Proposed merger between Borders Books and Barnes and Noble

Borders Books takeover bid for Barnes and Noble

Yesterday the book industry was met with the astounding news that the number two bookseller, Borders, was bidding for ownership of industry leader, Barnes and Noble. On the news B&N shares shot up nearly 20 percent as investors weighed in on the proposal.

Why would the two largest book chains merge?

First, sales of physical books sold in conventional stores have been falling. This is because online sellers like Amazon.com have been grabbing huge chunks of book sales and major retailers, such as Walmart and Target, have been selling large numbers of bestselling book titles at discounted prices. Add to this the growing number of electronic (e-book) book sales To put it mildly, this has caused a perfect storm for traditional brick n' mortar booksellers who have always prided themselves as the place to go to find books. Now, more and more, the least profitable part of their business is book sales with more profits coming from their in-store coffeehouse along with ancillary sales coming from gift items and greeting cards.

If this deal goes through it will be reminiscent of the merger of K-Mart and Sears over six years ago as orchestrated by real estate investor Edward Lambert.

Depending on whether you were a customer or investor, the results of that merger could be telling when it comes to the proposed Borders - Barnes and Noble deal. In the Sears - K-Mart merger, operations were consolidated in the Sears headquarters in suburban Chicago and the corporate offices of K-Mart in Michigan were shuttered. They then changed the name to Sears Holdings to reflect the ownership of its real estate. To Ed Lambert the Sears - K-Mart deal was all about leveraging their properties by closing underperforming stores then selling the property. This drove the stock price up and satisfied most investors.

On the other hand, the surviving physical stores operating under the Sears and K-Mart names continued to languish right up until today with their stores continuing to lose any competitive advantages. Other than hard goods lines like Craftsman and Kenmore, there are few reasons to shop one of their stores.

If a Borders - Barnes and Noble merger result in similar results, over time there will be fewer bookstores filled with fewer book titles. Some have imagined their bookstore of the future consisting of a cafe, gifts, periodicals and a small number of books. Rather than look through stacks of books customers will instead be ushered to download stations where they would be able to purchase e-books while sipping on a cup of coffee.

Stores would be half the size of today with fewer employees.

However that would be a short term situation as other big box chains such as Walmart and Target add their own download stations.

That could force the Borders - Barnes and Noble stores to downsize once more resulting in a Panera Bread style cafe with gifts and book downloads.

Whatever happens, for some time it has been speculated that the end of the conventional bookstore was on the horizon. All of which has been hastened by the technology that has led to eBooks and eBook readers.

The difference between "push" and "pull" marketing in book publishing

Having worked with hundreds of authors I can say there are few who understand the differences between marketing a typical small press book and one published by a New York publishing house.

First, a major New York publisher has the ability of placing huge numbers of books in brick n' mortar stores while smaller presses try to avoid all the hoopla and instead publish books that appeal to a distinct market niche. This is because the book business differs from most because it is an industry that allows retailers to return unsold books for credit. And since small presses use distributors (rather than selling direct as many larger publishers do) a book that is returned is generally replaced by one from another publisher while books sold by the big houses are replenished by books they themselves publish. That in itself is huge when it comes to a publisher's bottom line.

What large publishers do is "push" massive numbers of books into the marketplace with the hope a good number will sell. If they don't they can always replace one book title with another.

Smaller publishers instead try to create demand for a book prior to producing large numbers with the hope customers will become interested and order a copy. Classic "pull" marketing.

For pull marketing to work a book needs to create interest through events (such as signings and speaking engagements) or occupy a distinct market niche that is search friendly.

Both push and pull marketing are viable ways to market books. The important thing for prospective authors for them to determine which will work best in their own situation. For example, if you have written the next great novel, but do not want to be bothered with marketing it, then you will want to hire an agent and pursue a major publishing house. If, however, you like getting up in front of a crowd, have a way to engage the public and realize your book has its own distinct niche, then you might better pursue a small press or self publish because you will be far more successful than if published by a major publishing house.

Bottom line: There are viable opportunities with both the push marketing of a major publisher and the pull marketing of smaller presses or self publishing. Key is knowing the difference between the two types of marketing and not trying to force the wrong kind of marketing into the marketplace.

Biking and selling your book

This may be a stretch, but follow my logic.

Yesterday I biked the White Pine Trail which runs over 90 miles from Cadillac, MI to Comstock Park just north of Grand Rapids. The trail is part of the Rails to Trails Conservancy which is transforming abandoned rails to bike trails. http://www.railstotrails.org It is a tremendous program we should all support.

