July 29, 2011

O, Canada!

by

We’ve written previously about the forceful new dictums being enacted by Canada’s biggest bookstore chain, Indigo. For one thing, earlier this year it announced that it would arbitrarily deduct a fee for “co-op” (promotional displays) from every book sold, rather than allow publishers to buy promotions for books it thought would benefit most, or at least do what they could afford. It amounted to a substantial new cost per book for publishers, as well as a loss of control over the promotion of their own books, but no one did anything about it. Earlier this month the chain announced that from now on it would dedicate less than fifty percent of its floor space to books. Also, that it was cutting in half the amount of time that books would remain in the store before being returned. A few days ago, it announced it was going to force publishers to ship books directly to stores, rather than to the company’s warehouses. Again, this represents a windfall for Indigo, in the form of decreased handling, packaging, warehouse and shipping costs — it’s clear they’re keen to lay off people at their warehouses — and whopping new expense for publishers, who now have to assume all those costs.

It’s a grim literary landscape indeed, making it no surprise when, on Monday, BookNet Canada released a report detailing a first quarter plunge in Canadian book sales of nearly 11%. That’s a dramatic decrease, and represents declining sales “in all categories,” notes a Publishers Weekly report.

But of course. The dominant retailer says it’s dropping books from half its floor space, and making its suppliers pay its costs of doing business, and things are going to go south in a hurry.

What’s baffling is why the big Canadian publishers don’t do something about it, because the solution is simple. By not having more than fifty percent of its floor space dedicated to books, Indigo is technically no longer a bookstore. Therefore there’s no reason to given them the same deal as a dedicated bookseller. Publishers are free to tell them they have to take the same deal as all other specialty shops — that is, lesser discounts, and the books are non-returnable.

If just one giant publisher — Penguin Canada, say, or Random House Canada — were to do the logical thing here, Indigo would have no choice but to reverse course. After all, the company is called Indigo Books, and it still has half a store to fill with books, and you know that, more and more, the only books it wants to stock are the big bestsellers — the kind published by the giants.

But why do I think this isn’t going to happen? Meanwhile, I can only advise my fellow American publishers to get ready — as I say, this thing is going south, and in more ways than one.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.

  • Devil_may_care87

    True, the solution seems simple: publishers and distributors should band together and say enough is enough. Yet this is easier said than done, no?

    As Canada’s only national chain book retailer, Indigo has the pull to get away with setting their own terms. Any “one giant publisher” who steps up first to deny them this will risk losing about 50-60% of their sales, whether Indigo is by definition a “bookstore” or not; they still represent the majority of everyone’s revenue.

    Welcome to the fun of having a national chain with zero competition, America!

    • Dennis Johnson

      Thanks for this. As I say, I don’t think it’s going to happen either, and the reason is as you state — conglomerates capitalism operates on the “money on the table today” principal, which means even realizing something is good for long term health isn’t enough to justify a lowered income today. It’s a death-wish strategy, particularly when applied to cultural matters as opposed to widget-making, but there’s no question that it’s dominant.

      But I disagree with you about Indigo’s ability to withstand one giant publisher telling them to do the right thing for their industry. In Canada, moreso than in the US, where there are more giant publishers, I just don’t believe Indigo would subsequently have sufficient “product” — i.e. lowest-common-denominator bestsellers — to supply their strategy, as the work of non-conglomerate publishers is clearly of no interest to them.

      I’d also like to believe that if one publisher was smart and caring enough to take such a stand, others would follow. It’s not inconceivable — it only took a few days after Macmillan stood up to Amazon in the US for most of the other big publishers to join them.

      All of which is to say that sometimes, the simplest solutions are the stuff of heroes.

  • Devil_may_care87

    True, the solution seems simple: publishers and distributors should band together and say enough is enough. Yet this is easier said than done, no?

    As Canada’s only national chain book retailer, Indigo has the pull to get away with setting their own terms. Any “one giant publisher” who steps up first to deny them this will risk losing about 50-60% of their sales, whether Indigo is by definition a “bookstore” or not; they still represent the majority of everyone’s revenue.

    Welcome to the fun of having a national chain with zero competition, America!

    • Dennis Johnson

      Thanks for this. As I say, I don’t think it’s going to happen either, and the reason is as you state — conglomerates capitalism operates on the “money on the table today” principal, which means even realizing something is good for long term health isn’t enough to justify a lowered income today. It’s a death-wish strategy, particularly when applied to cultural matters as opposed to widget-making, but there’s no question that it’s dominant.

      But I disagree with you about Indigo’s ability to withstand one giant publisher telling them to do the right thing for their industry. In Canada, moreso than in the US, where there are more giant publishers, I just don’t believe Indigo would subsequently have sufficient “product” — i.e. lowest-common-denominator bestsellers — to supply their strategy, as the work of non-conglomerate publishers is clearly of no interest to them.

      I’d also like to believe that if one publisher was smart and caring enough to take such a stand, others would follow. It’s not inconceivable — it only took a few days after Macmillan stood up to Amazon in the US for most of the other big publishers to join them.

