AMS (Advanced Marketing Services) is a San Diego based distributor that helped publishers sell huge quantities of books to the big-box retailers like Costco. AMS experienced great growth in the 90s when big-box retailers were opening right and left.

But discount clubs are a small margin business and distributor profits depend to a great degree on what other services (i.e. advertising and placement fees) they can bundle for publishers. It also depends on huge volume. So of course AMS was always trying to find bigger margin business and found that to a degree in packaging books themselves, and eventually went on to buy well-regarded Berkeley distributor and sometime publisher PGW (Publisher’s Group West).

Now that AMS has declared bankruptcy on the heels of numerous legal and financial problems, it spells potential disaster for PGW distributed publishers.

Galley Cat has decent overview coverage here.

It’s scary. PGW distributes a great list of publishers, and this is awful news for them. And to me it’s proof positive that consolidation is not always a good thing for the industry.

It also gives you something to think about. Many publishers use third party distributors and it’s not unheard of to see small publishers go out of business when their distributors fail. Keep your fingers crossed for these folks.

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