For myself I have experienced some issues with the systems of trails. Mostly it is because rail lines were built on a flat plain so trains did not have to endure the ups and downs of conventional roads. As a result when riding on these trails you do not experience the normal climbing and descending of the natural terrain. It is almost as if riding a stationary bike with moving scenery.

This experience reminded me of authors marketing their books. There is a common perception among authors (and publishers) that if a book is properly marketed upon release, after an initial high rate of sales it will settle down to an even rate that it will maintain throughout its lifetime.

In my experience, nothing could be further from the truth.

I have found that books have sales cycles that begin with great promise as the first copies are sold. But then, after that initial period of exhilaration, there is a slowdown as a book begins to find its long term market. In my opinion this is the most crucial time in the life of a book and when the author must be most involved, even if a book is published by a traditional publisher.

This is because a book, like any new business start up, starts its sales journey with some initial marketing intended to make the market aware of its existence. But, unless a book is continually marketed, it will soon disappear from the consciousness of the market. This is because every second of every day, someone else is also launching their book (or product). As a result the general public is overwhelmed with new marketing messages which then get in the way of you selling your book (or product). Even in the case of having your book published by a traditional publisher, they will only market your book during its first publishing season before moving on to its next list of books.

It is like the comparison of riding a bike along an abandoned rail as opposed to riding on the open road. Marketing can be compared to dealing with the challenges a bike rider experiences when riding the natural terrain. It is easy to descend a hill but hard to climb back up the other side. Those who have the willpower and strength to learn to climb hills enjoy the ride much more than those who do not. Book marketing (or any other type of marketing) is not like riding on flat ground. One cannot expect good results unless they are willing to do the hard work.

That is what marketing is. It is all about the things you do once your book (or product) is available. Yes, there are initial steps that are taken prior to its launch which need to happen with every new venture. But today it could be argued that good marketing is all about what is done on an ongoing basis.

Does Proctor and Gamble stop marketing its Crest brand toothpaste just because it dominates sales in its category? Absolutely not. I imagine the company spends at least as much now to promote its Crest brand than ever before. That is what good marketing is all about.

If you are an author or publisher are you still marketing your book as much now as you did the day it was released?

Take Away Points:

Selling a book (or any product or service) requires continuous marketing.

Books (and many other products) do not have due date nor do they expire on a particular date.

As I've said before; sadly, authors are usually the first to give up on their own book.

Sales cycles are like roads with rolling hills. Those who push hard when sales tick downward will have the most success.

Blogging: Note to Self

I fear that I've become like the plumber who fixes his own house last. In January I pledged to myself to post a new blog every week throughout the year. But, as we reach the beginning of the last quarter of the year, I am averaging less than two per month.

Seems the doctor is not taking his own advice.

Each day, during conversations with colleagues, I tell them to keep writing their blogs.

Yet, I seem to find every excuse not to post new blogs of my own.

Like...

riding my bike


Or...

shooting photos


Or even....

walking the dog

But no matter the excuse, obviously I am not taking the time to follow through on my own promise to myself.


Take Away Thoughts:

What excuse do you use to avoid doing what you promised to do?

How will you get back on track?

Do you have a plan that is doable?

Learning about learning from Benjamin Franklin

Last week I viewed a remarkable interview of Ralph Nader on C-SPAN's In-Depth program. While I do not agree with much of what Nader says, I respect him for his unwavering commitment to his beliefs.

During the interview Nader talked about Benjamin Franklin, who is one of his heroes. Nader said:

Franklin is the demonstration of the power of self-education. He came from nowhere—was curious, observant—and taught himself. With all the current talk about education, there was never any reference to self education, which, of course, is the only way to learn. Instead we have a bureaucratic process of education when self education should be the progenitor. Anyone who wants to teach their children should learn from the autobiography of Benjamin Franklin who once said "he was born too early and in the wrong century." Franklin was a diplomat, writer, negotiator, merchant, printer, publisher, inventor—all self taught.

While we must continue to embrace all forms of education, it is most important to stress life-long learning and the value of having a curious mind.

The world of publishing is undergoing a revolution with new technologies and devices to provide accessibility to learning we would not have dreamed of just a few short years ago.

At the same time the value of great intellectual content is as important as ever. Now, though, we can imbed huge amounts of content through the use of technology and broadcast it instantly around the globe.

