June 20, 2016 § Leave a comment
The book publishing world has been pummeled by one external disruptive force or another for the past 15 years. This time frame roughly corresponds with the growth of the internet in all of our lives. Whether it be online retailing, eBooks, globalization, consumer attention span, or discoverability, publishers have been in “react”mode for almost as long as most of us can remember.
In a recent blog post, Thad McIIroy presented some very interesting data about the employment decline in the sector over the past ten years being as high as 25%. Couple that with data that shows books sales as relatively flat and average book prices (unadjusted for inflation) having very little change over the past eight years, and it’s no wonder we are reacting! We are simply trying to survive!
I attend lots of book publishing events and one of the themes I notice this year is a bit of a “sigh of relief”. Publishers, in general, appear to believe that the majority of the disruptive forces are now at bay, and under control. They believe that they can get back to business as usual.
I’m worried about this attitude, because there is no such thing as “usual”. Smarter publishers recognize that while there might be a lull in disruption, it won’t last long. We don’t know what we don’t know yet, but we know this much: the world is on an innovative hot streak, and some not-yet-known innovation will likely put us back on our heels in a heartbeat – and probably sooner rather than later.
We all need to take the time afforded to us now during this lull period to disrupt ourselves; to set our own directions; make our own innovations. Essentially it’s time to move from reactive management to proactive management.
People in book publishing are among the most creative on the planet. It’s time for us to reinvent our own future, before someone reinvents it for (and/or takes it away from) us.
June 15, 2016 § Leave a comment
There has been a lot of good news in the bricks and mortar book retailing world lately. Numbers that just came out this morning show that April, 2016 was up almost 10% over April, 2015. It is great to see this resurgence!
But, also this week, we got the news about Hastings filing for Chapter 11. That news will certainly hit the retail numbers in months to come as Hastings winds down its operations. But, the real underbelly of this story is all the unsecured creditors (mainly publishers) who will most likely will need to write off a crippling amount of accounts receivable.
Is this an opportunity?
Is it possible that a consortia of unsecured creditors get together and propose that they take over Hastings operations?
Publishers have long been looking for other channels, and ways to feel closer to their customers. If the publishers that will be affected by the demise of Hastings got together and collectively double-downed on an experiment, it could be very enlightening, and could act as a catalyst for some of the profound changes that are still necessary for book publishing in the future.
Just a thought.
June 27, 2013 § Leave a comment
I was quite impressed by this years annual meeting of the Association of American University Presses in Boston last week. 787 attendees from 300 companies participated in a 2+ day long forum that covered everything from advocacy and international expansion to the technical production details related to ebooks.
If I had to choose single word to describe the overall “vibe” of this event, it would be resilience. Pummeled by challenges like no other sector in book publishing, University Presses have weathered the storm, and seem determined and optimistic about embarking on a new chapter in their history.
Everyone at the conference seemed interested in learning from the experience of others and taking stock in what was really important in their work. University Presses collectively know that their scholarly publications are important to the legacy of this generation. They understand that they need to regain relevance with their parent institutions, and need to partner with academic libraries in order to give their work the best exposure.
It seems as though in the time between this years event and last years event, the entire group of 132 publishers has come to consensus on what their collective mission is, and they are prepared to take on that mission.
Peter Berkery, the new Executive Director of AAUP, could not have asked for a better moment to come on board. Given this new shot of leadership energy and the sense of strength and resilience I felt from the publishers at the meeting, I’m very bullish on this future of this group, and look forward to a strong future.
My kudos go to the program committee, and the AAUP leadership for putting on such an invigorating event.
July 8, 2012 § 1 Comment
I was on vacation when I learned the news that my colleague and friend, Don Linn, was moving on to become the President of the Chicago Distribution Center. My immediate reaction was very complicated. I wasn’t at all surprised that Don was moving on to another full time position, but I was shocked by his destination. The emotional dimensions were even a bit more complex: saddened, sure, but mostly excited for him, and even more excited for my friends at the CDC and for the university press community that use the CDC’s services.
