Rocket Bomber - publishing

Making Books

filed under , 28 August 2014, 14:39 by

I was trying to finish up a draft on paperback publishing and got sidetracked on a research tangent:

Books: From Manuscript to Classroom circa 1920

Oxford University Press and the Making of a Book, 1925

Railway newspaper stand and printing Penguin books in the 1940s

Making Books, 1947

Lithography (1940-1949)

Newspaper Publishing Process: “Newspaper Story” 1950

Learning to Set Type, 1959

Typesetting & Linotype, 1960

How Books are Made & Repaired: “Bookbinders” circa 1961

How a Book Is Made – Episode 6: Printing the Book (uploaded 2013)

The Well-Built Book, Copyright 1998, (but I’m thinking the orig. film is actually 1989-1990)

The Well-Built Book from Dianne Morris on Vimeo.

How Do They Do It? How books are made. (2005-ish?)

Book Printing and Manufacturing- A Guided Tour (uploaded 2012)

Digital Printing, Courier/HP 2011

Courier from Steve Franzino on Vimeo.

Digital Printing, Timson/Kodak 2012

6 minutes to print a book, Espresso Book Machine, Darien Library (uploaded 2011)

How much does all this cost? [for a single-color, 256 page book]

Pricing:
Quantity : Cost : Cost/Unit
5,000 : $10,689 : 2.17
7,500 : $14,255 : 1.90
10,000 : $17,817 : 1.78

This is a summary of costs, excluding shipping.

The manufacture of books — the subject of all those videos embedded earlier in this post — is an amazing technological marvel, and because of all the processes and inputs involved, it seems like the printing of the physical object should be the number one contributor to cost. However, by the time plates are made (or files uploaded) at the printer, the book is already finished. The act of physical printing — of making copies — isn’t as cheap as the act of making digital copies, but the difference is only $2-5.



Books are different, and special.

filed under , 30 May 2014, 20:14 by

Organic Asparagus runs about $5 a pound. Maybe less, maybe more (and in season of course). Not everyone has a local CSA to deliver organic asparagus, or a farmer’s market where they can pop down on a Saturday morning and buy a bunch, but other Asparagus Options exist. And if bloggers are blowing up websites arguing over asparagus, Organic vs Not, Domestic vs South American imports, well… I’m not seeing it.

SD Memory cards cost between $5 and $40 (or more) and the cards are available from different manufacturers and can be purchased online and in stores. I don’t even have to go to a specialty retailer; I can pick up a 4GB card from my local supermarket – no special trip, just toss it into the basket next to my organic asparagus, and maybe a impulse-buy DVD (from the checkout aisle) and altogether, I’ve spent $15: DVD, SD Card, Asparagus.

Steaks are also in that price range ($4-$20 a pound, available in store or online) and so are door knobs ($10-$50) and spatulas ($5-$20) — as are shoes, come to think of it (flipflops cost less than $5, and sure you can tell me about $200 shoes, but who buys those? ) [/SARCASM TAG]

And Books, of course.

Commodity good, runs about $10 a pound*, entirely fungible**, of note as a minor form of entertainment. We’re all familiar with books, but unless you’re a high schooler and you’ve just been assigned one – it’s hard to see why they merit further mention.

* (£13, €16 or ¥2200 a kilo)

** I don’t judge. …but, for my own sake, I’m going to link to this definition of fungible even though we all already know what it means. Because we’re smrt.

If, all of a sudden, the #4 manufacturer of SD memory cards got into a dispute with Amazon (or any other e-tailer – OR ALL other e-tailers) it might only merit a section C page 32 blip in the newspaper*** and no one outside of the manufacturers’ immediate circle would likely know or care. We’d just buy the next card offered.

*** kids, ‘newspapers’ were web pages printed out on cheap broadsheet paper and delivered daily, or twice daily, to homes: ask Grandpa about ‘em. Ask him what ‘comic strips’ looked like when he was a kid while you’re at it.

Asparagus doesn’t rate a whole slate of full-bore editorials from 500+ newspapers, newswires, magazines, blogs, and TV network websites. Shoes are more expensive (and the margins are better) (and more people buy them) but we don’t spill nearly as much ink (physical or digital) arguing about *shoes*.

Amazon doesn’t enter into a very public and very loaded negotiation with Adidas or Jimmy Choo. If a buy button (or a pre-order option) disappeared on sneakers, no one would notice. (OK, someone would notice…)

This is just my take on it [strawman]: but it seems to me that many would-be pundits want us to think of books just like we see memory cards — fungible commodity goods. Buy whatever. “You like teen vampire romance? Well, the vampires are out but try werewolves, we got plenty of those. Like cozy British mysteries? We’re working on getting those back in stock, but here, try these cat mysteries.”

Books are just the double-A farm team for *real* media anyway; nothing is worth a damn unless and until we make a TV show or movie out of it. “Oh sure, you can read if you want but I don’t know why you waste your time — hey, flip through this impulse-buy DVD bin, top 100 films of 199x, 3 for $10.”

A book wholesaler is arguing with a book retailer over which side of the table the scraps fall. Whoop whoop. [/strawman]

As widespread as this view is (in NY and LA offices, and some living rooms) Books are obviously different.

Shoes? “I’ll keep looking.” – Asparagus? “Maybe I’ll try the farmer’s market” – Spatulas? [see, there’s no quote here because no one thinks about spatulas] – Movies? “Where is the movie playing?” [no judgments, just a factual inquiry into where the movie is showing, so we can consider options]

But as soon as we learn a book might be unavailable, or worse, that we might have to wait to read it, even as much as two weeks! — or [horrors] might have to figure out some back-up place and way to buy it — well now the internet melts, people choose sides, authors and readers sharpen their debating knives, loose packs of rabid quibbles range the boards, and everyone is right while everyone else is wrong and facts and details — and common sense — are the innocent victims.

Because books.

##

You can stop here. I won’t judge.

I’ll make one final note: Even If Hachette stopped shipping to Amazon entirely, Amazon would still be able to source the physical books from Ingram, Baker & Taylor, and other book distributors and could fulfill customer orders with an additional delay of about 48 hours, at most. So the negotiation is all about the ebooks, and who gets which slice of how much margin; though I’m sure Amazon’s discounts on physical books is part of that mix. The rest of it is posturing on both sides, with some dissembling on Amazon’s part (“we don’t know when we’ll have the books”) and smug confidence that ‘public sentiment’ is on their side, on the part of Hachette.

And now I’m going to get wonky, and even more trivial and tangential.

##

Hachette v Amazon is all just business, and negotiations like this happen all the time, but the response so far feels a lot like the old ‘lit-geek vs. computer-geek smack-talking in the campus coffee shop’ I recall from college.

“What about the culture?”
“Get with the future, man.”
“The future is books.”
“…well then, the future is on sale for 35% off, free shipping with Prime. Oh, hey, I spilled some future in my Kindle, all kinds of future in here.”
… …philistine.

Amazon often elicits this style of knee-jerk response — because books.

But also: because Amazon. Enough people are threatened by Amazon that Amazon gets painted as a bad guy, and Amazon consistently ranks at the top of customer satisfaction surveys, and those two points aren’t necessarily contradictions.

But even with all the misperceptions and assumptions people make about Amazon, that fades to insignificance when we stop to look at the assumptions most people make about books and bookselling.

Let’s start with the business: Amazon may cut off Hachette, or (less likely) Hachette might drop the axe — a major supplier of content and a major reseller of content are fighting and the end result, to the consumer, is less content available from a preferred source. Would we be as worked up if, say, a major media company just pulled the plug on our TV over a contract negotiation? I think the answer to that is actually, no:

2000 Time Warner Cable v ABC/Disney
2003 Cablevision v the New York Yankees
2004 Comcast v Viacom
2004 Dish v Viacom
2009 Dish v ESPN
2009 Time Warner Cable v Fox
2010 Dish v The Weather Channel
2010 Cablevision v Scripps Networks (Food Network & HGTV)
2010 Cablevision v News Corp/Fox
2011 DirectTV v News Corp/Fox
2012 DirectTV v Viacom
2012 Time Warner Cable v NFL
2012 Dish v AMC
2012 DirectTV v the New York Yankees
2013 Time Warner Cable v CBS
2014 DirectTV v The Weather Channel
2014 Comcast v Viacom

Sometimes these disputes make the news because (some) viewers are going to miss a playoff game, or the Academy Awards, or the season premier of Mad Men. Otherwise the blackouts are of little note, especially if we’re not the in the market affected. The companies certainly don’t care; Time Warner lost 300,000 subscribers last year but shrugged and smiled. Yes, getting ‘public opinion’ on your side helps, but it’s just another bargaining chip and companies can spin it.

If we look outside of bookselling, we can see that ‘everything, always’ is by no means the usual model: stuff is on Hulu but not Netflix, or on HBO and no where else. Films and shows come out on DVD but aren’t available streaming anywhere – and occasionally, vice versa. Even in a landscape littered with dozen-screen cinemaplexes, somehow the movie we want to see is never showing anywhere local, and we have to drive 15 miles. (This always happens to me.)

