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Wednesday, December 27, 2006

The Long Tail of POD

By Stephen Blackmoore

First, my credentials. I am nothing more than an asshat with opinions and a bullhorn. So take all this with a block of salt.

Last week, Sandra post about the Espresso, a print on demand kiosk that belts out a complete bound copy of a book in 7 minutes. It's an intriguing idea, and one that's been in the works for years. I'm sure it needs improvement, and there will be bugs. But whether it works or not, it's the future. It's the Long Tail.

The Long Tail is a business model where the cumulative volume of individual small sellers can overrun the cumulative volume of high sellers. In short, John Grisham and Clive Cussler do great, the thousands of other book titles taken collectively do even better. The name comes from the way the distribution graph is laid out, a small area of high volume and a long tail of low volume that stretches much further away. The catch is that they're all online.

From Wikipedia (what does it say about our current electronic society that I can even cite Wikipedia in the first place?): "Anderson argued that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough. Examples of such mega-stores include the online retailer Amazon.com and the online video rental service Netflix. The Long Tail is a potential market and, as the examples illustrate, the distribution and sales channel opportunities created by the Internet often enable businesses to tap into that market successfully."

The Espresso, and POD technology in general, plays into this business model, as do those ebook sites selling online, such as Liquid Silver, Samhain Books, etc..

This kind of model really only works so long as low volume product can still be allowed to move, which is why it works so well with digital distribution. Digital files are easy to store and cost very little, relatively speaking, to maintain. Throw in something like the Espresso, a more on demand print on demand machine than previous entries, and it opens the doors even wider.

The effect for a Long Tail distribution/publishing model is that more product can be kept "on the shelves" as it were for next to no cost, allowing those titles to still sell, even though their individual demand may be low. More possible revenue makers. And if demand suddenly appears for a title after a long fallow period (take the spurious success of "Holy Blood, Holy Grail" after the DaVinci Code came out) it's no big deal.

The positive effect for an individual creator is that their books, music, art, what have you, can potentially always be available, and they can potentially continue to make money off them. Hooked on an obscure Appalachian bluegrass artist? You can find her on Amazon. A 1942 third edition detective novel from an obscure pulp writer? EBay. That documentary about lichens in the Antarctic? Netflix.

There are also some publishers who are designed from inception to handle the long tail. I'm a fan of Liquid Silver, Samhain Publishing and Ellora's Cave. Oh, don't look at me that way. Porn's a 4 BILLION industry and no one's buying it? Please.

I'm actually a fan of their business model. Some of the writing is hit or miss and the cover art? It's gotten infinitely better, but there's only so much rictus faced Poser models a reader can handle.

Anyway, they're all digital distributors. They are publisher as bookseller. They cut out the middle man and depend on a volume of diverse titles (I use the word "diverse" loosely") and an internet connection. These are not blockbusters by any stretch of the imagination. I haven't seen their numbers, but I would be surprised if they're not doing fairly well. They have relatively low overhead with no need for physical storage space beyond a server farm at their hosting company. They don't pay advances, instead paying their authors a percentage of each sale.

From the few I've talked to, the authors seem pretty happy with the arrangement, though I'd be willing to bet none of them would have a problem with getting an advance. I suspect we'll see more small presses heading in that direction.

So what are the downsides to the long tail?

Well, most existing business models don't work with it.


Friend of mine made a point a while back about independent bookstores. Loves them. Thinks they're great. But when B&N carries his books and they don't, the luster kind of peels off. They just aren't able to carry the load and so, as an author, he feels that he can't support them.

Most, if not all, independent booksellers don't have the ability to maintain the volume that is needed to operate in a long tail environment. Overhead is too high with rent, shelf space, etc. They depend on those titles that they can move a lot of.

Niche booksellers, like sci/fi and mystery, probably have it the hardest, because their pool of regulars is much smaller than a general bookseller. At the same time, since they cater to that smaller niche, they're more likely to have a regular clientele. But with rising costs and more competition, that pool is rapidly dwindling.

We all hear about indies going under because they can't compete. Some indie bookstores' bread and butter ends up being the collectors, those who want vintage mysteries, or first run hardcovers. In some cases, that's the only thing that keeps them in business.

