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The Steve Laube Agency

Helping to Change the World Word by Word

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Home » Economics

Economics

Hidden Retail Economics

By Steve Laubeon October 18, 2021
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I find the world of retail and bookselling economics fascinating. Doesn’t make for scintillating party conversations, but I digress. Below is a video that you should watch first as I have a few thoughts related to its content below the video. (If you cannot see the video in your newsletter feed, please visit the blog on our website where it is embedded.)

This particular video is a few years old, but many of the principles remain the same. While there may be a reduction in the practice of “slotting fees” (paying for shelf space in the store), there is still an ongoing form of it, even in the book retailing world. In many ways this “pay for positioning” has moved online.

You’ve read about Amazon ads or have personal experience with them. While not a slotting fee per se, the more you spend for a spot the greater the chance of that placement will be seen by the reader you are trying to reach. The same for Google ads, which unapologetically puts it this way on their own website:

“Google Ads runs an auction every single time it has an ad space available–on a search result, or on a blog, news site, or some other page. Each auction decides which ads will show at that moment in that space. Your bid puts you in the auction.”

Thus, the more you pay, the more likely your ad will be seen.

Next time you see an ad online, remember that it is highly likely that someone paid so that it would be seen by you, based on your search history, your purchasing history, and other sorts of data that rolls around, hidden behind the curtain.

Personal History

Back in the late 80s I was the national book buyer for a Christian bookstore chain. We were in the fledgling days of combining and leveraging our buying power with publishers. We created a Christmas catalog in which publishers could buy ad space. If they did so, I would then place orders with those publishers for all our stores in sufficient quantity to support the advertising. There were considerable negotiations for the fee the publisher would pay and the discount the publisher would give us based on the number of books we would buy. Considering that nothing was computerized in those days, it was a rather complicated process!

One publisher came to us, asking to buy “screen time” on the TVs in our video departments. They paid to have a sample of their kid’s video series run on a loop for a minimum of six hours per day during the Christmas season. That would be an example of a “slotting” or “positioning” fee. It worked really well because parents shopping in the store would park their kids in that section and afterward realize how good the product was and buy copies for family and friends. (The downside is that it drove the store staff buggy hearing the same songs over and over again!)

Back then it was also well known that Barnes & Noble and Borders would charge a publisher for “front of store” positioning and for “end cap” space.

Implications for Authors

If you are publishing with a major traditional publisher, you can be assured that this is nothing new to your publisher. They have been fighting for “positioning” for years and hopefully are doing the same for your books.

If you are publishing independently, you must fight these battles by yourself and use your own funds to underwrite the effort. You have considerable flexibility in changing the ads and experimenting to find what works and what doesn’t. But you are the entrepreneur doing the work and paying the bill.

I know of one couple who had a nonbook business selling on Amazon’s Marketplace, a wonderful “mom and pop” operation run out of their house. They did extremely well for many years until sales began to tail off due to other vendors paying more for the ad spaces (slotting fees).

They mentioned one case where a particular product retailed for $5. Their gross profit on that product was $4 because they bought it in bulk overseas for $1. They had a budget of $1.50 per unit sold for advertising space. (Are you following the math?) Suddenly, the price for that ad space increased to $2. Then to $3. And to their shock they found competitors willing to pay $4.50 per ad space for that $5 product.

Amazon and Google didn’t care. They were happy to collect the fees in the bidding wars. But my friends ended up selling their business to a larger company whose purchasing power allowed them to compete better in that arena and be profitable.

Educate Yourself

Never forget that publishing is a business. Sure, in our industry it is a business with a ministry purpose; but it is still a business. Videos like the one above and posts like this are my attempt to help us all have a better understanding of the business side of our Kingdom calling.