But no one blames the theaters, just like no one blames Netflix, HBO, or Showtime for making original programming, and no one [EXCEPT ME] gets bitter or bothered when Netflix and Hulu have a less-than-optimal selection (though perhaps we’ve all spent 3 hours browsing for something to stream on a Friday night without actually watching anything). Screens, large and small, are just islands and way-stops in the Big Content Ocean, and we’re all used to migrating ‘cross platforms and ‘twixt companies to find something to watch.

No blogger looks at a movie showing the next county over, and extrapolates that Hollywood is going to have to capitulate to Regal, because Regal controls the market. Media and markets are of course separate, of course — you know, *except* for books.

The reader expectation is that every bookstore is going to have a copy of any book the reader can name — because books. When the local 4,000 sq.ft. shop doesn’t have it (or even the 25,000 sq.ft. big box) the immediate response is, “Well, I’ll just get it from Amazon” with the unspoken addendum, “and I’m never bothering to shop here again”.

Let’s talk numbers — but not dollars: Items.

A “supermarket” grocery store might have between 40,000-60,000 items.
Walmarts and Super Targets add onto that, and stock 100,000 items.
A large hardware store/home improvement warehouse might have 120,000 items [it comes down to lots and lots of small nuts and bolts, in every dimension]. And we’re not counting every nut – that’s 120,000 types of items, stocking multiples of each.
Your local IKEA only stocks 10,000 or so items — Yes, 3 football fields (and Swedish meatballs) but a Walmart or Super Target has more SKUs.

Do you have that in mind?
The Ikea Maze?
Canned goods on shelves 6 feet high and down both sides of 60ft-long aisles?
Wandering the warehouse-sized sales floor of Home Depot, lost, looking for a left-handed metric counter-clockwise-threaded sonic screwdriver adapter? (that’s what 120,000 items feels like.)

That’s just retail. Let’s consider ‘content’. Video content is most popular (an assumption, but a safe assumption I think):

There are 2,885,994 titles in the IMDB database (as of this morning) — though of course that’s ridiculous as individual TV episodes each get pages — it’s better to look at the breakdown and note that’s ~309,000 feature films, 122,000 documentaries, 82,000 TV series listings, another 100,000 or so of TV movies, miniseries, and specials, and some direct-to-video crap (120,000 – each a gem and a delight, I’m sure) — Big Round Numbers, that’s 1.1 Million video options, of which most are out-of-print or collectible —with a light sprinkling of stuff so new it’s not out on DVD or online, and occasionally, not even in theaters yet.

…and the ‘Movie+TV Universe’ that you probably have a mental concept of is likely just a tenth of that — 100,000 movies and shows, new and old, even including anime and imports and MST3K and the Star Wars Christmas Special and weird stuff — and the other 90% is so ‘out there’ you’ve never even heard of it, not even to point and laugh at it. Does that match up to your experience, and sound fair? 100,000 movies and shows, or about 45 years of binge watching (likely much more – multiple-season TV shows are going to take you longer to binge).

[I’ll just note here that Amazon bought IMDB in 1998. Information is power.]

(I’m building up to it, stick with me here…)

100,000 is a whole Walmart. 100,000 is every thing ever that you could possibly think to stream online. 100,000 is the number of spectators in attendance at the Michigan-Ohio game (or Tennessee home games, for you SEC fans). 100,000 is the population of Peoria, Illinois – which I always reference out of tradition when these sorts of things come up. The uber-hipster neighborhood of ur-hipster Brooklyn is Williamsburg and it has, you guessed it, 100,000 hipsters in it.

Your local Big Box Books (might as well say Barnes & Noble, no need for the euphemism anymore) has…

60,000 books in it (yeah, not 100,000) — add on the music/DVD dept. (if your local still has one) and all the non-book crapware and we’re up to 100,000, though. A B&N is smaller than Walmart because books are smaller, and pack nice-and-dense compared to almost all other retail; and you know, at $10 a pound it’d actually be a good business to get into — except for, you know, Amazon and reality.

I’ve been working on a good ‘best estimate’ of the actual number of books out there for years now, and I can never find two sources that agree. However, the general consensus is that at least six million books are in print (actively supported by publishers, with stock on hand) and another six million or so are out-of-print but still available from distributors, available used, or some few cases available print-on-demand — so that’s at least 12 million books (in English) out of at about 129 million books total [source, 2010] and another million or so get added each and every year — not including an untold number of books (we’re gaining on multiple millions) that have only been published digitally.

Forget 129 Million – go back to that smaller number, 12 Million: four times the total listings on IMDB (which includes every individual TV episode), equivalent to 100 Home Depots, each nut-and-bolt a 200 page novel. 120 Walmarts. 200 grocery stores. [furniture is bigger, even flatpacked, but] 1200 Ikeas — and we’re only considering one copy of each book

Your local bookstore is expected to carry every book ever. See, this isn’t even an ‘unreasonable’ expectation on the part of the shopping public because there’s never any thought put into it: bookstores sell books, and in 2014, that means every book ever.

every. book. ever.

How does Amazon do it? What’s the magic? 65 U.S. Distribution Centers — whole damn warehouses — with another 9 planned.

…And this is perhaps the sweetest backhanded compliment we pay to the booksellers who have worked for decades to find, order, and sell us books: There is a casual, everyday assumption that they can match that, and can match prices. This is an expectation we have of no other retailer — the unmatchable scale of the task, and unthinking gall of it — at the very least, “special order” has a much different connotation (and usually, a mark-up) outside of bookstores.

No one strides confidently into the Buick dealership and asks to order a 1954 Studebaker, but that’s an every day reality for bookstores.

It was breaking my heart, in the last year that I worked at the bookstore, when avid teenage readers started coming in asking about books their friends were reading on Kindles, and I had to explain that not only did we not have the books in store, there wasn’t even a listing, and no way on earth or in faerie for us to order them — the kids were looking for paperbacks.
(Worse, in a way, was finding a paperback listing for just one book, coming out months from now because a publisher ‘picked up’ an ebook author, when the customer was looking for all 4-5 books in what they knew was a series. My explanation fell flat. The book business is complex, and front-line book retailers should be pitied.)

For physical bookstores, though ‘every book ever’ has been the constant background murmur (and default retort) for at least two decades – after two decades of Amazon the customer base is getting tetchy.

“You don’t have it?” [sniff] “Well I guess I’ll just order it from Amazon.”

1998 (or maybe 1999) was the Golden Year for bookstores (even though the peak came later, in 2005) — in 1998, the mall stores were still open, Patterson was still writing his own books, Harry Potter was on book two and the films hadn’t ruined anything yet, and epic fantasy fans were enjoying the second book of A Song of Ice and Fire with Martin on track to release a book every other year. [“HA!”]

Amazon was an option for the savvy, but more of a footnote than a terror.

In the 15 years since: author advances have been shrinking, print runs are smaller, the ranks of independent bookstores were decimated by Barnes, Borders, and Big Box bookselling — and then Borders went out of business on us. The number of places to buy, and the shelves dedicated to books, have both been curtailed. Whether we shop at Amazon because the stores suck or the stores now suck because of Amazon: there is a feedback loop in operation that is negative for physical storefronts (and increasingly, physical formats).

Into this charged atmosphere: we insert a (routine, everyday) business negotiation between a manufacturer and a retailer.

Except books are different. Just because. I can’t explain it (any more than I have— I at least tried to). We invest emotions in books. We tie up our identity with books. We take sides, we want to argue and we want to fight, and while the ranks of readers may be small compared to the population-at-large — apparently readers are handy with words and we like to write. (who knew?) It’s only a tempest in a teapot, but there’s a great echo in here and we all like the tea.

The current discussion doesn’t matter much, and the resolution will be between Amazon and Hachette and they’ll come to terms without our input but we really can’t help ourselves.

Because books.



A Once-in-a-Century Opportunity to Re-invent Publishing, and Books

filed under , 28 May 2014, 20:11 by

The working title for this article was, “These Days, Monopoly is Just a Board Game.”

I started to argue that Amazon wasn’t and isn’t a monopoly, but then I also managed to argue myself out of becoming an Amazon Cheerleader. Since I was looking into anti-trust statues and case law (spoiler: it’s dry) we’re going to wade into that half of the post first. But stick with me; I hope by the end I’ve also convinced you of the promise of that over-ambitious title up there.

I’ve set up a shortcut for those that want to skip Supreme Court Case precedents (no blame attached) and get to the second part: click this link

Also, I’m not a lawyer: just throwing that out there before we get started.

