Monthly Archives: January 2011

Some Business Decisions…

I received a question last night about our decision to use digital printing (print-on-demand) and to not accept returns. Specifically, the person asking the question noted that “Stating that books will not be available in bookstores harkens to the limitations of self-publishing”. I had planned to blog about some of my business decisions anyway, so this seemed like as good a time as any.

First, some information about how books and other products are sold. For most products sold in retail outlets, stores purchase goods at a discount but must absorb the cost of any stock which ultimately is not sold. In general, returns are only allowed for damaged merchandise. This is how books used to be sold. During the depression, because publishers were not in a position to sell books they agreed to sell books on consignment to bookstores as a way to keep bookstores in business. This is the current model for selling books. In a sense, bookstores get the best of both worlds – they get a 40% discount off the list price for carrying an item with no risk because they can return any unsold books. In this model it’s the publisher who assumes all of the risk. In his book “Publishing for Profit” (discussed in this blog), Thomas Woll dedicates an entire chapter to the economics of accepting returns and points out that this is the single biggest risk (and challenge) currently facing publishers.

This risk for publishers has consequences. First, it is often difficult for small publishers to absorb large numbers of returns and many go out of business (for example, see this article). In fact, one major bookstore chain is being sued by an independent publisher for the practice of excessive returns (see this article for details).

The two biggest risks in publishing are cost of goods (printing) and returns. Printing too many books results in a publisher sitting on inventory they can not sell, preventing them from investing that money in other projects. One way to contain printing costs is by only printing books when they are ordered ( this is called print-on-demand). There is a misconception that books that are printed using digital POD technology are never returnable. In fact, the printing method has nothing to do with whether a book is returnable or not – whether a book is returnable, along with the discount given to bookstores, is decided by the publisher. We decided that our books would not be returnable because of the risk associated with returns.

By minimizing the risks associated with returns and printing costs, as a company we can take risks in other areas:

  • We can publish short story and poetry collections, which do not have large sales volumes and thus are usually not produced by larger publishers.
  • We can take the risk of publishing unknown authors.

The decision not to accept returns will result in our books not being carried in most “brick-and-mortar” bookstores. Thus, the question becomes how might a book fare which is sold through online channels only? Foner Books has published some sales figures for the major book retailers from 2009. In 2009, total sales by the major book retailers were $13.483 billion dollars. Amazon and BN.com accounted for $6.533 billion, or 48.5% of sales. More important, while Barnes and Noble’s and Borders sales decreased over the previous years (-5% and –15%, respectively), Amazon’s and BN.com’s sales increased over that time (+11% and +24%, respectively). This trend is predicted to continue, suggesting that over time “brick-and-mortar” bookstore sales will become less important for overall book sales.

Our books are currently available at several online bookstores in addition to Amazon and BN.com. But as many self-publishers find, merely having a book available is not sufficient for it to be successful. It is essential to get the word out that the book is available and to get people talking about it. We have a marketing strategy for doing this that we have begun to implement for our short story collections. I plan on discussing this strategy in a future blog. We also plan on making all of our offerings available as eBooks, which as a book market currently has the highest rate of growth.

A successful business is one that understands the risks associated with their business and that works to minimize those risks when possible. While we understand that not having our books sold in “brick-and-mortar” bookstores is also a risk, we feel it is one worth taking to minimize the bigger risks currently facing publishers.

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Information and Inspirations….

Perhaps this is a bad habit I formed while doing my Ph.D. thesis, but I tend to research topics to death. I’m the guy who wants to know everything possible about anything that interests me. Thus, before deciding to start Divertir Publishing, I wanted to learn everything I could about the publishing business. In this blog, I wanted to mention some books that I personally thought were very useful during my research.

Publishing for Profit by Thomas Woll

In my opinion this book contains all of the information one would need to start a publishing business. Every important topic is covered, including why you should define a publishing niche for your business, how to decide on your editorial process, and why returns are such a problem in publishing today. The most recent edition also includes discussions on eBooks and Print on Demand (POD).

Some people might feel that this book contains too much information which is not pertinent, particularly to those who are either planning on self-publishing or who wish to start a small independent press. To those people I would say that to deviate from what is considered tradition publishing and explore new paradigms one must first understand what defines traditional publishing. One must have an understand not just of what is done, but why it is done. Publishing for Profit explains not only the mechanics of the publishing business but also the philosophy behind those mechanics. I would consider this book a must have for anyone seriously considering the publishing business.

The Self Publishing Manual by Dan Poynter

Truth be told, most of the information one would need to self-publish a manuscript can be found for free on the web. The one thing this book does very well is collate all of the information needed to self-publish a manuscript into one place. If one considers Publishing for Profit the textbook of publishing, then this is the lab manual. Woll’s book explains the why of publishing; Poynter’s book explains the how. This is information which is critical not only for authors wishing to self-publish, but also for small publishers looking to get started quickly. I think Appendix 1 alone, which is a “Publishing Calendar” that walks through all of the steps required to publish a book, makes this book worth owning.

Put Your Dreams to the Test by John C. Maxwell

This book is not about publishing, but none the less was critical in my decision to start a publishing company. This books starts by asking a very simple question: What is your dream? It then asks you to answer 10 “questions” about your dream. The goal of these questions is to help you determine what your chances are of successfully turning that dream into a reality. Reading this book helped me to consider everything from my motivations to my available resources as I made the decision to pursue the dream of starting Divertir Publishing. I would consider this book a must have for anyone consider starting a new business.

Future blogs will discuss additional sources of information and how to begin applying this information to the creation of a publishing business. I hope these books will be as informative and inspirational to you as they were to me.

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A New Publishing Venture…

The latest adventure in my life began the way most of my crazy ideas begin – it was the direct result of a conversation with my friend Roger.

I had just received a new Kindle 2 for my birthday, and I was completely hooked. This amused most of my friends, in part because I’m the same person who refuses to received email on his cell phone. I’m just not one of those people who jumps on the bandwagon for the latest technological “toys”. This made Roger wonder exactly what it was about this device that made it so special.

We spent lunch that day talking about the Kindle. We talked about how books could be purchased directly from the device, and how anyone could publish a book for the Kindle. It suddenly occurred to both of us why this little book reader was so special. The simple truth is that this device was going to help change the way we read and purchase books. More importantly, it might even change the way publishing was done.

The researcher in me kicked in at that point. I wanted to learn everything I could about publishing. More importantly, I wanted to learn how this new technology might change the way publishing was done. The conclusion of this research was that technology was indeed going to change the way publishing was done. The result of this research was my decision to start Divertir Publishing.

The purpose of this blog is to share my experiences starting a publishing company. For people who are looking to start an independent publishing company or to self-publish their work, I’m hoping this blog might provide the information you need to get  started. For people already working in the publishing industry, I’m hoping this blog will provide an interesting view from an outsider looking in.

I’m hoping this will be an interesting journey. Feel free to join me.

Dr. Ken Tupper

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