Wednesday, April 23, 2008

A Look Into The Future of Publishing

Last Thursday, I reported here on Michael Hyatt, president and CEO of Thomas Nelson, and his decision to pull out of the Christian trade show circuit. Instead he and his staff decided to re-divert the resources they had been devoting to attending trade shows to another purpose.

Nelson, the world's largest Christian publisher, invited its top 100 accounts to something they called Open House. From April 10 to 12th, those accounts were treated to an all-expense-paid series of seminars and events at Nashville's Music City Sheraton.

Yesterday's Publishers Weekly had a story in their "Trends" section on Nelson's first Open House. The article reported that 240 retailers attended that program.

At Open House, many attendees expressed surprise at the low-key, no-sell approach. There were no exhibits, no sales appointments and no product presentations, aside from a few five- to seven-minute video clips sprinkled throughout the seminars. Though most of the sessions and events showcased Nelson authors like John Maxwell, Max Lucado and Donald Miller, there were also presenters who are not on the publisher’s roster.

Hyatt's 45-minute presentation to the group is available on YouTube in five parts. I watched it at 6:00 this morning here. It's a masterful combination of Hyatt's personal testimony of faith, a motivational speech about Christian retailing in today's market and a look at where Thomas Nelson is headed.

Among the things he said:

. . .the economy is forcing everyone to make tough, but good decisions . . . in a recession, you're forced to prioritize . . . we realized for example in our fiscal year just ended March 31st . . . we did over 700 new titles last year . . . a small drop in an ocean of over 250,000 new titles introduced into the U.S. every year . . . We don't need more books, we need better books.

We found that . . . 23% of our new titles last year drove 90% of our revenue . . . So we've made the decision to cut our new title introduction in half . . . We can do that with hardly sacrificing any revenue and increasing the focus on the books we continue to do . . .

In a recession you're forced to allocate resources, and it's a good thing . . . Another thing we did, we took the Pareto Principle, 80/20 principle, and we also applied it to our accounts, and we found that overall over the whole company less than 4% of our accounts were driving 90% of the revenue . . . And yet we spend a lot of our time servicing the smaller accounts . . . We'd better be giving our best time and our best resources to people . . . that represent the majority of our business. And that's really what this weekend has been all about.

It's also forcing us to make tough decisions about our marketing activities. We don't need fancier marketing. We don't need glitzier marketing. I don't even think we need more marketing. What we need is marketing that drives sell-through. Period. And that's how we're evaluating everything that we do today.

Take a look at Hyatt's presentation. It's a skillful blend of inspiration, hard facts, motivation and a look at the future of publishing.


Stephen Parrish said...

We found that . . . 23% of our new titles last year drove 90% of our revenue . . . So we've made the decision to cut our new title introduction in half . . .

That only works if you know which new titles to cut, i.e., the losers. And if you know they're going to be losers, why have you been publishing them in the first place?

More realistically, if you cut your offerings in half, you'll cut your revenues approximately in half as well.

Maya Reynolds said...

Stephen: It all comes back to this sentence by Hyatt: "In a recession, you're forced to allocate resources."

In bad times, companies become less likely to take chances. It is probable that Nelson will be inclined to publish the "known" quantities--the best-selling writers rather than "unknowns" like newbie authors who have not yet built an audience.

On April 7th, I wrote about the possibility of overturning the system by which bookstores can return unsold stock. I said:

The major advantage the "returns" system offers publishers is that it makes bookstores more willing to stock new or unknown authors. Without the guarantee that they could return any unsold stock, booksellers would probably confine their purchases to the "sure thing" sales: books by best-selling authors or on explosive subjects.

These are tough times for newbie writers trying to get a foot in the door.

Stephen Parrish said...

But the new writer is the life blood of the publisher's future. Imagine Columbia Records relying on sales of Aerosmith and Billy Joel; they'd long have gone out of business. You MUST be in the grab for new talent. At all times. Even bad times.

At least I would be.

Maya Reynolds said...

No argument. But you're describing long-term thinking.

Remember what I keep preaching here. As the result of the consolidation of the industry, both the big publishers and the chain bookstores are now owned by publicly traded companies. That means they have to report to their shareholders every quarter.

That 90-day window tends to create very short-term thinking, not long-term strategic thinking.

Additionally, writing isn't like sports where a player only has a ten- or fifteen-year window in which to play. A best-selling writer can have a thirty-, forty-, or even fifty-year career.

I agree with your premise. However, that isn't the way the industry operates right now.

Having said that, I need to point out that Hyatt took Thomas Nelson in the opposite direction. In 2006, the company delisted its shares from the NYSE and went private as a wholly-owned subsidiary of Faith Media.

Historically, independent publishers have proved to be some of the most independent thinkers and innovators. Kensington Publishing is still independently owned and continues to make interesting (and exciting) choices. They were the first large publisher to jump on the erotic romance trend. In June, 2007, they formed an alliance with Samhain, an e-publisher, to bring popular e-books to print.

In general, I think independent publishers have more time and more freedom to grow young writers.

Similarly, independent bookstores have frequently been more willing to promote newbie writers than either chain bookstores or big box stores. Wal-Mart and Target skim the cream, stocking only the upper tier of best-selling books.

Stephen Parrish said...

Your use of the word "premise" is right on; businesses that survive longest are the ones that ignore short term trends.