It may take a village to raise a child, but it's taken 630 employees scattered across the country to build the Perseus Books Group into what is arguably the most important independent publishing company in the nation, a feat that has made the decade-old company PW's Publisher of the Year.
While Perseus has its roots in the mid-1990s, when millionaire investor Frank Pearl set out to establish an independent publisher that would focus on the publication of serious nonfiction, it's been in the last 18 months that the company, through a series of high-profile acquisitions, has solidified its place among the industry's elite. By taking on the contracts of 124 publishers formerly distributed by the bankrupt PGW, Perseus became the country's largest independent distributor, while its purchase of the Avalon Publishing Group broadened its presence among independent presses. The two major additions did not occur without some pain, particularly as both the integration of PGW and Avalon into Perseus involved job cuts. And, as happens any time publishers change distributors, there were some complaints about the transition process.
The Avalon and PGW deals followed other recent acquisitions of Consortium and CDS to create not only the largest distributor in the country but one of the largest independent publishers as well. The executive team that has orchestrated the creation of Perseus is led by president and CEO David Steinberger and his second in command, Joe Mangan, Perseus COO. But the man who
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| The Perseus Books Group senior sanagement team. |
se vision is Perseus is the publicity- (and camera-) shy Pearl, the influential, Washington-based deal maker with a love of quality books.
In an rare interview, Pearl says he was motivated to enter publishing when he saw the types of books that he likes to read going out of print. “I saw some patterns that I didn't think were too smart,” says Pearl, citing in particular the decision by the major publishers to focus their efforts on bestsellers, often to the detriment of the rest of their lists. After a further review of the industry, Pearl determined that a company concentrating on building a backlist could carve a profitable niche in the land of frontlist giants. To Pearl, the heart of publishing—backlist—is a good business, an annuity.
To remain independent and competitive, however, Perseus needed to develop more scale, prompting its move into the distribution business in 2005 with its purchase of CDS. Steinberger notes that there are “more challenges than ever” for independent publishers with “giant publishers selling to giant retailers.” To give independent publishers a voice, it was necessary to build a company with some market muscle. And although many businessmen may not view distribution as the way to grow, Pearl li
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| Perseus COO Joe Mangan and president David Steinberger. Photo © Leslie Jean-bart. |
kes that side of the business. He says distribution has “comfortable” margins and is a source of reliable cash flow. The key to success, though, is to view distribution as a service business, not simply as a way to fill extra warehouse space or a way to drive unit costs down.
That approach led Perseus to create three distinctive sales groups—Perseus Distribution Services, Consortium and PGW—that provide an array of services depending on the needs of its client publishers. “We're always thinking about what services we can add,” Steinberger notes. Morgan Entrekin, publisher of Grove/Atlantic, one of Perseus's largest distribution clients, agreed that one of the greatest strengths of the Perseus management team is its willingness to listen to suggestions. He cites as one example Perseus's decision, based partly at his urging, to keep an international sales force in place.
The addition of PGW added the necessary bulk to Perseus's existing distribution operation, but it was how PGW was integrated into Perseus that made 2007 a milestone year, rather than a disastrous one. Between March 1 and August 1, Perseus brought online another fully functioning warehouse, a process that can take up to a year. “It was a heroic job by a lot of people,” Mangan says. “It's gone better than I expected, and the publishers have been very understanding.” With PGW's clients in place, Perseus now has 1.2 million square feet of warehouse space in Jackson, Tenn,. holding between 40 million and 45 million books.
“Looking back, I'm amazed at how quickly and relatively painlessly it went,” Entrekin says of the time between AMS/PGW filing for bankruptcy and Perseus moving the PGW clients into Jackson. Speed was essential for Perseus in dealing with PGW. “We were looking for a way to structure a deal that could throw a lifeline to PGW's publishers,” Mangan says. Adds Steinberger: “We knew we had to move quickly to be of real help to the publishers, and to keep the PGW staff intact.” In doing the PGW deal, the value of being part of Perseus Capital LLC, the equity group headed by Pearl, came to the fore. “Perseus Capital had experience with bankruptcies and brought the right people to the table,” Steinberger says. And, as Pearl notes, capital wasn't an issue. The end result, observes Entrekin, is “the strongest platform independent publishers have ever had.”
