Six LDS Writers and A Frog

Monday, July 10, 2006

Bad News in the LDS Book Market

I learned some news over the weekend that should be a major disappointment to every LDS reader, author, and publisher. It sounded ludicrous enough that when I first heard it I didn’t believe it could be true, but now I have heard it from enough sources that I have to accept it. I will say that it is alleged here so that in the event anyone has any issues with my talking about it I am covered, but I believe it is solid information.

As of August first, Deseret Book Publishing will no longer allow Seagull Books to carry any of their products.

Let me say that I am not privy to Deseret Book’s management. I do not know their exact thinking behind this decision. However, it is easy enough to surmise that Deseret Book’s retail division is hurting and they have decided that by cutting Seagull out of the mix, they can return to charging full price for their products. (Although it is interesting that they are still selling through Wal-Mart and other big box distributors.) Basically, the publisher is propping up the retailer by striking at the competition.

Now you might ask yourself, “What’s so bad about that? Sounds like business as usual in the big bad world of competition.” But what you would be missing is the potential long term implications of this.

First, DB has never carried or published a great deal of fiction, at least not in recent years. They make the lion’s share of their money from the big name non-fiction titles by General Authorities and the like. Walk into a typical DB bookstore and you will see a bigger cookbook section than adult LDS fiction. Likewise, without the big non-fiction titles, Seagull will be primarily fiction. So now you have an either or situation. Only have a Seagull bookstore nearby (like the good folks who live in the north Bay Area) guess you can only buy fiction. Only have DB stores, like the folks in Las Vegas? Hey you didn’t really want fiction anyway did you?

Additionally, without Seagull to keep prices in check, you can look forward to paying full price for your DB titles. Nothing like shelling out $16 for a paperback novel or $40 or more for non-fiction. That should definitely help increase the number of people buying LDS books, right?

What does this mean for LDS authors? It means that you can be published by DB and carried in their stores, be published by Covenant and carried in Seagull, or be published by a third party and possibly get into neither one, since they are going to have to focus on their own titles to make up for lost revenue. It means that the chances of increasing the LDS reader base have decreased dramatically since most people will not have a clue why certain authors are not in certain stores. Your average LDS reader thinks that an LDS bookstore is an LDS book store.

Now some people are saying, “Don’t worry, it won’t last for long.” And maybe they are right. Maybe this will all blow over in a few months. But the thing that should scare you is that a large LDS publisher would be willing to use tactics that sound a lot like Bill Gates putting the competition out of business. Imagine someone like Penguin saying, “You know, I’m really not fond of XYZ book chain, so I’ll just without all of my books from them and see if I can drive them under.” The national market wouldn’t stand for it.

Hopefully it will blow over as I have a great deal of respect for both parties involved in the dispute. Hopefully things will be worked out between them. But if not, it will have a trickle down effect on everyone who reads LDS books, and it won’t be a good one.


24 Comments:

At 7/10/2006 2:00 PM, Anonymous Marnie Pehrson said...

Excellent points Jeff. The thing is, in the "real" marketplace publisher's do NOT own bookstores. It would be considered unethical.

While I'm an LDS author, I've more experience as a business woman. I've owned my own business since 1990 (specializing in online marketing) and have learned quite a bit over the years. I can testify from experience that competitive thinking gets you nowhere in the end. When you spend all your time worrying about your competitors, you kill creativity; you miss opportunities; and you don't see the forest because you're too busy griping about the moss growing on the trees.

I've seen people go out of business doing this. It doesn't work in a fast-paced, highly-creative marketplace.
Creative thinking on the other hand (joint ventures - working together to shape innovative solutions) makes a bigger pie for everyone. To pull a principle from the Doctrine & Covenants, there's plenty and to spare. The earth is full. There is plenty enough business to go around.

Competitive thinking is a scarcity mentality. It says there's a limited supply, so I've got to fight tooth and nail for my piece of the pie. It isn't true, and it doesn't work. Personally, I'd like to see better things in an LDS market.

 
At 7/10/2006 2:08 PM, Anonymous Marnie Pehrson said...

