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August 13, 2013
by seth godin

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ACT 1: The Book of the Month Club.

After World War II, a wealthier, better educated country started engaging in more culture, more often, in a more widespread way. We were more likely to watch the same movies, more likely to listen to more music, and much more likely to want to read the books others were reading. Paperback books really came into their own, making reading portable and cheap, and the Book of the Month Club began to dominate.

It’s difficult for us to imagine just how influential the board of the Club was. If they picked a book to be a main selection, it would be read, by default, by millions of people, discussed at the dinner table and at bridge club and instantly become part of the dominant culture.

This doesn’t have a lot to do with bookstores, except for the fact that as the Club faded due to the long tail of choice and the fracturing of the monoculture, the stores were there to pick up the slack.

ACT II: The magic of the dominant bestsellers.

Here’s the magic formula for a successful bookstore industry: Every month, a few new hardcover books are hand-sold, recommended by the local store. A few catch on and become bestsellers. Within its own cultural pocket, each book becomes a must-read, with the only source being the full-price local bookstore. The result? With a 40% profit margin and full return privileges, the local store can thrive. They don’t need to carry every book, just the books that sell. And in the early 1960s, it wasn’t unusual for a book to be a bestseller for a year or more.

ACT III: The New York Times bestseller list and Barnes and Noble end this magic moment

The insight was pretty clever—give up the juicy margins on the bestsellers and make up the profits in volume. Barnes and Noble had more inventory than just about any independent bookstore, but they needed traffic. So, they announced that if a book made the Times list, they’d sell it at 40% off (basically, at their cost).

This was a nuclear bomb for the independent seller. Suddenly, their core source of profit was in danger. Barnes and Noble was able to make juicy profits on the other stuff you’d buy in the store, and aided by the Times list, they bifurcated the market. Most people, most of the time, bought only the books on the bestseller list (the average American was buying and reading just a few books a year), but that’s okay if you’re the dominant player in a given town.

Harry Potter was the last gasp for many independents. They made that book happen, following their tried and true hand-selling approach. The word of mouth kicked in just as it was supposed to. With a profit margin of $6 or more on every book sold, the upside was nearly a hundred million dollars—but they got almost none of that, because Barnes & Noble (and the big box stores, which stole their strategy) sucked all the profit out of the bestsellers.

My mom used to run the independent bookstore she helped build at the Albright-Knox Art Gallery in Buffalo. I met sales reps when they came to our house for dinner, and saw the workings of what we think of as the ideal bookstore. Even during the pre-Amazon days, this was never a good business–without bestsellers sold at full price (and how many art books become bestsellers) it’s almost impossible to sell enough volume to make a small bookstore work.

THE END: Amazon and infinite selection, better service, more information and better prices, too

If you love books, it’s hard to see Amazon as a villain. More books sold to more people for more reasons than any other retailer in history. More cross-selling, hand-selling and up-selling too. The web pages of Amazon, on average, are better informed than many bookstore clerks.

Before Amazon and the web, we were on track for the bestseller inventory to totally dominate bookselling. Wal-Mart and Price Club and B&N had figured out how to dump huge quantities of certain books at really low prices, and there was pressure to avoid the long tail, and to guard shelf space zealously. I was new to the book world then, and there was just huge pressure to be on the right side of the bestseller line–everything else didn’t matter. Amazon fixed this, by embracing the long tail and carrying everything. If you love books, Amazon was a dream come true.

But if you love bookstores, Amazon is the final nail. In fact, it was the clumping the Times enabled, combined with the discounting that B&N started that did the stores in, but Amazon’s work in getting more books to more people meant that the discounts and selection they brought to readers removed the last bit of opportunity the stores had left.

Great independent bookstores deserve to thrive, and I hope they will. But they won’t thrive as local substitutes for Amazon. They will make it if they become hubs, connectors and gift shops. The book-as-gift concept is just now entering an important stage, and we don’t have to dumb down our local store to get there. More important, though, is the idea of a local place where smart people go to meet each other and the ideas they care about. We shouldn’t have that because it’s the last chance of the local bookstore, we should have that because it’s worth doing.

Vilifying Amazon, though, makes no sense. More people can read and write more books today (ebook and print) than at any other time in history.

I miss the magic of the local bookstore, but I would miss books more.

