A: The same things as traditional publishing!

A unique and compelling idea; great writing; author promotion; a good looking cover that fits the tone and genre of the book; and places to sell the book.

I try to keep this blog strictly editorial and don't get into promoting my company. But on this topic I'm going to make an exception and post a slide presentation that covers what I am calling micropublishing - and that introduces a new service area for my company!

A: Publishers and retailers work together well in some areas - but there is a huge disconnect based on competing self-interests that make it difficult to help each other succeed.

What makes for a successful retailer? More revenue than expenses, of course, but not just a simple profit and loss reckoning, but profitability within a biz model that includes a positive monthly cash flow. Healthy cash flow is achieved through healthy inventory turns. What are turns? For a bookstore that mean ordering copies of a title on payment terms (often 60- and more often 90-days to pay) and then hopefully selling those copies and getting money for them at the cash register before writing a check to the publisher. How likely is that to happen if you are stocking 200 thousand inventory items in a big box national chain? Not likely. But hot selling titles will hopefully push overall performance numbers up. But what happens if there's no new Harry Potter or vampire title to average in with the laggers (and even help them move more briskly because of increased consumer traffic) on the aggregate? What if you are a retailer and your inventory piles up to the point that you don't have the funds to buy new books (referred to as 'open to buy dollars')? Simple. You return slow-moving titles, of course. Store buyers place their orders with publishers (and/or distributors) based on projections of how many copies of a book his or her stores will sell in the first four to six weeks. How does the buyer come up with those projections? He listens to the publisher's sales rep give the key selling points, comparable titles, and publicity plans. He then combines the sales rep's projections with what his reports on the comps and his own gut tells him, and then places his order a couple weeks or months later. With the large chains the buyer will get a personal report card based on how well his titles met those projections. He has the further accountability of a finite dollar number in his corporate check book. Once that number nears zero without being replenished, his 'open to buy dollars' are done. So not only will he return books if they are not coming close to meeting forecasts, but he may be forced to return some borderline performing titles in order to have more dollars available to purchase a hot-selling title. To the publisher this feels like the retailer is paying his bills with returns.

The preceding paragraph sums up what is in a book retailer's best interests - and what their challenges are. What about the publisher?

A publisher feels like she will do well on a single title when she adds up pre-press expenses (cover and interior design and editing), manufacturing expenses, direct marketing expense, overhead, a return reserve (usually an aggregate percentage applied to each title that assumes not every copy printed will actually sell and will have to be disposed of as an overstock or remainer), and royalty expenses (including advance against royalties), and then subtracts that number from sales projections - usually three-month, six-month, and 12-month projections. How does she come up with those projections? She reviews the performance of comparable titles and considers the author's ability to help promote sales of the title to come up with her own number. She then shares her thinking with sales and marketing teams who will listen and agree or disagree in some measure and come up with their own projections. Different companies settle those differences in different ways. The publisher will do well on a single title in reality when the retail buyer brings in the number of titles projected (sell-in) and consumers buy enough copies of that title off the shelf (sell-through) to generate reorders. The publisher will get her report card on the basis of meeting or exceeding the original projections. She will do particularly well when overall sales pay off any advance against royalties and re-orders are frequent enough to keep inventory levels down (books sitting in a warehouse are like bananas - they can go bad overnite!).

The common success denominator for retailers and publishers is managing inventory levels. The retailer tries not to over order in the first place and is quick to return laggers. Both dynamics hurt the publisher who saves money on higher press runs and gets killed by returns. When publisher and retailer both get too conservative in order to combat this, another negative occurs. Stock outs. What happens when a customer comes to the store and the book he is looking for isn't there? She forgets about it - or if he is persistent, he orders it online and waits for it. That kills brick and mortar retailers. Another less obvious impact of conservative buying patterns is the lack of merchandising. There was a day when you would walk into a bookstore and there would be numerous titles stacked high to capture attention and send the message that this was a book that just had to be purchased. With a few notable exceptions, like the afore-mentioned Harry Potter example, title emphasis is more subtle - and much easier to miss (or ignore).

Two relatively recent technological developments that are helping publishers more than brick and mortar retailers are print-on-demand and the e-book. Print-on-demand vendors provide a pretty high quality book (and the print quality is getting better all the time) - though without bells and whistles like foil and embossing - overnight and at a reasonable price. Not as good a price as printing 100 thousand books on an offset press, but a good enough price that beats the heck out of an excess inventory fall bonfire! An e-book is never out of print. Add those two dynamics together and any book is technically available within 24-hours to a retailer or individual consumer without the risk of large print runs.