I am extremely excited that Don has found a position that will challenge and engage him in ways he hasn’t been challenged or engaged in quite a while. Don is a man of many talents, with a wide variety of experiences. Every one of those past experiences will be a great help to him in his new position. In many ways, Firebrand Associates was founded to showcase those talents, and yet, we never really accomplished that goal. So, I am very pleased that Don has found a new venue.
Don takes over a mantel with a formidable legacy. The previous President of the Chicago Distribution Center, Don Collins, was another man with a unique personal style and many talents. Since I have been lucky enough to call both of these gentlemen friends over the years, I’m sure that many in the CDC community will be curious about my opinions, and to them I will say this: after much reflection, I don’t think a better choice could have been made. Don Linn is not Don Collins, and Don Collins is not Don Linn. Their differences are immediately apparent, but they have several attributes in common:
- they are both enormously caring people; caring for their colleagues, their friends, and the publishing industry.
- they are both incredibly smart, and have a penchant for understanding bottom line impacts of actions and decisions.
- both men are “straight shooters”, and are willing to defend their positions even when they may seem controversial.
- both keep an eye on the future and are generally ahead of most when it comes to understanding the implications of new technologies on publishing.
- neither man is afraid to get his hands dirty. Sometimes the only way to understand an issue is to dive into the detail.
As should be obvious by now, I have tremendous respect for both Don and Don. As I mentioned before, I believe this to be a “win” for Don Linn, a “win” for the employees and clients of CDC, and a big “win” for the University of Chicago Press. Kudos to Garrett Kiely for his brilliant choice!
June 12, 2012 § 4 Comments
While walking the floor at BEA last week and meeting with a number of small to medium-sized publishers (as well as a few larger ones), it became clear to us that the Mergers and Acquisitions market in publishing is about to become active again after a couple of years of relatively light activity. On the potential sellers’ side, many are simply ill-equipped or unwilling to continue dealing with the massive change the industry is undergoing and would like to cash out while they still have an attractive ongoing business. On the buyers’ side valuations of potential acquisition targets, even those with very attractive content have reached levels at which a reasonable ROI is achievable and many of them believe that they can exploit sellers’ content further than the original owners.
Potential sellers often ask us, “If I did want to sell, what should I do to maximize the value of my business?” (because everyone is bashful about saying “I want to sell”). We’ll return to the subject of how to arrive at a company’s value in another post (it’s complicated) but for now, we’ll point out some things business owners can do to prepare for sale if and when they decide it’s time to pull the trigger. Many of them are common sense business practices, but following them can make it much easier for a potential buyer to embrace the company and ultimately to say, “Yes” at an attractive valuation.
An important part of any buyer’s due diligence will be to understand the publisher’s strategy and forecasts. Step one in this understanding is to have Written Strategic Planning Documents, including a 5-year business plan, Annual budgets, Operational goals and objectives, Key success factors (including a SWOT analysis), Organization charts for both personnel and operations.
Second, it’s critical to collect and organize complete and accurate Historical Financial and Operating Information, including Financial statements (audited preferred), Financial forecasts, Corporate income tax returns (filed on a timely basis), Fixed asset and depreciation schedules, Accounts receivable history and experience, and Inventory analysis and inventory locations.
Third, you’ll need to collect and organize Important Business Contracts and Agreements. (They are all in writing, aren’t they? If not, fix that now.) These could include Shareholder agreements, including loans, Bank or other borrowing agreements, Employee agreements, Long-term leases, purchasing commitments and customer contracts, Facility/building lease agreements, Licensing, franchise and distribution agreements, Trademark names and patents, Author agreements and any other documents that are critical to the ongoing business.
Fourth, Prepare for the Actual Sale. You’ll need to create a transition plan, thoroughly Understand your business’s value, Build flexibility in the company to survive if the transaction doesn’t take place, Find qualified partners to do the specialty work (Accounting, Tax, Legal, Sale Representation) so you can focus on the next point.
Finally, Run the Business as if It Were Going to Belong to You Forever. Buyers want to see an active ongoing business so continue to acquire, edit, produce and market normally. Trying to dress up or maximize for the short term before a sale seldom fools buyers.
