Indie Publishing: The Problem With Book Distribution

by Joel Friedlander on February 16, 2011 · 12 comments

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When I first got involved in book publishing I read a lot about the book distribution system in the United States and how it was “broken.” Writers at the time maintained that the distribution system needed to be completely re-thought if the industry was to continue to grow.

Not only that, it appeared that these ideas about book distribution weren’t new, they had been going on for many years.

All this took place about 30 years ago.

Book distribution hasn’t changed that much in the time since. When you work for a large publisher, or a good-sized independent, you work within the distribution system. Publishers, wholesalers, distributors and retailers understand their place within this system. These talented and dedicated professionals make it their life’s work to produce, market and sell books within this system and often succeed in every way you can succeed in bringing good quality books to the attention of a large number of people.

So what’s “broken” about this system, and why does it work so poorly—when it works at all—for micro publishers, indie authors and self-publishers with just one book?

Why Book Distribution Doesn’t Work For You

In order to understand how book distribution works you need to understand publishing as a media enterprise. Because books are such personal objects, and readers have such an intimate experience when reading, it’s easy to forget that publishers are media companies.

What I mean by this is that their businesses are mostly national businesses. Mass media, by its nature, is a broad avenue with many outlets. Look at these four effects that come from this fact:

  • One to many—Mass media have few inputs, but many outputs. In other words, publications that appeal to the broadest possible audience are the mainstay of media companies, including publishing.
  • National scope—because it’s necessary to reach the largest number of people, most campaigns for books published by large publishers are national campaigns. Rather than addressing a particular niche, books are positioned to achieve the widest possible readership.
  • Blockbuster mentality—because books are pushed into national campaigns, a great deal of money is tied up in launching these books. This naturally leads to a high risk strategy. Publishers now are getting upwards of 60% of their income from new titles. Years ago most of the revenue came from backlist, and there was an incentive to find books with a long shelf life. Now publishers expect some new books from each year’s harvest will become wildly successful on a national stage, carrying the rest of the company with them. Books that may only be moderately successful can’t “earn out” in this scenario, and are second-class citizens.
  • Protection of retailers—the risks involved in the blockbuster mentality are not lost on retailers, who have to bear the brunt of the publishers’ gambles. One of the chief features of the book distribution system—you can return the books that don’t sell—grew out of this asymmetry between the risk and rewards of the publishers and their partners, the bookstores. In order to “protect” the bookstores, publishers made their books returnable, eliminating much of the risk from the equation.

So in order to operate profitably within this system, a publisher has to

  • Identify books that will have a very broad appeal
  • Market these books to a national audience
  • Print and distribute enough of these books to take advantage of mass media exposure
  • Absorb the losses on all “losers” by using the profits from big “winners.”

What This Means for Indies

The effect of this system is that, for most indie publishers operating on their own, real national book distribution is very challenging. And by very challenging, I mean almost impossible to make a profit at.

The business is truly cursed with the returnability of its products. A book may appear to be profitable, and you may have received payment for hundreds or thousands of books that seem to have been sold. But that picture can be reversed at almost any time. You might look out your window and see a truck pulling up to with many of those same books being returned to you. Of course, this will also come with a debit to your account from whoever wholesaled the books for you.

Added to this is the expense, clearly beyond most indie publishers, of printing enough books to stock enough stores around the country to take advantage of a media campaign that you probably can’t afford anyway.

This would imply that the indie publisher or the self-publishing author with only one book has an unsustainable business model, if your business model requires you to use the book distribution system. It’s obvious that such a publisher cannot operate on the “blockbuster” model, since there are no “winners” and “losers” but just the one book you’ve slaved over and now hope to make a profit from.

You can’t afford to print 5,000-10,000 books, and you won’t get an account with a real distributor anyway. You won’t have a sales staff out pitching your book to book buyers at bookstores and discounters and book clubs. You won’t be running ads on busses and paying for your book trailer to be shown on the local news. You won’t be setting up a 10-city tour for yourself, or engaging in any of the other crucial parts of this distribution system.

In short, it won’t work for most indie or self-published books.

Don’t get me wrong. For the right book, the right author, and with the right support and enough of an investment, you can succeed at this, but the odds are very long indeed. The most successful self-published books succeed despite this distribution system, not because of it. They establish such a strong appeal among readers that demand for the book pulls it into the supply chain, and soon enough the author will probably license the book to a larger publisher who is well-placed to exploit that demand, something virtually no small operation can do on its own.

An Open Secret

Everyone in book publishing knows these facts, and lives with the reality that the business rests on what is essentially a consignment business model. There are two problems with this model:

  1. By its nature it denigrates the very products it intends to sell. Books that are touted as the next great read, or essential scholarship, disappear just weeks after their launch if sales figures aren’t high enough. The only commitment to these books on the part of publishers, their marketing staffs and the booksellers, is a conditional one: I’ll love you as long as you sell.
  2. It creates economic uncertainty for publishers. If your books are returnable, if you really have no idea which ones will succeed and which ones will fail because of the way the books are acquired and marketed, you have no way of controlling financial risk, even in months that appear to have already gone “into the books.”