PS: An addendum to my last comment: competitive plane tactics may work, but they take a whole lot more energy and effort than creative methods. You have to keep fighting to swim upstream. They are also more destructive.

Creative thinking induces a flow of ideas and abundance that is self-replicating, healing, and keeps flowing. It's an almost effortless way of earning profits. The thing is, I’m not sure it’s something that can be explained so much as experienced. It’s one of those principles we have to "do" to gain a testimony of it.

 
At 7/10/2006 3:40 PM, Blogger RobisonWells said...

This is really astounding.

 
At 7/10/2006 4:05 PM, Blogger Jeff Savage said...

Marnie,

You are absolutely right. There is plenty of business to go around. There is a DB and a Seagull in Spanish Fork, and both do a good business. My wife worked at the DB and the only gripe people had was that they couldn't find some of their favorite fiction. They like the DB atmosphere, they loved the lion house pantry, and very, very rarely did they ever ask about discount matching.

Of course having publishers own retail stores is a very strange situation.

 
At 7/10/2006 4:54 PM, Blogger Matthew Buckley said...

Oh brother.

Unlike you, Jeffry, I have a hard time finding any respect for Deseret Book. I have seen very little from them other than heavy-handed, monopolistic tactics. It seems to me that there focus is not to provide good products to as many people as possible, rather it is to find the easiest way to turn a buck. They seem to want to be the only true and living bookstore in the LDS world, and are willing to do whatever necessary to obtain this end.

Competition is healthy for the consumer because they always get a good price. Competition is healthy for the producers because they are forced to find better and more efficient ways to produce. The only people competition is not good for are those who want to make a whole lot of money without having to actually do any work.

 
At 7/10/2006 5:16 PM, Blogger Jeff Savage said...

I agree that competition is good for everyone. But in my experience most comapanies are neither completely perfect nor completely bad. They are trying to run a company successfully which is their stewardship. In this case, I beleieve they are hurting themselves as much as anyone else and their sales will reflect it.

 
At 7/10/2006 6:00 PM, Anonymous Anonymous said...

Deseret Book was once the best game in town (aside from independents) They became complacent and let the market share slip. Now they want it back. I for one would love to see more independents Perhaps we could (as consumers) attempt to force the publishers out of the book store business?

 
At 7/10/2006 7:40 PM, Blogger Sariah S. Wilson said...

Wow, so far we've had about 20 to 30 more people visit the site today than typically do. And all we needed was a little controversy. ;)

I keep trying to post my thoughts on this and they just come out bad. So in this instance, I'm going to elect to say nothing. Shocking, I know.

 
At 7/10/2006 8:00 PM, Anonymous Anonymous said...

What disturbed me about this news was that when I heard it, it was said that Deseret Book was pulling out of Seagull--including their books by General Authorities--"to preserve the worth of their products" and because "they weren't happy with the way their brand is portrayed." It was as if the implication was being made that they were pulling out because works by the GA were being treated with disrespect. I thought this was about as ridiculous an explanation as anyone could give. I've never seen any indication of such in any Seagull store I've ever been in. I think it's unfortunate that the leaders in the LDS book market are behaving in a manner that most other publishers wouldn't.

I also have a hard time believing they're strapped for cash when they just sold the paperback rights to Leven Thumps to Simon and Schuster.

 
At 7/10/2006 10:04 PM, Anonymous Marnie Pehrson said...

Jeff, good point about the atmosphere and other things that make people want to go into a bookstore. Look at Barnes & Noble for instance... they create an atmosphere you want to hang out in.

I do want to make it clear when I speak of competitive vs. creative plane, that I'm not knocking competition in the marketplace. Free enterprise is what's made America great, but when businesses focus on their competition instead of their customers, they make poor decisions. It's not about the competition; it's about the customer - about serving them in the best way you know how. If business owners will spend less time worrying about and researching their competition and more time discovering and fulfilling their customers' wants and needs, amazing things will happen for the business, the customer and entire markets.

