Last year the distribution industry was threatened by the global financial crisis and fretted over the issue of parallel importation. With these worries swept aside, at least for now, what is keeping the trade up at night?
Amazon, for one. As things stand, Australian distributors have little chance of competing with the global e-tailer. It’s a predicament in which local distributors stand shoulder to shoulder with booksellers, who are legally bound to wait for the local title to be distributed, thanks to parallel importation restrictions, upheld by the productivity commission last year, while customers can order their books—GST-free—from Amazon.
But of course, that’s not the only worry. With the increasing maturity of the ebook market, consumers can now buy and receive an ebook faster than it takes for Amazon to deliver. In fact, it only takes a few swipes on the screen of your iPhone, or to download onto your Kindle or Kobo.
It’s easy to think the distribution industry is going to be squeezed out of the picture as the ebook gains in popularity, but distribution businesses that are nimble and forward-thinking enough can get involved, and plenty are trying. Here’s a quick primer—just like distributors hold stock of a physical book, they can do the same for the corresponding electronic files. An ebook distributor might be responsible for everything from encrypting the file for security to deploying it in the correct formats for different devices.
Many also provide the ecommerce infrastructure that the retailer can incorporate into its own website. Though there’s not much movement in it locally, British wholesaler Baker and Taylor has the service ready to deploy. “We can build a robust e-book store branded for an individual customer that appears as its own ‘virtual’ bookstore,” says Australian spokesperson Ken Phelps. “The e-book content is then aggregated and managed by Baker & Taylor on their behalf.”
From here the job’s much the same—let booksellers know what you have in stock and make it as easy and as fast as possible for them and their customers to source it. “We have the same deal with all our publishers and authors,” says Jeff Higgins from local distributor Dennis Jones & Associates as he explains Dennis Jones’ ebook strategy. “We’ll put your book as an ebook into all the right channels in the same way as we put your printed book in the book retail industry, we’ll put it into the channels where ebooks are sold because we think have to. There’s a lot of misunderstanding about ebooks, even within the industry, but we’re very conversant in what’s happening in the world of ebooks.
But it doesn’t stop there. With the knowledge and systems behind them, many distributors are embracing the new technology by launching their own ereading platforms. Just one is Blio, an e-reader software application from US-based distributors Baker & Taylor. The distributor is also launching the Blio Bookstore, but is also offering partnership options with retailers, such as encorporating the software into their existing digital content solutions and ecommerce applications.
Ingram, another US-based distributor and wholesaler, is getting in on the act. In April this year it announced its involvement in Apple’s iBookstore, converting content to the correct format and submitting it on behalf of publishers.
Such arrangements and agreements are the pointy end of an industry in flux over everything prefixed with an ‘e’. Jeff Higgins says he’s talking about it all the time to publishers and authors, bringing discussions about ebooks into their author-coaching philosophy. ‘Sometimes the people we deal with aren’t conversant with the industry,? he says. ‘But that’s our job, so we’re actively asking them for e-rights so we can get them converted and make sure we’re in there with all the other companies pitching ebooks.?
But, as many publishers have acknowledged, there’s still a lot of guesswork around the best distribution process. Terri-Ann White at UWA Publishing says the company has started talking to and setting up arrangements with providers both overseas (Google, Amazon and Kobo) and local (Informit/RMIT Publishing and ebooks.com). “We’re playing the field for when things start to work,” she says, “but it’s a magnificently risky moment to be doing work for no return.”
Dennis Jones and Co have alliances and agreements lined up, including with some big overseas names, but they have no plans to deploy out-of-the-box website solutions, where they provide the infrastructure for a retailer to re-skin as their own. For now, like everyone, Jeff Higgings says the company is playing a waiting game. “I spoke to Google, and they said ebooks were going to be the next best thing,” Higgins says. “But they would say that. It’s still up in the air as to how long this is going take. There’s no way you can deny it but it really depends on the adoption of ereaders.”
Distributor Scribo is part of a much broader approach to ebooks. As part of the PMP Group, it shares a home with Griffin Press and Gordon and Gotch, a book printer and magazine distributor respectively.
Craig Davison, managing director of Gordon & Gotch and spokesperson for the distribution side of PMP business, says thigns are still in their infacy but plans are on the table. “It’s a wider digital strategy,” Davison says. “We have access to print on demand. We have access to the country’s largest book printer and distributor which we’re endeavouring to keep alive as long as we can. Our digital strategy will see us through our direct to consumer model with Treeet, which will give us access to sell ebooks online.”
Davison says Scribo is also working on a wholesale model, what he calls a white label solution which will see the company offer the distribution and technology back end, branded for each individual client (bookshops). It will not only be sold to international clients to give them an Australian presence, Davison’s quick to point out that 65 percent of their customers are ‘mum and dad operations’ that don’t have the capital or technical knowhow to deploy online sales and represent a big potential market. “It’s really taking what we do today and digitising it,” Davison says, “which is being the wholesaler and supplying stock.”
