Why Publishers Don’t Like Working With Start-ups

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

Gutenberg was a start-up entrepreneur once. Now he’s on stamps! Credit: rook76 / Shutterstock.com

It’s not true that all publishers don’t like working with start-ups, but as the founder of one such start-up in the publishing world, Jellybooks, I can tell you firsthand that what might seem like a home-run partnership doesn’t always come to fruition. Now, you might say that I’m just being a big ol’ complainer and this is just sour grapes (I’d understand), but I shall try to be as balanced as possible.

So, here goes:

Initial conversations with start-ups don’t always go well because publishers don’t like talking strategy or complex business models when exploring partnerships (they prefer to do in-house behind closed doors – there is a fear of being seen as naive or foolish by outsiders).

Publishers are also VERY conservative commercially. Take something as dead simple like putting your fulfillment servers in Luxembourg in such a way that you only incur 3% VAT (value-added tax) in the EU when selling to consumers (as Amazon and Apple do). No European publisher I have met has ever dared take such a step, even if you explain to them the details of HOW to do it (when I worked at Skype we of course operated out of Luxemboiurg). Publishing is all about risk when it comes to publishing content, but the industry is extremely conservative in most other areas.

On the other hand publishers LOVE hearing industry gossip, market-share data, insights about what is going on in the industry, etc. Sometimes, I think I am providing nothing but free consulting, but that is part and parcel of winning other “early adopters” among publishers (and is standard practice across the entire tech and start-up landscape).

Having worked for start-ups across multiple industries over the past 12 years, I would say book publishers are not that different from others, just more isolated and more insular because the average tenure of people working in publishing is much longer and most people have little work experience outside publishing. In other areas there is more movement of people between companies and industries and as a result far more knowledge exchange.

Here is my list of the top five reasons (or “excuses”) why publishing companies don’t work with start-ups:

— We don’t have the resources/digital team/etc. like the “big ones”
— I have too much on my plate for the next six months/sales conference coming up/Xmas sales/etc.
— We want to focus on the three-to-five partners/channels/opportunities that we think will be most significant (= Amazon, Apple, Google, Facebook)
— This looks too risky/ I don’t understand the risks/ I feel out of my depth with this project
— It is too difficult/expensive/complicated, because our back-end/website/etc. has been outsourced to a 3rd party

There are notable exceptions though and here are the top reasons why some publishers DO work with start-ups:

— This is interesting/fun/exciting
— You already signed up my immediate peer(s)/don’t want to be left behind
— This doesn’t cost me much/nobody will notice the tiny expenditure
— It helps me with marketing/supporting authors/other immediately pressing (not abstract) problem
— This is really different to everything else I’ve seen/let’s give this a try
— I know you from the past/I already trust you/I owe you a favor

Strategy or strategic differentiation is almost never a reason, at least not in publishing, where differentiation has always been content driven.

And like always in life, it comes down to finding and connecting with the right people because real business is done between humans and not between ideas, balance sheets or legal entitities.

14 thoughts on “Why Publishers Don’t Like Working With Start-ups

  1. Justin

    I deal with textbook publishers, and my experience was similar. It’s amazing how behind the times and conservative the industry is. I guess this does provide the opportunity for massive upheaval in the industry by a new entrant — the existing players are just too slow and conservative to respond.

    1. Andrew Rhomberg

      I am afraid, that text book publishers are even more conservative than trade publishers. This is in part a result of the “regulated” nature of their business where public bodies at national, state, county or school board level make the purchasing decisions.

      In Brazil, the state centrally buys text books for all universities, colleges and schools nationwide (160 million inhabitants) making it the biggest book buyer on the planet.

      In Spain, textbook purchasing is done by each of the 17 “regions” (like Catalunya or Asturias) each wanting textbooks to reflect their own requirements into account (i.e. history books have to reflect the local “view” of history”).

  2. Peter Turner

    Interesting post, Andrew. I feel your pain. While I agree with everything you say, the simple truth is that it’s always easier to say no if the upside of saying yes is small or unknown and the downside is that I might piss off one of my key retailers or incur some other identified evil. What we’ve been seeing is the sad but familiar business-decision dynamic of industries under stress: It’s always easier to do nothing than it is to do something that might be dangerous.

