For 2021, I will be featuring responses to questions I often field on other forums or that are sent to me here at POV Author Services. To end 2020, I’m answering a question from Pat McNees (Thank you, Pat!) who maintains a website called Writers and Editors with lots of articles and links to information about writing and publishing. Her question is: What are vendors and aggregators? This came up in the context of me responding to a different question where I discussed the plethora of distribution opportunities that independent publishers have these days, and how they have leveled the playing field between big publishing companies and small independent publishing companies, both those that serve a small number of authors and those that serve a single self-published author.
Distribution Basics: Vendors
All publishers (including self-publishers) choose how they want their book(s) to reach readers. In the old days, well before the Internet technology we have now, books were only available in a printed form. Publishers would own or have strong relationships with their own printing presses. They would maintain a large stock of books in giant warehouses (from 500 to many thousands) and ship them out as they were ordered by “vendors”–bookstores, specialty shops, museums, gift stores, universities. This process still exists today in some form. It used to be the norm where a publisher would send out a color catalog of all the new books planned to release in the year, and a curated backlist of books they wanted to feature. In some cases those catalogs would be a subset of their books that a specialty store (e.g., a university, a history museum) might be interested in purchasing. A “vendor” is someone who purchases the book from the publisher at a discount from the stated retail price, and then sells the book at a markup. Long gone are the days where a store would physically make their own products and sell them directly without dealing with additional vendors. Libraries and K-12 schools are treated as customers, as they typically do not resell a purchased book.
After the catalogs had a chance to be delivered and stores to review them, a bevy of salespeople, divided into territories and/or genre specialties, would make calls on bookstores, universities, K-12 schools, libraries, and sometimes specialty gift shops to call particular attention to certain titles and hope to get a bulk order for that title. This enormous logistical task is likely also what led to front-list titles coming out twice per year–Spring and Fall instead of a continuous cycle of releases. Small publishers (before they were all bought by the big four) often had difficulty competing in this market. Some of them would contract their titles to a bigger publisher in order to take advantage of their salesforce.
Fast forward to the age of the Internet and websites, as well as growing competition market share. Territorial boundaries are non-existent and books are no longer only offered in print. A publisher can now easily distribute in a foreign country. Technology now has options for ebooks, audiobooks, and books with embedded videos. More vendors enter the market, particularly vendors who arise not from the bookselling world but from the technology sector. Amazon, Rakuten, Ali Baba, and many others have books as one of the many products they offer online. Large bookstores now also offer online sales of print and ebooks–Barnes and Noble, Powell’s, Books-a-Million. Ebook only vendors also arise along with specific devices to make reading ebooks easier–Amazon, Kobo, Apple, Google, Nook, Tolino, and others. More recently subscription only vendors as well have become popular (Kindle Unlimited, Kobo Plus, ScribD, 24 Symbols, and others). Each of these entities are vendors. They employ the same method of distribution that brick and mortar bookstores use. They purchase books from the publisher or an aggregator, and resell them at a markup.
The Role of Aggregators
An”aggregator” is a vendor who acts as a middleman for distribution. They are sometimes called wholesalers. Most aggregators make their money in two ways: 1) by charging a fee for the services (e.g., warehousing, printing, distribution, sales); or 2) by taking a percentage of the sales the book generates. This fee is always taken before payment to the author or publishing company is made. What differentiates aggregators from vendors, is that they do not sell the book for the publishers. They do receive the books from the publisher, but instead of selling it they distribute it to many vendors and handle the payment processing for the publisher.
Whereas, in earlier days, a small press might use an aggregator/wholesaler to get their print books distributed across the country and use their salesforce to make the books visible; today it is rare that a publisher does everything on their own–even the big publishers. In the print world, Ingram was one of the first aggregators. They were created to help those publishers who did not want to or couldn’t afford to own their own printing presses, have thousands of sales people on their payroll, or manage the logistics of hundreds or thousands of vendors. Ingram began printing and distributing print books for publishers more than 50 years ago. They have now also added distribution of ebooks to their offerings. Ingram is also available to small publishers and individual self-publishers today through Ingram Spark which provides print-on-demand (POD) services for print books and ebook distribution services if desired.
Who else serves as an aggregator for publishers to access? In the library world, in addition to Ingram, are Baker & Taylor and American West for print books. For ebooks there is Overdrive, Hoopla, Bibliotecha, Odilo, EBSCO, and many others. Each of these entities receive books from many publishers and then act as a distributor to thousands of libraries. This is very useful for publishers who don’t want to have salesmen calling on 20,000 libraries or having to learn how to upload their books to each library’s catalog individually. And with the complexity of digital book sales, most publishers don’t want to have to contract with each library for the variety of sales options. Instead a publisher contracts with the aggregator (i.e., Overdrive) as to which of their checkout options they are willing to use for their book distribution. Both large and small publishers find these aggregators to be a cost saver in personnel time.
In addition to Ingram’s ebook distribution arm, the primary aggregators in the ebook world are Smashwords, Draft2Digital, Publish Drive, Vearsa, and BookBaby. Again, there are many others, but these are the largest entities. Each of these companies distribute ebooks to hundreds of vendors. In some cases an aggregator will also distribute to another aggregator. This is especially true when trying to reach foreign markets that are not easily accessible. For example, Tolino is a company who began developing an ereader for the German ebook market. In order to have ebooks ready available to their reader, they created a single point of purchase for publishers to distribute their books. In Germany, Tolino has the same market share that Amazon does but they don’t have a point of entry where publishers can upload directly. Every major aggregator distributes to Tolino to make this lucrative market available to publishers.
For the same reason that many publishers use Ingram to get print books into a large vendor market, they will also use another aggregator to get to specific markets at a better price. This is especially true for small publishers and self publishers. Though Ingram will distribute ebooks widely, their fees or percentage of the sales is larger than other distributors.
Reedsy has created a spreadsheet that looks at the differences between some of the top aggregators. The spreadsheet includes their distribution network and what percentage of sales they take. Note that this spreadsheet was last updated in 2019 and aggregators are always adding new vendors, dropping vendors that are no longer viable, and renegotiating contracts. Outside of Ingram, the aggregators listed above allow you to choose which places you want your book distributed. This gives you the opportunity to load directly to vendors (i.e., Amazon, Kobo, Apple, Google, Nook.) you wish to control and get the maximum royalties; but then use an aggregator to get into places that you can’t get to like libraries, foreign markets, or specialty markets.
Another reason independent publishers use an aggregator is for ease of distribution. Depending on how organized you are, you may decide that using an aggregator to distribute everywhere is the right answer for you. In that way you have one place you load your books, which means only one system of loading interiors, covers, metadata, and pricing. When you make changes (perhaps a cover change or a second edition release) you don’t have to search out all the places your book is distributed and make sure each vendor has made the needed changes. This also means there is one place for all the sales analytics and payments which, for some authors, is well worth the fees in order to make their lives a little easier. Time is money may be worth the fee the aggregator charges.