##

“Proponents of Amazon’s lower pricing strategies argue that Amazon is the underdog in the publishing monopoly, not the other way around. But the fact remains that Amazon is a company that singlehandedly controls 30% of the market share of the entire publishing industry. And unlike its competitors, it has a publishing arm, a distribution arm, and a retail arm.”
Amazon strongarms publisher, won’t allow pre-order of new J.K. Rowling book : 24 May 2014, The Daily Dot

“Amazon’s strategy against Hachette is that of a bullying combine the size of WalMart leaning on a much smaller supplier. And the smaller supplier in turn relies on really small suppliers like me. It’s anti-author, and in the long term it will deprive you of the books you want to read.
“Final note: some time in the 1980s the US Department of Justice’s anti-trust lawyers changed their focus from preventing monopolies from forming to preventing companies from colluding to preserve their margins (‘price fixing cartels’). As a result, Amazon very nearly gained a monopoly of ebook sales; they’re still around the 85-90% mark in the UK, and peaked at over 80% in the USA. (The irony of the DoJ-Apple iBook store settlement is that the DoJ went after the market incomer with the higher prices and 10% market share, rather than the near-monopolist who was using predatory pricing to drive their competition out of business.)”
Amazon: malignant monopoly, or just plain evil? : 26 May 2014, Charlie Stoss

“People have a choice on where to buy books. Amazon being the biggest bookseller on the planet doesn’t make them a monopoly or monopsony. If readers demand Hachette books, Amazon has not prevented them from being sold. There are thousands of other retailers who sell Hachette titles.
“I have five books published through Amazon’s Thomas & Mercer imprint, and more than a dozen self-pubbed through Createspace. Guess what? Indie bookstores and B&N don’t stock my paper books. And they are allowed to make that choice. And I don’t publicly whine about it.” …
“And there is a big difference between sales and profits. But no matter how you slice it, Hachette isn’t a helpless neophyte. They have power and capital and lawyers and have been around for almost 200 years. Amazon has the power advantage here, because they have customers Hachette wants access to. If Hachette wants to reach those customers, it will either accept Amazon’s terms or withdraw its catalog. And if Amazon can’t stand the idea of losing Hachette’s sales, it will back down.”
Fisking Charlie Stross: More on Hachette/Amazon : 27 May 2014, Joe Konrath

##

“The Rule of Reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. The rule, stated and applied in the case of Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), is that only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws. Possession of monopoly power is not in itself illegal.
“The Rule of Reason can be therefore considered a complement to per se illegality. Under the latter, the action, without consideration for circumstances, is illegal. Under the rule of reason, the circumstances in which the action was committed must be considered.” …
“On the same day, the Supreme Court also announced United States v. American Tobacco Co., 221 U.S. 106 (1911). That decision held that Section 2 of the Sherman Act, which bans monopolization, did not ban the mere possession of a monopoly but banned only the unreasonable acquisition and/or maintenance of monopoly.”
— Wikipedia: Rule of Reason – see also the entries for Standard Oil Company of New Jersey v. United States and United States antitrust law

I also like the finding (in other cases) that ‘geographical market division’ is straight up illegal, and I wonder how that could be applied to, say, cable companies in an argument. Do the cable companies collectively form a price fixing cartel more pernicious than, oh, I don’t know, Apple and 5/6ths of the Big Six publishers?

The phrase used is “illegal per se“ — in and of itself illegal, ‘inherently illegal’ —
“The United States Supreme Court has, in the past, determined activities such as price fixing, geographic market division, and group boycott to be illegal per se regardless of the reasonableness of such actions. Traditionally, illegal per se anti-trust acts describe horizontal market arrangements among competitors.The illegal per se category can trace its origins in the 1898 Supreme Court case Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211 (1898).” – wikipedia

Cartels are illegal, a monopoly in-and-of-itself isn’t (in 1911).

Modern day Justice Department lawyers (in my opinion, burned in 1999-2001 when the Microsoft monopoly case amounted to a whole-lotta-nothing) have been skittish, loath to prosecute, and have also taken a very narrow view of antitrust laws: Monopoly power when exercised to deprive consumers of “the benefits of competition” is illegal — and the US Dept. of Justice sees the price charged to end-consumers as the only yardstick to measure that by. (The final price is only one benefit of competition and healthy markets, but whatever.)

It would also seem that players in an industry can collude all they want, too — so long as they do so in the open, in public view, and have excellent lobbyists. This is the reason the cable companies can all charge $90 a month, and raise rates every year, while offering neither better service nor more programming options. The mistake that Apple and the publishers made was attempting the old fashioned back-room deal: They should have hired more lobbyists, set up a think-tank or two, and then debated the ‘issue’ in back-and-forth newspaper editorials and NPR interviews; heck, the CEOs could legitimately spell out the whole deal, in the context of a cable news appearance. After six months of that, they could legitimately claim Agency Pricing was just ‘natural’ and the way ‘everyone’ was doing business.

Or at least, that seems to be the MO of the Cable Cartel — in my opinion.

##

Coke isn’t a monopoly, because Pepsi.

Visa isn’t a monopoly, because Mastercard.

McDonalds is big and profitable and ugly, but isn’t a monopoly.

Walmart is pernicious and certainly isn’t playing fair in several ways, but they do not have a monopoly.

We, as individual consumers, may not like some very successful firms because we dislike how they do business — or object to the business entirely — and so we don’t eat at McDonalds or shop at Walmart or drink either brand of fizzy diluted corn syrup.

De Beers is a straight-up monopoly — (not that this will ever be an issue, but) if I ever find myself needing a diamond ring, you can bet your ass I’m shopping vintage, or even going to a pawn shop, and if need be having the stone reset, rather than giving them any money.

Even when consumers exercise choice (free market, etc.) there are always times-and-places where some non-Monopoly with plenty of competition still ends up being the only choice. Cable TV and Broadband Internet are two lovely examples — as I can all but guarantee you have only one choice for each, and it’s the same company. For rural US customers, away from the coasts, Walmart may not just be the only discount department store, but the only grocery store for miles.

Walmart is a monopoly to the folks out in Podunk and West Bumble, though those folks are often glad to have them there. The options that existed before were both limited and more expensive. I still don’t think Walmart is ‘doing good’ but they’re serving markets, and if all we consider are outcomes and prices (and not awful practices) then Walmart deserves (some, slight) praise.

Amazon isn’t a monopoly… right?

Amazon has ‘competitors’ in the book market, and the small electronics market (that’s their real retail bread and butter), and online streaming video, and music downloads, and cloud computing services, and small goods (anything that fits in a box). Amazon has barely started in the grocery delivery market — a market which doesn’t even exist yet, honestly* — and in a number of other fields-of-competition, Amazon is in 2nd place, 3rd place, or worse. There is no way** to call Amazon a monopoly

* natural monopolies in markets where no active market previously existed have also been addressed by the courts; we’ll get to that eventually.

Amazon is much more than a bookstore these days anyway. No matter how small a percentage of the business, though, Amazon is always going to sell books — because books are the key to everything else:

“[B]ook markdowns are extremely visible. Sellers can tout their low prices compared to what’s on the back of book covers, the price publishers want to sell it for. And that can be a convenient psychological device — especially if you’re a big retailer with lots of other stuff to sell. ‘When the customer sees a book at 40, 50 percent off,’ Teicher says, ‘the presumption is that everything else that that retailer is selling is also equally inexpensive.’ And books bring in some pretty attractive consumers. ‘Book buyers are good customers,’ Teicher adds. ‘They tend to be slightly more affluent, they tend to be consumers who shop and therefore are always in the marketplace for other products.’”
Why books always seem to have a discounted price : 8 May 2014, Marketplace

Amazon can and should price books however they want. They do the same for MP3 players, hard drives, digital cameras, headphones, blenders, kitchen wares, blu-ray players, electric razors, board games, golf clubs, auto parts, and industrial shop equipment.

Amazon is just doing what every retailer does, though: sell at a discount. Nearly every manufacturer or supplier has a MSRP — notably the “sticker price” on the window of a new car; publishers aren’t the only ones who print the price on the ‘cover’ — and nearly every retailer ignores it.

Sometimes the items are discounted right out of the gate — especially on the fourth Friday in November. Those of us who shop for clothes know that the retail ticket price is only there to make the eventual clearance/close-out discount seem that much more attractive. If you’re shopping for a TV set, I’m willing to bet that the MSRP is also the in-store list price on 90% of the new models on display; there will be one “flyer” item on sale, to get you in the store, and of course last year’s models are discounted (to 15% margin instead of 50%).

There was one notable retailer exception: book stores. Book stores charged the price on the book. Books as a commodity are different, though — the exact same book will be available in at least two formats, with a price differential between ‘prestige’ hardcovers and the soft cover. Having two paperback versions (‘trade’ and ‘mass-market’) further clouds the picture, as do remaindered hardcover books. It is technically possible to walk into a bookstore and find a $6.98 hardcover, a $8.99 mass market paperback, a $18.00 trade paperback, and a $28 ‘new’ hardcover all of the same book, same words on the inside and everything, with only a matter of size and paper quality (or the detail of a remainders auction) to differentiate them.

So books were being discounted; the publisher just found a very convoluted way of doing it, and the booksellers were more than willing to play into it. Customers know the score, and they buy — or wait, and wait — depending on the current format and asking price, and their enthusiasm for the book.

