Publishing Industry Consolidation and the Old 80 / 20 Rule

Publishing Industry Consolidation and the Old 80 / 20 Rule

Intrinsic Books - Publishing - Intellectual Rights Management - Web MarketingRemember the old 80 / 20 rule? When I started out in publishing in the late 1970’s and 1980’s the conventional wisdom held that 80% of a company’s business would be done by the top 20% of it’s customer base. The top 20% had to be looked after with care – often with individual account representatives to keep them humming along. The other 80% was to be mined by sales and marketing personnel for customers that might have the potential to work their way into the 20%.

Working on the 80%, sharp young men and women developed special sales, creative marketing, custom publishing and pioneered the sales of nonfiction books at the point of consumer interest – cookbooks and romances in supermarkets, pet books in pet shops, equestrian books in tack shops, history and technical books in hobby shops. Smart young editors pushed for series so that successful publications could be followed into the market by sequels.

It worked at the time, but for the most part those days are gone. It’s a new world in publishing, and the old 80 / 20 rule is long gone. The digital age has turned the publishing world upside down and the most important new rule is “Keep Amazon happy.” The book Industry Study Group just released a study based on “reader surveys” that provides some serious food for thought for the publishing community. The report is 41 pages and can be purchased for $995.00 or bundled with an earlier ebook report for $1592.00.

There is a short analysis of parts of the report on the Digital Book World website here:

Digital Book World quotes the statistic that digital sales “make up approximately 30% of the trade market for the past year.” Technology marches on and it is quite impressive that tablets, smart phones and other mobile devices now pervade our society. Nearly one of every three commuters reading on the way to/from work will be doing so digitally. And the digital reader is likely to be a younger reader. The future will be ever more digital.

The chart below, taken from Jack Perry’s column as posted on Digital Book World, provides the surveyed readers responses to the question “Where do you typically acquire ebooks?” The responses are sobering, especially in light of two recent court decisions that will shape the future of publishing: the price fixing case against Apple and what was the “Big Six” and now is the “Big Five,” and the case against Google for scanning copyright works without permission.
Digital Book World Chart - Intrinsic Books
It is not a big leap to look at the future of publishing and see the industry controlled by a few megalithic companies, maybe with few independents floating around. A few years back it appeared that ”desktop publishing technology” would lead to thousands of independent publishers purveying their works in the marketplace. While many authors self publish on various platforms available to them, for the most part they toil (and publish) in obscurity.

Add into this equation the merger of Penguin and Random House and the future of publishing looks to be in the hands of about a dozen companies. And that is shrinking. Good or bad, that’s the way it is. The old ways are gone, and so is the 80 / 20 rule. It’s being replaced by “Keep Amazon happy, keep an eye on Google and Apple, and pray for B&N.” If the last surviving national brick and mortar bookstore chain disappears there will be few choices left, digital or physical.

I don’t know if the BISG survey asked the readers surveyed the most important question, “How did you find out about the books you purchased?” As the publishing industry evolves with new technology and the channels of sales and distribution change, it will be incumbent on the author to spread the word about their books, whatever media they publish in. And the distribution channels for ebooks will be dominated by a very few very big companies.

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