Owners can increase their business value by developing and implementing an exit strategy. If you have (or might have) an interest in selling your publishing business at any time in the next five years, beginning to get these things in order will help maximize your company’s value in any market conditions.
May 29, 2012 § 3 Comments
One of the more interesting sessions coming up at the Firebrand Community Conference in September is going to be a discussion of the new skills required by publishers as the internet converges as both the platform and fulfillment mechanism for books and reading.
There are many aspects to this topic. What new skills does everyone in the organization need to acquire? What skills are required of everyone entering publishing today? Do we need a new vocabulary? Do we need new processes? What things do “digital natives” inherently understand that those of us who came to the business before e-mail arrived don’t quite get?
In this disruptive time, publishers are being asked to fundamentally change the way they produce and market every product. The shift is massive for publishers, moving from where essentially business-to-business companies to business-to-consumer companies, both because they can, and because leaving it to “middle-men” is no longer having the desired effects.
What do you think? What skills do you think you need to compete in today’s job market? What disciplines and new habits are you currently working on to be the best you can be?
For me personally, there are some old challenges that take on a new twist, and some new challenges that require iterative tweaking. Many of mine are not related to books, but just to the generally escalating speed of communication and the need for immediacy in so many things. Some of the old challenges are:
- Managing my time – I think I’ve been working on this since I entered the workforce many years ago, but now its different. As my roles have changed the demands on my time have increased dramatically. Moving from a “do-er” to a “manager – do-er” to a “manager” causes different time management challenges. Every day there seem to be new tools and software, and retaining a single discipline over a long period of time seems nearly impossible.
- Managing email – I’m one of those people who entered the workforce when email was only a theory on a whiteboard. Now my inbox can carry upwards of 600 messages a day. Learning to triage, and making time to triage is a constant challenge. I highly recommend Inbox Zero as a way to help, but it is still a constant challenge.
- Understanding how and how much to engage in social media and which social media. I’ve been all over the map on this one, and it’s still a constant challenge. I am amazed at how well some people work their social media presence and have used it to elevate their own personal standing, yet it takes a fair amount of time to get it right.
Some of my newer challenges relate to understanding how other people, especially younger ones, naturally think about things and communicate with each other. Trying to understand and engage in social media is part of this. However, there is also no denying that the traits that were important in the products and services we offer when I was selling them, are different now that median age of the customer we engage has declined.
What are your challenges?
May 23, 2012 § Leave a comment
I’ve recently worked on inventory projects for book publishers and wanted to share some keyobseravtions that warrant blogging.
- Success in controlling inventory in book publishing now should be defined as having inventory levels dropping more rapidly than book sales, while still meeting service level targets. Since print book sales are declining, successfully managing inventory means being able to anticipate/forecast declining patterns, yet still maintain high in-stock rates to maxmize existing demand. More working capital can then be used to invest in the digital side of the business.
- Decreasing inventory levels increases the number of transactions (like printings) that are required to resupply inventory. Obviously, printing for shorter supply timeframes means that you might, for example, print a title twice a year instead of once. Over a large title base, this can mean a huge percentage increase in reprint transactions that have to be processed.
- Increased numbers of transactions put pressure on staff, processes, and systems for greater efficiency. Most publishers are very leanly staffed at this point, and may not have the bandwidth to absorb signficantly higher transactions without major problems. Investment in better processes and/or systems could save publishers from having to make difficult staffing tradeoffs and suffering supply disruptions.
- Based on these observations and assuming continuing declines for print sales, book publishers will increasingly face tough tradeoffs between managing their inventory relative to sales, managing their transaction volumes, and covering staff overhead faced with diminishing print sales.
It seems counterintuitive during this digital transition away from the primacy of physical books, but book publishers that lack strong inventory systems and/or processes may need to invest soon for improved performance and sustainability. The risk of inventory ballooning while sales fall is one that can consume working capital and pollute a balance sheet, hampering a publisher’s flexibility to invest as needed in the digital business. A reasonable investment in improvements can save a lot of pain in the long term.