The local goes global
This article has focused on overseas book distributors as much as Australian ones, and there’s a good reason for it. Global wholesalers are making serious inroads into the Australian market. Servicing markets in the tens or hundreds of millions, they can afford not only to go big but go wide, and as the supply chain of not just books but DVDs, toys and just about everything else has fragmented, they’ve added a dizzying array of products to their systems. Books are often just one product class in a very large offering.
Ask some book retailers and even some switched on consumers and they’ll tell you it’s not just our small, far-flung market that puts Australian distributors behind the eight ball. Some will tell you they’ve just been slack, sitting on their hands feeling hard done by instead of concentrating on improving their service to compete on a global scale.
When a UK website offers free delivery worldwide and can get a book to you faster than any Australian bookstore or distributor (more below), it’s a matter of economic Darwinism, and Australian companies who can’t offer a better service — ie one that’s quicker or cheaper — won’t survive. What’s surprising is that in areas like technology where it’s not about [print volume, we have a unique opportunity to surge ahead in Australia. There’s no reason any local distributor could be building an ebookstore module and selling it to every bookstroe in the country today.
One respondent to this story said the industry ‘refuses to recognise things that are happening at times.’ Terri-Ann White of UWA Publishing thinks the question of how to distribute ebooks has people dizzy in the head. “People are trying to work out how to do everything and whether they’re wasting money going down certain paths that aren’t going to yield very much,” she says.
One thing’s for sure, when it comes to a consumer wanting a product, no amount of local loyalty is going to save us. The days of ordering an unusual book and waiting weeks for it to arrive are long gone in today’s click to buy world. “The public are far more aware of what they want and they’re not prepared to hang around and wait for it,” said Dennis Jones’ Jeff Higgins, explaining the new paradigm global wholesalers have been able to tap into. “We’re used to getting things quickly, and consumers are highly informed about the books they want to read.”
Another Australian distributor who asked not to be named added that a number of booksellers get special orders from the likes of Ingram and Baker and Taylor because they’re cheaper and often faster than the local version. “Everyone thinks Amazon’s a big threat in this part of the world but it’s not, it’s them”.
Scribo’s Craig Davison doesn’t disagree, saying global wholesalers have a place but adds; “there are some people who aren’t living within the boundaries of the legislation we have and who are using and abusing those distributors. They have a purpose, it’s just a matter of how they’re utilised.”
Competition is certainly getting fierce. UK online bookstore The Book Depository’s free worldwide delivery is a potential game changer — rather than pay more than the local retail price when international shipping is included, many Australian book buyers might have held off on purchases they didn’t mind waiting a few weeks for. Now they don’t even have to do that. The Australian RRP of The Icarus Syndrome (July, Melbourne University Publishing) is $34.99. The hardcover British version available for free shipping from The Book Depository is just AUD$26.31.
But for now, most of the market for global wholesalers seems to be in products that aren’t available through Australian distributors or licensees. “Today, most of our business in Australia relates to the supply of special orders for titles not normally available from local suppliers,” says Baker & Taylor’s Ken Phelps.
But that’s changing fast. There seems no rhyme or reason in who’s selling what to whom — just look at the Australian website treeet.com.au, which sells a range of entertainment products and is owned by printing group PMP. In case you didn’t know, PMP also owns Griffin Press, which prints books for a considerable percentage of the Australian publishing market.
It puts PMP in the interesting position of competing with its own customers, but of everyone we spoke to for this story, few would be drawn on any controversy. The more general mood seems to be that publishers, distributors and booksellers have to fight for what little disposable income consumers are spending on books, so anything’s fair game.
Protectionism made easy
Go to any business conference, shareholder meeting or industry pow-wow and some besuited manager or executive will use words like ‘change’ and ‘opportunity’ as stand-ins for woeful periods of economic carnage. While ebooks and the threatened erosion of our national book distribution industry are the potential boogeymen at the moment, government protection is an enduring theme.
The parallel import report seemed to divide us all into progressives who want to preserve culture and ruthless capitalists who want the market to cut out deadwood, but one of the most telling findings of the University of Melbourne study mentioned earlier is where respondents were asked to list the most important government policies affecting the industry, with 38.3 percent choosing tax concessions.
While that might be the ghost of the GST wars still casting a shadow, another graph reveals the next threat perceived to the industry as a whole, with about three quarters choosing territorial copyright. As long as Australian consumers keep picking and choosing the best deal from a global marketplace, parallel importation is a tidal wave looming on the horizon. In a little over two years you’ll be reading all about it on your iPad.