But back to the publisher-retailer relationship. Even print-on-demand can't totally mitigate the damage to performance numbers that occurs because the two parties have conflicting interests when it comes to inventory management.
Is there a solution? If you follow the financial reports of major publishers and retailers, neither side of the equation is doing well enough to give much in the give and take of business.

The solution for the author who wonders why his or her book isn't selling like it should is to look in the mirror and ask him or herself what he or she can do to build demand. The book publishing and selling environment isn't currently emulating the Fields of Dreams. Just because you wrote it doesn't mean it will sell.

A: Not very.

But that doesn't mean they aren't important. They are great for publicity and will probably help generate more sales. Many people peruse the various lists to help them determine what to pick up next. They are fabulous for an author's ego. Admit it, wouldn't you like to have the tag New York Times Bestselling Author under your name every time you published a book? All it takes is once!

Why aren't they accurate?

Book publishers don't use a upc code on the back of their books. Why? There is an ancient custom that retailers should be able to set their own prices. Instead most publishers use an ISBN number and code. Some use nothing at all. That means a whole new reporting system is needed to gather point-of-purchase data. The biggest collector of this data is Nielson's BookScan system - modelled after music industry's SoundScan.

But not all retailers feed their data to BookScan and not all bestseller lists use BookScan anyway. The New York Times has the most prestigious list, which is based on several large chains, a number of independent booksellers, and select mass market accounts. USA Today and the Wall Street Journal employ similar methods of sampling, including judicious use of BookScan. Ditto Publisher's Weekly. However, many large booksellers -like Sams and a number of other mass market retail chains, schools, Christian bookstores, rackjobbers, e-books, and high volume tabletop display marketers - don't provide their data to BookScan. The largest Christian retail chain doesn't even provide its data to the CBA (Christian Booksellers Association) bestseller list. One wouldn't, of course, expect the lists to account for other 'special markets' including direct sales nor organizational and author purchases. The good news is that Amazon sales are now included with BookScan - but several of the lists resisted using Amazon's sales until the last few years.

What percentage of book sales are reflected on bestseller lists? No one knows for sure based on all the above reasons. I've heard estimates ranging from 30% to 50%. Anecdotally, one author friend has now sold three million copies of a single book. Of those, 100 thousand have sold in traditional book selling settings and the other 2.9 million have sold direct to consumer, business to business, or through back-of-room sales when he speaks.

Because bestseller lists do create positive publicity and sales momentum there are more than a few occasions when authors and publishers have attempted to manipulate their book's placement on the lists. For example, back when it was harder to track single store sales, an author or agent might order the five or ten or twenty or thirty thousand copies of a new book needed for speaking engagements through a single bookstore to 'force' a book onto the list. I'm sure this has helped ongoing sales just for the fact that accounts would see the book show up on a list and order more store copies. But point-of-purchase data, at least within a chain, is now sophisticated enough to spot this as an anomaly, not a trend. The New York Times at least used to put a dagger symbol next to books that had large bulk orders. (Do they still do that?)

There is a publisher axiom that says you can get a book on any bestsellers list through marketing but in order for it to stay on the list it has to be a great book. Longevity of a book on various bestseller lists is almost always an indicator that the book has real 'legs'. Or, in the case of books that sell hundreds of thousands or even millions of units and never show up on a list, they either need to be great or the author needs to have a great platform for moving product.

So bestseller lists are important indicators of what's happening in major swatches of the book selling environment but they have information gaps in that environment and don't even attempt to measure what's happening in special markets, so they can't tell the whole story of which books sell most.

A: For traditional trade publishers, schedules are built around the selling cycle of key account retailers.

Start backwards. Pretend your book hits the shelves at Barnes & Noble on September 5 - I'm singling out B&N for purpose of example only. Why did it take a year to get there? (And yes, publishers would prefer to have a full year from the point when they purchase a manuscript from an agent until the time it hits the shelf.)

Month 12
To have a book on the shelf on September 5, B&N probably needs the book to start delivering to their distribution centers on August 5. It will take them a week or so to get it organized to ship to their 700-something stores; another week or so for it to arrive at all locations; and the next two weeks for local stores to get on the shelf. Remember, they have only so many inches of book shelves dedicated to your book's category, so it's likely that some slow-selling titles are getting removed from shelves and returned to publishers. If you have a real, bona fide marketing plan, you now do your thing this month and in the next few months. Pray that the retail buyers believed the sales person who told them what the marketing plan would be so that books are in the market when you tell people about it on radio interviews and internet blog tours.

