Last year just before BookExpo America, Ingram Book Company announced that smaller publishers would have to have a distributor of record in order to continue to do business through them. This year, a new contract has been sent to people defined as “Micro Publishers.” Ingram’s definition of a micro publisher is one with “less than $15,000 in net sales over a two-year period.” I tend to agree with this term. If your sales wouldn’t bring in more than $15,000 from bookstores through Ingram over a two-year period, the bookstore market is probably not all that important in your overall marketing plan.

By changing their policy somewhat today, Ingram is allowing the “micro publisher” to remain with them on a direct basis by agreeing to the terms in their Small Publisher Terms Agreement. Among other things, page one of the Publisher Submission Package states that the “terms agreement” cannot be altered but just “signed and returned.”Theagreement itself (at last a contract that consists of one page only) requires the publisher to:

1. Sell to Ingram at a 60% discount.
2. Pay freight charges to and from Ingram.
3. Allow Ingram a payment term net 90 days from EOM (end of month).
4. Allow all products to be returned to publisher with no prior permission for returns and no restocking fees.
5. Participate in a “New Vendor” program during their first year of business, which involves a one-time setup fee of $250, due upon first receipt of inventory.
6. Also participate in the New Vendor TitleVisibility Program at a nonrefundable cost of $400, again due upon first receipt of inventory.
7. Pay a Title Management Fee of $50 per title for each new ISBN, which will be deducted quarterly for the first contract year.

The setup fee of $250 covers the initial publisher’s account setup in all Ingram systems: PIMS, ipage, free reports, TIMS, AP, Ad Tracking, etc. The Title Visibility Fee of $400 covers the introduction of the new supplier to booksellers via publisher marketing, which includes a 1/4 page black-and-white ad in a trade catalog of choice and a ipage standard package A ad, which appears in an annotation format (cover/copy) and on the home page and four tabs that have ad space available. The Title Management Fee for every new title supports ipage Product Detail and various other programs offered by Ingram.

The Real Message Here

After reviewing the entire contents of the package sent by Ingram, I think the message this company is attempting to send to smaller publishers is: “Do you really want to sell through us and to the bookstores?”

Let’s take a look at the following scenario, shipping a 1 lb. 7-oz. book from California to Tennessee.

You produce the book with a cover price of $11.95.

Traditional Printing POD

Unit cost of manufacture $2.00 $5.00

60% discount to Ingram 7.17 7.17

UPS Ground for 1 title 1 way 4.75 4.75

Your total costs $13.92 $16.92

Now this clearly shows that going with Ingram may not be your best-case approach. With a cover price of $11.95, you’re going to be losing money in this deal with both traditional printing and with POD. Subtracting the cover price of $11.95 from your costs of $13.92 with traditional printing, you see that you’re losing $1.97. With POD, you lose even more–$4.97. Is going with Ingram really what you want to do?

The Choices You Have

There are things you can do. You can:

1. Raise the cover price, but that might mean pricing your title out of its market.
2. Print larger quantities of your titles to see if you can get your cost per unit down, but that might mean ending up with a garage full of books.
3. See if you can establish a relationship with a distributor who will deal with Ingram for you, such as PGW, IPG, NBN, Biblio, or one of the other smaller groups throughout the U.S.
4. Develop alternative markets through which to sell your titles and focus your marketing plans and energy on making a profit without using a book-trade wholesaler. Consider the bookstore market to be one you may eventually grow into rather than a place to be in the beginning.

If I were starting a publishing company today, I’d definitely opt for “d.” While we all value walking into a bookstore and seeing our title (normally spine out) peeking at us from the shelf, one has to ask oneself, “At what cost?”