This morning I gave the keynote speech to 300 independent publishers at the annual conference of the Independent Publishers Guild, at a hotel near Chipping Norton. I was a late substitute for Vince Cable. It turned out to be quite an event. I wouldn’t normally publish the entire text of a speech on here, but after the reaction of people there, I thought it would be useful to do so. Afterwards people collared an kept thanking me for having the courage to say what had to be said. They were referring to the passages on W H Smith and Amazon. If you don’t want to wade through the whole thing, click HERE for a summary of what the book industry media are reporting. I suspect I have become public enemy one at W H Smith, but read on, and you will discover why…
Ladies and Gentlemen, I believe that originally Vince Cable was due to speak to you in this slot. I apologise profusely that you’ve got me. I believe this conference is taking place in David Cameron’s constituency; indeed his home is just up the road. I don’t know if he has declared the area a Liberal Democrat Free Zone or not, but I will try to emulate Mr Cable’s customary cheery personality and joie de vivre. Or not, as the case may be. I understand he has a subsequent engagement and is spending the day undermining the Prime Minister
Back in 1997 I did something mad. I took my first steps into the book trade. My partner and I opened up a specialist political book store in the heart of Westminster called Politico’s. It became a political haven and soon established itself as a meeting and event space, visited by Cabinet ministers and casual book buyers alike.
This was a time when the publishing industry and bookselling were flying high. The days when ex cabinet ministers were getting 6 figure advances for their memoirs. I enjoyed my time as a bookseller and it taught me a lot, but in 2004, after 7 years, a massive rent hike forced us to close shop and go online. Two years later I sold the online shop to Harriman House, only to buy it back last year but I’ll talk about that later.
Then I attempted to become a Conservative MP which I will readily admit was not my greatest triumph! Thankfully my ventures into blogging, broadcasting and business have been somewhat more successful. But my passion for books led me to return to the industry in 2009, when I set up my own publishing house Biteback Publishing specialising in political and current affairs titles.
Now that I’ve been running Biteback for 4 years I have re-discovered just what a bonkers industry publishing really is – and how much it has changed in the last decade.
Which other industry discounts its bestsellers rather than books that don’t sell? To coin a phrase, it’s the economics of the madhouse. Don’t even get me started on sale or return! From its structures to its pricing policy, the publishing market is an utterly unique industry. And you know, frankly, in some ways we only have ourselves to blame for the fact that the leading booksellers seem to have us over a barrel. Well, let me qualify that. It’s actually the big publishing conglomerates who are to blame for the parlous state some smaller publishers find themselves in.
It is the likes of Penguin, HarperCollins, Macmillan and the others who have introduced discounting policies which have led to bestsellers being sold at a loss. What kind of market is it where a small independent bookseller goes down to Sainsbury’s and loads up his shopping cart because he can buy the books more cheaply from Sainsbury’s than he can from the publisher? What kind of market is it where the two main wholesales are generally given lower discounts than Amazon?
It means that smaller bookshops can’t afford to sell bestsellers. OK, you might say that it means they can have a much wider range of books for sale and they can build their own local niches. But new titles and bestsellers ought to be making up a large part of a small bookshop’s turnover. No wonder they are going out of business at the rate of several every week.
Publishing is no different to any other industry – it is having to adapt to a changing world.
Just 5 years ago no one had ever heard of a Kindle never mind owned one. Now for every 100 physical books Amazon sell, they sell 114 e-books. Waterstones sales are on the decline and all the other chains have disappeard. Amazon’s sales have grown exponentially. For too long Waterstones failed to grasp what was happening and they failed to adapt to the online revolution. Instead of attempting to understand this, it simply charged huge prices to publishers to out their books its window or on its tables, and filled the shop with stationary.
Since its takeover in 2011 by Alexander Mamut it is beginning to correct the failings of the past. James Daunt has come in, and has made some radical changes. Scrapping the 3 for 2 offers, incorporating more cafes, introducing click and collect, and most controversially changing its buying policy to reduce returns. To say I’m not a fan of the new buying policy would be an understatement, but in some ways I understand it. Instead of ordering 800 copies of a new title, they now order 100 or 200 or fewer. Whereas a few years ago they would place the order months before publication, which helped us decide print runs, now the order is sometimes not placed until AFTER publication. Fewer risks are being taken, and by their own admission they have become reactive rather than proactive.
I could give you countless examples of why I’m not a fan, but I’ll give you just one. I published last year a book called Muckraker which was a biography of the first tabloid journalist WT Stead. That book got glowing lead reviews in nearly every single national newspaper and would later go on to win Political Biography of the Year at the Political Book Awards, yet Waterstones agreed to take on only 49 copies. It had sold several hundred copies on Amazon before it had even reached the shelves of Waterstones!
Overnight, some publishers’ turnover with Waterstone’s was cut by one third, without any warning at all. The one positive long term effect of this will be to cut returns and that has to be a good thing. In 2011 we had £15,000 of returns from Waterstone’s. Last year we had £900.
