The problem of Deseret Book Part 1: A Question of Size

10.28.05 | | 23 comments

This is the first in a three-part series on the role of Deseret Book in the LDS Market. As the largest player in the market and because it is owned by the LDS Church, it occupies a unique, but problematic, in my view, position.

The LDS publishing industry has an 800-pound gorilla — Deseret Book. I’m sure that the management there would not disagree that Deseret Book is the largest company in the industry, but they would say that this is not a problem. After observing the industry for about 10 years, I have to disagree. Its a problem.

Why? Well, Deseret Book’s size and control makes it much more difficult for smaller publishers to sell their books. This limits what books are available. Because Deseret Book is owned by the LDS Church, it is often percieved as being semi-official, giving it marked advantages among much of the LDS audience. And Deseret Book’s size in combination with its position as retailer, distributor and publisher puts it in a position to make decisions that aren’t fair to others.

Lets review Deseret Book’s history and position. Arising from the operations of George Q. Cannon & Sons, owned by the long-time first counselor in the first presidency, the Church-owned Deseret Sunday School Press and the Church-owned Deseret News Press, Deseret Book was, like many publishers of the time (1st half of the 1900s) both a publisher and retailer. Since it was owned by the Church, Deseret Book had a stability that most other businesses of its size could only dream of.

I suspect the company’s growth through the 1970s was mostly in its retail operations (i.e., stores), which have expanded to its present 41 stores (a 42nd is apparently in the works). At least some of this expansion has come from acquiring other LDS bookstores, as it did recently in Seattle. As a result Deseret Book is clearly the largest LDS retailer.

More recently, Deseret Book has grown its publishing operations through acquisitions, principally by acquiring Bookcraft, its most significant competitor, in April 1999. Deseret Book also aquired Excel Entertainment, the most important company in the nascent LDS film industry, earlier this year. Deseret Book is also clearly the largest LDS publisher, and recently began using this size to sell distribution services to small publishers, giving it a significant position among the distributors in the LDS market.

I found the purchase of Bookcraft particularly troubling at the time and wrote in a opinion on Mormon News (not available online at the moment) that the purchase made Deseret Book too dominant. At least since that time Deseret Book has controlled more than 60% of the LDS market, and its recent acquisitions make me believe that this percentage is increasing. If the LDS market were larger or if it were the entire US book market, such a purchase would have certainly invited anti-trust review. [Note: I am NOT a lawyer.]

So why is this bad? First, it tends to limit or reduce the number of titles produced, at least in the resulting company. This happens frequently in publishing mergers — the merger means new management reviews the titles it is selling and has planned and gets rid of the slowest selling titles or those that don’t fit the new vision of the management. Often, in order to pay for the merger, the combined company then cuts editorial staff in some way, reducing the number of titles it can produce.

Did this happen to Deseret Book? I don’t know about staff cuts (there were some a year or so after the merger, but I don’t know if editorial staff were cut), but Deseret Book did get rid of titles, and the structure it planned at the time — four imprints (Deseret Book, Shadow Mountain, Bookcraft and Eagle Gate) — seems to have also disappeared.

Market domination makes it easier for Deseret Book to sell its books. Because it is owned by the LDS Church, members naturally look to it for books about the Church. The ownership gives its book an air of approval, where one doesn’t necessarily exist (generally books authorized by the Church are those published by the Church and distributed through Church distribution).

Members also naturally go to Deseret Book stores to get LDS books and other materials, simply because it is owned by the Church and, they assume, wouldn’t sell anything that isn’t in harmony with the Church’s teachings. Right or not, Deseret Book apparently accepts this responsibility and, according to news reports in the past few years, requires that its buyers verify that the books it sells meet its standards.

This size also conveys a sense of completeness that clearly does not exist. While some members assume that everything that fits Church standards is available through Deseret Book, this is also clearly not true. Deseret Book doesn’t take on products they don’t think will sell, and those products often do not appear even on its website or in its catalogs. For a small LDS publisher, if Deseret Book doesn’t buy a title, it may mean that even the best informed purchasers of LDS books won’t know that the book even exists.

Deseret Book’s advantage in the market also puts it in a position to push its own product at the expense of other publishers. As the largest LDS retailer, Deseret Book is looked to as the primary source for LDS books, but since it is also a publisher, it has an incentive to push its own books instead of others. As one competitor told me at the LDS Booksellers Association meetings in August, as the Christmas season approaches, orders from Deseret Book’s stores dry up for all but their best selling titles. Orders from Seagull Books, the second largest LDS chain, owned by the second largest LDS publisher, Covenant Communications, also dry up. Why? They prefer to stock their stores with their own titles rather than those of other publishers.

Of course actions like these weaken the smaller publishers, and limit the number of titles that smaller publishers can produce, simply because they have fewer money and resources to market their titles and fewer prospects for selling those titles, if Deseret Book chooses not to carry those titles.

