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Scratching the Surface of Distribution

Scratching the Surface of Distribution

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In the book industry, most of the Big 5 own their own distribution service or use one of the other Big 5 as a distributor. They are able to do that and good for them. For independent small publishers, which distributor one uses can depend upon many factors. It can depend upon the size of the publisher (how many titles are published each year), or a publisher’s reputation (what kinds of titles you publish every year and how they are received) or the fact that most distributors of independent literature have a set of guidelines that a publisher must fit into to even apply to use their distribution service. Let’s take a look at a traditional distribution model for small press books.

Small Press Distribution (SPD) was founded in 1969 with the intent to distribute the books of 5 small publishers. Since then it has grown into a nonprofit book distributor that currently “serves over 400 small and independent presses, the majority of which have no other source of distribution” (SPD About fact sheet from website, retrieved 01/07/2015).

On the SPD About page is this:

When you buy a book from Small Press Distribution, you don’t just get something terrific to read: you help independent publishers and writers keep more money from their projects, which in turn helps nurture and sustain the literary arts as a whole.

That is pretty much what you want to hear from a distributor of small and independent books right? But let’s look at the terms that the publisher is agreeing to when they sign up to get their books distributed by SPD. Here it is from SPD’s online Publisher Handbook:

SPD books are sold at varying discounts depending on the circumstances and the number of books purchased. Publishers are paid 50% of the NET price received for each book sold regardless of discount. Starting with 2014 books, the 100th copy on will earn the publisher 55% of the NET. The average discount at which books are sold is currently 29%, so the average percent of list price publishers receive is 35% for the first 100 books, 38.5% for the 100th on, but this may vary.

So let’s break that down. If a book’s retail price is $15, then the publisher receives on average 35% of that $15, which is $5.25 for each copy sold (goes up slightly after 100 copies sell).

Now consider that since most of these publishers have limited first print runs within the 100-1000 copy range, the price that they have to pay to get the book printed for a somewhat nice quality perfect bound, paperback book (depends on your definition of quality here, the better the quality of paper, cover material, etc, the more expensive it will be) ranges anywhere from $1.70-$4.00 per book, and could be more.

Most of that depends on who the printer is and how many books are ordered (and yes, this includes Print on Demand services like Lulu, Amazon’s CreateSpace, Lightning Source, etc…). So if the cost for the publisher to print the books is more than $5.25 for each copy, then already there is no way to make any profit. That means that the publisher is not making anything and also presumably the writer is not either. But let’s say for the sake of argument that it costs an independent publisher $1.75 per copy to print their books. Then they are still left with $3.50 of profit according to the model above. Or are they?

Looking a little closer, SPD (like many other distributors) charges an annual $180 service fee for all publishers and a $25 new title fee for every time a new title is listed with them. Those service fees are what really make it not worth a publisher’s while to use most distribution services. There is also the fact that the publisher has to pay for the shipping costs of sending their books to the SPD warehouse (shipping fees are nothing to laugh at—why do you think Amazon has been exploring their own ways of bypassing the US Postal Service, UPS and FedEx these last few years by developing their Amazon locker program where you can order something and go and pick it up at a secure location in your city, as well as the whole shipping by drone thing that made headlines on 60 Minutes in late 2013). The last thing to consider is the return of books that were already purchased by bookstores: “Returns to SPD of books for which the publisher has already been paid will be deducted from the next payment.”

All of these things add up. None of this is unique to SPD. Some distributors may give a larger/smaller percentage of net sales to the publisher and some distributors may charge more/less in service fees to the publisher but they all use a similar structure when interacting with publishers. We also must remember that SPD is recognized as a leader in the distribution of small and independent press books within the United States.

I am not trying to pick on SPD with this column. Everyone that I have dealt with there has been very helpful and the customer service, speaking from the publisher side of things, has been very good. After 45 years in the business, they have a built-in customer base made up of libraries and bookstores and consumers that allows the books they distribute to be read by more people and have a wider circulation.Those are some of the reasons to use a distribution service like SPD.

Publicity for a book or writer, especially for a new writer’s first book, can be difficult for an independent small press publisher. When you use a service/distributor like SPD, “publicity” is part of what you’re paying for. Each independent publisher needs to decide if it is worth it for them to use such a service. I know personally, that the price of distribution has been wearing on me lately and I have been exploring other ways in which to try and get books noticed and out there. In the comments section, I would like to hear from anyone, but especially people that work for/at indie small presses about distribution, so we can discuss some more.

Jeremy Spencer

Jeremy edits The Scrambler (an e-zine) and Scrambler Books (an independent publisher of books) out of Sacramento, CA.