I remember ten years ago I created astonishment in the book trade when I proposed the abolition of Sale or Return. Well, now I reckon I was 10 years ahead of my time. The day is coming when we will the end of it. Booksellers have the freedom to their knowledge and expertise to decide which books they really think they can sell. I’d happily forego a bit more margin if books were sold on a firm sale basis. Yes, it would cut print runs initially, and might take some time to bed down, but in the long run we’re deluding ourselves if we think Sale or Return is a good thing or can survive indefinitely. But no one small publisher will ever break out and impose firm sale by themselves. It’s something which the industry needs to agree on, ideally in cooperation with booksellers.
Waterstones simply has to survive. It is now the only national high street bookseller or bookselling chain. It would be a tragedy if it went the same way as Borders, HMV and the others. But as publishers we’d be mad if we didn’t plan for a post Waterstone’s environment. We need to think of far more innovative ways to get our books to market and market them directly to book buyers. Yes, I am afraid that all publishers are going to have to become booksellers.
Waterstones have to work out a way of avoiding just becoming a shop front for Amazon. The number of people who go into Waterstones, write down the ISBN and then go home and buy the book from Amazon is growing all the time. I have no idea what can be done about it, but that is the challenge facing all bricks and mortar booksellers.
The relationship between publishers and booksellers should be a harmonious one; after all we both rely on each other to survive. But increasingly for many years it has become a battle to even get our books into the stores, especially for independent publishers. Then when you do get books in, you face the prospect of massive returns. Of all the booksellers the worst culprit has to be WH Smith, who seem to be very willing to take publishers money and sell no books in return.
Whenever I have done business with W H Smith they demand a large ”marketing fee” – some might call it the book trade industry equivalent of protection money – to place our books in their stores. A few months later we get between 75% and 90% of our books returned in boxes that have never been opened! WH Smith has become nothing more than an exorbitantly priced warehouse for books, or as I have heard many people refer to them as “a lending library”.
Its business practices are wrong and it is no friend of small independent publishers. What serious, ethical company allows big publishers to buy a place on their bestselling books chart? And that’s what they do. And by doing it they deliberately mislead their customers. The customers assume it really is chart of their bestselling books, when it is actually nothing of the sort. Many will say I am mad to break the conspiracy of silence on these business practices, which have gone on for years. We all know they are going on. Quite frankly I have reached a point where I am totally ambivalent about doing business with WH Smith ever again. After hearing this, they probably think the same about doing business with me, but quite frankly, my dears, I don’t give a damn.
Now to the elephant in the room, Amazon. They have transformed the booktrade more than any other, sometimes for the good and sometimes not. Their colossal size means they have a monopoly over internet bookselling. You can’t blame them. They are brilliant at what they do. They sell books cheaper than anyone else and are totally reliable. You order a book from them and you KNOW it will arrive when they say it is going to. Things very rarely go wrong.
And they do give smaller publishers like us a choice. Never let it be said they don’t. And the choice is sell your books to us at 60% discount, or we won’t take any of them at all. They are able to do it because we, individually, aren’t strong enough to say no, and because the competition rules allow them to. I wouldn’t mind if they actually paid any tax on the profits they make at our expense. But that’s another story.
To tackle the Behemoth that is Amazon the big publishers have started to merge. The Random House/Penguin merger happened for many reasons, but one of the main was to have some clout against Amazon, and rumour has it Simon & Schuster and HarperCollins will go the same way.
So the question we are left with is this: Is Amazon unassailable? The answer is absolutely not.
We are currently experiencing a kickback in this country. Not just on books, but on all retail practices. When it was revealed that Starbucks were avoiding taxation, they experienced retaliation from their customers who shopped elsewhere, they were forced to cave in and pay some tax. This proved that even the biggest global conglomerates, will never be as powerful as the buying public. From the horsemeat scandal which rocked the supermarkets, to the tax fiasco of Starbucks and Amazon, people are starting to question their own buying habits, and ask themselves who they can really trust. Independent bookshops before Christmas experienced a real upturn in trade from people who had previously been Amazon customers. The challenge now is to keep them.
I believe that we independent publishers operate by good business practice and this is our chance for us to say this is who we are. This is what we do. This is why you should buy from us. Let’s not kid ourselves, we can’t compete on price with Amazon and we should be honest about that. But we need to make it clear to our customers what they get from shopping with an independent publisher.
There are many reasons why Amazon has failed to become a publisher itself, despite many low profile attempts. Firstly, bookshops are unwilling to stock books published by a company which has systematically tried to destroy them. Secondly, they are crap at presentation. If you want to browse for books, you very rarely go to Amazon. Thirdly, despite their huge size they do not understand the publishing industry – we are not simply printers.
However we are living in an age where people are increasingly choosing to self-publish, where agents themselves are turning into publishers. If we independent publishers are going to survive against this onslaught of challenges we need to show what we can provide. What value we add to the publishing experience. In many ways we are better equipped than the big publishers to deal with the changing market, and showing both authors and customers what we offer. Small independent publishers don’t have numerous committees and layers of management, we can make decisions fast. Most importantly with a small team you can adapt quickly to the changing market.