Devices like the iPad allow publishers to insert video, photos, audio clips, links to websites, blogs, you name it within and next to the written word. Unlike one dimensional e-readers such as Kindle and Nook, iPad type devices can provide a much richer experience. Within the next year or two there will be an incredible number of new products with even more capabilities. We are just scratching the surface.

While some my bemoan the transition from printed books to these multichannel electronic devices, we must embrace this new technology and use it to its utmost. After all, what would Benjamin Franklin do?

My bet is that ole Ben would be at the forefront of this new technology.

Amazon Kindle sales stats easily misinterpreted

You may have seen the headline earlier this week: E-Books Top Hardcovers at Amazon in the New York Times.

Sometimes it is important to dig a bit into a story to see what is hype and what is reality. While the information is true and, amazingly, in just a couple years Kindle sales have skyrocketed resulting in huge e-book sales at Amazon and other online merchants. However book sales consist of several formats and are not all hardcovers. In fact hardcovers are around one third of book sales with other sales divided between trade paper and mass market paperback. Also, Amazon has been selling Kindle versions of bestselling hardcovers at around ten dollars compared to the normal average list price of twenty-five dollars for a print copy. Many decisions for purchasing a Kindle download are made at point of sale. In other words, the customer is shown two choices. They can buy the print version or save a substantial amount by downloading a Kindle copy.

So while this is certainly worthwhile news it is not as earth shattering as what Amazon would like us to believe.

Will e-book sales continue to grow? You bet.

Is the printed book going the way of the dial tone? Not at all.

If one drills down into the statistics they will find that some genre sell extremely well as e-books while others are best suited as print copies.

Let's say you want to read the latest novel from John Grisham. You may be tempted to buy the e-book and load it onto your reading device so you can bring it along on an upcoming trip.

For other books you may want to have them in your library as a reference. In those cases you may prefer to have a printed copy.

Bottom line is that e-books are a great option and we, as consumers, like having choices in how we access our media. Rather than e-books being the way all books will someday be acquired, instead we will have multiple ways to access written content. What is important is that we embrace both future, present and past technologies so that the consumer can receive written content in whatever way they wish.

It would be a mistake to embrace one technology and cast off all others.

Will these changes in how written content is accessed make our lives more complicated. Absolutely. Get used to it.

Today we have so many choices in how to broadcast our intellectual content. From starting a blog to publishing conventionally, and everything in between, there has never been a time when we have had so many opportunities to share information.

Truly a great time to be alive!

To keep your rights or grant your rights, that is the question

Many prospective author's dream of signing their first contract without learning about the ramifications. Did you realize by granting the right to publish to a publisher you have entered into what is likely to be a lifelong agreement? Especially these days in light of the advent of electronic (virtual) technology that allows a publisher to keep a book in print well after all physical inventory of conventionally printed books has vanished.

Way back when, at the turn of the 21st century (ten years ago), pretty much every book published was an actual printed book. Publishers had to pay to store excess inventory on pallets in a warehouse. It made sense to take books out of print and sell the remaining inventory to so-called "remainder" companies who specialize in disposing of excess inventory through half-off discounters. Once a book was out of print the rights reverted back to the author who could repurpose the content to other venues or self-publish on their own.

But today we live in a world where books can be "repurposed" as electronic e-books at very little cost to the publisher. It is hard for a publisher to justify ever granting rights back to the author. Heads you lose, tails they win.

In addition, one should ask why they would ever want to grant rights to a publisher in the first place. For that grant of rights an author only receives a miserly portion of the proceeds, generally 8-10 percent of the retail price minus any returns (in the book business between 30 and 60 percent of books sold to retailers are returned for credit). As author you receive the smallest cut from your book sales with the retailer getting 40 percent, the distributor 15 percent and the publisher receiving the rest (somewhere around 35 percent). Not actually that fair given the fact that without the author there is no book to sell.

The justification for the publisher, distributor and retailer receiving a larger share than the author is that the retailer provides space in their bricks n' mortar store, the distributor has to ship to and bill the retailer and the publisher bore the costs of developing your book (editing, design, printing) and promoting it.

But in today's world most books are sold through alternative channels (the Internet, the author, through organizations, etc.) making the retailer and distributor less important. And publishers only promote "select bestsellers" by combining what they should have spent promoting your book with the promotional funds from other books into a single promotional budget that supports the sale of bestselling authors. The most a publisher is going to do for your book promotionally is to list it in their catalog and website. Or, as commonly said in publishing circles, "promote one book and take the others and throw them against the wall to see if they stick." Sounds cruel but it is true.

So... what to do?

