November 17, 1998
Beyond Bestsellers: Online Buyers Mine the Backlist
By BOB TEDESCHI
f you thought the Marlo Thomas album "Free to Be You and Me" or the book "Aphrodisiacs: A
Guide to What Really Works" would never stand as paradigms of anything other than a
creativity-starved marketplace, think again.
With the advent of Internet retailing, books and CDs you thought you'd never see again -- or didn't
want anyone to see you with -- are gaining new currency in the publishing and music industries. Online
stores like Amazon.com, Barnes and Noble.com, CDNow and N2K are turning conventional retail
wisdom on its head, by generating a majority of sales from titles that aren't generally found on
bestseller lists.
Analysts say the trickle-up effect of such sales is boosting both industries, and is raising interesting
questions about where the new prosperity will lead them.
"Online sales have definitely given books and music a shot in the arm," said Maria LaTour Kadison, an
online retail analyst with Forrester Research, a market research firm based in Cambridge, Mass.
While the trend is still too nascent to represent a profound shift in either industry, LaTour Kadison and
other analysts said online sales are adding to overall revenues, rather than simply cannibalizing
traditional retail sales. The reason: many of the books and CDs sold online are not even carried by
stores, because they don't generate enough sales to justify shelf space. But in a virtual store, virtually
anything is available, assuming the retailer can get it from a wholesaler.
Indeed, online buyers have demonstrated an appetite for the obscure. Music and book retailers on the
Internet say a vast majority of their sales come from titles that don't make the bestseller lists. This
situation is the mirror image of traditional retailing's 80-20 rule, wherein 80 percent of a store's
revenue comes from sales of 20 percent of the merchandise. In that formula, there's no room for titles
that collect dust.
But for the creators of those dusty works, cyberspace is the ticket. Marlo Thomas, the star of the
television sitcom "That Girl," released the kid-friendly album "Free to Be You and Me" in the 1970s,
generating strong sales at first. Since then, demand has dragged -- which is why no one was more
surprised than Amazon.com's brass when the title popped into the site's list of top 100 CDs two months
ago.
"We sold more than 1,100 copies in four months," said Mary Morouse, Amazon.com's vice president
of merchandising. "How? We don't know. It might be Amazon's reviews, or customer reviews -- but
she probably hadn't sold that many copies in years."
Customer reviews are one of the myriad ways Internet retailers can compete with their brick and
mortar counterparts; other efforts to promote titles online include chats with the author or artist, audio
or video Webcasts and targeted e-mail messages. Taking a page from traditional retailers, Web stores
can also include in each order they ship promotional material or coupons -- with the added advantage of
tailoring the coupon to what interests buyers, given what they've already bought from the site.
Similarly, online retailers "upsell" by suggesting other works when customers are browsing through the
site and offer a wide range of editorial content to help make the sale -- including customer reviews,
publisher comments and critical raves.
"For a publisher it's sometimes frustrating, because your instinct is to go meet with stores and sell them
-- show them how good your books are," said Steven Schragis, publisher of Carol Publishing, in
Secaucus, N.J., which primarily publishes nonfiction titles. "Here it doesn't work that way. They just
buy from you and you just say 'Thank you.'"
In other words, there's not much to complain about. Schragis, who attributes between $30,000 and
$40,000 worth of orders each month to Amazon.com, said that "books that we'd sell maybe two of --
like 'The Highly Sensitive Person' -- we'll now sell fifty or a hundred in a year. That won't make
anybody's career, but still..."
Revenues from online sales are particularly appreciated by small- and mid-sized publishers and record
labels who can't afford huge promotional campaigns. "It really has leveled the playing field," said
Helena Schwartz, director of marketing and sales for Columbia University Press, which publishes
mostly nonfiction books on subjects ranging from lesbian studies to international affairs. "The Internet
makes it possible for books with much smaller print runs like ours to have display space, if you will."
The same goes for makers of more expensive books and CD sets. According to Alexa Tobin, director of
merchandising at Music Boulevard, one of the most surprising sellers of the year has been "Have a Nice
Decade," a compilation of 1970s hits from Rhino Records. At $100, the 7-CD set, which is wrapped in
shag carpet, would prove prohibitively expensive for most music retailers to carry in multiple units.
"And where would they put it? Certainly not up at the front of the store. But you know there's a huge
audience for it," Tobin said.
However, Music Boulevard promoted the set online with excerpts from liner notes, music samples,
reviews and prominent placement on the site. The result: of all the copies sold nationwide in the first
two weeks, nearly 20 percent came from Music Boulevard's site.
On the other side of the spectrum, large wholesalers and distributors are also profiting from online
shoppers -- albeit indirectly. The Ingram Book Group, the leading book wholesaler that was recently
purchased by Barnes and Noble, declined to disclose sales figures, but acknowledged that online retailers
have "helped sales very much, particularly our back list" said Keel Hunt, an Ingram spokesman,
referring to dormant titles. (Hunt added that Ingram will "continue to supply existing customers,
including Amazon" after the company's purchase by Barnes and Noble.)
Indeed, online stores with brick and mortar affiliates may be in the best position to reap the rewards of
the public's yen for obscure artists. When asked if the online effort has helped Barnes and Noble's
terrestrial sales, Ben Boyd, Barnes and Noble.com's director of communications, said "Holy Cow -- a
hundred percent increase in special orders at our stores since the site started."
But perhaps the most intriguing question is how this trend will play out in the long run. Can musicians
and authors expect more marketing for their products? Will consumers see an increase in the range of
titles offered? Or will the labels and publishers simply take the revenue and run?
"That's a good question," said Nicole Vanderbilt, director of the e-commerce group at Jupiter
Communications, a research firm based in New York. "They'll have to keep a close watch on the
demand curve, to understand where to take advantage of these incremental sales. But that's still a ways
off."
Schragis agreed. "For it to have a really significant effect on the industry -- we're not at that level yet,"
he said. "For now, what this means is that authors make a little more money, publishers make a little
more money, and that's great."
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