In what its president and CEO, Jack McKeown, termed a watershed event, the Perseus Books Group has revamped its sales operations, the highlight being the creation of its own national accounts sales force. The new sales group will call on eight national retail and wholesale accounts that represent well over 50% of Perseus's total revenues. HarperCollins reps will continue to call on the rest of the wholesale and retail universe and perform all warehousing, fulfillment and distribution services. The new agreement took effect October 1 and will last a minimum of three years.
McKeown told PW that Perseus had been waiting until it had achieved a "critical sales mass" before establishing its own in-house sales force. "This move signals that we are ready to go to the next level of growth," McKeown said. Since its formation two years ago, the number of Perseus employees has increased from eight to 160. The company is currently publishing 350 titles annually, with a backlist of 3500 that "contains no deadwood," according to McKeown. Sales increased 40% in 1998, and McKeown predicted that revenues will grow by a similar amount this year. PW estimates that Perseus's total sales are now approximately $60 million, with backlist titles accounting for more than 55% of revenues.
According to McKeown, Perseus's business model, which focuses on individual publishing operations while centralizing certain services, has worked very well. "What other publisher has editorial operations in New York, Cambridge, Washington and Boulder?" McKeown asked. Each location serves as the site for specific services; Cambridge houses all promotion and sub rights activity, while all MIS and production are done in Boulder. New York houses editorial as well as corporate functions. "We now have a platform to build on through organic growth, and we will continue to aggressively acquire companies for the next several years," McKeown told PW.
It is McKeown's contention that the consolidation among the large publishers has created many niche opportunities for companies such as Perseus: "With the mergers, a number of imprints have become undervalued in a corporate setting. We offer a fresh alternative." While the majority of Perseus's list is nonfiction, McKeown said he "would love to acquire a quality fiction house," noting that Perseus already has its own plans to expand its fiction output through Counterpoint. Another internal initiative for 2000 is to use Da Capo Press to do more original trade paperback publishing. With such a strong backlist, Perseus is also exploring the possibility of creating its own on-demand publishing program. Currently, Perseus has about 200 books in Lightning Print's program.
Two firm believers in the Perseus business model are Peter Osnos, publisher of Public Affairs, and John Donatich, publishing director of Basic Books. Osnos asserted that Perseus's success "has shown that it's possible to publish high-profile major nonfiction books without being a huge multinational publisher." Furthermore, Perseus has proven that so-called midlist titles can be published profitably. "The books were not the problem; it was the system that was broken. The system created an environment where [midlist] titles were doomed to be buried by high overhead costs," Osnos explained. Perseus's publishing units have lean management, tight market focus and don't invest in "lavishness," Osnos said, adding that Public Affairs treats each title "as an entrepreneurial opportunity. About half of the titles on Public Affairs' spring list were done in cooperation with a partner."
Both Osnos and Donatich attribute Perseus's success in part to its partnership with HarperCollins. "We're benefiting from the reinvigoration of Harper," Osnos said. "Harper is a good bag to be in," agreed Matty Goldberg, v-p of marketing for Perseus.
Although Perseus has had six bestsellers over the last two years, Donatich said he is more encouraged by the number of titles for which print runs have increased over time. Why Are All the Black Kids Sitting Together in the Cafeteria? went from a first printing of 2500 copies to 28,000 copies, while Uncommon Grounds sold more copies in August than it did in April, when it was released, Donatich noted. "We'll put money behind a title that has momentum," Goldberg said. Donatich considers Basic's current hot book, The Sword and the Shield, to be a perfect Basic book. "Its foundation is in academia, but it appeals to a broader audience," he explained. Donatich is also a fan of the Internet as both a medium to spur book sales and as a marketing opportunity. The Public Affairs bestseller Blind Man's Bluff got its start on the Internet, and between 10% and 12% of its sales were made through Amazon.com.
In addition to Sword, another major title for Perseus this fall is Africana: The Encyclopedia of the African and African American Experience, with a first printing of 85,000 copies. A CD-ROM already exists, and other spin-offs are planned.
According to McKeown, Perseus is both "cash positive and profitable." Osnos added that by keeping operations in line with real expectations, "Perseus can flourish without praying for rain."