May 8, 2019
Hello from Elizabeth, Anne, and Lynn.
Before rolling out this statement, we need to address one point immediately: Dreamspinner Press is not in overall financial crisis or in any danger of closing. What we are is working through a temporary crunch in month-to-month cash flow as we wait for more than two years of financial investment and thousands of hours of effort to yield steady results. Dreamspinner’s balance sheet is healthy; our assets outweigh any debts.
This statement is lengthy. It is critical we address questions and concerns we know are out there, provide context, and share progress made toward Dreamspinner’s business goals. We believe it is worth your time to read this.
CREATING OUR CURRENT BUSINESS PLAN
In late 2016, Dreamspinner management took a hard look at the industry, our place in it, and where we wanted to go. Months of discussion boiled down to the determination that we needed to diversify to remain viable, and we needed to evolve in order to flourish. This is not the publishing market of twelve years ago. We are not the company we were twelve years ago, or even five years ago. What’s more, we don’t want to be. Our final decision was that Dreamspinner Press had the fortitude to recreate itself within the fluctuating industry, and we chose to enact those changes knowing it would be a challenging and sometimes painful road, cultivating the business plan of our future.
We devoted ourselves to maturing our company by investing time and effort into careful planning and execution of expanding market penetration, individually tailored author services, and a commitment to quality.
In early 2017, management researched options for diversification, investigated opportunities for company growth, and evaluated the company’s financial and workforce potential. We signed an official partnership with a national distributor, hired an experienced marketing director, broke our internal hierarchy down into only three layers, cut our production schedule nearly in half, and closed general submissions. Make no mistake, many of these decisions were agonizing. We spent ten years building a family in what was essentially a bull market for gay romance only to discover with the onset of the bear market that we had to be a business first.
The transitions over the past eighteen months have been, frankly, painful. We have:
- realigned management responsibilities
- defined clearer production goals
- revised staff assignments
- updated our mission statement
- expanded marketing efforts exponentially
- rolled back production by six weeks to accommodate new printing and distribution plans
- enforced earlier submission deadlines
- designed completely new products to launch the first gay romance publisher mass market paperbacks
- adapted the senior editor role to provide partnership and greater support to authors
- and so much more.
WHERE WE ARE NOW
Again, Dreamspinner Press is not in overall financial crisis or in any danger of closing. What we are is working through a temporary crunch in month-to-month cash flow as we wait for more than two years of financial investment and thousands of hours of effort to start yielding steady results. This crunch is attributable to three points.
1) Industry delay in vendor payments
Vendor payments are literally out of our control. Vendors and retailers pay out on their own schedules. That often means at least two quarters pass before we see income from anywhere other than our website, and as we expand into mainstream publishing, those cycles lengthen. Unanticipated vendor delays beyond contractual payment dates put a strain on our working cash flow.
2) Long-term investment in a new distributor sales chain
In late 2017, Dreamspinner partnered with the nationwide distributor Independent Publishers Group (IPG). This partnership gives us the leverage to push our books into the mainstream market, including “mass market” paperbacks, the smaller size paperback books that fill most fiction shelves. IPG handles direct sales in our name to all sizes of bookstores, libraries, and other distributors through a dedicated sales force, a printed advanced catalog, and a wholesaler website among other channels.
To leverage these opportunities, Dreamspinner Press’s print publishing plan is evolving from a completely trade paperback print-on-demand model in which costs are only accrued when a book is sold, to the option of ordering mass market print runs to have books physically in stock for traditional distribution. These print runs must be paid for in advance, and it can take twelve months or longer to receive corresponding sales income. That’s a major contributor to the short-term cash flow issue—for more than a year, we have been investing in getting the cycle started.
This investment will pay off. We’re already seeing reports from IPG listing increasing sales numbers, including presales through the advanced catalog. In reports spanning January 31 to March 31, our bookstore and library sales have jumped 137%. Full print runs are being purchased by major retailers—sometimes multiple print runs. We’ve seen social media posts from readers finding our authors’ books on the shelves in their brick and mortar stores. And the increased lead time to market has enabled us to attract the attention of major trade publications such as Publisher’s Weekly, Foreword, Booklist, Kirkus, and two appearances in Entertainment Weekly, garnering positive reviews that in turn increase sales. We’ve had four starred reviews in PW so far in 2019. A starred review is a guaranteed buy for leading library chains. The strategy is working. It’s just taking time.
3) A companywide accounting conversion
We shared in late 2018 that Dreamspinner Press has changed accounting firms in order to streamline processes, relieve our overwhelmed office staff, and work toward setting up monthly royalties payments. This transition has been particularly rocky, especially on the technology side, and it has negatively affected the process of royalty calculations in the past two quarters.
We are deeply sorry for delays in some disbursements as we prioritize payments to affect as few people as possible while maintaining production. We hoped for a smooth transition with no impact on disbursements. Unfortunately, that hasn’t been the case, and we will plan more conservatively to prevent it from happening in the future. But as much as we feel compelled to fulfill all our delayed financial commitments immediately, there is one point we are firm on: We refuse to put the company in unconscionable financial distress. Long-term stability is extremely important to us.
Royalty payments started going out May 6 and will continue as we confirm report accuracy. We anticipate those payments to be complete no later than May 15.
To focus effort and emphasis during this financial transition, Elizabeth North is devoting her time solely to finance and business development. Anne Regan and Lynn West will absorb other responsibilities, including event coordination, foreign rights licensing, author career planning, and technology and product development. Authors can expect a period of transition as emails and calls to Elizabeth are redirected as appropriate. We will reply to questions as they are received.
WHAT COMES NEXT
We are aware of the impact past publisher closings have had on our author community. We also were affected by online retailer closings, and every time one of those publishers or retailers closed, we heard people, even our own authors, saying we were next.
We will come through our current challenges stronger and in a better financial position overall. The opportunities on our horizon are exciting, and we are planning so much more: mass market expansion into backlist titles, expanding visibly into the romance market at-large, taking advantage of the explosive foreign language translations demand, and even seeing our authors on the New York Times Best Sellers list.
We are still here, still publishing, and will be making dreams come true for years to come.
Elizabeth North, Chief Executive Officer, firstname.lastname@example.org
Anne Regan, Chief Operations Officer, email@example.com
Lynn West, Publisher and Chief Development Officer, firstname.lastname@example.org
This statement is not confidential. PDF download: https://tinyurl.com/DSPWorld-May2019