Publishing: Bypassing the middleman
US book publishers have long been at the mercy of a small oligopoly of middlemen, the retailers who sell their books. With Borders and Barnes & Noble dominating the general trade book market, and Wal-Mart, Costco, and others as the main engine of mass market books, publishers have had to take all the risks while kowtowing to the increasingly stringent demands of these vendors.
But the worst insult was yet to come. Barnes & Noble over the past few years has started to encroach on the publisher's turf, by setting up its own publishing arm. Already its "Classics" series is eating into Penguin's territory, but more publishing lines are planned. The aim at the retailer is to have its own books make up 10% of its gross sales.
So a few weeks ago, it came as no surprise that Random House, a division of Bertelsmann AG, announced its own plans to sell directly online to customers, bypassing the retailers. While the plans are still fuzzy, the company would be the largest publisher to join such competitor as Penguin, Norton, Torstar (Harlequin), and Scholastic, that have opened up online sales.
A Penguin spokesman noted in a New York Times article ("As Sales Flag, Publisher Eyes Retailers' Turf", 12/20/04) that
the goal of an online operation was not to put either bricks-and-mortar stores like Barnes & Noble or online sellers like Amazon.com out of business. Rather, it is to make all of the 30,000 titles on Penguin's backlist of books available in ways that many stores cannot.
As brick-and-mortar retailers like Wal-Mart and Barnes & Noble manage shelf space more tightly, there is less room than ever for backlists and slow sellers. An online repository may help keep books that serve minority tastes in print, offering virtual shelves that can extend almost indefinitely (as Amazon does)., and can extend shelf lives of books.
It's not certain what success Random House will have online. But its announcement is an indicative of a promising strategy of suppliers who are oppressed by ever more demanding retailers. One of the great promises of the online market has been the ability of buyers and sellers to get together without middlemen. But that promise has only been fulfilled in part, as the Web in some ways reduplicates the real world, and successful Web retailers get acquired and the blockbuster mentality. The dream of a hundred thousand cottage industries, say mini-publishers, thriving on the Web is still a dream.