  3. Theresa M. Moore

    Yesterday I got a reply email to an Ingram e-book publisher saying that they “never heard of you” and that they were not interested in carrying me for distribution. This after I got a happy reply and forms from my sales rep. I sent him an overly polite email back saying that after looking at the documentation and noting the onerous cost of both setup and conversions, I would take a pass. I did not say that I was insulted by the ungenerous classification of “unknown”. I can publish e-books myself using my own software; I was just curious about the program and did not intend to jump into it right away. Now, I have closed the door to the idea of using their distribution program altogether, if that is going to be their attitude about start-ups. It’s the money they’re after, and the writer was rude. There are no guarantees that the e-books will become popular or sell well. Why should I pay good money only to see them languish in anonymity?

    1. Andrew Rhomberg

      The “underbelly” of the publishing industry is ripe for change. Too many systems are based on a traditional “paper-based” view of the world. This side of the industry could look utterly different in 3-10 years time.

  4. Andrew Roskill

    Thanks for the great article. I thought this sentiment: \You already signed up my immediate peer(s)/don’t want to be left behind\ was interesting. I was part of a print on demand (POD) startup called BookSurge (now CreateSpace, an Amazon.com company) and the biz dev team worked on signing up publishers. I thought it was a complete no brainer sales proposition. No risk, very little resources required, all incremental revenue and margin. The publishers understood how it worked and were generally very enthusiastic, so we thought the deal was done. But then they would say something along the lines of \Sounds great, but we’re never the first to do anything new.

  5. john holdcroft (@johnholdsea)

    Great article. As a Business Development guy with a start up that is constantly hoping to engage Higher Education publishers, I see this all the time. Our product is not perfect, our sales team is an Army of One (that would be me), but I know it is something of great value to the end user. My challenges have been something closer to:

    1. We (the publisher) have the content, which is king. How do we know you (the start up) won’t screw up our content, resell our content without our permission, or enable someone to pirate our content.
    2. Your model is great but we want to control both our distribution points, our pricing, and the appearance of our content (never mind that the end user is not best served by this point of view)
    3. We do not know who you (the start up) are. Of course you don’t, as you work for a publisher who mainly promotes from within, does not feel comfortable getting out of its own zone of influence, and thinks innovation is a new cover and new binding on a $220 calculus book. I am over-stating to make the point.
    4. Most publishers do not want to innovate. They would rather observe other innovation, see the backlash to the innovation from the marketplace, and then put a big toe in the water and praise themselves for this bravery.

    by definition, start ups are always innovating. Most fail, but all are trying really hard to build products and services and bring them to market. I love working for a start up, but I do miss the times of having a window office in either NYC, Boston, or San Francisco and watching sales come in without innovation. Trying to find the peace of mind for both.

    1. Andrew Rhomberg

      At Jellybooks, we learnt the hard way that we had to change how we “sold” our product to publishers.

      I say “sold” because the product is free, but publishers still, correctly, perceive cost in terms of time and resources spent on the project.

      We had to move away form “pitch” of creating a tool for book discovery in the digital age, because this was a “nice to have”, abstract problem for publishers. The decline of book shops displaying books is not a day-a-to-day pain point for publishers. In a way it is a form of the “prisoner’s dilemma” as in “let others solve that one” as well as “I can’t solve this today, so lets wait and see what happens tomorrow”.

      Instead, we discovered what publishers really liked about our platform was the free sample hosting, that they could use for their own website or make available to authors, bloggers, reviewers, etc.

      This was further enhanced by the social media and sharing tools we had developed for readers, to which authors were taking with gusto, but not readers (we discovered that sharing book recommendations is a relatively “private” affair done mostly by email).

      Publishers haedia networks to promote their books. Fortunately we did not need to pivot (we had the tools and features required already). Instead we changed the “pitch” once we understood better where our partners saw the value in our tools.

      Despite our positive experience in this regard, I still think that publishers are among the most conservative and slow -moving media executives. A friend once said “publishers are like deer in the headlights of the Amazon monster truck. I would not be surprised if some of the BIG 6 might up as road kill in the next few years.” On the other hand this might be a golden age for agile, niche focused, entrepreneurial, author-centric publishers, because not every author wants to be a publisher (i.e. self-publish).



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