      All of which is to say that sometimes, the simplest solutions are the stuff of heroes.

  • http://twitter.com/rbertsindelar robert sindelar

    This is a great example of why publishers need to come up with a new retail tier :”the showroom model.” I’m not talking about consignment. In this case, publishers would grant significantly better terms (discount and dating) to physical retailers that take a certain percentage of the publisher’s list based on the store’s square footage. The retailer would also have to be open to the public at least “x” number of hours a week. Basically retailers that guarantee to continue to be a showroom for the publisher’s physical product. This would work for chains as well as indies.

  • http://twitter.com/rbertsindelar robert sindelar

    This is a great example of why publishers need to come up with a new retail tier :”the showroom model.” I’m not talking about consignment. In this case, publishers would grant significantly better terms (discount and dating) to physical retailers that take a certain percentage of the publisher’s list based on the store’s square footage. The retailer would also have to be open to the public at least “x” number of hours a week. Basically retailers that guarantee to continue to be a showroom for the publisher’s physical product. This would work for chains as well as indies.

  • Vicki Fox Smith

    Considering the fact that big publishers like Penguin Canada charge hugely inflated costs for books that do not have to be shipped anywhere at all (yes, I am talking about eBooks), I have very little sympathy for them when their pBook schemes come undone.

    • Dennis Johnson

      Well, you can be a sucker for the retail propaganda that intellectual and artistic value for some mysterious reason goes down when it changes to digital format, but it’s simply not true that ebooks costs significantly less to make than print books. The only cost difference is the actual print costs and shipping — which are lessened but not evaporated. Plus, costs are shared between the two formats; at current prices, it would not be worth making ebooks alone, without a print book to back them up. Thus, one supports the other. Damn print books if you will, but you thereby damn ebooks as well. I’d like to think most of us in the biz are trying to figure out how to make them coexist, so everybody gets to read the way they want.

      • Vicki Fox Smith

        Penguin is one of the publisher’s that enforce Agency pricing. Unlike the pBook editions, which booksellers can price anyway they wish, Agency priced books can only be sold at the price the Publisher dictates. I have heard the nonsense about eBooks not saving money, but, particularly for Penguin, which does an awful job preparing its eBook files and must not be investing very much in terms of quality control, at some point, not having to create books out of paper and then shipping them to warehouses and stores has to factor in there.

        Think it through, there are costs associated with developing the eBook format and distributing the files to the sites that sell them, but eventually one has to have paid for that initial investment, and the days of additional costs are over. Not so with pBooks, which will continue to have printing and shipping costs associated with them as long as they continue to be manufactured and delivered.

        • Dennis Johnson

          “Think it through?” You tell a publisher of ebooks and print books — the person who actually puts up the money to make a book happen — to “think it through?” Gee, that never occurred to me.

          Agency agreements don’t apply to sales in brick and mortar stores, which is what we’re discussing here. I’ve already answered you on the costs of making ebook; if you want to insist I’m lying, fine.

          Your gripe about the quality of Penguin’s ebooks, meanwhile, makes the point that ebooks, in fact, add their own design and layout costs to the process (although Penguin seems not to be spending as much as it should, by your complaint anyway) that to some extent counter-balance the not-so-great savings of not having to print and ship.

          And even though it’s irrelevant to what this post was about, well, you’ve defended another canard (such a great word!) that I have to address: Any publisher will tell you that they have less control of pricing under agency than they did under wholesale: It sets pricing bands publishers must price within, and retains the ability to force you to change prices if they so desire, which they often do desire. My guess is that, given big publisher disatisfaction with it as a solution to Amazon’s unhealthy discounting, it will eventually be replaced.

          In short, I’m sorry madame, but your vehemence about insisting books should be cheap no matter their actual costs, let alone their actual value, is making you hear what you want to hear. What I hear is someone who doesn’t know what they’re talking about — to such an extent that I have to wonder why you’d be reading a publisher’s blog, or at least this publisher’s blog, unless you were just another Amazon astroturfer. But then making yourself look so foolish doesn’t really do much for the cause, so I could be wrong about that.

          • Vicki Fox Smith

            It is to laugh. Or should I say it is to laugh, Sir. 

            As much as I may annoy you by bringing eBooks into a discussion concerning an article about a change in the policy of a bricks and mortar retailer, I can’t see why you feel the need to distort what I have said. I am, after all, one of those odd people who still buy 100+ books a year. I am not talking about buying 100 indie published 99 cent specials, or even the fine books that are sold after being marked down from $30 to $7.99 at my local Chapters store. 

            Book pricing has to make sense to people like me. Let me give you an example. Dorothy McIntosh’s first novel, “The Witch of Babylon” was just recently released as a trade paperback. There was no hardcover edition. The cover price for for the paperback is $26.00.  The paperback edition sold through Amazon as an import is $27.99. I can buy it as low as $16.30 at Chapters online. The eBook price on Kobo is $18.99. Barnes and Noble has it listed as unavailable at $26.00.