In a sense this is really not much of a surprise. Any company that dominates a market like Deseret Book dominates the LDS market has a similar advantage. Its certainly happened before. But rarely is it really good for a market.

Unfortunately the problem of Deseret Book doesn’t stop at its size. I’ll address that in the next part of this series.

23 comments: “The problem of Deseret Book Part 1: A Question of Size

  1. Clark Goble

    I think the bigger problem is its quasi-authoritative status. I understand why the church kept it – especially in the earlier days. Guaranteeing some LDS publishing was a necessity. In these days of Amazon and easier publishing, I’m not sure it is still being well served in this investment. I’m not saying get rid of Deseret Books. I think having a large publisher is a good thing. I do think having the church divest itself of it would be wise.

    I also tend to agree that having the publisher and bookstore as the same company is problematic. Once again I can understand why that was once important. But with other LDS oriented bookstores like Seagull along with most major chains like MediaPlay, Barnes and Noble, and Borders all selling a lot of LDS books, I’m not sure this is as important. When you throw in the online sellers, I tend to agree that it becomes somewhat problematic. I think this more of a negative now rather than positive.

     

    Posted by Clark

  2. Eric Russell

    What’s the solution to this kind of problem? Is it for DB to sell off its imprints?

    I have difficulty seeing how the size of DB is a problem when there’s a Seagull almost everywhere there’s a DB. If we were dealing with a monopoly, that would be one thing, but it looks like there’s plenty of competition out there.

  3. P. G. Karamesines

    I don’t know anything about bookselling! Are you saying that this publisher/distributor relationship is antiquated? Did nonLDS publishers have a similar structure historically, and then at some point the market demanded change, so a split occurred in most markets except the parallel LDS market? Are there, say, Catholic publishers today that similarly own bookstores for the purpose of distributing their own titles? Neo-Nazi publishers? Technology-oriented publishers? Etc.?

    What about the LDS music industry? Does DB also similarly control that market in that it both produces and distributes?

    Like I said, I don’t know much about bookselling, but maybe the LDS book market is simply substantially behind the national one in its development and so is suffering a prolonged adolescence.  

    Posted by P. G. Karamesines

  4. Kent Larsen

    Eric:

    Outside of Utah Deseret Book is in many places that Seagull Book is not. Both have 19 stores in Utah. But Deseret Book has a total of 41 stores, while Seagull has just 24. In addition, I believe Deseret Book stores are generally larger than Seagull’s stores.

    There is also a qualitative difference in the stores. Deseret Book generally has a wider selection than Seagull, especially because in many Utah stores it carries non-LDS materials as well, whereas Seagull is only LDS books and products. Outside of Utah Deseret Books stores seem to only carry LDS products. Deseret Book also has better name recognition among Mormons and has a more orthodox reputation.

    Bottom line, I’m certain that Deseret Book sells much more than Seagull as a bookstore. But my comments are more to their overall operations, including publishing and distribution. As a whole, I still would estimate that they control some 60% of the market.

     

    Posted by Kent Larsen

  5. Kent Larsen

    Patricia:

    I’m not sure exactly what you mean by “Publisher/Distributor” relationship — but you seem to be talking about the fact that a publisher owns a chain of bookstores, right?

    It is true that US publishers generally do not own bookstores any more. Most of the major US publishers sold off their bookstores by the 1960s and 1970s. But I don’t believe any of these publishers who owned retailers were a significant portion of the market — most bookstores were independent at that time. So the situation isn’t comparable.

    I must admit that I’m not completely familiar with all the other possible market segments that might be similar. It could be that there are some publishers who have a significant presence in their segment and who own bookstores in that segment.

    I’m also not sure I’d use the word “antiquated” for this structure — I think it can work in certain circumstances. But when the company that has this structure is the dominant company in the market segment, its even hard to avoid abusing its dominance in the market.

    Just to make this clear, its not that Deseret Book is both a publisher and a chain of stores. Its that it does both of these AND is the dominant company in the market, already controlling mroe than half the market. If it didn’t already dominate the market, the fact that it is both a publisher and a retailer wouldn’t be so much of a problem.

    I also don’t know if the LDS music industry is quite the same. It is part of the LDS products industry, and I believe I know the players, so I believe its pretty much the same. But music is sold differently than books are, so its possible that there is some difference — perhaps Deseret Book isn’t as dominant. 

    Posted by Kent Larsen

  6. P. G. Karamesines

    Thanks for your patience with my ignorance of this subject!