 
At 7/11/2006 12:04 AM, Blogger Kent Larsen said...

Very interesting, Jeffrey. I await further information, and I may even make some of my own calls on this tomorrow.

I was surprised by your indication that "Deseret Book Publishing" won't provide materials to Seagull anymore -- why did you say "Deseret Book Publishing"?

If I remember correctly, that is what DB calls their operation to distributed the publications of smaller publishers. Its own titles are simply from "Deseret Book." Were you trying to make that distinction? Is it titles from Deseret Book that aren't being sold to Seagull? Or is it the titles from smaller publishers that it won't distribute to Seagull?

BTW, I have one quibble with Marnie's characterization of a publisher owning stores as "unethical". I do think this is true in Deseret Book's case -- because its domination of the market (see my own post last Fall on the Problem of Deseret Book!). However, if the publisher doesn't control the market like Deseret Book does, I don't see a problem. In fact, most publishers had retail operations (longtime new yorkers remember Doubleday Bookshops and Rizzoli) until the 1950s and 1960s, when they lost favor as investments. Other publishers still own other ways of retailing books (bookclubs, for examples).

 
At 7/11/2006 12:12 AM, Blogger Kent Larsen said...

BTW, does anyone know if there is a connection between this and the rumor that Sheri Dew has been asked to step down (and has been given six months to find other employment)?

 
At 7/11/2006 12:29 AM, Blogger Jeff Savage said...

I believe that this applies to all books published by DB--including imprints like Shadow Mountain. I was primarily differentiating DB's publishing arm from its retail divison.

The two publishers that have enough retail clout to affect the industry are DB with their stores and Covenant with their Seagull stores. My personal experience has been that both chains favor their own publishers, but up until this last year they were each willing to carry other publishers titles.

Beginning last fall, DB cut back dramatically on what they would carry from other publishers.

 
At 7/11/2006 1:28 AM, Blogger Mark Butler said...

All we need now is a LDS equivalent of Judge Harold Greene to split Deseret Book into two or more companies, the way AT&T was split by force, or the way IBM and others have split voluntarily (Lexmark and Lenovo in the case of IBM).

 
At 7/11/2006 2:32 AM, Blogger Kent Larsen said...

Mark, you're right.

While I'm no legal expert, and a lot depends on exactly what DB's policy is, it does seem like DB should be vulnerable to an anti-trust case.

I do know that generally a company can't discriminate between customers -- i.e., give a discount to one customer and not to a similar customer.

So how Deseret Book can legally sell its books to independent LDS bookstores and not sell them to Seagull is beyond me.

Of course, were Covenant/Seagull to file an anti-trust lawsuit, they'd have to file the suit against the Church, so...

 
At 7/11/2006 11:57 AM, Blogger Matthew Buckley said...

Does anybody know if any of this has hit the news? I guess I don't expect the Deseret News to report the story, but I think the Trib or the Standard would pick it up.

 
At 7/11/2006 1:04 PM, Anonymous Kristy Blackham said...

Get a grip! It's not hard to see that every single poster here has some sort of agenda or loyalty to a publisher other than Deseret Book. Eveyone who knows anything about the LDS market knows that Seagull/Covenant is the DI of LDS fiction. On the retail side they cut prices to attract readers, (yes, on Deseret Book products as well), hoping to sell their own (Covenant) products when they entice people into their stores. That's fine and dandy, except that means ALL the others stores in the market, including the independent stores, must match that price to maintain customers. Since they either don't have their own products to sell at such a discount or because they pay a decent royalty and therefore can't discount to that extent, they can't even compete. This is why so many independents have disappeared, and why Deseret Book is fighting to maintain the value of their products.

On the publishing side, Covenant/Seagull has lowered royalties to a ridiculous point to make up for that the discounting in Seagull. That means the Covenant/Seagull authors take the hit, while Seagull sells at a discount and continues to make their regular profit. Deseret Book can't match those discounts because they still pay the once-standard royalty.

