Repost: Digital Platforms & Distribution

Originally posted April 12, 2007

Over the last 100 years (probably) US publishers have dithered over whether to use their facilities for the exclusive warehouse, fulfillment and distribution of their books or to offer 'publisher services' to other publishers. In recent years we have seen as many large publishers give up publisher services as adopt them. Some publishers think the headaches out weigh the potential marginal income and others in turn believe these publisher service functions to be core strengths and tasks they can leverage.

Recent announcements by Random House and Harpercollins indicate that there will be an application of the physical 'publisher services' model in the digital world. Clearly here the opportunity and the economics will be significantly different than in the physical world. Other players are entering the market as well: Both Ingram and Gardners (UK) have or are entering this segment. Gardners announced today, and will expand on this business opportunity at London Bookfair, a 'digital warehouse' which is "designed to provide a comprehensive range of e-commerce services for booksellers and publishers." Further,

Gardners Digital Warehouse will supply the capability for Publishers to link their existing digital files, eBooks, Audio Downloads, and extended bibliographic content such as ‘search inside’ to Gardners Books range of Internet and high street retailers. Publishers can also utilise a range of digitisation services designed to enable any size of Publisher to create digital content economically and to use it for publicity and eBook sales with all of Gardners customers.

The vast majority of publishers in the UK and US are small and do not have the depth of experience or financial capacity to support their own back office functions which is why 'publisher service' programs by larger publishers and companies like NBS and PGW exist. Similar issues will exist in the digital world and perhaps the financial aspects and the knowledge gap will be even more stark as processes and applications become more technology driven. Regrettably, as digital distribution becomes a basic service it will simply be out of the reach of the less sophisticated publisher. And this is where Harpercollins, Random House and others will step in to offer a range of digital services to support this market.

The issues these publishers will face will be different than those they faced as physical distributors but intuitively I have to believe the margins will be greater and the services they can offer the publishers and authors will be materially better. It is early days yet and the current offerings are fairly basic (not to be critical) but there are some tantalizing possibilities.

Other than the big fiction authors who get loads of attention, marketing money and have brand equity the vast majority of titles go unsupported almost immediately after launch. Successful titles in this environment are often driven by the desire and resourcefulness of the author. Imagine in a digital world where the author can use the digital platform to create their own marketing program, interact with stores and buyers, build communities with consumers and in many ways manage the sales and marketing for their own titles. It will happen. Adding social networking and other interactive 'modules' to the platforms offered by Harpercollins, Random House, Ingram and others will achieve this and I suspect some derivation of these ideas are in the works. The advantages for smaller publishers and authors is the scale that these platforms will offer both in terms of financial considerations and that they will become destination sites for consumers of books.