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About The Author

Jeremy Spencer

Jeremy edits The Scrambler (an e-zine) and Scrambler Books (an independent publisher of books) out of Sacramento, CA.

  • Great post. It makes me hurt.

    My experience with Publishing Genius was that, when I first applied to SPD, after having done just a couple books, Laura wrote me a pretty nice rejection letter. She explained that I should try them again once I had more books, higher print runs (I think that was the main factor—they only accept publishers with minimum runs of 500), and also the sort of books I could charge more for. At the time I was like “well what the hell do you know?!” but reading your insightful post, I’ve come to understand that they were looking out for me in a way. It’s so true that their annual fees and listing fees can put a severe dent in whatever money you make with them, but now, after having done a few more books, those fees aren’t as much of a factor. “Gotta spend money to make money.” And it was SPDs video on pricing (https://www.youtube.com/watch?feature=player_embedded&v=B3O2bZqvTSo) that taught me how to do that.

    That being said, I’ve definitely been frustrated with the small returns on my books, sometimes less than a dollar over cost, but traditional publishers only expected 3% profits until the 90s (cf Andre Schiffrin’s The Business of Books).

    • Jeremy Spencer

      I feel what you are saying Adam. Interestingly, for Scrambler they did not turn me down when I applied because of print run at all, they actually accepted me and then I was hesitant because I didn’t know how many books to expect to sell, etc… and I waited about 1 1/2 years after I was accepted as a publisher to actually sign the agreement and have them distribute books because I still was unsure.

      I guess I just think that all of these things, this whole distribution model is based on “this is how things have always been done” (at least since like the 60’s/70’s). And I just think that we are not thinking in terms of 21st century ideas. We are still stuck in the 20th century with many of these kinds of things. Even in the video above, at about the 4:10 mark, he starts talking about how most small publishers are in it for “love and passion, primarily” which of course is true, but we all know that that by itself does not make for a successful publisher on its own (unless you are rich).

      Here is something I wrote on the Scrambler tumblr about 2 years ago that basically started this whole new way of thinking about things for me:

      “I watched an episode of “Shark Tank” a while ago, and the bald shark,
      the a-hole dude, said something to one of the presenters. He said “so
      your distributor is making more money than you?” And then he said
      something like that was not how a successful business is run. And I
      immediately started thinking about Scrambler and how my distributors are
      making more than me off of the books that I publish.”

      • I’m totally with you on the 21st century thinking. You know who’s great at that? Amazon … Standard distribution is ripe for disruption. What if SPD were to offer you a job. What would be the first thing you’d do?

        • Jeremy Spencer

          I was responding to this and kept writing, so now my answer to this question will be next week’s beat. Thanks Adam.

  • Jon Chaiim McConnell

    Is there any value to viewing the initial hit as a loss leader before cutting the 3rd party distributor cord somehow after a few years? Since it would get the publisher name out there way faster? Or does that only really work for the individual writer selling books directly after building an audience?

    • Jeremy Spencer

      I think you could definitely look at it that way as well. But probably most publishers don’t look at it that way.

    • Interesting idea. But like Spencer Madsen says above, I don’t think there’s a lot of value in having a distributor for the first few years, so it’s not really leading anything EXCEPT loss. No one gets your name and books out there better than you do, at least at the beginning.

  • spencermadsen

    Small presses rush into finding a distributor too fast. In my experience, for every 100 copies sold online, a bookstore will sell 4-5 and give you a smaller margin. Bookstores aren’t where the profits are for a publisher, especially using SPD.

    I avoided SPD completely once I saw their terms. Instead I focused on selling books myself, making a much wider profit margin and doing a better job of marketing to the public. I made sure (with lots of help) my own website looked decent enough to suffice as its own marketplace and tried to draw people to it.

    I worked out direct-deals with Powells and Mcnally Jackson and a few other bookstores and made a better margin shipping to them directly than I would have using SPD. Plus I made connections with their buyers. But still it’s pennies compared to the online direct-sales.

    Now that I’ve sold some 5,000 books in 2 years I’m working out deals with more reputable and profitable distributors both here and abroad. Their terms are much better than SPD’s and they actually market the books in their catalogue.

    If I had relied on SPD for sales, marketing, profits, it would have been a crutch that would’ve eventually driven me bankrupt.

    My feeling is: wait.

    Focus on selling books direct to readers. Building a name for your press and your authors. If you do a good enough job, the distributors will come to you.

    • Jeremy Spencer

      Thanks for sharing Spencer and I definitely think you are on to something. As many direct sales as possible is always the best, I agree.

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