December 31, 2012
by seth godin

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Those that have been following along have seen the Kickstarter posts I did here, here and here. Feel free to go catch up, I’ll wait…

THE THEORY: The hardest part of book publishing is getting the first 10,000 copies of a book read. After that, the book either resonates or it doesn’t. It’s talked about, handed from person to person, used as an example in a book group–or it’s not. Sure, you can add more hype, but at that point, you’re pushing water uphill. I’ve always focused on how my books do their second month on sale, not the first month. The first month is a testament to the author’s ability to self promote, which is far less interesting.

THE TACTIC: Kickstarter seems custom made to solve the 10,000 copy problem. The author with a tribe can reach out to her readers, activate them and make an offer: if enough of you agree to buy this book today, I’ll write it and send it to you just before a publisher puts it on sale…

Book publishers are smart enough to see the powerful marketing leverage that this creates. When the author has done the hard work of finding those readers in advance, the risk the publisher faces is significantly less. Sure, there’s the risk that the book itself might not be great, that the word might not spread beyond the first circle, but at least the first circle is secured. Most of what a publisher does (in terms of effort, cost and risk) is aimed at that first circle, after all.

IN PRACTICE: The Kickstarter platform is a bit of a nightmare for the independent author. I’m not sure I could find the intestinal fortitude to use it again. There are significant structural flaws in the way information is collected and used that virtually guarantee that 5% of the readers who use it will end up disappointed or need a lot of handholding. What should be consistent and coordinated ends up failing at both. And the cost of fulfillment and international shipping is high enough that it’s likely no money will be made (which is fine if the other elements fall into place).

The good news is that the enthusiasm and support that early adopters bring to the table is extraordinary. This is an untapped human need, and people (some people, anyway) really enjoy the role of patron and early supporter. Others, of course, magnify the impact of their investment and are hard to please, but I found that the vast majority of my readers fell into the first camp.

AND THE PUNCHLINE: The book goes on sale today. You can see the reviews that have been posted already–by readers who paid their money for the book months ago. And Barnes & Noble will be making the book easy to find, directly as a result of the fan base coordinated via Kickstarter.

But, it’s also clear that other books launched today without this pre-seeding are going to do far better in their early sales, because they are satisfying pent up demand, whereas my strategy exhausted pent up demand among those most likely to buy it instantly. And I think that’s a smart trade to make, or at least I hope it is.

I won’t be the last person to try this pre-coordination approach. I think it’s particularly attractive as we enter a digital-only world.

Voting for a winner

The single most fascinating Kickstarter stat is this: The odds of succeeding with your campaign are ten times higher once you reach about half of your goal. While this is somewhat self-fulfilling (only popular campaigns get that far anyway), it actually points to an irrational part of human nature: we don’t want to back a [...]

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When you focus on what’s being removed, it’s easier to understand the revolution

We remove shelf space as a limiting factor in books. We remove the cost of polycarbonate as a cost factor in CDs. We remove paper as an expense in magazines. We remove the number of channels as a limiter in the broadcast of TV. These are not small changes. These are revolutionary shifts in what’s [...]

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Confusing media with messages

Yesterday’s post about the halfway mark got a few responses from people who thought I was selling books short. “There has not ever been, nor will there ever be, a “halfway point” for cultural achievements,” one wrote. Let me try again, with more detail. We can probably all agree that more than half of the [...]

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And then what happens?

What happens when we reach the halfway point, when most of the great books have already been published?  Just as most of the great TV shows have probably already been made, and most of the great classical music recordings have already been recorded. Golden ages don’t last forever, and it’s entirely possible that we’ve reached [...]

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The power of simultaneous action

In 1776, the USA was more than 40 days across. It took over a month to ride on a horse from one end to the other. Today, it takes less than a second. And yet just about all of our systems are built around the slow build, the slow transfer of information and the slow [...]

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Kindle data progress four years later…

I’ve written a few posts about how I’d maximize the value of e-readers. Here’s the first and the second. Four years later, one of the things I’ve been agitating for–using the knowledge of how much time people spend reading a book and how many finish it–is starting to become real. Phil found this article in [...]

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Watching the price of media fall

I did a show at the NBC headquarters in NY a few weeks ago. I’m guessing that it costs them about $6,000 a minute to make a news show in the studio. That counts the painters, the set guys, the three camera operators and their assistants, the lighting guys, the producer, the executive producer, the [...]

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Author’s wishlist for Kickstarter

Having had a ball using Kickstarter, I couldn’t help but notice ways I’d like to improve it. Here are my top tweaks: Allow backers to get more than one reward. Right now, you need to open two accounts to fund two rewards. This is silly and helps no one. Allow organizers to load balance after [...]

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