One of the biggest problems currently faced by publishers is that of ever-diminishing margins. According to John Thompson, whose Merchants of Culture I’ve been reading these past few weeks, the problem in the US is mostly due to the huge advances given to authors, and in the UK to the cut-pricing of the supermarkets. Lets just consider the problem of supermarkets for a moment; they’ve witnessed the biggest growth in sales of any book outlet over the past decade or so, and getting a title onto a supermarket shelf is tantamount to making the bestseller list. But supermarkets aren’t committed to books and they turn them around fast. They get a whopping 60% discount from the publishers (in the UK, where there’s no longer a net book agreement), and then send back thousands of copies of books if they don’t sell within a couple of weeks. This can make for an awful lot of returns – up to 80% on a book that doesn’t do well. And those copies sold cheaply have to be shipped back and pulped expensively. But publishers continue to take the risk because no one in the chain – not the author, or the agent, or the publisher, can afford not to have that book in the supermarkets, if they’ll take it.
How on earth are publishers going to extricate themselves from this mess? Well, you can see why the advent of ebooks ought to be a good thing. The ebook removes the whole vexed problem of returns; it solves the issue of distribution, taking the power back from demanding retail outlets, and it removes the time-consuming and costly business of printing, with the difficult call of reprints and so on. What’s more, Thompson points out that there has already been a digital revolution in publishing, where all the editorial processes, the sales and distribution processes, even marketing and publishing, now happen essentially on computer screens. Publishing looks poised to go fully digital. So the real question is to find out why ebooks have been so very slow to take off, given that electronic publishing projects have been heralded as the salvation of publishing since the late 1990s.
Part of the problem was that the initial electronic book projects all did so badly and lost so much venture capital money that many had their fingers burned, and all subsequent attempts to do away with the physical book have been regarded with some caution. The early devices were poor and expensive, and the whole experiment seemed like a waste of time. One publisher told Thompson:
‘Are you improving the experience for most users? Probably not – you’re probably degrading the experience in terms of the resolution, the convenience and everything else. Sure, you can carry 80 books around on this $400 reader, but the number of people I know who require 80 books to be carried around at one time is very small.’
Then there was the experience of digital where it was almost successful, for instance, scientific journals. Librarians have apparently been some of the keenest to see digital happen because of storage issues and their own increasing awareness of technology’s advantages. Scientific professors were equally keen to work in new formats using hypertext, and equally comfortable with technological progress. Scientific journals, full of short articles, ideal for reading on screens, transferred really neatly to an electronic format. So everything was hunky-dory, apart from one bone of contention: the ‘archiving problem’. What would happen if the journal folded or the publisher went out of business? What would happen if the library cancelled the subscription? It was no good to pay for something, only to have it disappear completely when one of these highly possible scenarios occurred. The compromise solution was to hold both e-journal and a hard copy, frustrating the full move into e-formats.
And in fact, rather than the technological problems that have been most visible to ordinary consumers – issues of ereader usability and incompatible formats – the really sticky problems seem to have been caught up in difficulties with rights. Who owns the right to the content of a particular book in electronic format? Is it the publisher? Or the author? And what should be paid to whom? All the contracts already in existence had no provision for e-publishing. What to do about work that was still in copyright, although the author had died? Then, there was the problem of all those ‘orphan’ books, given that only a tiny 10% of books are in copyright and commercially available. Some may remember the outcry over Google’s library project, which I won’t go into here because of the sheer complexity of the issue (I did notice that the American Library Association’s most recent explanation of where the case stands is entitled A Guide for the Perplexed).
And how, practically, could the backlist be mobilised? When publishers started to think seriously about the ebook, the first thing they realised was that all their files were with the printers. The printers offered to sell them back for a nominal price, but it turned out that they hadn’t been interested in archiving the material, so much was lost or corrupted. This meant that before publishers could do anything, they had to found their own digital archives, and that meant saving the book in a whole variety of formats – Quark files, PDF files, XML files. Undoubtedly this process is being streamlined, but initially, it was a costly and time-consuming thing to do.
So there have been a lot of legal and technical behind-the-scenes issues all of which have contributed to the vexed question of pricing. Theoretically, removing the costs of physically printing and shipping the book should make it much cheaper, right? Well, publishers have consistently argued that this is not the case. After all, it doesn’t remove the problem of advances that the US faces, or the overheads of the big publishing companies, or their publicity and marketing costs, and when a great deal of money has had to be spent already in legal work, and in setting up new divisions to format and archive material, there is probably some truth in this. But, and here we hit one of the biggest problems of all – the public perception of a book’s value is already dropping, thanks to the super-cheap books available in supermarkets and marketing deals, and the thought of no printing process makes it drop all the more. But publishers are already suffering dreadfully due to squeezed margins and simply can’t afford at this point to drop prices. They want to wed price to the value of the content, not the format, and say it’s the story that consumers are paying for, not the form in which it comes.
However, Amazon can be a lot more cavalier. Amazon and its Kindle have cornered a significant chunk of available ebook revenue and Amazon can exert every bit as much pressure on publishers as the supermarkets do. Already in November 2007 when Amazon launched the Kindle in America, it was challenging publishers on price. Amazon offered all new releases at $9.99 on ebook, a loss leader for them, but a way of encouraging customers to fork out for the Kindle that was then retailing for $399. They aimed to siphon off the ebook market by making their device the market leader, and therefore their own sales outlet the chosen point of purchase. It would then be able to bully publishers into agreeing to keep ebook prices low. Or as one CEO put it: ‘If Amazon has 35 per cent of the physical sales channel and 90% of the digital sales channel then we’re all screwed.’ No wonder publishers become more cautious about the growth of ebooks – if they are not going to make any money, or even see them ‘undercut the very lifeblood of the industry’ as one executive said to Thompson, then what’s in it for them?
And one last big problem on the horizon – the author revolution. For many years now, the big books have got bigger, and the mid-list has been squeezed into obscurity. A handful of writers have vibrant careers and make a lot of money; the vast majority have to hold onto their day jobs, do their own publicity and are helpless when they get dropped because their sales are disappointing (when they don’t even know how many books they are expected to sell). Thompson has several grisly tales to tell of authors who had wonderful first advances and won prizes, only to be ignominiously dumped with no warning by publishers and agents who in no way fostered their career. Numbers – now accurately provided by the digital revolution – are the be all and end all of publishing decisions. The prospect of the 99 cent bestseller self-published ebook did not exist when Thompson’s Merchants of Culture went to print, but he had seen harbingers of it in the 99 cent itune, which wreaked such havoc in the music industry. What will happen as more and more disgruntled authors, either dropped from the mid-list, or unable to get published traditionally, turn to the cheap ebook as their last chance bid to make it to market? How will this affect consumer perceptions of the value of a book, which is already dangerously low for publishers? Authors may well get their revenge on publishers who have treated them without loyalty and left them to do too much of the work for too long. But there is no telling at what cost this revenge might come.
In many ways, the future of publishing lies in the hands of the enterprising now, those who can ditch the traditional model which is full of holes and find new ways to manage sales and distribution, and new ways to interact with authors. Out of the chaos something will come, but what it will look like no one really knows.