The demise of the Net Book Agreement has obliged publishers to study the techniques of packaged goods marketers. Will they boost sales? By Harold Lind
The London International Book Fair opens at Olympia next week, and it will be fascinating to see how far the book trade has adopted marketing techniques to meet the threats and opportunities of the new world.
Since the abolition of the Net Book Agreement (NBA) in 1995, the trade has been exposed to the chill winds of competition, and the new category killing retailers such as Borders are presenting the publishers with a dilemma.
A quarter of all book titles published produce 95 per cent of total sales and a third of titles stocked by the average bookstore sell fewer than ten copies a year through the entire trade. As Richard Knight of Booktrack said at a recent Marketing Week conference, these latter titles could be regarded less as stock than as fixtures and fittings.
One route pursued by the major stores is to grow bigger, widen their activities and become social centres for those with any kind of literary interest, rather than mere purveyors of books. If most titles sell as little as Knight suggests, the cynical might see this as using unsaleable books as bait to entice the public into a store to buy more saleable CDs, videos, coffees and lunches. The true beauty of the exercise is that under present conditions the bait is infinitely renewable. The store simply returns one set of unsold books to the publisher and has them replaced, more or less free, with new titles.
It is easy to see the advantages of this technique for the big booksellers. They can offer the public something the supermarkets cannot, and make an acceptable profit, even if not entirely by selling books. The benefits to the publishers are less clear, since eventually it is they which bear the cost of the bookstores’ bait. The result is that the economic logic of the book market seems to be putting the major publishers and retailers on a collision course. The big question is whether there will be a collision or whether the great improvement in marketing techniques will provide a basis for both sides to co-operate in increasing the book market as a whole, much as grocery retailers are now tying in with suppliers in schemes such as efficient consumer response (ECR) and category management.
Indeed, the whole basis of the relations between publishers and booksellers needs to be re-thought now that the cosy cocoon of the NBA has been destroyed.
At the Marketing Week conference, leading publishers such as Les Higgins of HarperCollins and Amanda Ridout of Hodder Headline admitted that pre-1995 marketing by publishers was rudimentary. Booksellers paid publishers for an agreed number of copies of new publications and in due course returned those they had not managed to sell, receiving a credit which helped to cover their next selection of titles. In some respects, this system gave publishers an easy life, but it left them largely ignorant of who the book buyers were and how they could tailor their products more effectively to meet real demand. This helps to explain why the overwhelming majority of titles failed to cover their costs, while the few successes frequently sold out just as demand was at its highest.
The first major crack in this cosy, incompetent world came with the incursion of the supermarkets. They bought in large quantities and sold, at significant discounts to the published price, the sort of titles they knew their shoppers would buy. Mills & Boon, Catherine Cookson and Delia Smith have given the supermarkets about nine per cent by quantity of all books sold through shops.
These figures come from Booktrack, a market research source which appeared after 1995, and which for the first time produces weekly sales figures for books from the great majority of retail outlets.
The more sophisticated publishers are taking account of the new information to go in for what the packaged goods industry might almost recognise as marketing. The end result should be that fewer but more profitable books will be published. Booktrack figures show the number of titles published annually increasing by 50 per cent during the Nineties, and still five per cent higher than in 1995.
Up to now, the bookstores have always had the final word, since they were the only conduit through which authors and publishers could put their wares before the public. But this is changing rapidly. Not only is there a much greater variety of retail outlets through which books can be sold, it is becoming increasingly possible for publishers to eliminate the middleman altogether and sell directly to the public.
Panel research on book buyers from Taylor Nelson Sofres shows that already a quarter of the revenue in the book market does not pass through retailers but comes instead from off the page and book clubs, and this area is growing rapidly. So far electronic systems such as the Internet are insignificant for consumer sales, but in a few years’ time they are likely to play a considerable role. They already do so for publishers by enabling them to supply consumer demand rapidly without holding large stocks.