Adding Avalon
Similar to the way PGW added scale to Perseus's distribution business, the Avalon acquisition brought critical mass to its publishing operation in such areas as travel and current affairs. “Avalon has brought great strength to our group,” Steinberger says. The integration of Avalon into Perseus also had some painful aspects, most notably the decision to shut the Carroll & Graf and Thunder's Mouth imprints. Despite those closings, Perseus remains committed to a decentralized publishing approach—the company has 11 offices—and to building a business based on a model of modest advances and evergreen titles. Steinberger says Perseus is in “active conversation” with some of the industry's largest retailers about “different ways to support backlist books. We want to find ways to keep good books working.”
That style, however, doesn't mean the company can't produce bestsellers. This fall, books such as Skinny Bitch, The Sneaky Chef, This Moment on Earth, The Portable Atheist and Blackwater have all hit various bestsellers lists. Blackwater is a good example of the flexibility Perseus has. The book, about the armed contractors in Iraq, hit the bestseller lists when it was released early in the year and then faded before resurfacing after Blackwater guards were accused of killing Iraqi civilians in September. “We can shift gears quickly and get books into the market channels when the opportunity is there,” Steinberger says.
When about 70% of the company's revenue comes from backlist, technology also has been an important factor in Perseus's growth. Sales through Amazon have been a huge factor, Pearl notes, and Steinberger hinted that more aggressive use of print-on-demand technology is coming in 2008. “We are a long tail company.” he notes. Another acquisition of a publishing company could also come next year, though the company is likely done buying distribution companies. “I think we can grow reasonably consistently by bringing on new clients,” Pearl says. Indeed, since the PGW deal closed, Perseus has added a total of 17 new clients, including the well-regarded MacAdam/Cage, to the PGW group, while Consortium has re-signed one of its most important publishers, Seven Stories. Leading conservative publisher Regnery became part of PDS in May. But Pearl believes there are still a few publishers that could benefit from being part of Perseus and that when Avalon is fully digested, Perseus will again be looking for the right acquisition opportunity. He wouldn't put a limit on how large the Perseus Books Group might grow. “There is no natural ceiling,” he says.
Perseus's effort to establish a significant independent publishing company is admired by colleagues and competitors alike. Peter Osnos, who partnered with Perseus to launch Public Affairs in 1997, says Perseus's experience as an independent publisher has helped it to create a distribution company that is aware of the needs of indie houses, and has been successful at combining “state of the art systems with the spirit and dynamism of independent publishers.” And even Jed Lyons, who is building a hybrid publisher/distributor at Rowman & Littlefield/National Book Network similar to the Perseus model, and who competed for the PGW clients, applauds Perseus “for making a big bet on independent publishing. For that alone they deserve a lot of credit.”
| Publishing Divisions |
| • Avalon Travel |
| • Basic Books |
| • Basic Civitas Books |
| • Da Capo Press |
| • Da Capo Lifelong Books |
| • Nation Books (joint venture partnership) |
| • Public Affairs (joint venture partnership) |
| • Running Press |
| • Seal Press |
| • Vanguard Press |
| • Westview Press |
| Client Service Businesses |
| • Consortium |
| • Perseus Distribution |
| • PGW |
Innovation, Service, Good Books
Romanos Goes Out on Top
After nearly 40 years in publishing—in a career that began as a sales rep and ended as CEO—S&S’s Jack Romanos is going out on top. The company he joined 22 years ago as president of Pocket Books will post a rec
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ord year in sales and earnings in 2007, topping records set just one year ago.
