taken the first big step to becoming compatible with the way society and information are reorganizing . . . Nelson has demonstrated the first point general trade publishers need to take on board: the imprints are company infrastructure that are built around a dying ecosystem. Everybody’s are.

I've linked this blog to Michael Hyatt's blog since early March when I first discovered him. I've been waiting for an opportunity to write about the reorganization of the Thomas Nelson Company (TNC). After I heard that Hyatt had spoken at the Book Expo, I started to search for a copy of his talk.

Yesterday, Publishers Marketplace was kind enough to post a video of Hyatt's entire speech. I ignored the charms of Liev Schreiber guest starring on C.S.I. last night to watch Hyatt's presentation.

Hyatt started by describing the history of the Thomas Nelson Company. Instead of regurgitating that information, I'll substitute the Wikipedia description of the company: "currently the sixth largest American trade publisher and the world's largest Christian publisher."

Hyatt described the first hundred years of the company as "Thomas Nelson 1.0."

He dated "Thomas Nelson 2.0" as beginning with his tenure in 1984 when the company embarked on a buying spree and launched several new divisions. By 2004, Thomas Nelson had eighteen total imprints. Hyatt said imprints are like bunnies. They're cute, irresistible . . . and they multiply.

Although the company was doing well, there were problems. Chief among these were:

(1) Redundancy. As an example, each company printed its own catalog, and the TNC sales force had to carry all those catalogs on their rounds to booksellers.
(2) Unnecessary Competition. The various imprints were competing against each other, even occasionally bidding against each other and driving up advances.
(3) Complexity. The TNC staff often had difficulty in describing how one imprint was different from another, and authors couldn't tell which imprint to query.
(4) Brand Confusion. TNC had author brands and imprint brands but no real Thomas Nelson brand. Hyatt dates "Thomas Nelson 3.0" from the moment he realized this during a meeting with Barnes & Noble executives in 2004.

Prior to making any rash decisions, Hyatt took several steps to analyze his company. For eight months TNC developed a proprietary database in which they collected all the point-of-sale information they could find based on the BISAC codes.

If you're not familiar with BISAC, you can check the definition on the Book Industry Study Group's website here.

In essence, the BISAC codes are used to help shelve books. "The BISAC Subject Heading List is an industry-approved list of subject descriptors, each of which is represented by a nine-character alphanumeric code. The descriptor itself consists of two, three, or four parts . . . For example, the code for the descriptor representing general African history is HIS001000 and the related descriptor is "HISTORY / Africa / General". There are 50 major sections, such as COMPUTERS, FICTION, HISTORY, and TRUE CRIME. Within each major section are a number of detailed descriptors that represent sub-topics . . ."

TNC then matched their imprints' marketing plans against the BISAC sales data. Some of the results were disquieting. Hyatt gave the example of TNC's big push into gardening books. The BISAC data revealed that readers were moving away from such books and instead getting their info online.

At that point, Hyatt took a giant step. He dismantled the functional silos represented by the TNC imprints. The company reorganized into divisions that more closely resembled the BISAC codes. In some cases, this wasn't difficult. TNC already had a children's division, a business division and a gift division.

I found one of the new divisions very interesting. TNC set up a separate division for their "Big Authors." In order to keep those best-selling writers' brands from swamping the Thomas Nelson brand, the company established a separate section with fourteen people who support these eight or nine blockbuster writers.

Two principles guided the TNC decisions: The company reorganized according to customer needs and with a focus on the TNC brand. "If it doesn't add value, it disappears."

This plan went into effect April 1. Hyatt has already discovered numerous advantages:

(1) Dramatic simplification
(2) Better internal collaboration
(3) A greater consumer focus
(4) More market visibility for the Thomas Nelson brand

In talking about the TNC reorganization, Mike Shatzkin said:

EVERY trade publisher who does this exercise will, we’re sure, find themselves spread too thin . . . To succeed in the future, you will have to make commitments to communities: commitments to publish a critical mass of content and commitments to be a presence in the communities’ conversations. This will require choices that were never contemplated when the interested parties were PW, The New York Times, and the buyers at major trade customers.

After a publisher has assessed how its roster of product offerings maps against the evolving digital community structure, the next step is, to the extent possible, reorganize the business around the future, rather than around the past.

First of all, the publisher needs to exercise discipline to stick to the niches to which a commitment is being made. Any book published in those niches can add future value, regardless of how much money the book might lose. Andy (sic) any book published outside those niches adds nothing to future survivability, regardless of how much money the book might make . . .

The niche must become the main unit of management attention.

Marketing efforts, similarly, should be conceived, directed, and measured by niche, not just by title.

And recognition of the niches helps identify the other stakeholders in the niche, most of which will not be publishers and will not be competing with publishers. In fact, they will often be potential partners for publishers, able to forge a symbiotic relationship with them. You need to get your company partnered with those other stakeholders before your competitors do.

We're talking Publishing 3.0 here.