Final Troubles In Publishing

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.




11 thoughts on “Final Troubles In Publishing

  1. All true, and all sad!

    My new book is out tomorrow and, yes, I am excited, but am also exquisitely aware of these issues. How many people will buy it? Anyone’s guess, (even with a ton of national media attention already and more to come). Stressful? Hell, yes.

    Wish me luck?!

  2. Reading this, I began to wonder if Amazon hasn’t sown the seeds of its own destruction. By hastening the dis-intermediation of author, text, and reader, they may well be creating a world in which they themselves is no longer necessary. Digital publishing tools are becoming efficient and affordable. Online publicity and marketing seem tailor made for the “word-of-mouth” world of reading. Selling digital books through your own website in compatible formats is also incredibly easy.

    If harnessed correctly, these trends might make selling books through Amazon unnecessary. Their lead is substantial, but not irrevocable. I think the end game here is going to an author’s website and buying the text directly (or some amalgamated site).

  3. Wonderful post. I don’t agree with all counts (I believe low eBook prices will ultimately help the book industry, but only after publishing undergoes some serious changes…), but you’ve raised some excellent topics. I’ve never really thought of the backlist “issue”. As for the “author revolution”, it’s slow in coming. This also leads me to believe that publishing really needs to reset. So much of the publishing thinking is flawed and antiquated… not just in reference to eBooks. That a select group of authors receive huge advances (under the assumption that they sell well, in theory “supporting” the middle-range authors) and receive all the best care and marketing publishers can offer while most authors struggle to even get their book published is… disappointing. To say the least.

    You’re absolutely right. The traditional model needs to be fixed, needs to be redone. I hope it can be done before too much damage to authors, readers and the book industry is done.

  4. The economics of e-publishing is really interesting, and I can see why publishers are cautious about making the prices much lower than print. I think people really don’t have a sense of how little of the price of a book has to do with printing and distribution. I don’t know that much about book publishing and printing, but I know that in magazine publishing printing and mailing is a tiny part of the overall cost. And then if significantly fewer copies are printed, cost per copy goes up, so losing print readers to digital could make print quite a bit more expensive than it is now. There might be some costs that could be reduced, but e-publishing brings new costs that the public doesn’t always seem aware of. It’s really a vexing situation, and I’m sure it leads to some ridiculous decisions.

  5. These are good questions and I agree that nobody yet knows how it’s all going to play out. We’re watching it happen like the monks that illuminated manuscripts watching the bible roll off the presses.

  6. These posts about the book industry have been fascinating. Thanks for bringing me more up to date with it all. Wonder how it will all end up. It seems odd that the big publishers have not set up some joint ebook distribution site that might allow them to compete with the other players, which could also allow smaller outfits to sell through them too, but I guess that would involve a lot of knocking of heads together.

  7. I think publishers need to educate the public on the real costs of books but they aren’t and so people are starting to think that publishers are gouging them when it comes to pricing e-books. You’ve probably heard about Google’s set back, with the court declaring last week that the settlement was unacceptable because of they orphan works were being dealth with (among other things). While I am not a fan of the Google books endeavor, I was hopeful that something could be worked out for orphan works to make them available again. Part of the problem is copyright law itself with copyright being extended for so very long now there are more and more books that are falling into the orphan category and we readers are losing out.

  8. broadsideblog – I DO indeed wish you the very, very best of luck! And I hope you’ll drop by and tell us how you are doing!

    Reading Ape – Well, I guess anything is possible right now. Although to be fair, amazon has acted very shrewdly up until now, and I’m not entirely sure that books are still the biggest part of their business. Plus, they’ve been buying up lots of small epublishers. But what happens next is down to who has the best strategy, and if authors can attract enough attention to their blogs and websites, they certainly could make money that way.

    Bibliobio – I do think that the old model isn’t working well and that the situation is so complicated that some new thinking is going to have to be applied. I think we are only at the very start of anything like an author revolution – if anyone wants to self-publish ebooks, though, I do think they need to do it soon or face an extremely crowded market.

    Teresa – absolutely! That’s it exactly. I had no idea the situation was so complicated before I read Thompson’s book (which is very good indeed, and contains far more than I have been able to cover in these posts). I do think that the chaos at present is going to make for some odd decisions, unless people are thinking very strategically.

    Lilian – love your metaphor. Meet you at Vespers to discuss it, k? 🙂

    Bookboxed – I do wonder whether more collaboration between publishers might be the way forward – after all, on the whole, we buy books by author, not publisher, so competition doesn’t work that way. I guess the problem is that a lot of the big firms are themselves owned by corporate giants, and I suppose collaboration isn’t in their make-up – on in their shareholder’s interests. But that’s a shame, because economies of scale really do help the book industry.

    Stefanie – you are so right about those copyright laws. They are SO complex and difficult and much gets snarled up in them. I hadn’t heard about that google setback but will read up about it now you’ve told me. It’s really interesting what you say about public perceptions. I wonder how they could get the message across, because the book industry is a mystery to most people, readers and writers alike and a bit more transparency might well prove very helpful.

  9. Very smart post. The 99-cent self-publisher is a major concern: ambitious amateurs can flood the marketplace with their cheap, knock-off efforts but their sub-literate prose is a turn-off to diehard readers and book-lovers. Remember them? They were the core audience publishers USED to cater to, at least to some extent…but now their bottom lines are shrinking and said publishers have abandoned any pretense of releasing good, professionally crafted books, favoring derivative clones and celebrity confessions. Corporate publishers are still struggling, trying to figure out how to exploit books/printed word, wring out every last drop of profit they can. They’ve developed the same home run/blockbuster mentality as their counterparts in the motion picture industry. No longer interested in cultivating talent, developing a readership; going for short-term gain at the expense of literature AND the serious readers who still crave an original, well-told tale.

    Independent publishing is definitely part of the answer…but the cult of the amateur means that the vast majority of author-published work out there is cringe-worthy, of such poor quality it reads like a series of boring posts on Twitter. Separating the wheat from the chaff is frustrating but discerning readers shouldn’t abandon hope. More authors are going the indie route every day. And they’re soon to be joined by some big-name talents, who will shortly realize they can make more money and have more control over their content if they go it alone. And then, hopefully, those amateurs will find themselves squeezed out…and can go back to scrap-booking and needlework, past-times more suited to their puny talents…

  10. I’m not a fan of interesting times and wouldn’t mind if all this were much simpler! The truth is, I’m benefiting right now from an abundance of paper and ebooks that I get from all kinds of sources, but I’m aware that I won’t benefit for long if it becomes harder and harder to find good books and great authors aren’t getting published. I do want someone to act as a gatekeeper or a screener of everything that’s out there, although the current ones aren’t doing such a great job, for all kinds of reasons.

  11. Cliff – I do agree with you completely about self-published books. All that’s going to happen is that the slush pile will be available virtually. Publishers have traditionally done a good job as gatekeepers; the cult of the bestseller has corrupted that a bit, alas, but there are still standards that have to be met. An ocean of so-so novels isn’t going to be helpful to anyone. But I do think that more big names will go the ebook route and try to earn a bit more money for themselves. Quite what happens after that, I’m not sure.

    Dorothy – there’s a really awkward and uncomfortable truth here that we all need to pay more for books, if we want there to be a flourishing industry that produces high quality literature for our delectation. I don’t have an ereader and the lure of free classics, and so on. But I do buy a lot of cheap second hand and remaindered books. It is a problem, and not one with an easy answer!

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