At his retirement party last week, Les Moonves, CEO of Simon & Schuster parent company CBS, praised Romanos for “results that were nothing short of phenomenal” over the past two years. Sales at S&S are expected to near $1 billion when 2007 closes. Other speakers at the event extolled Romanos’s cool and unflappable demeanor, even when facing the wrath of overly demanding bosses. Incoming S&S CEO Carolyn Reidy applauded Romanos’s great ability to “manage up,” thereby deflecting heat from corporate chiefs and freeing the rest of the company to focus on the business of publishing. (By his count, Romanos had six bosses at S&S, most of whom were “interesting” characters.).
During his career, Romanos never hid his desire to publish commercial titles, although during his tenure S&S had its share of National Book Award and Pulitzer Prize winners. Vince Flynn, a bestselling author Romanos championed before he made it big, noted that Romanos is “egalitarian—he doesn’t care who you are, as long as you can help sell books.” Reidy recalled that when Romanos published Lee Iacocca’s autobiography at Bantam, he introduced the concept of publishing hardcovers using mass market paperback marketing techniques, an approach that resulted in sales of 2.5 million copies of Iacocca. Reidy said one of the great secrets to Romanos’s success was his abililty to foresee the future, be it creating an audio division, inventing the premium mass market paperback format or preparing S&S for digital commerce. Looking back at his time at S&S, Romanos recalled that after he survived his first year there, he set goals: making profits equal the $100 million in revenue S&S generated in 1985 and retiring at 65. The profit number will come very close this year and, in any case, Romanos said, “It’s the right time for me to go.” —Jim Milliot
John Rubin Grows Above the Treeline
Since launching the Web-based inventory management company Above the Treeline five years ago, John Rubin, 37, has revolutionized how independent booksellers can use their stores’ sales data to more precisely manage their inventory. Not only can ATL subscribers—more than 200 ABA stores and over 200 CBA stores, at last count—check the sales history of a particular title at their store on a daily basis, but they can also—anonymously—sha
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| Photo © Joni Pockey |
re sales data with each nother. And the 40—50 publishers who subscribe to ATL can check how their releases are selling in consenting stores.
This past year, Rubin has partnered with the ABA, demonstrating ATL’s benefits to booksellers attending the trade shows, and, in May, he added more than 1,500 storefronts to his subscriber base by signing on the Borders Group. ATL now manages on a daily basis a total of 120 million records of unique items at approximately 2,000 individual bookstores.
“It’s worked out very well,” Rubin says. “Bookselling is bookselling. Inventory management is inventory management. The issues are the same for stores everywhere,”
Rubin takes pains to emphasize that, because ATL services so many independent stores as well their leading corporate competitor, all sales data provided by individual stores is confidential, and grouped only with information from like stores, i.e., ABA stores, CBA stores and, now, the Borders Books and Waldenbooks stores.
Rubin is kicking off 2008 with a rollout of Above the Treeline 2.0, in which the company will employ new Web technology to further fine-tune the system, increasing the speed of the application and facilitating the ease of interaction between booksellers and publishers. Though he declines to provide specifics, Rubin says he’s exploring some more “interesting partnership opportunities in the publishing industry,” with a possible announcement in the first quarter of the new year. —Claire Kirch
Sarah Crichton: Looking for Good Stories
When agent Ira Silverberg sent Sarah Crichton Ishmael Beah’s 600-page manuscript—a first-person account of a boy soldier in Sierra Leone—she was a bit overwhelmed. “It was daunting, and I felt that if I was getting involved with a person’s life, I had to come through.” She worked on A Long Way Gone for nearly a year, meeting with Beah al
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| Photo © Joyce Ravid |
most every Monday and talking with him about his book. In the end, he delivered, she says, “a brilliant, perfect” memoir. The book was excerpted in the New York TimesMagazine, became a Starbucks’ Book Break pick and spent 29 weeks on the PW bestsellers list, with more than 650,000 copies in print. On the Daily Show, host Jon Stewart told Beah, “Your book hurt my heart.”