In order to function in a long tail environment, they either need a large volume available to them and the ability to get it to the customer in a hurry. They can't beat the large chains on either of those fronts.

Some booksellers have reshaped / invented themselves to work this way with various degrees of success. Look at the number of low volume booksellers riding off Amazon's coattails in the new/used categories. Mom and pop shops that handle a few books at a time, or work with low cost remainders. They don't have to have volume because they only move a handful of things to begin with and they're fine with that. Plus they run off of Amazon's long tail infrastructure, which keeps their costs even lower. The low cost justifies the low volume.

And then you have the publisher as seller, which I mentioned above, though right now that appears to only be in digital formats, like .PDF files. As that segment grows and the technology improves that's going to cut into the bookseller's cashflow, too. Especially when a technology like the Espresso takes off.

In the long run, the indie as it exists today is going to disappear. It's no longer a sustainable model.


For the most part, they're not equipped to handle it, either. Forget the editors and typesetters, they have an enormous infrastructure devoted to nothing but manufacturing and distribution. All very tightly joined together. They have created worldwide supply chains and deals within deals that move books like arteries move blood.

POD technology like the Espresso undercuts most of that business model. I suspect that a large portion of people in the distribution industry have been soiling their collective britches over this. You don't need a truck or a warehouse to move and store books when a T1 line will do the work for you.

So far the retailers have taken the hit, figuring out the details. No incentive for the publishers to, yet. Why change your model when someone else can do all the heavy lifting for you? As the saying goes, settlers get the land, pioneers get the indians.

At some point, though, the publishers are going to look at the numbers, and I'm sure they already have up, down and sideways, and see that it just costs too goddamn much money to print and ship these things. Then, when Wal-Mart and B&N look at it and see that they can move more product and reduce shelf space for underperforming titles, both in their stores and in their warehouse and distribution centers for online sales, they're going to push it, too.

Five years and I see whole sections of Borders taken up by a bank of kiosks that will belt out your favorite thriller in 2 minutes flat. Maybe.

When Apple created iTunes, it succeeded because it created partnerships with several music labels. A technology like the Espresso is going to have to do the same thing in order to survive. If it doesn't get some high profile titles in its catalog it's going to die on the vine and be resurrected in 5 years as something faster and better. Or slower and cheaper but with better deals with the publishing houses. Regardless, it's going to happen.


As of the last time I looked, which admittedly was a few years ago, many contracts stipulated that the rights to the book reverted back to the author after the book had been out of print for X period of time.

What happens to those rights when X is potentially forever? On the one hand this can be good. It never goes away. But what if, for some reason, and there are a lot of them, the author wants his or her book back? Is this still being written into contracts as part of a boilerplate? You tell me. I've got no data on that. I suspect it's beginning to change as authors realize more how this is going to work.

I mentioned advances back... uh, way back, actually. I sure can run on, can't I? Anyway, on the one hand, they're good, because the author gets some money to actually spend the time to write the books. Beats having to juggle a day job, a home life AND two to four novels a year. Many authors depend on this in order to live. It takes time to write a book and during that time they need cash. Beats blowing sailors for candy bars and small change. Unless you're into that sort of thing.

From the publisher's point of view, though, an advance is akin to betting on black. They've got nothing saying that the book will be successful. A smarter model is to pay for what's being sold, rather than take a gamble. I'm amazed they make any money. The authors sure as hell don't.

I think we're going to be saying good-bye to the advance. I can see a model where either the author is going to get a flat fee for their work or they're going to get royalties. And how is that going to affect agents?

When you don't have to produce a thousand books to sell 300 and the money flows in faster because your time to market is shorter, the incentive to pay that much up front fades. At that point it's just another line item for cost control.

I don't want to sound bleak, and for some I'm sure I do. But that's not what I'm trying to get at.

Yes, there are a lot of downsides, but they're only downsides because we look at them through the filter of the way it works today. It's not bad, just different.

This is a change that everyone's going to have to adapt to. Maybe not now. Maybe the tech and the public aren't ready for it. But in time it will be. There are just too many savings to be had for the money people.

I think this is potentially a good thing for small presses that can take advantage of it and authors who can shift to accommodate. Not all can. Not all will want to. But give it five years, ten, and things will be different.