Book stores used to be an exception in that they “always” charged the cover price — but only up until the chain booksellers began to routinely and without exception discount their bestsellers, not because of online prices (not at first) but rather to compete with the likes of Costco and Sam’s Club — which were selling the headline, bestselling authors’ books at discounts of 30% or more. That was in the early 90s, before Bezos had turned his bookstore into a behemoth. Amazon didn’t invent the discounted hardcover, they just had lower overhead, and so they could do it even better.

Amazon entered into the book market, where pricing and formats were already a muddled mess, and then further complicated things: by organizing a network of 3rd-party resellers of used books, by lowering their own margins on all books including the backlist, and (the clincher) by choosing to list all editions—new, used, remaindered, 3rd party sellers, paperback, hardcover, and collectible signed first editions—on a single product page. “Oh look, this book is only $2!” exclaimed thousands of customers simultaneously, even if they then went on to buy the book for $5.99 or $18.79 or $65.

Customers’ perception of [physical] book prices had already changed by the time the Kindle launched in Nov. of 2007 — and immediately sold out. Others had tried to sell ebooks online, and ebook readers pre-date the kindle by 10 years but Amazon had an edge: their customer base consisted of early adopters, avid readers, folks comfortable with or at least willing to try new technology if it meant they could save money, and folks affluent enough to drop $300+ on a gadget — no, those last two points aren’t a contradiction: I think the mindset is that books are a commodity good so of course you buy for the cheapest wherever you can find ‘em, but a gadget, especially the best-in-class gadget, is a one-of-a-kind (and potentially, a must-have) so price is no object. (‘Best in class’ and a price insensitive fan base is Apple’s whole business in a nutshell.)

The major selling point of the kindle was $9.99 brand new bestsellers; the initial price on the Kindle was $399. Enough people did the math and figured it was still cheap at that price. It shouldn’t be surprising — Amazon didn’t launch Kindle without knowing their market. When you have a database of the customers who buy at least two New-York-Times-Bestselling books a month, and can send them an email, you’ve already done that math.

[more on ‘$9.99’: NYTWashington PostAmazon itself]

Amazon launched into a market that didn’t really exist, and so quickly became the only major player worth talking about. Barnes and Noble (fatally?) took two years to enter that market, and Apple now famously only entered the market in 2010 as an ‘add-on’ and initial hook for their new iPad — and when they could stack the deck in their favor. So it should be no surprise that Amazon is the major player, with 60-75% of the ebook market (or more, and growing).

** And at what point could we say Amazon is a monopoly?

Of note is the 2nd Circuit Court decision United States v. Alcoa, 1945 —
“Judge Learned Hand held that he could consider only the percentage of the market in ‘virgin aluminum’ for which Alcoa accounted. Alcoa had argued that it was in the position of having to compete with scrap. Even if the scrap was aluminum that Alcoa had manufactured in the first instance, it no longer controlled its marketing. But Hand defined the relevant market narrowly in accord with the prosecution’s theory. Hand applied a rule concerning practices that are illegal per se. It did not matter how Alcoa became a monopoly, since its offense was simply to become one. In Hand’s words,
[blockquote]‘It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.’[/blockquote]
“Hand acknowledged the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result. But that acknowledgement has generally been seen as an empty one in the context of the rest of the opinion, because of course rivals in a market routinely plan to outdo one another, at the least by increasing efficiency and appealing more effectively to actual and potential customers. If one competitor succeeds through such plans to the extent of 90% of the market, that planning can be described given Hand’s reasoning as the successful and illegal monopolization of the market.” – wikipedia

In the end, the 1945 decision was mooted by changing markets —very much like the Microsoft/Internet Explorer decision in 2000 quickly became irrelevant as other browsers ate away at IE’s market share — but Alcoa and Microsoft were both subject to court oversight after being found guilty, and oversight continued until the market caught up. Apple and the courts are still arguing over what “court oversight” might mean in the ebook-pricing case.

[The publishers already submitted to court restrictions when they settled the case before trial. They have to renegotiate their contracts, though the court allowed that these negotiations should be staggered. Hachette is the first of the five on the schedule; say, how is that going?]

Let’s take a second look at “the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result.”

See: the 1st Circuit Court decision, Fraser v. Major League Soccer, 2002 —
“The Court of Appeals upheld the jury’s finding that the plaintiffs did not prove that Major League Soccer illegally monopolized the market for player services, and failed to prove the product market and geographic market, because MLS competed with other soccer leagues in the U.S. for players, and MLS competed with soccer leagues in other countries.
“On the charge of a reduction in competition under the Clayton Act, the Court of Appeals held that ‘the creation of MLS did not reduce competition in an existing market’ because no active market for Division 1 soccer previously existed in the United States” – wikipedia

I don’t know what soccer player salaries have to do with author royalties, but I think we all can agree that MLS—which owns every individual team, not just the league—is a de-facto monopoly on US Soccer and that likely does affect 98% of player salaries, no matter what the court found at trial.

However: “the creation of MLS did not reduce competition in an existing market because no active market for Division 1 soccer previously existed”

The same could be said for ebooks in 2007.

On the other side of the coin, the Alcoa decision — where control of part of a market (ebooks for example; just throwing that out there) can be considered as separate from the overall market (all books) — might just be a precedent if someone chose to apply it. Of course, any and all actions taken by Amazon in pursuit of book market share is just “good business”. For Amazon to act differently would be stupid. Bezos is not stupid.

In fact, I’m sure that Bezos knows the distribution centers he’s built in the last decade, combined with the ease of one-click shopping, an engaged and enthusiastic customer base (of readers!), integrated hardware/software that includes dedicated e-readers, andoid-ish tablets, and apps on everything, along with razor-thin margins and customer retention programs like Amazon Prime, all represent very high barriers to entry. The ability to drop a few or a hundred million to buy out a nascent competitor certainly doesn’t hurt. It seems obvious to buy an online bookseller like Abe Books — but more vitally, Amazon is being proactive in acquiring any developing network of readers, including both Shelfari and Goodreads. The business is being won not just in market share but in mind share, and having a lock on enthusiastic readers is apparently worth at least $150 Million (for Goodreads, the purchase price of Shelfari wasn’t disclosed).

“It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel”

##

Following the precedents, the Apple ebook case makes sense in its own way — price fixing and cartels are definitely illegal. Monopolies in and of themselves are not.

Any theoretical Amazon case would also be a huge mess because you’d have to argue about who Amazon’s customers are: sure, on the surface, Amazon’s only book customer is the end reader — but if Amazon [eventually] controls 90% of the ebook market, wouldn’t an author’s only way to reach those readers be through Amazon? Isn’t the author—attempting to use Amazon’s services to reach Amazon’s reader base—a customer too? Amazon buys books from publishers — but if you’re a [dead tree] genre fiction publisher and Amazon accounts for 50% or more of your overall sales, online or off, who has the power in that relationship? What are your options outside of Amazon?

By placing itself across the whole book industry — and playing different roles in retail, distribution, and publishing but not controlling any of the three — Amazon in a way insulates itself from accusations of monopoly while also becoming a much bigger and more formidable adversary than it might have been otherwise.

In November of 1998, Barnes and Noble (with about 15% of the book retail business) proposed buying Ingram Book Group, which at that point had 11 distribution centers and shipped books, audio books, and magazines to stores nationwide — including to Amazon. While each was the number one competitor in their field, both Barnes & Noble and Ingram still faced strong second-placed competitors, and both parties promised that the merger wouldn’t affect Ingram’s existing distribution deals or customer relationships. The buy-out was dropped in 1999, about six months later, over fears the FTC would axe the deal; the respective companies felt dragging the process out any further would only damage their image, and potentially, their business [and certainly: B&N’s stock price].

[Additional reading on that: AP, NYT, CNet]

Would the union of book retail with book distribution have destroyed competition? — Apparently it didn’t; after 1999 both B&N and Amazon brought distribution in-house (spending hundreds of millions in the process), handling the majority themselves and buying direct from publishers instead of middlemen. But in 1999 the “major” player in book retail (with 15% of the market) was effectively blocked from consolidating its position by anti-trust fears.

And Amazon has 30% of the book market, but isn’t considered an anti-trust candidate by anyone except those suffering from ‘Amazon Derangement Syndrome’.

##

[Enough droning on about Amazon.]

Could the publishers be making major changes to the way they do business? Aw Hells Yes. Amazon is devouring the business like a pack of cheetahs because the old school, New-York based publishing business was and is very inefficient, a half-broken system that was in no way improved by the consolidation of imprints, and the consumption of New York publishers by Big Media conglomerates.

If I were to launch a publisher today, it would not be in Manhattan — well, Manhattan, Kansas, maybe, but not New York. The ghosts of Max Perkins, Book Row, and the Algonquin Round Table seemingly haunt the business —or perhaps, it is the publishers who cling and won’t let go, not the ghosts who are refusing to leave. We’re constantly lamenting either the demise of literacy, of literature, or just of good taste. (that link is a 1959 article in Harper’s on the decline of book reviewing)

So lets rethink this a bit and reframe our mental image of publishing:

By the 1930s, rotary presses, offset printing, and hot metal typesetting had industrialized the manufacture of books, to the point where a paperback could be sold for just 25¢ (in 1939, inflation adjusted $4.15) — while simultaneously, the market for fiction in magazines (high-brow and low) fostered at least three generations of writers, the end result of which we see in Pulitzer Prizes, Noble Laureates, and (even better) the glorious era of Pulp. The modern day publishers were all born in this era (as previously, there was no way to profitably make the books—copies of books, in the manufacturing sense) and in a way, they are all still stuck in it.