Months 10-11
Printer ready files of your book were sent to the printer. The printer needs a week or two for the make-ready process. They will have ripped 'blues' of interiors and covers that were sent to publisher for approval. They were probably forwarded to you as well - or at least a pdf file was emailed to you to read over. It takes each of you a week to do your final quality checks. It can sit a week or two in a long line of projects before it hits the print line and it might even get bumped because a new novel by Stephanie Meyers or John Grisham is selling so fast that the printer gave your spot in line to another publisher. (Sad to say but true - it happens.) It takes another week or two for the book to get shipped to your publisher's warehouse or distribution center and yes, it takes them a week or two to ship it to B&N.

Months 8-9
You might find out that your editor is now assigning you to a copy editor. A copy editor gets into the nuts and bolts of grammar and syntax and punctuation. You get an edited chapter every day or two and you are given 24 to 36 hours to respond! Not fun. Finally, in week 7, you see a final cover; you like it better; you might love it; you might have Exhibit A when you explain 16 months later to your family and friends why your book really didn't sell. You get a final edited manuscript and are told you have three business days to make any final changes. A week later you get a typeset copy of the book. It's amazing how much better your material reads when it is professionally typeset. You have another three business days to mark any mistakes or changes.

Months 6-7
You don't hear much the first three weeks but the publishing team is very busy getting sales and marketing tools prepared for sales conference. In week four you get a cover you don't like. You protest. You might even have won the argument but you have a friend who comes up with an even worse cover and you tell the publishing team how much you like it because you had more of a say in it, ruining your credibility. The publisher finally says that catalog drop dead date is here and they'll have to use what they've got but they'll consider revising prior to publication. An improved version gets used with the sales sheet. You wonder why a publisher does a catalog if the real presentation is done with a sales sheet. He or she doesn't know why either. In addition to key account presentations, your manuscript is sent to trade and consumer outlets by the publicist. We'll come back to this time period later.

Month 5
No one is real happy with the state of the manuscript but someone from the marketing department needs to write catalog copy and uses what they have. Another marketing person calls to get your list of influencers who need a pre-publication manuscript. You tell them that it's not ready to be read by reviewers but the marketing person explains that everyone in the publishing industry understands it won't be a final edited copy.

Month 4
In the second week of this month you'll get a long conciliatory call from your editor with a list of things you need to rewrite. You have two weeks to get everything done.

Month 3
You turn in your manuscript and hear nothing. You start calling the editor who has been assigned to you and don't hear back. After a couple weeks of this you call your agent. Your agent calls the publisher. The publisher assures him or her that you'll hear from your editor in just a couple more days. Six weeks later an assistant calls and sends an email and lets you know that you'll hear from your editor in the next couple days.

Months 1-2
It takes the whole month for you to get a first draft of your contract, which is probably 13 to 15 pages long and is organized with the logic and layout of a 3,000 square foot house that started out as a single-wide trailer. You have a bunch of questions that your agent will patiently cover with you. Your agent wants to impress you with his or her knowledge of arcane publishing nuances and negotiating acumen so he or she will start insisting on contract changes. After a couple of center lane head-on chicken rushes, the parties will finally settle on the few things that actually have to do with business. Your agent will tell you the story and you'll be impressed.

Bottom line, go back and look at months 6 and 7. This is what is driving the schedule. Reviewers need their review copies and this is when retail accounts, like B&N, Lifeway, Borders, Family Christian, Wal-Mart (and their book buying distributors A-Merch and Treat), BooksaMillion, Mardells, and others expect (and demand) publishers to present new lists. There are three main selling seasons. Fall books (August through December release) need to be presented by March; Spring books (January through April releases) need to be presented by August; Summer books (May through July) need to be presented by the middle of November.

Are there exceptions? Yes. They are called 'drop ins' and that works great with big, time-sensitive book concepts. Emergency land a plane in the Hudson River and save a couple hundred lives as the captain of an airline and be assured someone can and desperately wants to have your book in the market in the next two months. But there needs there to be a compelling reason to rush to press. Otherwise, you can do a lot more harm than good and seriously damage your sales.

Maybe this long-winded A to your Q will make the wait for your book to reach the market seem more bearable!

A: I can only answer on the basis of today, and on November 25, 2008, the answer is that the publishing industry has indeed been impacted negatively and at least in equal measure to the overall economy!