I applaud Deseret Book's decision to stop allowing their products to be used by Seagull/Covenant in a sort of baiting and switching (more like baiting and piling on more) situation. Rolex doesn't have to allow their products to be sold in Walmart, do they? Especially if they are sold at wholesale prices. Doing so destroys the value of the product in every single store. So in answer to the annonymous person above, yes, it does hurt Deseret Books products, even books by GA's. (And because Deseret Book doesn't lower author royalities to make up the difference, it also hurts their whole company.)

If Seagull/Covenant would play fair with prices and royalties, the LDS market would be able to attract and keep talented authors. Instead, with the exception of a few really great authors, we have a host of poor quality books and authors who receive little for their efforts. And why should they work harder for such peanuts? Every time an LDS reader buys a discount book, they are essentially taking food from the mouth of an author. (It's like stiffing the poorly paid waitress at a restaurant.) Authors won't stand up for their rights because they know they are easily replaceable. There's always another crop of mediocre writers willing to be exploited.

If we want good LDS fiction and nonfiction, we readers must be willing to pay for it. The bottom line is that Seagull/Covenant and their constant discounting is the problem here. But before you believe anyone's take on this (including mine), you should find out where his or her loyalties lie and what the facts are on both sides. For instance, I've read reviews of several prominent LDS reviewers, and they never say anything seriously negative about books coming from their own publishers, regardless of how horrible the book was. (Speaking of that, why isn't there a representative from Deseret Book on this site?) As for me, I trust Deseret Book. But quite frankly, I've heard enough of the problems in this market to get my books in another market altogether. I'm sick of the fighting and half truths. And I won't mind paying full price for a decent book.

 
At 7/11/2006 1:29 PM, Blogger RobisonWells said...

Kristy-

I don't know the details of everyone's contracts, but speaking as a Covenant author, I can see no downside to discounted books at Seagull. I get paid based on the publisher's suggested retail price, not based on any bookstore discounts. (Consequently, I would propose that your argument, which hinges on Covenant/Seagull royalty unfairness, is moot.)

Not to play the capitalism card, but doesn't fair competition ensure lower prices and higher-quality products? How does restraining competition serve anyone except the monopoly? It certainly doesn't serve the public.

 
At 7/11/2006 2:09 PM, Blogger Sariah S. Wilson said...

It's not hard to see that every single poster here has some sort of agenda or loyalty to a publisher other than Deseret Book.

Well, since you came out swinging by instructing us to "get a grip," it's also not hard to see that you have a loyalty TO Deseret Book, which is fine. Of course people are biased. What's wrong with that?

Eveyone who knows anything about the LDS market knows that Seagull/Covenant is the DI of LDS fiction.

Is it bad that this made me laugh out loud? I'm thinking it wasn't supposed to.

This is why so many independents have disappeared, and why Deseret Book is fighting to maintain the value of their products.

I hardly think Seagull alone put independents out of business. That's a rather sweeping generalization. Do you just entirely discount the effects of book behemoths like Barnes and Noble or Borders or Amazon on independents? I’m pretty sure they have those in Utah.

On the publishing side, Covenant/Seagull has lowered royalties to a ridiculous point to make up for that the discounting in Seagull. That means the Covenant/Seagull authors take the hit...

I can only speak for myself here, but that wasn't the case with me. I had my contract reviewed by a prominent literary attorney--the majority of his practice are authors who work in the national market--who told me that the royalty percentages and terms were extremely generous, especially compared to what he typically sees. And I'm just a newbie first-timer. Kerry Blair must be raking in the bucks.

If we want good LDS fiction and nonfiction, we readers must be willing to pay for it...And I won't mind paying full price for a decent book.

Unfortunately, I think you'd be in the minority in that feeling. I think it closes the market. You'd have a handful of authors who are already popular that would continue to be published with their books sold at prices that many people could not afford. New authors would have no hope of breaking in. Publishers wouldn't be able to take a chance on anyone because consumers wouldn't shell out that kind of money for unknowns.