• Do not sign your rights to publication to a publisher unless they are willing to agree to returning your rights once your book is no longer stocked in printed form.
• Have the publisher provide you with an actual marketing plan and budget for promoting your book.
• If you already have access to the marketplace (website, speaking platform, access to an audience via conventional media, appearances or the Internet) consider self-publishing. If you can justify the costs of development and see a way reach an audience and make a profit, why would anyone settle for a small percentage of the proceeds through a conventional book contract.

When you think iPad think couch

This past weekend I read and watched many reviews on Apple's new iPad. What many of the reviewers were trying to figure out was how this new device would be used. Some looked at it as competition for the laptop. Others said it was like a oversized iPod touch. Still others wondered why the iPad did not have a built-in camera. Finally one reviewer said something that made sense to me. He said the iPad was for use on the couch because it is more a receptive device than a creative device.

Perfect.

He is right. I would not use an iPad as a replacement for my laptop. Instead I would use it while relaxing on a couch. Much like I'd read a book or watch television. In fact, I'd use it instead of paging through a book or flipping through the television remote.

From a publishing perspective, if people use the iPad in place of a conventional book then it is important to publish in all formats from print to digital. Early evidence shows during the first weekend over 200,000 books were downloaded. With around 300,000 total units sold during that time this means two book downloads for every three iPads sold. A huge number given the general slow pace of digital downloads sold in relation to how many e-books have sold industry wide most weeks.

Beyond the number of books downloaded so far, growth in iPad book sales will undoubtedly explode over the next several months. The reason is because, unlike other so-called e-readers, the iPad has a full color display and allows added content to be embedded in its pages. For example, imagine reading a cookbook and being able to click on a color photo and have a video screen appear showing the actual preparation of the recipe. Or how about a book about a famous musician whose recordings can be accessed from the pages of the book.

In the next several months, as developers are able to create new apps, the iPad will benefit from a wealth of new programs that no one yet has imagined.

We are only just scratching the surface on the capabilities of this ingenious device.

What do you think about the Apple iPad?

Can you see yourself owning an iPad at some point?

How would you use an iPad?

The price of chasing your dreams

There are over two thousand Olympic athletes gathered from around the world in Vancouver for the 2010 games. Each athlete has a story and most have involved great sacrifice on the part of their families, friends and themselves. One such athlete is twenty-nine-year-old pairs skater Mark Ladwig who, with partner Amanda Evora, placed tenth in this years' Olympics.

Mark Ladwig was born and raised in Moorhead, MN, just across the Missouri River from Fargo, North Dakota. Like many kids in his town, Mark first laced on skates to play hockey but switched to figure skating when he was twelve. While in high school he met future wife Janet and they attended prom together, but just as friends. After graduation they stayed friends as Janet went on to college at North Dakota State and Mark pursued his dream to become a Olympic skater and moved to Bradenton, Florida to begin training at the Ellenton Ice and Sports Complex. They married in 2006 and their son Holden was born this past September.

Since leaving home ten years ago, Mark has worked as a busboy and server in several restaurants, driven the Zamboni at the ice arena and even was a part time disc jokey at a country radio station all the while training full time. A typical day finds him starting his training at 7 a.m. completing just in time to work at the Beach Bistro restaurant from 4 p.m. to midnight. Wife Janet worked as an interior designer until being laid off early in 2009 eventually taking a job at a local Target store. To pay for his training, which runs about twenty-thousand dollars a year, the couple has had to juggle finances and credit cards plus work odd jobs to make ends meet.

Mark and Janet Ladwig are just one example of what it takes to chase a dream.

In publishing, each day I receive several submissions from prospective authors. While some understand what it takes to achieve their dreams it is amazing how many have no idea that the road to publishing success is filled with hard work, sacrifice and even street smarts. Writing a book is just the beginning. Making the book content as good as can be requires a talented support team of editors, designers and proofers. Success in the marketplace is often dependent on the author's willingness to invest in and to work countless hours to get his or her book content in front of the right audience. It is every bit as difficult as the dream millions have of one day becoming an Olympian.

Take away questions:

• What are your dreams?
• Are they realistic?
• How are you pursuing them?
• Do you have the willingness and determination to chase your dreams?

Final thought:

Ray dropped out of school at fifteen. He had many jobs from ambulance driver to salesman. In his early fifties he decided to chase his dream and talked the owners of a California drive-in restaurant to sell him a franchise. Today the restaurant chain Ray Kroc founded, McDonalds, has over 31,000 restaurants serving 47 million customers each day.

Don't give up, it is never too late to chase your dreams.