If you follow the book publishing industry as much as I do, you know that yesterday was a dark day. In what many are calling “Black Wednesday”, a few key publishers announced employee layoffs and/or salary and hiring freezes.
- Simon & Schuster laid off 35 people.
- Thomas Nelson, the world’s largest publisher of English-language Bibles cut 55 people from their payroll.
- Random House reshuffled their upper management, and now many are waiting for an announcement of staffing changes.
- Houghton Mifflin announced further layoffs.
All that happened yesterday. Today, there’s more…
- HarperCollins plans to delay pay increases until after July 1, 2009. As of yet, they haven’t decided whether to eliminate jobs.
- The chief executive at Macmillan told employees that he could not guarantee that everyone would have a job going forward.
- Bowker announced a restructuring and laid off 13 people in the U.S.
One wonders what’s next?
This much is clear. Book publishers need to face the reality that their tried and true sales model is coming to an end.
Book publishers depend largely on the retail channel for their sale revenue. Unfortunately, that channel has been weakening with each passing month, and publishers have little recourse than to cut back on expenses. They do not have a direct relationship with the book buying individual, so they can’t suddenly decide to sell direct from the web. They depend on online retailers like Amazon for the bulk of their virtual brick and mortar sales. They cannot pick new books that will be surefire hits because they don’t know what their customer wants. They only know how many units similar books have sold through in the past. Every decision to publish is a risk of precious cash.
So, is the publishing business lost? Hardly, but their recovery won’t be easy.
Publishers will have a difficult time building a direct relationship with customers. Their internal structure is not setup to accommodate it. They can however, partner with organizations who do have direct relationships with buyers. Now, you might say, isn’t that the kind of partnership they already have with Amazon? No. Amazon owns the customer relationship and they don’t share that. Moreover, the publisher treats them like just another retailer. Book publishers need to co-promote and co-publish with organizations who own relationships with real buying customers. These organizations regularly communicate with these customers. They can ask them what product they want, how they want it, and what they’d like to pay for it. Book publishers can, for the first time, publish books that are created specifically for identified groups of people. Some will even pay ahead of time and essentially fund the development of products. This is being done in the marketplace right now.
All of this means the publisher will need to think and react differently to an unknown market. For the most part, they haven’t been willing to do this on their own. Today’s economy will force them to adapt. Is it risky? Of course, but the alternative is death. The question is, who will have the will to choose life?