While in a perfect world everyone would have enough money to pay full price for every book they wanted, that's not the reality. Some people can't afford to pay $16 for a new book, and in the case of a new author like myself, a lot of people aren't going to risk that kind of money without knowing if my book is any good or not. I know Zebra (a line from Kensington) actually sells debut authors' books at an extremely low price ($3.99 or so) because they want customers to take a chance and to help those authors start to build an audience.

I guess for me, if I have a choice between paying full price for something or getting it on sale, I will ALWAYS buy it on sale. I'm not as worried about taking food out of authors' mouths as I am about taking food money away from my own family. A discount or a sale might get me into a store I might not typically go to and to purchase brands I might not typically buy and try them. It's a common business practice/tactic and an effective way to increase your customer base.

For instance, I've read reviews of several prominent LDS reviewers, and they never say anything seriously negative about books coming from their own publishers, regardless of how horrible the book was.

We've already had a big discussion about that here, and:

1. Horribleness is completely subjective. As I've said earlier, one man's treasure is another man's suckfest. There are authors my friends love that I can't stand, and vice-versa. Every review, by nature, is going to be subjective because of the reviewer's own likes and dislikes. The market has to be diverse because the reading preferences of the consumers are so diverse. There’s no such thing as one single, objective reviewer who can speak for an entire market.

2. The LDS writing community is apparently a small one. You don't have the same sort of anonymity that you do while working for a national publication. In fact, Publishers Weekly does all their reviews anonymously on purpose, with good reason. They once had an author call them up and offer $5,000 to reveal the identity of the person who had given him a bad review. In the LDS community, the person you give a bad review to might be at your next stake conference. Hello, awkward. A lot of authors have a hard time doing the whole "thick skin" thing. We know we're supposed to, but nobody wants to hear that their work is terrible.

3. Jennie Hansen (I hope you don't mind me paraphrasing here, Jennie) said once that she only reviews books that she enjoys. She doesn't have the time to sit and wade through a book she thinks is terrible. I recently read an article on reviewers that stated many newspapers get 60 to 100 books a week for review. Publishers Weekly gets that many in a single day. Why would anyone waste column space on a book that's terrible?

(Speaking of that, why isn't there a representative from Deseret Book on this site?)

Because I don't know any. I'm the one who started this site, I'm the one who invited the authors you see posting now. I invited authors I knew, authors I had interacted with in a writing community before I became published (latterdayauthors.com), authors who I saw wanted to actively market their works and who said they had the time to contribute to this blog. Several of the authors here were so helpful to me with advice and critiques and suggestions before I submitted my manuscript. It is probably one of the reasons I didn't even consider sending my work to anyone else but Covenant. Everyone I spoke to was happy with their relationship with Covenant and were not at all disgruntled or dissatisfied.

but doesn't fair competition ensure lower prices and higher-quality products? How does restraining competition serve anyone except the monopoly? It certainly doesn't serve the public.

Isn’t that why we have anti-trust laws? To prevent companies from setting up monopolies? I agree with you Rob, that competition does in fact encourage lower prices and higher quality. In fact, I think as competition thrives that we’ll get what Kristy says she wants--more quality LDS authors.

P.S. to anyone reading this - please feel free to you buy my book at a discounted rate. You're not taking food out of my mouth. Somehow I will manage to survive. ;)

 
At 7/11/2006 2:42 PM, Blogger Jeff Savage said...

Kristy,

Thanks for your comments and the fact that you are willing to support good LDS fiction. I also appreciate your standing up for the other side of the issue. Not much of a debate when everyone agrees. So as the person who originally posted here, let me thank you for your candor.

I agree that the demise of the independent LDS bookstore is a travesty, (although it’s happening in the national market as well, and in many locations where there are no Seagulls or DB’s anywhere in the area, so I’m not sure we can lay that at Lew Kofford’s feet.) I also agree that a company can decide where there products would be best sold (But let me say that if Wal-Mart could sell Rolexes at the rate they sell everything else, Rolex would have a product there in a New York minute.)