Now, the word processor, digital publishing, and social media have again revolutionized the manufacture of books — In publishing, It’s 1879 All Over Again, and every blogger is a newspaper onto themselves, every online author their own very small magazine or press, and every existing, accepted business model should be assumed to be wrong until proven otherwise.

But instead of seeing the revolution take off (like it has in other areas of tech), enterprising small publishers and aspiring authors still have to contend with the weight of the Book Establishment: the media conglomerates, their gatekeepers, and a self-appointed literary police force that values laurels and prizes over fun and pulp. The Established Book People control every approach to the market: breaking free from the slush pile and into publication to begin with; access to shelves in bookstores, or even better, front-of-store placement; getting your book reviewed by nationally-distributed newspapers and magazines, or even better …Oprah.

How does one crack into this market? Do you have to, anymore, to ‘make’ it as an author? If you go online, is Amazon your only way, or just the only way to reach Amazon’s (numerous and book-hungry) customers? To date, only Pottermore has begun to explore (and exploit) what is possible — though of course we could argue that Rowling is in a unique position to do so. In time (5 years? 10?) others will definitely follow. The next G.R.R.M. will not be a greybeard with an existing publishing contract, but will instead use Facebook, Twitter, Tumblr, and [The Next Great Social Media Thing that Hasn’t Been Invented Yet] to pull readers into a totally independent website, to read appendices and argue minutia on forums and to buy, buy, buy digital copies of the books.

Rowling and G.R.R.M. had a lot of help though: movies and cable TV gave a boost to properties already pretty famous and selling themselves out in the bookstores. 99.999999% of new authors won’t be able to take the same path (or sit on Oprah’s couch, let alone Conan’s) but the idea of doing it all yourself shouldn’t be discarded just because we can’t all win the lottery. Maybe the next G.R.R.M. will get his start writing fan fiction — maybe she has already done so, and just needs a push to go from posting on others’ web sites to building and hosting her own. Sure, reader-outreach and fan interaction might ‘live’ elsewhere (twitter&tumblr, perhaps) but you’ll need more than a few @handles and an Amazon landing page if you want to control your own destiny.

For authors that don’t do it themselves? To go back six paragraphs, “If I were to launch a publisher today” it would be a website, not just an imprint — and the small editorial staff would include writers to maintain the blog, programmers to build the platform, and some social media savvists (yes I just made up that word and invented the job) to find and capture fans — and the staff would be given a mission to curate a small niche of publishing — or a large niche, or a whole genre, but whatever: our target is a target, and we’re aiming for both the authors and the readers. IF I could buy the Analog or Asimov brand names: we’d be off and running, yesterday.

So long as I’m wishing: Give me the modern-day John W. Campbell or Lester Del Rey and let’s do this already. Pitch it as a tech startup to con the VCs acquire some startup capital to pay the bills the first two years and *do it*.

If Vox, Whalerock, Ziff Davis, Conde Nast, or First Look Media want to get in touch with me about starting this new hybrid website-magazine-imprint, I can be on a plane and at your office on Monday. Have the contract ready for me to sign; no takebacks.

##

Publishing is ripe for disruption. Amazon found a couple of cracks and are working the wedges to split off their chunk of the market. Amazon is very successful at what they do; they are the first of a new kind of book company — currently more retailer than publisher, but doing just fine with their house imprints and also, more than willing to share parts of the infrastructure with others (authors; but authors direct and not their publishers) (at least: so far).

Amazon is monopoly-ish but the Justice Department has given them a pass (and will continue to) so long as Amazon isn’t “abusing” their position to raise consumer prices. Anything else that Amazon does, including making publishers squeal, making B&N obsolete, and stomping (or buying) any upstart that even looks like it might be eyeing Amazon’s business: that’s all fine.

HOWEVER,

And this is aimed at the Amazon Cheerleader Squad,

Amazon’s dominant market position isn’t a good thing, in my opinion. It’d be great (and I’d certainly be less apprehensive) if there were a strong, and growing, and decently-popular alternative to Kindle Direct Publishing to threaten Amazon and keep them honest. A Pepsi to their Coke, or a Discover Card (or even a Square) to their Visa/Mastercard hegemony.

I think it’s fine to use Amazon, but one shouldn’t be enamored by it. In the current publishing landscape, Amazon has every potential to become a de-facto book monopoly — a utility like AT&T, maybe, something you don’t notice and with flat rates that everyone gets accustomed to using — but being a comfortable and familiar monopoly doesn’t make it less of one. If you think of Kindle Direct Publishing as a book utility service (which is more of a poetic analogy than a direct one, but I find it fits) and recall the abuses of pre-breakup AT&T, or perhaps that other de-facto monopoly, your local cable company — maybe you’ll pause for just a moment before encouraging everyone to jump on board.

Additionally, there is nothing Amazon does for you that you, as an author, can’t do for yourself. Sure, one can buy into Amazon’s Kindle Ecosystem and that’s great — it’s easy and seductive.

But if you argue that Publishers don’t deserve 95%, or 85%, or 75% for formatting, editing, production, and distribution when one can easily contract that out (for an upfront, one-time fee – not ongoing chunks of the revenue) and the parts that can’t be contracted out have been made obsolete by ebooks…

…then maybe you can also see my argument that Amazon doesn’t deserve even 30% if you’re the one marketing the book, finding fans on facebook, slowly building up your backlist and ‘brand’ — and you only direct them to Amazon because you haven’t set up your own website yet. (for an author, yes, 70% is way better than 5-17% — even the 35% Amazon offers for books outside the KDP Select program is better — but 100% and 100% control should be the goal, right? …right? )

Genre authors who are at the forefront of the Kindle Revolution might want to start reading web comics, and learning about how comickers are monetizing. Some of them even print and sell hardcover books, direct, at a profit, …without Amazon — and that’s after they give away the comics for free. There is a lot to think about here.

##

Like I said, it’s 1879 all over again and we’ve been given a once-in-a-century opportunity to re-invent publishing and books. A whole world of options is out there and a possibly brilliant future awaits.

But we can also learn from the past: let me tell you, no one in 1914 was arguing that Sears & Roebuck was the future of publishing just because they had revolutionized retail with direct-to-customer shipping, were leveraging the possibilities of the network (rail network) to ship faster and cheaper all the time, used massive volume to keep margins and prices low, and their ability to reach and inform millions of customers (through their catalog) was unprecedented, nation-wide, and ubiquitous.

Have it shipped direct and save 70 percent off new fiction!

Publishing was re-invented by the packagers and the pulps, not the establishment players. The revolution was led by the people serializing fiction to sell magazines, and the 25¢ paperbacks sold outside of bookstores — dozens, and then hundreds, and then thousands of independent players, of which only a handful were successful (those became today’s imprints, handed around like poker chips by media conglomerates) but all of which were making and selling books. The first editors and publishers learned on the job, and often were the authors themselves; we are being given the same opportunity.



Amazon's Generosity

filed under , 26 May 2014, 11:39 by

Amazon:


Counterpoint:
“Amazon offered a choice. Not just for writers, but for consumers who wanted larger selections and didn’t want to pay luxury prices for books. (Publishers didn’t just control who got published, they also controlled the prices of their titles. What other industry prints a price on its product?)”
Turow & Patterson: A Plateful of Fail with Extra Helpings of Stupid

see also: Five+ years of me angsting on Amazon

##

Amazon is not a Great Evil, hellbent on destroying publishing.

Amazon is a business, and is using their market position to be even-more business like.

Is that evil? Yes, actually, I think abusing your market position to extract profits without providing additional value is kind of evil, but apparently I’m alone on that — and just because Amazon isn’t attempting to extract the extra money out of their customers (yet), I’m told my opinion doesn’t matter, or worse, that I suffer from Amazon Derangement Syndrome for pointing out the obvious.

Are publishers any better?

The major media conglomerates that currently own the publishers aren’t. A publisher who can’t add value (production and marketing support) to a book certainly isn’t entitled to take a large percentage of its profits. But is the model bad? I think it was working up until the 80s, and then a lot of things happened before Amazon got started [consolidation, shifts in book retail — including the rise of first the mall chains and then the big box stores, the ‘elevation’ of genre fiction, and the multi-media tie-in] and Amazon stepped in to abuse the exploits readily available because the book business was (from a “business” standpoint) “broken”.

If Amazon is “good” and the publishers are “bad” — then what’s the third way?

If it is all just business, then any well-run business should be able to provide services to both readers and writers in ways that do not require the publisher’s scale and clout to get shelved in bookstores, and don’t rely on the size of Amazon’s customer base and on Amazon’s generosity. If it’s ‘stupid’ to ignore Amazon because “that’s where the customers are” then you’ve merely traded one pair of gatekeepers (the acquiring editor, the chain book-buyer in New York) for a different set of gates, and all the gates are owned by Amazon.

