novelraw Chapter 14 The Publisher's Overtures
Chapter 14 The Publisher's Overtures
President Wang's hand, holding the teacup, froze in mid-air: "Three yuan?"
"Yes, three yuan. I control the cost to around one yuan, and I make two yuan. They buy the goods for three yuan and then resell them to distributors or directly to retail stores. The profit margin in this process is large."
"As long as the profits are big enough, it proves that the records are popular among students, and the stall owners will be even more enthusiastic than I am. They will help me stock the shelves and help me promote them."
After Zheng Hui finished speaking, President Wang pondered for a moment and then said, "The idea is good and feasible, but there is a loophole in it."
Zheng Hui was taken aback: "A loophole?"
"You give the stall three yuan, the stall gives four yuan to the people below, and when it gets to the small shop near the school gate, the purchase price is probably only five yuan."
But when it gets to the record store owner, he sees it's an authentic copy, the packaging is good, and the song is great. How much will he sell it for?
He might sell it for ten dollars, or even twelve dollars.
Why? Because other genuine products sell for this price. He sells it for ten yuan, making five yuan profit per box. Why would he sell it for six or eight yuan to earn only two or three yuan of hard-earned money?
If the retail price doesn't come down, no matter how much you lower the price for wholesalers, the middlemen will ultimately benefit. Students still won't be able to afford it and will still be driven to the pirated market.
The end result is that he'll display your original copy on the shelf as a facade, while secretly pushing pirated copies relentlessly. In the eyes of those record store owners, selling originals and selling pirated copies is never an either-or situation; they want both.
Zheng Hui frowned. He had indeed overlooked the issue of pricing power at the retail level. He could only control the ex-factory price, not the retail price.
"So, what does the president mean?"
President Wang said, "Add a band and prominently print a line on the cassette cover and the poster: Suggested retail price 8 yuan."
"Eight yuan is a hurdle. For students, skipping two breakfasts or saving up their allowance for a week can get them eight yuan. Compared to ten or twelve yuan, they can grit their teeth and accept this price."
For the shop owner, buying a disc costs five yuan and selling it for eight yuan makes him three yuan profit per disc. This profit margin is higher than selling pirated copies.
Moreover, with this suggested retail price, the students have a better understanding of the market. If the shop owner dares to sell it for ten yuan, the students will point at the price and argue with him.
In this way, sales volume increases, the boss makes money, and students buy genuine products; only then can you distribute that million boxes.
After listening, Zheng Hui felt enlightened; experience truly matters.
"I've learned a lot. The suggested retail price of eight yuan is indeed the finishing touch. This lesson from the president is invaluable."
President Wang waved his hand and smiled, "What's with all this talk about being rich or poor? We're just helping each other succeed."
He stood up, walked to the bookshelf, took out a map of Guangzhou, and spread it on the coffee table.
"I can't just talk the talk; I'll give you a push for this million-box order."
President Wang drew a circle on the map with his finger.
"I can help you get into Xinhua Bookstore. They're a legitimate business. Although fewer people buy cassette tapes from bookstores than from audio-visual stores these days, they represent prestige and class."
"When displayed in Xinhua Bookstore, parents feel reassured and are more willing to buy it for their children."
"I can also put in a good word for you with the chain stores of major audio-visual stores. The owners of several large stalls in Guangzhou Audio-Visual City are all old acquaintances of our publishing house."
I'll organize a meeting later and introduce you to them. With my connections, they won't dare to lower your price or refuse to pay in cash.
"As for schools... our publishing house already has collaborations with the education sector, and we go into schools every year to hold events."
I can have the people in the distribution department take your sample tapes and posters directly to the student unions and broadcasting stations of those schools.
A recommendation letter stamped with the official seal of the Swan Publishing House is far more effective than personally offering cigarettes or gifts. School teachers will definitely be happy to play songs recommended by a publishing house, given their recommendation of excellent inspirational songs.
"There are also radio stations and newspapers. Lingnan Voice, Yangcheng Traffic Radio, Yangcheng Evening News, and Southern Metropolis Daily. I can help you contact these media outlets. Let them do an interview for you, play some music, and create some buzz."