Our size means we offer authors a personal yet professional service. Unlike big publishers our authors can get to know our staff, they are able to communicate with everyone from the MD to the publicity assistant. I’ve lost count of the bigger name authors we now attract in part because they are fed up with being taken for granted by the bigger publishers. But there’s another reason smaller, independent publishers are attracting authors with bigger names. It’s because the big publishers now rarely publish books they think will sell fewer than 10,000 copies. This is a real opportunity for all of us in this room. As a consequence, agents are having to accept smaller advances and more realistic high discount terms.
Yes, even literary agents, who generally seem to love living in the last century, even literary agents are having to recognise that the terms of trade have changed. Smaller publishers are able to play hardball with agents, in a way we never could before. And boy does it feel good. Publishing really has to be a partnership between agent and author, with the author now taking more of the risk by accepting that the days of big advances have gone.
This personal experience should also extend to our customers. Although the book industry itself is huge and diverse, we independent publishers generally have quite specific areas of interest. This means that we are able to build communities focussing around that particular subject. By providing customers with the content and information they want you build a stronger more loyal relationship with them.
To use a personal example, as I mentioned I bought back my old online store politicos.co.uk last year. It aims to collect the widest selection of political titles all into one easily navigated site – not just our own but from other publishers too. We fulfil our own books, Gardners do the rest.
It has created a community of political book lovers who interact with the site and tell us what books they would like to see on there. Key for us as a publisher it has brought our target audience to us and we are able to substantially discount our own books and still make a decent profit by becoming booksellers in our own right. This is just one way that I have attempted to exploit the niche and build better relationships with our customers. In today’s fast paced market you can’t simply sit back and wait for customers, you need to go out there and find them yourselves.
Also as we are more specialist than the Big Four we are very familiar with our audience, it means we can better market a book directly at that target audience. Moreover for the author they can also be directly involved with marketing ideas and plans because of the personal nature. Meaning they learn how to create promotional opportunities themselves. We instruct all of our authors on how to market their books themselves on social media. So much so that Edwina Currie, whose second volume of diaries we published, started trolling her enemies on her first day on Twitter.
Our small team at Biteback have also managed to build up personal relationships with all the leading national newspaper literary editors. Not only does this ensure we can punch above our weight when it comes to coverage of a book, it has allowed us to become a serious player when it comes to serialising a book.
Independent publishers should not be afraid to try different things. When even traditional dinosaur-like literary agents are changing and beginning to diversify, we should also be trying our hand at different things. I suppose if this was a farming conference I’d be calling this diversification. But in truth it is important that we diversify what we do. Let’s offer e-book only publications, or even stage some events. Just last month I put on the Political Book Awards, it had been 6 months in the making and it wasn’t easy. It meant a lot of the staff at Biteback had to do things they had never done before but it was a huge success both in terms of publicity but also financially. Now we are going to embark on staging more events from literary lunches to meet the author events, anyway to get closer to our target audience. So don’t be scared to step outside your comfort zone, some of the best ideas come from thinking outside the box.
Remember there are always different ways to get a book to market, other than the traditional bookstore or Amazon. Big publishers have been hit hardest by the change in Waterstones buying policy because their books are so general they rely on impulse purchases. This is where we independent publishers are able to hold our ground, by discovering new ways to get our material to the customer. The best and most obvious way is via social media. It is fatal mistake for any publisher not to have a website, Facebook page and Twitter account. You need to make yourselves known to your audience, interact with them, and engage with what they want.
There are some wonderful examples of entrepreneurial enterprise in our industry. Look at what Andrew Franklin has achieved at Profile – or Robert Topping with his fantastic Ely bookshop. But for entrepreneurs to succeed, they need access to capital. Biteback is a four years old this year, and it will have taken us four years to make a profit. Publishing is not a fast-buck industry. Some might say it’s often not even a slow buck industry, but there you go. I make no bones about it. If we had borrowed money from the banks whe we started, they would have closed us down by now. But because we had a financial backer, Lord Ashcroft who understood the industry, kew what we wanted to achieve and had confidence in us to do so. I like to think we are repaying his confidence, but what about all those companies and individuals who don’t have kind of backer we do? It’s a major problem that our financial sector, unlike that in Germany or America, only has its sights set on the short term. I know the IPG holds Meet the Investor evenings, bringing the publishing trade together with potential investors. It’s a great initiative which other sectors would do well to copy.
The next few years are going to continue to be tough for us small independent publishers. I don’t believe the doomsday prophets who claim it is the end of independent publishers and the physical book. We need to restate exactly what publishing is all about. It is so much more than simply printing books. So we need to create those communities, we need to try new things, we need to embrace e-books. But most importantly our customers need to be at the heart of everything we do. If we do that, the story of the independent publisher will be one of not only survival but growth.