Sure, for an ebook Amazon will pay an author up to 70%, assuming the author adopts Amazon’s preferred pricing structure, but why does Amazon charge 30% at all? If it’s only about hosting the data, it looks like 1 GB of storage and 5 GB of data transfers (customer downloads, in this case) would only cost me 17¢ a month using Amazon’s own Web Services — that’s 17¢ for the data (…per month, and I’d only be charged for what I use), so I guess the other $.72 (on a $2.99 kindle book) is sales commission? For listing the book on Amazon’s website?

Except… the web site is automated, too. The author fills out the book metadata, decides which keywords and categories to use; the customers submit the reviews. Amazon is just providing the server space and the download (for 17¢ a month). Customers find the book using search, or by browsing — which means relying on Amazon’s algorithms and hoping that there isn’t some dumb reason Amazon would want to hide your book from the search results, or to keep it off of top 10 or top 100 lists.

Amazon makes money on Kindle books in aggregate so it doesn’t have to support any one author, or any one category or genre of books, or even provide any support at all so long as the website is up and the servers are running.

Amazon deserves credit for setting up the system (and for leaving the lights on for the rest of us, I guess) but it doesn’t do anything; the sales commission it earns is for providing access to its customer base, a de-facto social network of millions of readers who have self-selected — for reasons of cost and/or convenience — and are the fraction of readers that are both more technically savvy and most willing to try digital options (because they did, when they first chose to try Amazon).

Amazon may “only be 30% of the market” but represents at least 75% of the ebook market, because that’s who their customers are. Amazon only takes a 30% cut — for books under $10 (a pricing scheme they enforce, and they take 65% if you choose to deviate from their guidelines) — for a service that costs them pennies on a closed platform they control. Amazon only provides the listing, the author is then responsible for the marketing, and for generating enthusiasm in their readers. Some authors are very successful on Amazon’s platform and that’s fantastic — but no one has asked them the question: now that they have a reader base, do they need Amazon?

Amazon processes the payments, so that’s nice (and the hosting and distribution of files) and of course there are interactions and synergies that come from being listed next to other authors and books — benefits that outweigh the trivial fact that other authors are technically the competition. But I can just as easily push books from my website — in fact there are Wordpress plugins that can turn any blog into a store. Sure, it’s a lot of work — but the arguments against publishers (“I can hire a proofreader, and an editor, and a cover artist, and someone to format the ebook for me… hell, I’m doing all my own marketing anyway… why do I need a publisher?”) can also be applied to Amazon (…now you need to hire a web programmer, and a web designer, but the rates are going to be similar to a good book editor, and once a solution and/or model is in place many authors will be able to copy it, or parts of it).

I repeat myself for emphasis: If Amazon is “good” and the publishers are “bad” — then what’s the third way?

If it is all just business, then any well-run business should be able to provide services to both readers and writers in ways that do not require the publisher’s scale and clout to get shelved in bookstores, and don’t rely on the size of Amazon’s customer base and on Amazon’s “generosity”.

Monopoly, monopsony, whatever… Amazon is not the final solution, but gets a lot of the credit (and a lot of goodwill) for having “solved” the book “problem”.

All I see is a single player that has gobbled up too much of both book publishing and book retail. Amazon’s Generosity should not be taken for granted, or assumed to be limitless. I suppose the advice to authors should be: get in now, while the getting is good, and hope you can make your roll before the rules change and Amazon, in its great indifference, rolls over you.



I wonder if the historical model I should be researching is RCA, not Pocket Books?

filed under , 20 April 2014, 14:40 by

“Thinking of ebooks and printed books as comparable is like assuming that anything conveyed by means of the written word is a poem; plays, novels, stories, film scripts, letters, shopping lists and text messages exist too. Publishers have got to stop thinking of their digital products as ‘books’, and start imagining more expansive ways of communicating information. Until then, the digital revolution hasn’t even begun.”

‘The ebook revolution hasn’t even begun’ : Gaby Wood, 30 March 2014, The Telegraph

##

I wonder if the historical model I should be researching is RCA, not Pocket Books? The argument could be made that the Consolidated Amazon Book Cheetah™ currently thinning the fat, slow publisher herd have more in common with General Electric of the 1910s and 1920s than with cheap pocket paperbacks that appeared in 1939. GE built the devices (RCA radios) while simultaneously developing the content and networks (NBC Red and Blue) that drove demand. The later success of television rode piggyback on the real revolution that had taken place decades earlier.



The Fallacy, and the Truth, of "Big Publishing"

filed under , 25 February 2014, 20:35 by

[blockquote]

“In the last 20 years, two multi-billion-dollar bookstore chains rose — and one fell. A hell of a lot has changed in 20 years.
“In 1994, Viacom owned Simon & Schuster and was buying Macmillan USA; now in 2014 Macmillan (via the original UK root) is back in the US book business – but under the imprimatur of privately-held German firm Holzbrinck. Viacom spun off S&S, as the publishing arm of CBS. Hachette Book Group USA (Hachette Livre being the bookish face of French multimedia conglomerate Lagardère) was born in 2006 with the French purchase of Time Warner Books — and more recently Hachette has also added on Disney’s Hyperion. (Hyperion, I’ll remind you, was built by Disney from scratch in 1990.)
“Rounding out “The [old] Big Six” – HarperCollins is only 25 years old, assembled from parts by Rupert Murdoch’s News Corporation over the course of the 1990s. And everyone is shadowed by the Randy Penguin merger: the imprints of Random House already read like a directory of 1947 New York publishing houses; added to Penguin’s haul the new Penguin Random House is set to publish half of all adult trade books (or more). That merger isn’t even a year old yet.”
[/blockquote]
Forbes: Please Hire Someone Who Understands Books, or Math, or Both : Rocket Bomber, 11 February 2014

Up until last year, we used to talk about The Big Six – the six largest US publishers: Random House, Penguin, Hachette, HarperCollins, Simon & Schuster, and Macmillan — In 2013 The Big Six became The Big Five (or alternately, Randy Penguin and the Following Four) after Bertelsmann and Pearson came to an agreement to merge their subsidiaries (incidentally, the two biggest US publishers), Random House and Penguin Putnam.

OK, first: Randy Penguin and the Following Four is a great band name. But more importantly: what [now] gets referred to as The Big Five are just the publishing arms of major international multimedia conglomerates — so far in this post I’ve name-checked Viacom, CBS, Holzbrinck, Lagardère, Time Warner, Disney, News Corp, Bertelsmann, and Pearson — the publishing houses get handed around like poker chips by media giants who [editorializing here] just don’t give a shit about print anymore, but hey, it’s still a multi-billion-dollar industry and everybody else has one “so I guess we need a publishing arm, too”

Publishing is worth (rough numbers) $27 Billion, but that’s only in the very-low-two-digit-billions, so to a Viacom or 21st Century Fox or Time Warner, the whole book thing just isn’t worth futzing with. Each of those entities has—when given half a chance—sold, spun-off, or otherwise dumped a “Big Six” publisher and retained the ‘real’ media assets … in 2013 Disney bought Marvel (technically a publisher) but the $4 Billion price tag was for characters and “IP” and what is now a blockbuster movie studio, not the floundering funny-book business. The year after Disney bought Marvel, you might have noticed they sold off their actual book division, Hyperion, in favor of concentrating solely on ABC/Disney (and soon-to-be Marvel and Lucas) tie-in product. Fox has similarly shed its News Corp skin, taking the TV and Movie studios and leaving the publishing behind. CBS is stuck with S&S only because they were cast aside with them back when Viacom split. Time Warner (which has been Time Warner since 1990) (and which sold off Little, Brown and Time Warner Books in 2006) even has plans to spin-off the Time Inc. magazine distaff branch and soon (mid- to late-2014) the last vestige of dirty, dirty print will be purged from Warner Brothers’ balance sheet — except for Batman and the other ‘DC Entertainment’ characters.

##

From 1989 to 1998, if you mentioned “the Big Six” to someone working in publishing in New York, they’d assume you were talking about accounting (or maybe poetry). The Big *whatever*, as a term, is too recent — and definitions are fluid.

[source: Google Ngram]

“New York Publisher” was (and occasionally still is) the disparagement of choice when talking about corporate inflexibility, but more and more we were actually talking about media giants and corporations, not about publishers per se. The Big Six emerged in the late 90s (note, not a historic and ever-present phenomenon) and were part of the larger media consolidation then taking place between movies, TV, cable… and yes, the internet and video games, too: AOL Time Warner and Vivendi Universal, anyone? Man, the aughts were weird. Book publishing, as ‘ur-content’, got swept up into the whole mess. The fit was often bad.

Books, newspapers, comics and magazines—what we call publishing—are the red-headed stepchildren of media, of note only in context. HBO gets all credit for Game of Thrones, Harry Potter is a Warner Brothers property, Lord of the Rings is New Line Cinema, Walking Dead is an AMC TV show. Marvel Studios had an immaculate conception in 1996, springing forth from nothing, whole and wholly-formed, into a super-hero movie desert and eventually becoming so popular that there were even popular comic book adaptations of the movies.

