Is Being Small A Problem?
Or, Why Don't People Look At The P&L?
Or, It's Not The Size, It's The Editorial Strategy That Matters
I read a fascinating post over at Scott's blog about promotional compliance. General summary: promotions (3 for 2s and the like) in large retailers can sell a hell of a lot of books, and so publishers are happy to pay for inclusion in them - but it all goes a bit wrong, for both publishers and retailers, when the books don't appear where they're meant to. Well worth a read.
However, it was the comments to the post that were even more interesting as in a few short sentences they highlighted some of the misconceptions that have been bugging me of late - well, for the last three years - and made me ask the question - is being small the problem that everyone makes out? Sales vs profit.
The first interesting thing about Scott's comments suggests that sales are the holy grail. One commenter insisted that "Tube ads sell books", and was thus of the opinion that Tube ads are what publishers should invest in. Yeeees - have you ever looked at the rate card of tube ads? £15,000 for one poster on the escalators per week rising to at least £150,000 for a modest cross-London campaign? It's not a question of 'tube ads sell books'; it needs to be a question of 'do tube ads sell sufficiently high numbers of books to even pay for the cost of running those ads, let alone contribute to the costs of print, instore promotion, development and all the other elements that make up the title's P&L?' (Of course, that's how Scott replied because he is right-thinking.)
I'm not even sure that many publishers run P&Ls by title. At Snowbooks we're just in the middle of writing our own software to automatically run monthly title P&Ls, because you can't buy such software off the shelf - there's no demand for it. Publishers seem only to care about volume and value sales. I don't need to point out that if you sell a million pounds worth of a book, but pay a five hundred thousand advance, plus spend quarter of a million on a national ad campaign, plus a hundred thousand for print, production and payroll costs, plus two hundred thousand royalties, you have, quite spectacularly, made what looks like a success into a dismal failure.
It's the ingrained idiocy of large companies. They can't help it - they're all bright individuals - but something happens to bright people when they have to work together in functional silos (specialised departments, like marketing, sales, editorial, HR - you know). People have to be measured on things so that the management can keep tabs on them (and so that HR can claim they actually do something) and that's where it starts to unravel. You measure the sales and marketing department, say, on whether the books make it into the Nielsen top 50. Sounds reasonable; encourages a bit of competition with the other big houses and if a book is selling well that's a lot of money coming into the business, right? Thing is, that's just a volume and value sales measure. Marketing may be measured on their sales, and top line on the amount they spend, but without a title level P&L who's to know whether 90% of books are losing money? Whether the mechanics you used to get a book into the top 50 at any cost - tube ads, PR campaigns, launch parties, huge proof print runs - ended up making you a loss? And if you don't know whether 90% of books are losing money, how can you go back to the commissioning editors to have a few stiff words with them? To quote one of the cheesiest training presentations I ever saw - sales are vanity, profit is sanity. Oh, and cash is king. Which you knew.
So to return to my question - being small is quite helpful in this regard, because it's much easier to track what's working and what's not, and to tweak our direction accordingly. We don't have all the costs of the larger companies - and, thank god, we don't have to tie ourselves up in knots creating false measures to live and die by.
Size vs Editorial direction.
The second misconception I picked up was that small publishers are disadvantaged because we can't get onto promotions. Er, no.
Some small publishers might not be able to get onto promotions - but it's because their lists are specialised. It's not their size that stops them, it's their editorial strategy (and sometimes their poor execution of cover designs and typesetting). Some large publishers don't get their books into promotions, because they are business books, or legal books, or IT books, and no amount of price discounting is going to encourage a browser to buy the latest treatise on Tort law or Perl for UNIX programming.
The phrase the commenter used was "... so very many smaller publishers get shafted because they can't afford to get their books into promotions." Er, no. Promotions, more often than not, sell sufficient quantities of the right sort of books (commercial fiction and non-fiction) to pay for all the costs associated with publishing that title - I have a huge wodge of proof if anyone wants to contest that. If promotions sell sufficient books, the publisher has enough money to afford them. I agree that there may be cash flow issues that restrict publishers from joining in on all the promotions they'd like to - but cash flow issues don't stop them printing books, or paying authors advances. Please - don't assume that because publishers are small they are automatically restricted from involving themselves in promotions. If they publish the sort of books that do well on those promotions, publishers are treated the same regardless of their size. It's the editorial output that matters.
It Could Be So Much Worse
The market we exist in *is* tough - because of curve balls that the market throws at us from time to time like weak compliance, missed payments, expensive paper, exchange rates, and the ever present need for more working capital. But we are tremendously lucky in ways that are taken for granted. We have never written a cheque to the VAT man, for example. It can't last - is Chantelle's biography really a VAT-free necessity? - but while it does it's a source of great jealousy from our non-publisher peers. And you have *no idea* how brutal retailers can be to their suppliers - multiple book retailers are nuns in comparison. No, not nuns, kittens. Er, no - er, just - just very nice. They are, compared to other companies I've worked with, incredibly interested in sourcing product from a wide supply base and happy to incur the extra cost and spend the extra time it takes to engage with smaller suppliers to deliver a wide range of books to their customers. And gawd love 'em for it.
So in summary: being small is not as dangerous as people say it is. There is no size-related entry requirement to access retailers' 3 for 2 tables. It just depends on the books you publish and the way you publish them.