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Category: Book Business, Economics

Submission Mistakes of the More Subtle Variety

By Bob Hostetleron March 25, 2021
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I wrote a post on this blog a while ago (here) about some embarrassing and even disqualifying mistakes writers had made in submissions to me. One reader commented on that post, expressing gratitude and then adding, “What would be helpful to me is to hear the subtle or inadvertent mistakes aspiring authors make when sending a proposal to you. Can you help us with that?” Why, yes, Louise, since you …

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Category: Book Proposals, Economics, Pitching

A Year in Review: A Look at 2019

By Steve Laubeon January 6, 2020
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It’s that time of year to reflect on the past year, to learn from our experiences, and to count our blessings. Here are some thoughts on the last tumultuous twelve months. The Industry The publishing industry seems to survive the bad press that loves to find the negative in everything. Each publisher continues to pursue the best content possible. The market is ever-changing, and some really smart …

Read moreA Year in Review: A Look at 2019
Category: Agency, Agents, Awards, Book Business, Book Sales, Christian Publishing Show, Christian Writers Institute, Contests, Conventions, Economics, Encouragement, Marketing, The Publishing Life, The Writing Life, Trends

Should I Write for Free?

By Bob Hostetleron February 27, 2019
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Writers write, right? Often, however, writers are invited, asked, pressured, or even hornswaggled (look it up if you have to) into writing for free. Sometimes that’s good. Often it’s bad. How can you know which is which? One word: strategy. What is your strategy? Do you even have one? Or, put another way, do you have a mission statement as a writer? When you define where you’re going and what you …

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Category: Economics, Money, The Writing Life

Good and Bad Advice on The Writing Life

By Dan Balowon June 19, 2018
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After graduation from college, I got an entry level job at a radio station, programmed with call-in talk shows. I carried out the trash, conducted regular “Frosty-runs” to Wendy’s for the news director, painted the sales office, screened callers for the shows during off-hours, took transmitter readings, got coffee for the hosts, and anything else the boss wanted. Once in a while, they let me push …

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Category: Career, Contracts, Economics, Marketing, Platform, The Writing LifeTag: Career, The Writing Life

Common Sense Publishing

By Dan Balowon May 22, 2018
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I will often use humor as a defense mechanism. It helps maintain my sanity, to some extent. However, I’ve noticed a number of times what might be considered a weak attempt at humor is actually true. I guess the common statement about most humor having a kernel of truth in it, might be accurate after all. I’ll frequently respond to someone questioning why something is happening by stating, “Oh, you …

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Category: Book Business, EconomicsTag: Book Business, Common Sense

The Minimum Wage Author

By Dan Balowon March 13, 2018
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Most authors earn less than legal minimum wage writing books. Most do so for their entire writing careers. (U.S. Federal minimum wage is $7.25 per hour. A full time person working 40 hours per week would earn an annual revenue of $15,000 at that rate.) In fact, they work for free for a long time before getting paid and once they do get paid, the amount earned almost never makes up for the long …

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Category: Economics, Money, The Writing LifeTag: Career, Money, The Writing Life

Three Significant Announcements Regarding E-books and Audiobooks

By Steve Laubeon January 29, 2018
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Last week there were three significant announcements from Apple, Google, and Walmart of interest to all authors. First the three bits of news and then a few observations. Apple Apple announced that their iBooks app is being renamed to simply Books. Accompanying it will be a complete redesign of the reading app, their store, and the addition of an audiobook tab to make it easier for users to access …

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Category: Book Business, Book Sales, E-Books, Economics, News You Can Use, The Publishing Life, TrendsTag: Audio Books, Book Sales, ebooks, Technology

Retail is Dead! Or is it?

By Steve Laubeon November 6, 2017
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You’ve read the news. This calendar year bankruptcies or total closures were announced by Toys R Us, Gymboree, Bebe, American Apparel, Guess, Rue 21, The Limited, Gander Mountain, Vitamin World, and Family Christian Stores. Sears and Kmart announced last Friday that they were closing another 63 stores in January, on top of the 358 they closed already this year. And the watchful vultures are …

Read moreRetail is Dead! Or is it?
Category: Book Business, Book Sales, Economics, Publishing History, Publishing News, TrendsTag: Book Business, Book Sales, Publishing News

Show Me the Money!

By Karen Ballon June 7, 2017
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I’ll never forget the Sunday I was getting ready to leave church, and the pastor’s wife came up to me and touched my arm. “Karen, my son can’t find a job, so he’s decided to make some fast money by writing a book and having it published. Do you have any counsel for him?” I’m so proud of myself that I didn’t guffaw in her face. Not so proud that I fixed her with a hard look and replied, “Do me a …

Read moreShow Me the Money!
Category: Economics, Money, The Writing LifeTag: Economics, Faith, Money, The Writing Life
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