Four Ways Publishers Can Diversify Sales Channels, Become Less Reliant on Amazon

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

One of the biggest challenges a publisher can face is Amazon turning off its buy buttons. While it’s a rarely used tactic, it has happened to Hachette this year (Amazon is not allowing pre-orders on Hachette titles) and in 2010 to Macmillan. Some publishers admit that nearly 50% to 70% of their sales come through the Seattle retailer, and if this is the case, then vanishing buy buttons can be a serious problem.

With the Amazon-Hachette negotiations dragging on and Amazon becoming more aggressive in its negotiating tactics, it seems prudent to discuss how a publisher can prepare in case it some day finds itself in the same position as Hachette.

When exploring new opportunities, many publishers retreat from potentially lucrative new channels in fear of upsetting Amazon. But in so doing, they make themselves even more dependent on Amazon and vulnerable in negotiations.

There is no easy solution but here a few things worth considering:

1. Be Proactive. It all starts with being more proactive and faster in the decision-making process. Publishers need to steal a page from the start-up playbook and get comfortable with failing on some projects while reaping huge benefits on others. In the digital world, the premise is quite simple—cannibalize yourself or be eaten by someone else. It’s both a mindset and a culture change. No more “wait and see.” No more Friday afternoon’s off. No more long summer vacations. No more meetings to plan upcoming meetings. No more “out of office” replies via email. Adopt a GSD strategy—Get Stuff Done.

2. Hire Executives-In-Residence (EIRs). Google was one of the early companies to adopt the executive-in-residence position. An EIR is a person who is strategically hired by a company to work “on” the business, not “in” the business. In other words, this person is not locked into a particular department with a particular job description. Her role is to strategically evaluate the business and to figure out how to put rocket fuel in the tank. She most likely reports only to the C-level executives. A great EIR is someone who can honestly and realistically face the facts while building a cohesive team to accelerate the future vision of the company. Every large publisher should have at least one EIR from the tech industry helping them navigate the rapidly changing landscape.

3. Consider Acqui-hires. Great teams build great stuff. Over the last decade, some of the most successful companies in the world—Apple, Google, Amazon—have bought companies simply to acquire the internal talent, intellectual prowess, and innovation. There are a lack of digital natives in the traditional publishing world, and many publishers could assist themselves by grabbing an entire team of highly-motivated and talented individuals at one time. Acqui-hires are not a silver bullet, but if done correctly, they can accelerate innovation and bring needed tech talent and digital infrastructure with them. Readmill was acquired for only $8 million by DropBox. Imagine what a publisher could have done had they acquired the team and kept the technology alive (DropBox is shuttering the site).

4. Make Acquisitions. Consolidation has already begun in the publishing world. Over the next few years, large publishers will continue to acquire smaller publishers to diversify their content offerings and take advantage of economies of scale. The wise publishers will also start acquiring tech companies that can help them build new channels of distribution and protect themselves against the power of one retailer. Late stage acquisitions are often more expensive, so publishers should look for “ramp up” companies that are poised for explosive growth. Amazon acquired Goodreads for a rumored $100 million+ when it had around 16 million users. But publishers could have moved strategically when Goodreads had 500,000 to one million users and possibly acquired the growth and technology before it happened. Not only would Goodreads have been a valuable asset for its marketing channels and data, but also it would have been a defensive move to keep the asset out of the hands of Amazon.

Nobody is going to save publishers except publishers themselves. They must make bold and strategic moves to work with an aggressive partner who is also sometimes an adversary. If publishers don’t actively invest in their future now, they may not have one.


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