Zheng Hui was dumbfounded. He originally thought that buying a game license was a simple transaction of money and goods, but he never expected that the president of the company would be able to throw out so many resources.
Xinhua Bookstore, audio-visual store general agent, campus radio, radio stations and newspapers.
If he were to run it on his own, it would take him at least a year and a half to complete, and he would have to beg and plead with everyone.
Zheng Hui hesitated for a moment: "President, with such force, what do I need to do?"
There's no such thing as a free lunch, and Zheng Hui didn't believe the president was simply being kind.
President Wang smiled like an old fox: "Little Zheng, don't be nervous. These things are incredibly difficult for you, but for me, it's just a matter of making a few phone calls and signing a few documents."
These resources are just sitting there doing nothing. You've seen what the Guangzhou music scene has been like these past few years.
President Wang sighed, his smile fading slightly: "A few years ago, this was the center of Chinese pop music. Mao Ning, Yang Yuying, Gan Ping... didn't they all come from here?"
Back then, every day, a bunch of singers who wanted to release cassette tapes would crowd in front of our publishing house.
And now? Everyone's run away. They've all fled to Beijing and Hong Kong.
Such a large publishing house, with such a good recording studio and such good distribution channels, spends its days either publishing English textbooks and children's song tapes or doing OEM work for others.
"Being the president of this company is frustrating too."
President Wang pointed to the cassette tape on the coffee table: "Your one million dollar order and one million Hong Kong dollars in foreign exchange are achievements for me, enough for me to report back to my superiors."
But I'd like to be a little greedy. If your album becomes a hit, it'll be released through our White Swan. That would boost our reputation in the industry. The higher-ups would be happy too, thinking we're still doing serious work and producing quality albums.
I don't care about your money; I'm after the power and influence.
President Wang had another set of calculations in mind that he hadn't mentioned: the order for one million boxes had been completed, and one million Hong Kong dollars in foreign exchange had come in—that was a real achievement.
When he goes to the bureau for a meeting at the end of the year, he can straighten his back a bit more.
Success! He was a talent scout and a driving force, achieving both political success and a good reputation.
Even if it doesn't work, he won't lose anything, since Zheng Hui paid for the production costs himself anyway.
However, business is business, and the terms still need to be discussed.
President Wang flicked his cigarette ash: "Of course, there are some specific details about the cooperation that we need to discuss first."
Zheng Hui sat up straight: "Please speak."
"For distribution, we charge a distribution fee of 50 cents for each cassette tape sold through our publishing channels, such as Xinhua Bookstore and the chain stores we are in contact with."
"Of course, we'll settle the price with you at four yuan."
Zheng Hui made a mental calculation.
He paid the wholesaler three dollars and the publisher four dollars. After deducting the 50 cents distribution fee, he had three dollars and fifty cents left, which was 50 cents more than what he earned from the wholesaler.
"No problem," Zheng Hui nodded.
President Wang continued, "However, business-to-business transactions have long payment cycles. Xinhua Bookstore typically settles accounts every six months. Also, they operate on a consignment system, meaning unsold goods will be returned to you. You need to be prepared for that."
"Six months?" Zheng Hui frowned. He could accept returning the goods, but six months was too long.
"Can we settle accounts quarterly?" Zheng Hui asked tentatively.
President Wang waved his hand: "Let's not make any absolute statements yet. If it sells well, it's a seller's market. Bookstores are out of stock and begging us for more. So, let alone a quarter, we can settle accounts every two months, or even cash on delivery."
But if sales are poor, then nobody can predict the outcome of this cycle.
That was the truth. Zheng Hui thought about it and nodded in agreement: "Okay, I understand, I accept."
President Wang said, "Then it's settled. Of the one million boxes, take two hundred thousand and distribute them through our publishing house's channels to Xinhua Bookstore and other reputable chain stores. For the remaining eight hundred thousand boxes, you can go to the audio-visual market to wholesale them; we'll help you with the connections."