Monday, 22 August 2011

Cutting Out the Middle Man

Fanseyeview reports that Amazon and authors are cutting out the middle man, in this case the publisher.

Well, in every market we see a long term trend of price wars at the retail end squeezing margins across the whole supply chain. As an ecosystem, the publishing world produces a few gems and a lot of noise, for example the ever-increasing pile of self help books from minor celebrities.

For a few years, the print end of the supply chain has reduced costs, through digital technology, then a move to Asia and China, where we can get a 250 page book printed in relatively small quantities for £0.78 (about $1).

While it's easy to focus on the greedy retailers such as Amazon and their cut-price-to-win-market-share-at-publisher's-expense strategy, we shouldn't overlook the role of distributors who are still looking for 50% of cover price to hold stock for a publisher.

The evolution of any market in this state is "disintermediation", or the cutting out of the middle man.

However, it is easy for people to see the publisher as the middle man, and say that with self publishing, who needs a publisher?


Self publishing means that the author becomes the publisher. And then, instead of writing, or talking to readers, or holding signing events, the author spends his or her spare time managing orders, maintaining ISBN records, designing book covers, formatting manuscripts, setting up pages on Amazon, setting up distribution arrangements, locating niche retailers and all the other things that we do as a publisher.

So disintermediation can't take out the publisher. Remember, this is the publishing industry. You can't take bakers out of the bakery, all you can do is get the baking process closer to the customer.

In the case of publishing, you can't get the reader any closer to the author, otherwise the author would never sell any volume of books. Having read a few news stories, blogs and other commentaries on the subject, it seems that most people overlook the fact that the author's work is not the book, the book is a physical product that the publisher creates to convey the author's work into the reader's hands.

Projects like Unbound are not a revolution in publishing, and they don't replace a publisher. Unbound is a publisher, they just have a different business model, as outlined in my previous post.

Print costs are rock bottom. Cover prices and sell prices are rock bottom. Who do we cut out? The people who actually turn the manuscript into a saleable book? Or the people who take a cut just for moving the book from one place to another?

Why is Amazon moving into publishing? Because they know that it's the retailers and distributors who are the middle men.

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