Slumbering Giants and Publishing Services

Maybe I feel some of the tectonic shifts in our industry more acutely than others, because our very existence as a company is so threatened by them.

Nothing illustrates this point more than the consolidation of the distribution market. From my point of view, this consolidation has been largely driven by the need to have a more efficient supply chain. This essentially means that retailers - large and small - have the tools they need to help their customers find what they are looking for and deliver it to them as quickly as possible. This is true whether it is the local corner bookstore or a behemoth online retailer.

To have a more efficient supply chain means to have the technology and industry standards in place for companies to have their computer systems talking to each other, and to automate as much of the process as possible.

This technology 'barrier to entry' in publishing is now at such a daunting level, that most publishers have realized its better to 'partner' with another company who knows how to manage the technology than to make the money and people investments necessary to do it themselves.

Fortunately, there are companies that have made all the proper investments along the way, and have built a formidable array of systems and technology services that make it easy for publishers to take advantage. Most of these companies are in the distribution business (as well).

For several years, distribution companies have thought of themselves in those terms alone - that they handled distribution. Now, most are awakening to the fact that they are really publishing services companies, and it just so happens that they are also distribution companies. Once awakened to this FACT, they start to realize that they are no longer bound only to those customers they do distribution for. Now they can start offering other services, like content management, content distribution, production management, or royalty accounting to companies they don't have any distribution arrangement with at all.

So why is this such a threat? Well, its two-fold for us. One is direct, and one is indirect. The direct threat is that there are now simply less customers for us, and for all other publishing systems providers. We, at Quality Solutions, are slightly immune to this as our systems help publishers with their core competencies - editorial, and marketing. However, the clock is clearly ticking, and it won't be long before the slumbering giants will be offering those services as well. And, while we're fortunate to have many of the large service providers as customers, our room for growth is very small.

The indirect threat is from other publishing software companies. Especially those who offer order processing and other back office systems. In a market where there were maybe 20 companies to begin with, we've seen several 'consolidations' just in the past six months. The last two being just recently - Vista and Ingenta, and the Cat's Pajama's and Media Services. These companies are swallowing each other to stay alive as their customers bolt to the larger 'publishing services' companies.

This is an indirect threat to us, because now those software companies are thinking that their future lies in what we do. This will only create more competition in an ever shrinking market, and will kill us all more quickly, as our services get commoditized. It sort of feels like the rats on a sinking ship seeking higher ground.

The only answer to this threat is to create new services! We've got several in mind, and in the coming months, we'll be announcing several in rapid fire succession. The creation of new services is often a risky business, and building things that publishers didn't even think they needed has been the hallmark of what Quality Solutions has done for the last 20 years. Stay tuned!