    I guess I was wondering if being both a publisher and owning a chain of book stores is a common way of not only controlling the market but of making sure your stuff gets published in the way you want it to be. I think that one thing that’s edgy about writing is that once you sell your work to a publisher, things get changed that you have little or no control over: The book title, for instance, or somebody comes up with a strange cover, or you have to deal with the hassle of an editor wanting you to put something in you might not want to, like Stephanie Meyer mentioned with her book where the publisher wanted her to put in a premarital sex scene. In other words, Deseret Book and its appendages exist not just to control the market but to give the church tighter control over how its church-related works are published. It’s a “safe house,” so to speak. That is, I’m wondering if its overall air of control of the market etc. is rooted in that very powerful urge to control a work from start to finish.

    It’s difficult to “trust” publishers and their editors (among those publishers that still use editors) with your beautiful words. IMO, turning loose of total control of your work is an act of maturity. Thus my wondering if Deseret Book is in some sort of prolonged adolescence.

    I once worked on an LDS writing project with a … project manager, I guess I’d call it. He didn’t write the work, but prescribed how it ought to be written. When we hit an issue in the novel where we disagreed, I (the principle writer) suggested we submit the work to a publisher (one was waiting) and see what their editors suggested. The project manager stoutly refused to go that course, saying he ” … didn’t trust those people.” He was speaking of editors of an LDS publishing house.

    This person went on to work his way towards developing a system of teaching writing, publishing, etc. that attempts to keep a pretty tight rein on the writing from start to finish, all because, I believe, he “doesn’t trust those people.” I’m wondering if Deseret Book is a similar deal–a structure that exists to do things very nearly from start to finish the way people want them done.

    Gee, I hope I’m not rambling here. Just trying to put things together in my head with your help.

     

    Posted by P. G. Karamesines

  7. Kent Larsen

    Patricia:

    I think a publisher owning bookstores is about selling the publishers books, but your suggestion that they might be trying to control what kind of books get sold is also important. Yes, Deseret Book can control the content of what sells — but only because it already is the largest company in the market.

    I’m not sure what to say about your comment on Deseret Book being immature. I agree that needing control is a sign of immaturity — in a psychological and parenting sense. I’m torn about whether or not it applies on a business level. Yes control (as in a monopoly, which is total control over a market) might be immature, but it also makes the most money of any market structure, regardless of how “mature” the players are.

    Of course, I think in the long run all monopolies are unsustainable without outside support, so in that sense perhaps seeking that kind of monopoly control is immature.

    I guess what I’m saying is that it is hard to equate where Deseret Book is with adolescence, since it doesn’t necessarily come after “childhood” or before “maturity” — companies are run by people, and the people in control at the moment determine whether the company is acting maturely or immaturely. There has been some suggestion in business research that companies go through ‘lifecycles,’ but I don’t think that they can be held as strictly as we hold our personal lifecycle.

    As for your experience with the ‘project manager,’ he does seem to have control issues as you’ve told the story. But knowing what I know about publishers, I can’t say that I blame him. On some levels editing is a very objective process, and on others it is as subjective as anything. It would not surprise me to find out that he had worked with editors at LDS publishers who imposed their subjective ideas on previous projects — to the detriment of the project. It happens here in New York also.

    I can’t say that I know a lot about Deseret Book’s internal operations. What I’m saying about them comes completely from outside observation. It could well be as you suggest — that Deseret Book is trying to control the process it works through very carefully.

    But, it is hard for any business to maintain that kind of control in a competitive environment. Other companies with friendlier policies would eventually gain an advantage. Deseret Book’s advantage in this area is the fact that it is owned by the Church and that it has a reputation for being orthodox. Take away either of those advantages, and it might get into trouble fast. 

    Posted by Kent Larsen

  8. P. G. Karamesines

    I guess what I’m saying is that it is hard to equate where Deseret Book is with adolescence, since it doesn’t necessarily come after “childhood” or before “maturity” — companies are run by people, and the people in control at the moment determine whether the company is acting maturely or immaturely. There has been some suggestion in business research that companies go through ‘lifecycles,’ but I don’t think that they can be held as strictly as we hold our personal lifecycle. 

    I apologize for my poor word choice–I meant immaturity in the sense of a particular phase of development, usually on the young side, heading toward the next phase of development. I think most things “develop,” businesses included. Lifecycle? I agree that’s too tight of a metaphor.

    Of course a business isn’t an organism, but I have heard of businesses having “growing pains.” My point is that maybe DB is moving rather slowly through a particular phase of its development, a phase that is natural, or perhaps I should say usual, to the growth of a business, especially one as invested in a particular community as DB is, but in DB’s case perhaps it’s lingering longer and maybe the community makes it possible for that to happen. Isn’t DB taking steps to market outside the LDS community now? I would perceive such an effort as moving toward the next phase of development.

    Anyway, I think that wanting exclusive control of how something is done start to finish is necessary in some cases, but sometimes it’s oppressive. In cases where overarching control is perhaps a central issue for the business (or a person), I would expect the business to cultivate at least an aura of having been sanctioned by some authority or another. That’s a very effective way to control a market, isn’t it? I don’t know if DB does IS concerned with overarching control, but it might be perceived as having some of the characteristics of a business that is.

