Distribution Basics
The latest news regarding the PGW component of the larger AMS bankruptcy is promising, at least for the PGW clients. Perseus will purchase Avalon, the largest PGW client, and has enlisted Charlie Winton, Avalon’s principal (and also the founder of PGW), to come on board. Perseus then reportedly made a very favorable offer to the remaining PGW client publishers - proposing to take over their contracts and in a relatively short period of time, make good on something like 70% of the money owed to them by the bankrupt PGW.
This is a far better outcome than any of the publishers could possibly expect from PGW either in liquidation or any reorganized version of it, so it would seem likely that most, if not all of the PGW publishers will make the move to what will now be a powerhouse distributor in Perseus (which already had absorbed CDS and Consortium).
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This seems as good a time as any to talk about book distribution, how how it works, and will work in the future, and what publishers and even authors should know about the dynamics of working their way through the supply chain to market and sell their books to readers.
Over the past several years, the overall landscape of the book business has changed considerably. There are still many, many places to buy books in the United States and buying books online has become big business (Amazon alone now represents as much as 10% of total books sold), the number of entities buying books for resale has declined. Something like 90% of all books sold by an average book publisher will go to fewer than 10 customers - including wholesalers!
Faced with hundreds or even thousands of book publishers, retailers and wholesalers rely on distributors to help them rationalize their supply chain. It’s more or less impossible to sell books to Barnes & Noble, Borders, Books-a-Million or Costco without a distributor, and while anyone can sell to Amazon, it’s alot easier utilizing the services of a professional book distributor.
And while there are still a fair number of distributors in business today, along with larger publishers and university presses that offer distribution services to smaller client publishers, recent bankruptcies and purchases have clearly narrowed the field.
With a more concentrated retail marketplace, distributors are rationalizing their business models, some are specializing in certain types of books or publishers, while others are setting more stringent size requirements for publishers they will work with. Since it has become relatively cheap and easy to publish books, distribution is now much more of a buyer’s market, as there are simply so many books and so many new publishers. It has clearly become more difficult for a new publisher to find a distributor, even as distributors compete amongst themselves to sign up the relatively few publishers whose sales volume or sales profiles makes them highly attractive as clients.
Publishers of different sizes and profiles have very different choices available to them. Generally, the size of the publisher dictates the distribution models available - smaller publishers have fewer options, the largest publishers have the greatest array of models to choose from.
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In our next post, we will cover the different distribution options available to publishers of varying sizes. One note for all publishers who currently are distributed by another company - no matter the size of the distributor, you should file a UCC-1 form memorializing your ownership of inventory consigned to your distributor with the Secretary of the State within which your books are warehoused. If you have not done this yet, do it immediately! If you need specific advice about distribution contact Booktrix - we can help.
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