BISG Annual Meeting: Change Is Constant

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The rapidly changing book industry —  and how publishers and retailers are currently handling, and will in the future handle, change — from digital data advances to e-books was the main focus of the Book Industry Study Group’s (BISG) annual meeting, held in New York City on Friday, September 28.

BISG Executive Director Len Vlahos told industry professionals at the meeting that “BISG represents the 360 degree view” of the industry. “Everyone has a unique perspective … it’s enough to make your head spin. But through it all, through all that tumult, from every vantage point, you still need to produce, identify, distribute, and sell your product,” he said, adding that BISG’s focus remains “to create a more informed, empowered, and efficient book industry.”

Tara Catogge, senior vice president of inbound supply chain for ReaderLink Distribution Services, reviewed some of the highlights from BookStats 2012: An Annual Comprehensive Study of the U.S. Publishing Industry, a joint reporting venture between the Association of American Publishers and BISG. BookStats’ approach for collecting and displaying data can be represented within the sides of a three-dimensional cube, she said, with the sides representing format (print or digitized), category, and channel.

BookStats reflects publisher net unit and dollar sales, however, not retailer point of sale (POS) sales.

Among the study’s findings, Catogge reported a “channel shift” in the retail market. While the number of books sold through all retail channels rose by more than 195 million units between 2010 and 2011, much of this growth came from online retailers, which, because of the explosive growth of e-books, grew by over 100 percent in units while brick-and-mortar retail saw an 11 percent drop in units.

As an example, Catogge noted that following the Borders’ closing, the vast majority of its share went to the online channel, which doubled in 2011 as compared to 2010, and now represents 18 percent of the market.

Overall, net revenue from chain retailers declined 23 percent from 2010 to 2011, and dropped 29.4 percent over the four-year span BookStats has been tracking this data. Total net sales revenue from retail bookstore chains reported by publishers in 2011 was just over $2.2 billion, making it is the second largest brick-and-mortar sales channel (next to college stores) that publishers sell into.

As for the independent bookstore channel, the BookStats study notes that the comparison between 2011 to 2010 “is different than might be expected for two important reasons: (1) 2010 data for this channel was significantly restated when col­lege store sales were broken out” for the current edition; “and (2) the potential shift by publishers to rely more heavily on wholesalers may have impacted the comparison to the 2010 results.” In addition, online sales at indie bookstores are counted in the online channel category. As a result, the restated 2010 revenues are nearly $60 million lower in 2011.

The study also explains that channel data is further complicated by variations in publishers’ methods of accounting for sales by channel: publishers do not have all of the final destination market data for their products; they track which businesses they sold to, not where consumers ultimately bought the books. “For example, a book sold to a wholesaler or rack jobber may end up in Wal-Mart, or it might end up with an independent retailer or library. What appears to be market growth or decline in some channels, especially within retail, may actually represent a routine shift in inventory sourcing,” according to the BookStats’ Executive Summary, which noted this should be kept in mind when viewing the data.

Also during the meeting, Angela Bole, deputy executive director of BISG, discussed the organization’s support of the EPUB3 standard as the preferred standard for representing, packaging, and encoding structured and semantically enhanced Web content — including XHTML, CSS, SVG, images, and other resources — for distribution in a single-file format. “There is a critical need to rally around a single standard globally,” she said, “to impede instances of fragmentation. There is still work to do.”

Bole added, “When you are a publisher, you need to know what is supported on different devices.” She explained that different digital books with the same title but a different file format should not be assigned the same ISBN, for example.

In a panel discussion, Vlahos asked whether the rapid and tumultuous change seen in the industry over the past few years is something that will continue moving forward. Tom Turvey, director of strategic partnerships for Google, noted that the U.S. is far, far ahead in a lot of ways, so what has happened in the U.S. will now happen internationally. “I expect more change, we’ve not come close to seeing what is about to happen,” Turvey said.

Maureen McMahon, president and publisher of Kaplan Publishing, concurred. “We’re just beginning to see the change,” she added.

“Change is constant,” said Ken Michaels, president and COO, Hachette Book Group, “and impossible to predict.” In discussing the changing needs of consumers, Michaels said, “To adapt to the fundamental need of consumers, you need to have a spirit of innovation. “

The discussion turned to selling content in a mobile environment. “This is not a wave that’s coming, it’s a wave that is here,” Turvey said. “Sales for mobile devices are far greater than expected.” That said, due to the fluid nature of technology advances, Turvey said he wouldn’t try to lead that change into the mobile world. “You don’t want to be over-invested in one solution” if it turns out it’s not the right solution.

“It’s a very different way of doing business — content-centric,” Michaels commented.

McMahon said the move to digital has changed the skill sets the publishing industry is seeking in staff. “You need to hire people with the ability to learn and the ability to teach.”

Dominique Raccah, president and CEO of Sourcebooks, said due to the sheer volume of content available, her company places a significant emphasis on breaking through this glut, by focusing on covers, for example, to “give our authors the best possible chance…. It has to be extraordinary because you’re not going to get a second chance. This is completely new to us. I didn’t think we needed consumer research for a cover, but now we do.”