Even Dinosaurs are Vulnerable - Capital Professional Services
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Even Dinosaurs are Vulnerable

Companies and industries have a life cycle just like every living thing. They are born of innovation and grow rapidly out of creativity as they age their growth slows and eventually they become moribund, obsolete and if they don’t reinvent themselves they die. As they are living in their final stages they are often referred to as “dinosaurs”. And the publishing industry definitely fits into that category. In today’s article, best selling author Robert Ringer talks about this particular dinosaur and how a young upstart tamed it. ~Tim McMahon, editor

On Taming Dinosaurs

PublishingOnce upon a time, there was a ferocious dinosaur known as Publishaurus rex who roamed the Earth, devouring everything in its path.  Bookstores and authors were especially attractive prey for this carnivorous monster.

While scientists believe that most dinosaurs disappeared as a result of some catastrophic natural disaster about 250 million years ago, the Publishaurus rex not only managed to survive, but prosper.  In fact, it’s still around today, though it has been tamed.

It took the cleverness of an entrepreneur by the name of Leonard Riggio to accomplish such a feat.  The story of what Riggio did to bring the book-publishing industry to its collective knees would rival Jurassic Park on the big screen.

First, a little history.  I don’t know how book publishers ever got themselves trapped into such a bad deal, but since the beginning of time, most books have been “sold” to bookstores on a consignment basis.  From a business standpoint, this arrangement is so absurd that whenever people who aren’t familiar with the book-publishing industry hear about it for the first time, they’re amazed.

Nevertheless, publishers were always able to live with the obscene consignment arrangement because they had so much power that they bully bookstores.  In earlier days, when large bookstores chains hadn’t yet been invented, many bookstores were fearful of returning too many books to a powerhouse publisher for fear of being cut off from future shipments.

But as Waldenbooks and B. Dalton developed into large chains in the seventies, the bookworm slowly began to turn. Even so, the publishing dinosaur was so busy with other more important matters that it didn’t even notice what was happening to its own business.

By important matters, I’m referring to publishing executives attending sales conferences four times a year in such fun-and-sun locations as Puerto Rico, Miami, Los Angeles, and Las Vegas … the Frankfurt Book Fair once a year in Germany … the annual London Book Fair in the U.K. … having lunch and dinner with literary agents at New York’s finest gourmet restaurants, where they could (as one agent gently described it in an article in a national magazine) “plot how to screw authors” … and, of course, at the highest levels of management, partaking in extramarital affairs that provided entertaining gossip for the publishing industry.

Then, one day, a funny thing happened to publishing executives on the way to lunch at 21 Club in Manhattan:  A fellow by the name of Leonard Riggio bought a little bookstore company called Barnes & Noble.  You had to figure that Riggio was a country bumpkin, because who else would want to plunk down his hard-earned money to get into a dull business like retail bookselling?

Apparently, I wasn’t the only one not able to pick up on what was occurring in the book-publishing business, because even the biggest publishers didn’t see it coming.  In fact, no one paid much attention to Riggio and his little chain of bookstores until well into the 1980s.

He moved quietly and cleverly until, little by little, Barnes & Noble maneuvered itself into a position where it was able to tighten its control over the gates that stand between book publishers and retail customers.  Along the way, Barnes & Noble also bought up smaller bookstores and chains, the most notable of which were B. Dalton and Doubleday.

Riggio’s next major move was to begin building superstores, and today Barnes & Noble has more than six hundred retail outlets spread through every major metropolitan area in the U.S.  As part of his master plan to become the industry gatekeeper, Riggio also added two new twists.

First, he put small cafes in his retail behemoths so customers could have a croissant and cup of coffee without ever having to leave Barnes & Noble.  Second, he had overstuffed lounge chairs strategically placed throughout each store, so customers could relax and read to their heart’s content.

By the time well-fed, lethargic publishing executives woke up to what was going on, it was too late.  They already had a huge Barnes & Noble chain around their collective necks, and Riggio was giving them harsh commands to heel and toe.

As a result, nowadays if a publisher wants to assure that its books will be given reasonable nationwide distribution, it had better be prepared to pay homage to Barnes & Noble.  And if it wants decent placement for any particular book in Barnes & Noble’s superstores, that homage must come in the form of hard cash.

For example, if a publisher wants a book to appear on the third table from the front of the store at Barnes & Noble, it has to pay extra for that privilege.  If it wants the book to appear on the front table, that’s even more expensive.  Simply to have a book placed on the “end rack” of any bookshelf in a Barnes & Noble store, a publisher must to be prepared to pay The Gatekeeper a few extra shekels.

Then, of course, there are the special racks that are filled with just a single title.  This is such an expensive proposition that in order to be able to afford it, a publisher almost has to be prepared to cut back on (gasp!) executive dining with literary agents for a month or two.  And, finally, a publisher can purchase a special rack at the very front entrance of B&N’s superstores for about what it would cost a family of five to tour the world for a month.

Basically, all Riggio did was copy the legal bribery system that has been used by supermarkets for decades.  When you go to a supermarket and see a display of, say, Pepsi or Coke, be assured that those companies paid serious money for their special store placements.

So, is Riggio an earthly rendition of Lucifer for ruining the cushy lives to which publishing executives had become so accustomed?  I think not.  After all, for centuries publishers have played the role of gatekeeper vis a vis aspiring authors, with a ruthlessness that makes Riggio look like a Boy Scout.

Now, it’s the long-time bullies of the publishing industry — major publishers — who are getting bruised and battered and drowned by returned books coming from every direction.  They haven’t even come close to figuring out a way to deal with Riggio’s way of doing business.

The lesson all of us little guys on the sidelines can learn from Leonard Riggio is that no one has such a stranglehold on any industry that it is invulnerable.  If your plan is clever enough, and you’re prepared to do whatever it takes to execute it, anything is possible.

The secret is to keep a low profile and move quietly, but keep moving forward.  And if the companies currently ruling the roost are arrogant — which is almost always the case — it gives you a huge advantage to move stealthily into position to upstage them.

Hmm, which reminds me … for a number of years now, Barnes & Noble has had its hands full dealing with once little upstart by the name of Amazon.com.  Now the question is, will Barnes & Noble itself manage to survive the brutal onslaught of online bookselling?  The moral is that dinosaurs can be tamed.  Three cheers for capitalism and creative destruction!

This article originally appeared on RobertRinger.com and has been reprinted by permission.

Image courtesy of Domdeen/ FreeDigitalPhotos.net

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