            If your point is that the price this book is being sold at by Chapters is out of whack given the costs involved in publishing it, I can understand that and I can understand your need to choose to use me as a convenient target for your outrage.That being said, this is a situation that appears to readers to be of your own making. People like me who love to read and who buy the books we read will always want to buy at the lowest price possible with the caveat that things like convenience also come into play. For the book I used in my example, I have to decide if the convenience of being able to have this particular book instantly is worth an extra $3.00. I can’t bring myself to see it as a bargain because it costs less that $26.00.

  • Vicki Fox Smith

    Considering the fact that big publishers like Penguin Canada charge hugely inflated costs for books that do not have to be shipped anywhere at all (yes, I am talking about eBooks), I have very little sympathy for them when their pBook schemes come undone.

    • Dennis Johnson

      Well, you can be a sucker for the retail propaganda that intellectual and artistic value for some mysterious reason goes down when it changes to digital format, but it’s simply not true that ebooks costs significantly less to make than print books. The only cost difference is the actual print costs and shipping — which are lessened but not evaporated. Plus, costs are shared between the two formats; at current prices, it would not be worth making ebooks alone, without a print book to back them up. Thus, one supports the other. Damn print books if you will, but you thereby damn ebooks as well. I’d like to think most of us in the biz are trying to figure out how to make them coexist, so everybody gets to read the way they want.

      • Vicki Fox Smith

        Penguin is one of the publisher’s that enforce Agency pricing. Unlike the pBook editions, which booksellers can price anyway they wish, Agency priced books can only be sold at the price the Publisher dictates. I have heard the nonsense about eBooks not saving money, but, particularly for Penguin, which does an awful job preparing its eBook files and must not be investing very much in terms of quality control, at some point, not having to create books out of paper and then shipping them to warehouses and stores has to factor in there.

        Think it through, there are costs associated with developing the eBook format and distributing the files to the sites that sell them, but eventually one has to have paid for that initial investment, and the days of additional costs are over. Not so with pBooks, which will continue to have printing and shipping costs associated with them as long as they continue to be manufactured and delivered.

        • Dennis Johnson

          “Think it through?” You tell a publisher of ebooks and print books — the person who actually puts up the money to make a book happen — to “think it through?” Gee, that never occurred to me.

          Agency agreements don’t apply to sales in brick and mortar stores, which is what we’re discussing here. I’ve already answered you on the costs of making ebook; if you want to insist I’m lying, fine.

          Your gripe about the quality of Penguin’s ebooks, meanwhile, makes the point that ebooks, in fact, add their own design and layout costs to the process (although Penguin seems not to be spending as much as it should, by your complaint anyway) that to some extent counter-balance the not-so-great savings of not having to print and ship.

          And even though it’s irrelevant to what this post was about, well, you’ve defended another canard (such a great word!) that I have to address: Any publisher will tell you that they have less control of pricing under agency than they did under wholesale: It sets pricing bands publishers must price within, and retains the ability to force you to change prices if they so desire, which they often do desire. My guess is that, given big publisher disatisfaction with it as a solution to Amazon’s unhealthy discounting, it will eventually be replaced.

          In short, I’m sorry madame, but your vehemence about insisting books should be cheap no matter their actual costs, let alone their actual value, is making you hear what you want to hear. What I hear is someone who doesn’t know what they’re talking about — to such an extent that I have to wonder why you’d be reading a publisher’s blog, or at least this publisher’s blog, unless you were just another Amazon astroturfer. But then making yourself look so foolish doesn’t really do much for the cause, so I could be wrong about that.

          • Vicki Fox Smith

            It is to laugh. Or should I say it is to laugh, Sir. 

            As much as I may annoy you by bringing eBooks into a discussion concerning an article about a change in the policy of a bricks and mortar retailer, I can’t see why you feel the need to distort what I have said. I am, after all, one of those odd people who still buy 100+ books a year. I am not talking about buying 100 indie published 99 cent specials, or even the fine books that are sold after being marked down from $30 to $7.99 at my local Chapters store. 

            Book pricing has to make sense to people like me. Let me give you an example. Dorothy McIntosh’s first novel, “The Witch of Babylon” was just recently released as a trade paperback. There was no hardcover edition. The cover price for for the paperback is $26.00.  The paperback edition sold through Amazon as an import is $27.99. I can buy it as low as $16.30 at Chapters online. The eBook price on Kobo is $18.99. Barnes and Noble has it listed as unavailable at $26.00.

            If your point is that the price this book is being sold at by Chapters is out of whack given the costs involved in publishing it, I can understand that and I can understand your need to choose to use me as a convenient target for your outrage.That being said, this is a situation that appears to readers to be of your own making. People like me who love to read and who buy the books we read will always want to buy at the lowest price possible with the caveat that things like convenience also come into play. For the book I used in my example, I have to decide if the convenience of being able to have this particular book instantly is worth an extra $3.00. I can’t bring myself to see it as a bargain because it costs less that $26.00.

  • Z. Frazier

    Sounds like they picked up some of the Borders executives.

  • Z. Frazier

    Sounds like they picked up some of the Borders executives.

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