On the TV side, we also have Justified, Bones, Orange Is the New Black, and House of Cards — and hell: Roots, Shogun, this is nothing new. Masterpiece Theater has the occasional original story (nod to Downton) but for decades its bread-and-butter was literary adaptation.

This is a looooong aside (and trivial, or trivia, or both – you can skip it), but having done the research I had to include it: Two-thirds of all books that hit #1 on the bestseller list for the past century were made into movies — another 10% made the jump to TV, so three-quarters have been adapted.

The exceptions are kind of fun to note:

  • Mr. Britling Sees It Through by H. G. Wells, 1917
  • Strange Fruit by Lillian Smith, 1944 (eventually, an Oscar® nominated short in 1978, but not a feature-length adaptation)
  • The King’s General by Daphne du Maurier, 1946
  • The Source by James A. Michener, 1965
  • Trinity by Leon Uris, 1976
  • Chesapeake by James A. Michener, 1978
  • The Covenant by James A. Michener, 1980
  • The Matarese Circle by Robert Ludlum, 1979 (…is in development hell – though at one time both Tom Cruise and Denzel Washington were attached)
  • The Partner by John Grisham, 1997 (optioned)
  • The Testament by John Grisham, 1999 (optioned)
  • The Litigators by John Grisham 2011 (optioned)

There’s a batch that haven’t been adapted, but we could argue that doesn’t matter because others in the series* have been:

  • The Silmarillion by J. R. R. Tolkien, 1977
  • The Mammoth Hunters by Jean M. Auel, 1985
  • The Cardinal of the Kremlin by Tom Clancy, 1988
  • The Plains of Passage by Jean M. Auel, 1990
  • Desecration by Jerry B. Jenkins and Tim LaHaye, 2001

And the TV movies and mini-series:

  • Wheels by Arthur Hailey (Book 1971, on TV in 1978)
  • Centennial by James A. Michener (1974, TV 1978)
  • Noble House by James Clavell (1981, TV 1988)
  • It by Stephen King (1986, TV 1990)
  • The Tommyknockers by Stephen King (1987, TV 1993)
  • Scarlett by Alexandra Ripley (1991, TV 1994)
  • The Street Lawyer by John Grisham (1998, TV movie 2003)
  • For One More Day by Mitch Albom, (2006, TV movie 2007)

The Talisman by Stephen King and Peter Straub (1984) was being developed as a mini by TNT but never made it to air

Out of the whole list (and for more info on that, I’d direct you to Matt Kahn and his site, where he not only lists the Publisher’s Weekly #1 Bestsellers for each year, he’s also slowly reviewing each and every one) there are only four I couldn’t find more information on:

  • The Brethren by John Grisham 2000
  • The Summons by John Grisham 2002
  • The Broker by John Grisham 2005
  • The Appeal by John Grisham 2008
    …but it’s Grisham, so I’m sure these have been optioned even if it wasn’t internet-link-generating-news at the time.

And of course, there are the pair of bestsellers from the early 1980s: the bestselling book in each of these years were novelizations of movie scripts: E.T., The Extraterrestrial in ’82 (by William Kotzwinkle) and Return of the Jedi in ’83 (by James Kahn). If pressed for a date when publishing died, I’m picking 1982.

My point — yes, I had one — is that books and publishing are, in the corporate view, just the minor leagues. Even big names like Stephen King, John Grisham, and J.K. Rowling are just the ‘farm team’ for the real business, which is making movies and TV. Books are a static property to be strip-mined, not a resource to be conserved — or hell, a vibrant product that can be nurtured and will multiply if given even the slightest bit of care and feeding. The major media companies, and the publishers they’ve hobbled, can’t be bothered.

Amazon gets some credit here. But…

Well, Amazon gets credit for throwing Miracle-Gro® on a field of weeds and wildflowers — the seeds were there already, there was even some minuscule growth — indeed, this was a field that used to be tended by the pulp magazines and rack paperbacks.

[And honestly, I’d feel better about e-books and the new self-publishing Revolution if it were like the pulps of decades past and not a wholly-owned subsidiary of Conglom-o. But that’s my bias…]

##

We talk about Traditional Publishing like it’s a single thing, a single model, or a single company. It’s not. To claim that all publishers are the same is to equate The Big Five with Osprey, Harlequin, Regnery, and Soft Skull. The big “New York” publishers are actually run out of Gütersloh, London, Paris, and Stuttgart — of the two remaining “New York” publishers, one is more concerned with their (Hollywood-based) TV programming and the other’s major asset is financial information firm Dow Jones.

If anything, Amazon has managed to flourish because first, consolidation squeezed the publishing industry practically dry, and then the new corporate owners criminally neglected it.

##

For perspective, check out Publishers Weekly’s list of The World’s 60 Largest Book Publishers, 2013 – which not only is a global list but also incorporates the huge educational/textbook and financial reporting sectors (Reed Elsevier, ThomsonReuters, and Wolters Kluwer are the major players you’ve never heard of, each with about ~$5 Billion in revenue — not gross sales, revenue) — and we really should be talking about Scholastic as one of the [new] Big Six — and Europe and Japan are massive book markets, and the eventual digital book solutions in both might impact the digital book market in the US. Of Course Amazon is a player, but not the only one. (The side battle in Brazil is also of note)

I’d love if some of the “new book” self-publishing evangelists addressed the Fall of Publishing (1982-2006) in their arguments, and perhaps would explain why their new corporate overlord is in any way better than the old ones. It would be one thing if we were advocating for a creators’ collective to advocate rights for all designers/producers/writers against the many companies and web sites who seek to exploit authorship – but instead I only see efforts to pit the new model against the old one for internet ‘points’.

Who owns a kindle ebook? More importantly: what happens to a kindle ebook if Amazon stops hosting it? Prodigy and CompuServe were the shit in 2000, and in practical terms, were also ‘the internet’ for their user base. Amazon seems different (but awfully similar) but once again we’re looking at a walled garden and 2015 in practice isn’t all that different from 1985.

Dollars are great, I need more myself. But if the discussion is about business models and propagation of books, I need more than hagiographies of KDP and some by-the-way statistics based on web-scraping. Let’s talk about the future of publishing, not the panning-for-gold in the effluvia of a commerce-site-cum-social-network. Talk to me about how this all works in 2024, or 2034. Amazon is Fantastic, but can’t be the only player: tell me what’s next, and how to participate.

If your imagination fails at KDP, then your imagination fails. If “big publishing” is what you’re against, then tell me what you are for. Howey, what’s next?



Average words for average people

filed under , 18 February 2014, 12:09 by

“And I advised them to consolidate their brands into a single web shop. Because when you sell average products for average people, it’s practically impossible to achieve any usable conversion rates for each brand on their own, but combined you can create scale.”

“Note: The opposite of this, of course, is to be a niche channel from the start, during which you use your uniqueness to make people feel special, which in turn allows you to connect and leverage your market. But you can’t do this with without cool products.”

Thomas Baekdal (whom you all should be reading anyway) said this as part of a much larger discussion of how digital adoption (and the lack thereof by older folks) is creating a generation gap — Not a new point, mind you, but Baekdal expresses it well and we all need a reminder anyway. If you spend all your time online, sometimes you forget that even though Grandma is on Facebook she uses the web, and technology generally in a way that is very different. Grandpa uses his iPhone to make phone calls (can you imagine) and there’s the old saw about how neither of them can program the VCR, which is kinda true but also a joke made obsolescent by things like Tivo-style DVRs and Netflix.

…which is all beside the point – or at least the point I’d like to make.

The reason I pulled those 4 sentences out of Baekdal’s article and presented them out of context is because I think he’s saying something important about writing, too.

Book authors and bloggers need to think about what the product is, and who’s “buying” (literally buying or just reading). “Average products for average people” describes many, many blogs on the internet, no matter what the subject or focus is. What we write about can be the most amazing thing you guys, really the best but the writing itself is merely average. Informational. Journalistically bland, short because it needs to be short and not boring, but boring in its own way because too much style-for-its-own-sake obscures the meaning and makes your blog unreadable.

“And I advised them to consolidate their brands into a single web shop. Because when you sell average products for average people, it’s practically impossible to achieve any usable conversion rates for each brand on their own, but combined you can create scale.”

I think this is why we see blogs staffing up and why someone ever thought “platisher” was a term that had to be coined. [aside: No. – longer aside: A so called platisher is just another publisher, though one that is smarter about how readers read and prefer to interact with their content. The blogging platform is nice but has as much to do the with bones-and-bolts of writing and publishing as glossy magazine paper.]

The new publishing companies that are attempting to settle in the unpopulated space between blog and magazine are consolidating brands and voices to produce usable scale.

Keep that in mind. Now go read Baekdal’s post, “The Generational Divide” because I know you passed over the link the first time. Good, thought provoking stuff there.



