The Distribution Problem: Monopoly, Control, and Hidden Profits

The Distribution Problem: Monopoly, Control, and Hidden Profits

The news is full of the idea that we should break up big tech. They have a monopoly, after all. They control advertising (Google), shopping (Amazon), information (Facebook), apps, and software (Apple and Microsoft). While there is some debate over whether a breakup is even possible, there is another monopoly that is largely ignored except ty those in the publishing industry: book distribution.

First, let me be clear in saying we are not providing breaking news or amazing information that has come to light, man. We are just stating facts that have already been reported, but hopefully, in a fresh way that lets you, the reader, understand the publishing industry in a new, and hopefully transparent light.

Here’s the thing, and one of the reasons we started Unbound Publishing in the first place: publishers are rarely transparent about how narrow margins are and the obstacles we fact to being profitable. But we think the more that authors, bookstores, and others see these truths and issues, the better we can all work together to solve them. As a result, we want to make a better future for publishing in general.

When it comes to book pricing and distribution, there is a lot that is shrouded in mystery. Here is the low down:

Ingram, Amazon, and Getting a Book in Bookstores

So we have talked before on this blog about print on demand, and how it is the way of the future, but we need to talk about the system currently in place. Because if you think it is easy to navigate and at all fair to authors, publishers, and bookstores, you’ll want to read further.

So let’s look at the options at our disposal. You can print directly through Ingram and offer print on demand. There are some clear advantages, distribution, and promotion being just two of those. There are also a lot of options you can’t get from other print on demand services: interior options for color, hardcover printing, and more.

You can also print through Amazon through a service once called Create Space that has now been migrated to their KDP Print program, although it remains essentially the same. The cost of printing was often lower, but the quality was inferior. There are also fewer options: if you want a cover interior, a premium option is the only one available, and it increased the cost of printing your book significantly.

The kicker of the Amazon printing method is that most indie bookstores understandably won’t order from Amazon. The two are, if you are not aware, pretty much enemies. In fact, it can be argued that Amazon is no author or bookstore’s friend, but when you don’t like the largest bookseller in the world right now, you work with them anyway if that’s where revenue comes from.

Amazon No

But if you want to get in bookstores and libraries, publishing through Amazon, especially using one of their “free” ISBN numbers won’t get you there.

The solution is that many publishers create two paperback editions when possible: one for Amazon and one for Ingram. On Ingram, they just make sure that distribution to Amazon is not checked, and on Amazon, they make sure they don’t opt for the expanded distribution options. That way, you have print books available in both places.

It’s impractical, it’s cumbersome, but it’s the easiest way to make both of the distribution monopolies happy.

The Retail Discount

In order for bookstores to carry your book, you have to offer them a discount from retail. Ingram recommends anywhere from 30-55%. The ideal for any bookstore is a 55% discount and books must be returnable. So many authors and publishers select that option. Because you want bookstores to carry your books, and you want to make it easy for them.

And you think that is what you are doing until you go to your local indie bookstore and ask a few questions. Truth? They don’t get that entire discount. It’s been written about before here and here, but Ingram uses a US-based company called Ingram Content Group to distribute books to bookstores.

They determine the discount a bookstore gets, and guess what happens to that other revenue you offered with the discount? It rarely comes back to the author. Ingram Books keeps it. That’s how they make money. So your local indie bookstore could be getting a 5% discount on your book when they order rather than the 55% you opted for.

How do they get away with it? Simple. Authors don’t really have a choice. Most bookstores order through Ingram and Bowker because books are returnable and they get a discount, and it’s just less cumbersome than ordering direct from each author and publisher (unless the publisher has a huge catalog).

What Do We Do About It?

First, we offer books directly to bookstores and others at wholesale rates, so if you are a bookstore or someone in the industry, and you want to carry our books and get a more significant discount (if you feel you are getting a poor deal from Ingram) please contact us. We really do want to help any way we can.

Second, there are some new players emerging in the print-on-demand space. Draft2Digital and other eBook distributors are experimenting with print and audiobook distribution. This means there could be viable options to both Ingram and Amazon in the near future, ones that would work well with Indie booksellers, libraries, and others.

Third, publicity and a certain amount of backlash on Ingram and others have created pressure to work better with Indie bookstores and others to make policies more transparent, and discounts more viable.

The Pandemic Effect

Lastly, an effect that cannot be ignored is the pandemic effect post-COIVID. Bookstores are slowly reopening, but some have closed for good, unable to weather closures and restrictions, and also either unable or unwilling to look at online operations and digital sales as a solution.

This means that in some areas especially, there are libraries and bookstores that remain closed and may never reopen. Does that mean authors and publishers should be discouraged? Not at all. It means there must be a shift in mentality and creativity to other ways to get books in the hands of bookstores and retailers. Online stores, direct to consumer (DTC) sales from the author and publisher site and more must be considered.

And events will happen again. Bookstores and libraries will open. Readers hungry for content will return in large numbers.

How do we make print profitable and viable for everyone? The move to print on demand and the embracing of modern technology is one answer. So is working with authors, bookstores, and publishers to solve the distribution monopoly problem. We can’t count on government regulation, so we in the market must be the ones to drive change.