I think you are mistaken in several areas though. As far as the royalty issue, I have been with Covenant for six years now and I am very happy with my royalties. I believe that long timers like Kerry and Jennie are happy as well. But the point is moot because your assumption is based on false information. In some cases DB pays a slightly higher royalty and in other cases they do not, but in no case is the difference enough to affect whether or not a retail store can offer discounts. I wish my royalty (or any DB royalty) was high enough to offset 40% discounts. Let me tell you it ain’t so.

And even if this was about discounting, your analogy of Wal-Mart was right on. Why isn’t DB pulling their books from Wal-Mart, the ultimate discounter? That would leave me, (biased as I might be), to surmise that maybe it’s not all about price.

I did enjoy your DI comment. Based on my experiences with shopping at DI, I’d surmise that you are saying Covenant sells some really cool stuff and really good prices and the profits go to worthy causes. Thanks! I know it couldn’t have been a slap at Covenant authors though, because I will put the quality of that writing against any other LDS publisher’s work. If my writing does suck though, please let me know so I can inform my national literary agent to drop me as soon as possible.

Finally, let’s address your last issue. The biggest complaint I hear from LDS readers is the price of the books they buy. Especially in areas where there is only an independent book store that charges full sticker price. How can national novels sell for so much less? It is because of quantity. It is much cheaper to sell lots of one book than a few of lots of books. And how do you sell lots of books? You get your books in lots of stores and build up a following. So if DB is really concerned about the bottom line, if LDS authors want to make a living wage for their work, and if we want to expand the LDS market, the ONLY way to do it is by getting more stores selling more LDS books. Some will discount, some will serve rural areas, some will offer a bakery, but all of them help the cause. Believe me, I would give up all my royalties for the next three years if it would let me triple my reader base. In the long run it would pay much higher dividends.

Finally let me say that while there are several Covenant authors on this site, our books are still being distributed to all stores. If we were just looking out for our own best interests, we would be dancing up and down that we won’t have to compete with DB authors in Seagull. However, since many of my best friends are DB authors, I know that most of them are very concerned with the sales they will lose because of this.

It doesn’t matter whether you are a die-hard DB shopper or a reader who wouldn’t buy the Bible if it wasn’t discounted. This is not a good thing for anyone.

 
At 7/11/2006 3:19 PM, Blogger Jeff Savage said...

Let me clarify my royalty comment above with some hard numbers, so you'll understand how the royalty/discount issue is actually a myth.

Let’s say that a book sells for $14 and DB is paying a flat 10% of retail. That makes their royalty $1.40

Now let’s say that with the promo clause a Covenant author makes 10% of wholesale on a certain percentage of their books. Maybe $0.75 (I have always made more than this, but just for the sake of argument.)

The difference is $0.65.

If the book sells for a 30% discount (and Seagull often offers 40% off.) they are giving up $5.20.

Are you honestly telling me that Seagull can afford to discount $5.20 off my book because of the $0.65 I am losing? That doesn’t make any sense. And yet they discount everything from DB books, to independents, to art, to Covenant books.

The theory that Covenant/Seagull is making this huge profit on the backs of the authors is ludicrous. I only wish there was that much money involved in our pitiful royalties.

 
At 7/11/2006 3:46 PM, Blogger Kent Larsen said...

OK, so everyone can get a bit of perspective, here are the national numbers:

Royalty on hardcovers: 10-15%
Royalty on paperbacks: 5- 8%

I don't have enough information to know how well this is reflected in the LDS market, but I'd be surprised if it were very different.

Bottom line is, if the discount that Seagull is offering exceeds 15%, then even eliminating the author royalties won't pay for it!!

 
At 7/11/2006 8:35 PM, Blogger Matthew Buckley said...

Wait, if Seagull is the DI of the LDS bookstore market, does that mean that Pedro and Napolean shop at Seagull?

Sorry, you all knew that sooner or later a Napolean Dynamite joke would rear it's ugly head...

 
At 9/02/2006 6:40 PM, Anonymous Anonymous said...

DI is a great place to shop for LDS books,as a matter of factthe store is the first place i look when shopping for a book. I dont care if the book is used, I like that I can buy a good LDS book for next to nothing especially since i will only read it once.

 

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