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06 January 2007

Scrivener's Error

Scrivener's Error: "A Bankrupt System
23:08 [GMT-6]

Last Friday, Advanced Marketing Services, Inc. declared bankruptcy in the District of Delaware (No. 06–11480). AMS is/was the parent of Publisher's Group West, the third-largest distributor of trade fiction (and, depending on how one measures, the third- or fourth-largest distributor of printed books). This is one of the first visible dominoes to fall that will have a significant effect on the publishing industry.

. . .

(If the publishing industry is as unprofitable as it constantly whinges, why do venture capitalists and the like — not famed for their pollyannish views — continue to acquire publishers?) One of those secrets is the distribution system. Since a massive consolidation during the 1990s (when the Department of Justice and Federal Trade Commission were still dominated by Reagan/Bush I supervisors), there have been very few distributors of printed books in the US.
. . .
The most coherent market definition of distributed books is "trade fiction." And the concentration there is astounding: the HHI2 is — depending upon the accuracy of the numbers — somewhere between 1700 and 2400. The two biggest players — Ingram, and Baker & Taylor — appear to have just over 60% of the dollar-value market share in distributing trade fiction.

2 The Hirschman-Herfindahl Index is a measure of concentration in a market. One states the market share of each of the top five market participants as a number out of 100, squares the individual results, and then adds the squares. An HHI of over 1800, under Department of Justice guidelines, indicates a concentrated market, and mergers and acquisitions under those circumstances are supposed to get "heightened scrutiny" if they increase the HHI by a further 100 points. That does not necessarily mean they will be rejected; the burden is on the market player(s) involved to show that in that particular market, any increase in the HHI will not have anticompetitive effects.

Further links to the story:

Advanced Marketing Services, Inc.
(Public, OTC:MKTS) Over the Counter; Symbol = MKTS

To follow the story using Google collection of bare bones background plus constantly updated links, go HERE.

CRITICAL MASS - the National Book Critics Circle Awards blog - advises its readers (particularly all those 'former' freelance writer-reviewers for Advanced Marketing Services, Inc's book review magazine) to check out GalleyCat's coverage . . HERE . . and . . HERE

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