The old axiom was that publishing was recession proof - especially religious publishing. Why? In the overall scheme of the economy (and people's pocketbooks) books are a relatively inexpensive form of entertainment, best partaken of at home, which saves gas and eat-out money. In the case of religious publishing, the prevailing wisdom has been that when the economy is good "people play" but when it's bad "people pray!"

But in this maybe-post-probably-ongoing-subprime-American-automaker-melt-down-government-bail-out-required economic downturn, sales are not good for retailers or publishers. The list of retail chains reporting same-store declines is as long as the list of ... well, uh, retail chains. The only reliable statistics available on the health of independent retailers is the number that are closing on a weekly basis. Iconic flagship book retailer, Barnes & Noble, reports glum 3rd quarter results and 4th quarter projections:

B&N Sales Sink; Sees Gloomy Holiday
by Jim Milliot -- Publishers Weekly, 11/20/2008 6:19:00 AM

The news was about as bad as it could be from Barnes & Noble. For the third quarter ended November 1, total sales fell 4.4%, to $1.1 billion, with sales through its bookstores down by the same 4.4%. Same store sales fell 7.4%. Sales at Barnes & Noble.com rose 2%, to $109 million. Moreover, the nation’s largest bookstore chain predicted that--based on the negative sales trend to date--same store sales in the fourth quarter will fall 6% to 9%. Earlier this month, B&N chairman Len Riggio warned employees in a memo that the company was bracing for a terrible holiday season.

Books-A-Million, which is strongest in the Bible Belt fared even worse.

BAM Comps Drop Nearly 10%
by Jim Milliot -- Publishers Weekly, 11/21/2008 2:13:00 PM

The drumbeat of bad news from the nation’s bookstore chains continued Friday with Books-A-Million reporting that total revenue dropped 5.7% in the third quarter ended November 1, to $110.9 million. Comparable store sales tumbled 9.9%, the “weakest comparable store sales in many years,” said CEO Sandy Cochran. With the sales decline, BAM’s loss deepened to $2.2 million in the quarter compared to a loss of $555,000 in last year’s third period.

The sales decline was felt in most segments, Cochran said, with bargain books, gifts, and the teen categories among the few areas where business was up. A decline in customer traffic plus a cost conscious consumer where blamed for the poor results. BAM is focused on “controlling costs, managing inventory and preparing for the holiday season,” Cochran said.

While Cochran said the holiday publishing schedule is a good one, she sees few signs indicating that the difficult marketplace will shift anytime soon. For the first nine months of the year, revenue was down 4.8%, to $349.2 million, and the company had a loss of $635,000 compared to earnings of $4.6 million in the same period last year. Comp sales for the nine months were off 8.0%

Perhaps the most dramatic announcement came from the supply side of the industry with the news that literary giant Houghton Mifflin was putting a hold on acquisitions - akin to a fish saying that they might spend a year away from the water.

HMH Places "Temporary" Halt on Acquisitions
By Rachel Deahl -- Publishers Weekly, 11/24/2008 12:54:00 PM

It’s been clear for months that it will be a not-so-merry holiday season for publishers, but at least one house has gone so far as to halt acquisitions. PW has learned that Houghton Mifflin Harcourt has asked its editors to stop buying books.

Josef Blumenfeld, v-p of communications for HMH, confirmed that the publisher has “temporarily stopped acquiring manuscripts” across its trade and reference divisions. The directive was given verbally to a handful of executives and, according to Blumenfeld, is “not a permanent change.” Blumenfeld, who hedged on when the ban might be lifted, said that the right project could still go to the editorial review board. He also maintained that the the decision is less about taking drastic measures than conducting good business.

“In this case, it’s a symbol of doing things smarter; it’s not an indicator of the end of literature,” he said. “We have turned off the spigot, but we have a very robust pipeline.” The action by the highly leveraged HMH may also be as much about the company's need to cut costs in a tight credit market.as about the current economic slowdown.

What's it mean for you as author or aspiring author?

If your heart is set on publishing with a traditional publishing house of note, the news isn't great. My own company, Thomas Nelson, in anticipation of emerging economic woes, cut the number of titles being published almost in half as of March 2008. As a publisher I always find it more fun to do books than to not do books, but unquestionably, we were ahead of the curve.

If you are able to see publishing not just in terms of a paper and ink product with a particular logo or name on the spine - and are open to the array of self- and micro-publishing options available today - then this is just one more confirmation to go for it now rather than wait for your deal to sail in!