The New World of Book Distribution

This whole sorry situation is one of the reasons why independent, direct-to-the-reader distribution that’s made possible by the internet has appealed so strongly to self-publishers and book readers who are looking for more than what’s offered to the largest possible audience. What’s pushing this along?

  • Amazon and other online retailers, democratizing influences of the highest order, present any and all books on an equal footing, creating portals for anyone who can publish a book.
  • The Internet itself, with its ability to discover products based on search rather than on wide advertising, creates a trail to those portals.
  • Social media, in which intermediaries are dispensed with as readers and authors interact with each other, mitigates the whole blockbuster phenomenon.
  • Ebooks, which eliminate the risks of over-production, over-distribution and returnability, stand the blockbuster model on its head. They allow, even encourage, the opposite model, what you might call the “experimental” model, where publishers are encouraged by the lack of financial investment to put out lots of products instead of loading all their efforts and hopes on one book, and which encourage experiments with pricing that are impossible with printed books.

All this has created what you might call a golden age for indie publishing. As long as indie publishers understand the nature of the book distribution that’s available to them, and exploit the advantages they have over larger publishers, amazing sales can be the result.

The long history of self-publishing leading up to now has mostly been about marketing to niche audiences. That remains the strength of indie publishing today. Making those niches profitable, using the content we publish ourselves, and understanding the power of social media marketing bring self-publishing success within reach.

Photo by *Sage* TokyoChicago

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    { 6 comments… read them below or add one }

    Robert Quade November 20, 2012 at 5:37 am

    Twenty years of research, writing, re-writing, editing, etc. all for nothing. Author House made gross errors in the final production, but the most devastating was the placement. The title of the book is Hunter of the Cats and it deals with the Civil War era. Author House listed the book under fantasy cats. Repeatedly I ask them to relocate the book to historical fiction, to no avail. Not because I’m the author but it is well written according to those who read it. I am not interested in royalties but to have people enjoy the story and the tidbits of historical facts I have hidden in one liners. My contract with Author House has expired and I still possess the ISBN. I would like to re-publish the book and this time have it placed under historical fiction where it belongs. The sequel is setting on the shelf gathering dust until I can get some final results on what to do with the first book. Any assistance would be greatly appreciated.

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    sania June 27, 2011 at 6:18 am

    i really like it congrats

    Reply

    Alice Flanagan February 27, 2011 at 6:46 pm

    Really enjoyed your article – thank you. Having experienced the pain of the book distribution world myself I concur with your observations. I have written two books, one which I independently published and one which was published through an independent publisher. At the end of the day the job of getting my books sold fell squarely on my shoulders and I have had to learn a lot about marketing and the industry as a whole in the process. With the opportunities available now via the internet have blogging, social media and online bookstores the marketplace is once again open for those who wish to sell their wares. It still requires effort but most of that effort is writing based and as an author that’s what I love doing.

    Reply

    Joel Friedlander February 27, 2011 at 10:02 pm

    Alice, thanks for that. You’ve put your finger on the great advantage writers have if they only learn to exploit it.

    Reply

    Howard Douglas February 19, 2011 at 11:10 am

    I haven’t read a better blog about book distribution for a long time.
    Hell of a post….thanks for sharing.

    Reply

    Michael N. Marcus February 16, 2011 at 1:33 am

    Book returnability is a destructive artifact of the Great Depression.

    Sales of books, like most non-necessities, had fallen off greatly. In an effort to get bookstores to take in new books, the publishers offered guaranteed sales. Stores received the books “on consignment,” and, after several months, the money for the books that had been sold would be paid to the publishers. Unsold books would go back. This arrangement kept inventory on the bookstore shelves and helped create exposure for books on obscure topics or by unknown authors, but the logistics and waste added substantially to the cost of publishing.

    When books are bought on consignment, bookstore owners don’t have to care if they order slow-sellers or outright flops because almost all unsold books can be returned to the publisher, or even be destroyed, and still generate a refund or credit from the publisher. This adds to the cost of publishing (increasing the prices of books) and wastes natural resources.

    There have been accusations that major book chains arrange to send back books — and reorder the same titles at the same time — so the stores always have inventory with no concern about paying for them.

    Selling on consignment may have been a good solution in 1929, but 80-plus years later it has become very expensive and wasteful. Book publishers and bookstores are in trouble.

    The system also hurts authors.

    The urgency that store operators feel to return books before they have to be paid for shortens the time available for a book to build a market.

    It takes time for book promotion to have an effect and for word-of-mouth to build for a new author or niche subject. Nobody knows how many books, which might have been successful with another month or two or three on display in the stores, are considered flops.

    Only now, in the 21st century, is there some slight movement away from the burdensome, wasteful process that was an important innovation that kept books available in the 1930s.

    HarperStudio was an imprint (brand) of HarperCollins, launched in 2008. It started an experimental program to sell books to booksellers in a one-way transaction, in exchange for providing additional gross profit. The experiment failed and HarperStudio was shut down after two years.

    Bookstores are also shutting down.

    Michael N. Marcus
    http://www.BookMakingBlog.blogspot.com
    http://www.Self-Pub.info
    — Create Better Books, with the Silver Sands Publishing Series: http://www.silversandsbooks.com/booksaboutpublishing.html
    — “Stories I’d Tell My Children (but maybe not until they’re adults),” http://www.amazon.com/dp/0981661750

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