Mike Shatzkin: Publishing moves from B2B toward B2C focus

Publishing industry consultant Mike Shatzkin, whose columns are always worth reading even when I don’t mention them here, has a piece looking at new Random House CEO Markus Dohle’s contention that the publishing business (and Random House in particular) will be shifting from a B2B (“Business to Business”) emphasis to a more B2C (“Business to Consumer”) position.

Shatzkin writes:

Markus replied that he was fine being quoted because he was “convinced that publishers have to become more reader oriented in a marketing and trend finding/setting way rather than in a direct to consumer selling way.” I welcome the clarification and believe it is right in its emphasis on marketing over sales even though I think that sales, inevitably, becomes part of what a publisher has to do too. And direct contact with and tracking of individual consumers both seem absolutely essential.

Shatzkin notes that part of this move involves redirecting publishers’ branding efforts, heretofore aimed at appealing to store buyers, librarians, and others involved in businesses related to the publishing industry. Shatzkin points out that most of these brands hold very little meaning for consumers right now, and discusses how publishers might need to “completely rethink their imprints” if they are to gain that meaning.

Though Shatzkin mentions Harlequin, Penguin, and “For Dummies” as examples of brands that hold varying degrees of meaning for consumers, he doesn’t mention Baen, who has been in the “B2C” business for over ten years now and built up a pretty substantial fan following among the SF community. (It’s odd that nobody who ever talks about publishers with sensible attitudes toward e-books, free e-books, or who reach out directly to consumers seems to remember Baen these days.)

I wonder what meaning he would think that brand name brings to consumers? Certainly to e-book fans it means an insistence on no DRM and reasonable prices—people are willing to “subscribe” to Baen books as well as Harlequin.

Nonetheless, we’ve been talking for a while about how the increased connectivity of the Internet world means that publishers need to start relating better to the community of readers. Brett Sandusky called publishing an “industry of ninjas” who make and sell products without actually interacting meaningfully with the people who use them.

During the big Macmillan/Amazon agency pricing controversy of earlier this year, Macmillan exec John Sargent proved this with his Publishers Lunch announcements aimed at others in the industry—rather than the readers who were justifiably annoyed by Macmillan’s insistence on raising e-book prices. He did start a blog to communicate more publicly since then, but hasn’t said a whole lot on it in recent months.

As Baen has proven, there is nothing stopping any and every publisher from starting its own e-book storefront. But apart from Harlequin, not very many of them seem to have managed it. As Shatzkin points out, publishers are still dependent on retailers for a big chunk of their income right now, and any appearance of undercutting that might not go over so well—especially given that a number of the largest paper book retailers have also entered the e-book market themselves.

This means publishers are going to have to walk a bit of a fine line when it comes to their B2C focus. At least for now, it has to be more about marketing than actually selling, funneling those sales to the retailers that they depend on. But for publishers like Baen who manage to make the transition, it could be a key to wooing readers with much more affordable e-books while not sacrificing profitability.