    As an emergent writer, I find my gaze wandering more and more outside the LDS market. Not out of a “grass is greener” longing. As I look around the LDS market I find myself thinking, “This can’t be all that we are.”

     

    Posted by P. G. Karamesines

  9. William Morris

    Just a quick follow-up to Kent’s response to Eric on Seagull:

    It also seems to me that Seagull takes its cues from Deseret Book. Or at least the catalog it sends me doesn’t seem to have any products in it that DB doesn’t already carry. In fact, Seagull’s focus (in terms of marketing) seems to be rather narrow. So I’m not sure how much *competition* they really are for Deseret Book. Or at least Seagull isn’t the same competition that the independent LDS booksstores were/are. 

    Posted by William Morris

  10. Naiah

    Kent:
    You mention DB selling only LDS items outside Utah. Unless there’s been a *seriously* big merger, involving Scholastic publishing and rights to J.K. Rowling’s Harry Potter series that I don’t know about, then, at least going by the Seattle (actually Bellevue) store, that’s not so.

    There is a “LDS Literature” section, as well as a “Literature” section at the store up here.

    :)

    It would be interesting to see a more public push from the LDS booksellers’ association. Perhaps they could/should publish a comprehensive catalog–or at least an online one–each year/each quarter…? 

    Posted by Naiah Earhart

  11. Wilma Aebischer

    I have a very small home based book store. When I started this business in a downtown location in 1991, no other LDS supplier would sell to me until I registered with Deseret Book. They then required a $2500 first order. With a little determination I went ahead and placed my order with them, and registered my Bookstore name. Handcart Books. However, due to health problems in 1997 I had to make a change and move my product to my home in 1998, which I have adequate space to display my product. I am not a large quantity customer for any of the wholesale companies, and I must buy LDS Books from Deseret Book,which also is presently marketing very heavily in the Retail market, discounting to retail buyers, sometimes within 15% of what they discount books to me on my wholesale account. Other LDS wholesle customers are very cooperative, as they are also trying to compete with Deseret Book in the LDS Market. I am not alone in this problem, I have discussed this with several other independent booksellers like myself, and Deseret Books pricing, and locations are making it very difficult for independents to stay in business. My question could a small company like mine buy from a major publisher, even though we sometimes only buy one or two copies,at a time, due to lack of space and slow market, which ties up our operating capital ? I surely wish I could find an answer to ways to make my business more profitable. Thanks for your information.

  12. Theric Jepson

    .

    It does seem like DB is trying to force everyone else out of the market. The more anecdotes I hear the more I wonder when the class-action lawsuit is going to get filed.

  13. Wm Morris

    I think that both of these comments are a bit out of proportion. Some of us may not like Deseret Book’s business practices or dominance of the market, but I’m not convinced we’re yet at lawsuits and apostasy.

    Independents and wholesalers are having problems throughout the book business — not just in the Mormon market. And using discount pricing and wholesale order limits is fairly standard practice.

    This is the type of situation where finer legal and business minds than ours would need to do some in-depth investigating and analysis. Criticism of Deseret Book’s products and business practices is fine on this blog as we take the stance that it is separate from the LDS Church (which is not fair game). But let’s not get carried away.

    I don’t think we really know if a class-action lawsuit is imminent or how the institutional church would react to such a lawsuit.

  14. Kent Larsen Post author

    IF there is ever a lawsuit, I only see one possible cause for action – an anti-trust violation, and even then it seems very dubious, because it would depend on showing that the LDS market is separate enough from the national market that you could actually have a monopoly in that market and the national market would have no effect on it. That seems basically impossible, as much as I think Deseret Book borders on a monopoly. (note that I am NOT a lawyer, so my words have no legal value).

    But I do feel for Wilma’s position, which comes, I think, from the relatively remote area where she is (Lake Havasu, Arizona). From what I can tell she is serving just a couple of LDS stakes — generally not enough to support a brick-and-mortar bookstore.

    Unfortunatley, she is right that Deseret Book’s policies make it very difficult in her situation. Effectively DB is saying that members in the Lake Havasu and Kingman areas of Arizona must travel to the Phoenix metro area to get to an LDS store, or they must buy over the Internet.

    I think both of these ideas leave the area underserved, and DB’s policies make it very difficult to run a small audience store. This becomes even more important when you realize that this small LDS audience problem is actually the NORM in much of the world!

    I think we need a model that will help these audiences to be served. We need some creative thinking about how to reach the audience.

  15. MoJo

    I think we need a model that will help these audiences to be served. We need some creative thinking about how to reach the audience.

    Never fear. One is being put in place.

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