The book’s success confirmed that Crichton, who raised eyebrows when she got her own imprint at tony FSG, not only had literary chops but a great sense for what the public wanted.
Crichton’s professional track began here at Publishers Weekly in the late ’70s. She went on to become an editor at Seventeen magazine and then at Newsweek. In 1996, she was tapped by Charlie Hayward to be publisher at Little, Brown. At the time, the choice was questioned by those who doubted whether she would ever really become “a publishing person,” a notion that seems laughable today. Crichton, who was ousted from Little, Brown in 2001, suggests that perhaps working for a major conglomerate was just not that suitable.
A phone call in spring 2004 from FSG president Jonathan Galassi brought Crichton back into the publishing fold: “I had been impressed by Sarah’s talent and energy. We were looking to broaden FSG’s list and it made sense to ask this dynamic, brilliant, original spirit to come do what she does best here at FSG.”
Crichton was ready to go (“I said yes as fast as I could”), announcing that she would publish 12—15 books annually and wanted to be the hands-on editor for all of them. Her first title, published March 2006, was The God Factor by Chicago Sun-Times religion reporter Cathleen Falsani. Her first mystery, The Janissary Tree by Jason Goodwin, won the 2007 Edgar for best book of the year.
“People love to read great stories,” says Crichton. “And that’s my driving force—to publish books I want to read and to help writers be as good as they can be.” —Daisy Maryles
John Freeman and the NBCC
Book publishing folk have been bemoaning the reduction of space devoted to book reviews in newspapers for years. But the issue reached a tipping point in April 2007, when former Atlanta Journal-Constitution book review editor Teresa Weaver learned her position would be eliminated. The newspaper promised to continue covering books, but many industry insiders saw Weaver’s exit as
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a major blow, and her departure reinvigorated the debate over the decline in print coverage of books. The AJC wasn’t the only paper to make such changes this year: the AP, the Chicago Tribune, and the L.A. Times Book Review also had cutbacks.
Led by National Book Critics Circle president John Freeman, book people in Atlanta and all across the country rallied to get Weaver reinstated. Although a petition signed by some 6,000 people ultimately failed to get Weaver her job back (she wound up in the newly created position of book editor at Atlanta magazine), Freeman believes the AJC’s coverage did not change “as much as it looked like it could have.”
Freeman’s glass-half-full take is that since the events of last spring, non-newspaper organizations have stepped up. He commended Barnes & Noble’s online review, Bookforum and the New Yorker for increasing and improving their coverage. And the NBCC has sponsored panels aplenty on the increasingly large role bloggers are playing in bringing book reviews to the public. One more upshot to the crisis? Freeman says he now has informants throughout the industry. “Someone will forward something to me saying, ‘You better watch out for this.’ ” —Lynn Andriani
Jan Nathan’s Legacy
One could argue that small press publishing has come full circle. Three decades ago, it was closer to a cottage industry than a business. Today, it is where publishing enjoys its greatest growth. This past summer witnessed the passing of a woman whose hand was instrumental in that evolution. Jan Nathan, the longtime director of the Publishers Market Association, died in June at the age of 68 after a quarter-century of advising, cajoling and very much nurturing small pub
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lishers. Her infectious energy will be sorely missed, but her legacy lives on. Jonathan Kirsch, legal Counsel for PMA, recalled Nathan as “among the most crucial and decisive figures in the media revolution.”
When PMA began in 1983, it had but 15 members; today, the organization is 4,200 strong. Indeed, Nathan understood the power in numbers—as is evident at any BEA show, where there are aisles upon aisles of PMA members. Nathan’s son Terry succeeded her as director. When asked how his mother would counsel the new publishers of our digital future, Terry said that though Jan was “very much a traditionalist, at the same time she had incredible foresight.” Although she was excited about POD, she would “squirm” at the thought of vanity presses flooding the market.” As always, Jan Nathan—forever protective of the professionalism she instilled in her serious membership. —Michael Coffey