The Long, Long Tail

filed under , 13 February 2014, 22:17 by

[blockquote]

Writing Doesn’t Pay?

“This is a story that has been sensed by many. The clues are all around us, but the full picture proves elusive. It is being told in anecdotes on online forums, in private Facebook groups, at publishing conventions, and in the comment sections of industry articles. Authors are claiming to be making more money now with self-publishing than they made in decades with traditional publishers, often with the same books. I’ve personally heard from nearly a thousand authors who are making hundreds of dollars a month with their self-published works. I know many who are making thousands a month, even a few who are making hundreds of thousands a month. But these extreme outliers interest me far less than the mid-list authors who are now paying a bill or two from their writing.

“My interest in this story began the moment I became an outlier. When major media outlets began asking for interviews, my first thought was that they were burying the lead. My life had truly changed months prior, when I’d first started making dribs and drabs here and there. And I knew this was happening for more and more writers every day. But that inspiring story was being buried by headlines about those whose luck was especially outsized (as mine has been).

“Before we reveal the next results of our study, keep in mind that self-publishing is not a gold rush. It isn’t a get-rich-quick scheme. There are no short cuts, just a lot of effort and a lot of luck. Those who do well often work ludicrous hours in order to publish several books a year. They do this while working day jobs until they no longer need day jobs. This is also true of the writers earning hundreds or even thousands a month. Please keep this in mind. The beauty of self-publishing is the ownership and control of one’s work. You can price it right, hire the editor and cover artist you want to work with, release as often and in as many genres as you want, give books away, and enjoy a direct relationship with your reader. It isn’t for everyone, but you’re about to see a good reason why more authors might want to consider this as an option.”

[/blockquote]
Author Earnings: The Report : http://authorearnings.com/the-report/ : 12 February 2014, Hugh Howey

Hugh and Company have used web spiders to pull data from Amazon’s listings (why has no one thought of doing that before?) and then used that data to figure out some odds and ends about self publishing using Amazon’s Kindle ebook platform.

Several important items to consider:

  • The data from the Author Earnings report is restricted to just three genres: Mystery/Thriller, Science Fiction/Fantasy, and Romance.
  • The Author Earnings report is only for ebooks
  • “Again, daily unit sales are estimated by sales ranking” – the Sales Ranking is pulled right from item listings on Amazon, but the ‘sales’ ascribed are estimates only. How good is the estimate? I don’t know. Good enough?
  • However, that fact that “The Report” is based on a snapshot of a single day on Amazon is worrysome.

Howey and the Author Earnings website gave us the data, though, and practically begged us to use it.

The Long, Long Tail.

The y-axis, unit sales, are the estimates provided by “The Report” – could be anything, really, but these were the numbers chosen by Howey and associates and the same numbers they used to prove their points.

The x-axis is as labeled: Amazon Sales Rank. This is direct from the data provided. Sadly, in a graph like the one above there is no way to account for the 916 books that tied for their Amazon Sales Rank (458 pairs; first for #14, then #30, then #58 …and so on, go look). My guess would be that these pairs are a result of the collection method: Amazon updates at least hourly and the web scrapers obviously took more time than that.

SO… my “long tail” chart omits 458 books that tied. We’re looking at 5585 data points, and that’s fine — honestly, with the way LibreOffice Calc draws the chart, the teeny tiny blips on my graph are still plenty big enough to cover even a five- or 20-way tie. If anything, the line still looks too solid.

Anyway, that’s the data. Unit sales vs Sales Rank.

And we all already know about the Long Tail, from the Chris Anderson book, or from math classes about power law probability distribution.

And we look at the graph and we see a bog-standard long tail distro (it’s Amazon, after all) and we shrug and a select few in the reading audience are wondering what in the hell I could be on about with this.

Note again, the x-axis: in the picture above we’re creeping up towards 3500 and yes, it’s obvious where this is going, blah blah blah.

3500? Fine, but the data provided — 5585 books, from #1 to Amazon Sales Rank #99873 — means that we’re only about 3.5% done. Tippy toes in the water. In fact, if one were to extend the graph above, instead of taking up most of the width of your computer monitor, it’d be 25 feet long.

At least, it is on my computer: The pic I posted above is just a screenshot.

If I compress it down a bit to fit (sort of) on your computer screen, instead of a nice ski-slope leading into the long tail, we can see just how dire a drop off it is:

This isn’t even All Of It – there’s one more thing to consider. “The Report” went to great pains to find the top 7000-ish bestselling genre Kindle titles — And of those, 6042 had an Amazon Sales Rank under 100,000. An additional 845 books are listed in the .xls file available from Author Earnings — and these slide quickly further down the ranks, from Amazon Sales Rank #100054 for the book that didn’t quite make the cut-off to #752309 for the last, 6887th book to appear in their spreadsheet. 752,309th place sounds bad enough, but just how many ebooks are on Amazon, anyway?

2.4 Million. A very long tail, indeed. Amazon has absolutely no problem with this, by the way: The files themselves are small and only use bandwidth when downloaded. If the Number One Ebook sells a million copies, that more than pays for the lot — and the whole point of Anderson’s Long Tail is that sales are made along the whole length, not just the bestsellers on the far left end.

My first pic, the graph out to 3500, is about one-tenth of one percent of all Kindle ebooks. The odds may be slightly better with ebooks, as opposed to traditional publishing, and the payout better, but we’re still talking about lottery tickets. So, bright and shiny First Time Author, where do you think your book is going to end up on this graph? In that very slim top 0.1% way on the left, or somewhere in the long flat bottom with the rest of us?



Forbes: Please Hire Someone Who Understands Books, or Math, or Both.

filed under , 11 February 2014, 15:41 by

Forbes just put up Amazon Vs. Book Publishers, By The Numbers – claiming at least on the face to “ignore the overheated rhetoric for the moment and focus on the raw data.”

Fine. But can you hire someone who can do math?

Forbes: “$5.25 billion: Amazon’s current annual revenue from book sales, according to one of Packer’s sources. That means books account for 7% of the company’s $75 billion in total yearly revenue.”

I’d take that one further. Books, at least as has been self-reported by the members of the Association of American Publishers, is a $27 Billion a year industry. To be fair, trade books (publishing minus the textbook market) is only (only) $15 Billion. Amazon is the big, ugly, 500lb. gorilla of the market but two-thirds of books are still being sold elsewhere.

Putting that $5.25 Billion in context and knowing the publisher’s side is at least as important: one could argue that Amazon is only 7% invested in books and the Amazon-Publisher relationship, while publishers are at least 30% invested and growing increasingly worried as that fraction keeps getting bigger. This is the wrong way to think about the numbers (note my use of the phrase “one could argue”) but knowing the relevant percentages is more important than throwing around billions — and does a better job of putting the original New Yorker piece in context.

* Forbes: “19.5%: Amazon’s share of the e-books market. E-books now make up around 30% of all book sales, and Amazon has a 65% share within that category, with Apple and Barnes & Noble accounting for most of the balance.”

edit 14:59 12 Feb 2014: I’m not totally mean spirited. On review, Forbes poster Bercovici did go back and post a correction. The quote above now reads “19.5%: The proportion of all books sold in the U.S. that are Kindle titles. E-books now make up around 30% of all book sales, and Amazon has a 65% share within that category, with Apple and Barnes & Noble accounting for most of the balance.” — I still feel that this is a misreading of the 30%/65% data as Amazon’s Kindle Direct Program operates independently of AAP/mainstream publishing. My other points below are still valid. —M.

Thank you, Jeff Bercovici, Forbes Staff — you have successfully demonstrated you can multiply the integer 30 by 65%.

The number is completely meaningless, but you’ve certainly nailed the arithmetic. What in the hell am I supposed to do with 19.5%? I suppose, if it were described as the percentage of the Total Book Market that Amazon Happens to Sell as Ebooks Rather Than Physical Books, there might be some point in knowing about 19.5% — but this isn’t what the data means.

19.5% is NOT “Amazon’s share of the ebooks market” – a point directly disproved in the very next sentence of the Forbes article, where Amazon’s [estimated] share of the ebook market is listed as 65%.

Also, ebooks are only “around 30% of all book sales” when we restrict ourselves to sales self-reported by the 1200 or so publishers participating in AAP industry reporting, and again, that would be 30% of the $15 Billion in trade books, excluding the other $12 Billion in publishing annually from textbooks, which are still resistant to the widespread ebook adoption we’ve seen in other publishing categories. Of course, Amazon’s books sales would also include their Kindle-exclusive ebooks — a number not reported anywhere and also not part of the AAP’s estimates (the 30%-ebook number we all like to throw around). The stronger one assumes KDP to be, the smaller Amazon’s share of the trade book business—including the AAP’s publishers’ ebooks—but, if anything, a thriving Kindle program is even more worrisome to a publisher.

Just how much of Amazon’s [estimated] $5.25 Billion is ebooks? – more than 30%, I’d bet, since the publishers report 30% and Amazon sells at least as many ebooks as print books, by their own reporting. (or is that bragging?)

Just how much of Amazon’s [estimated] $5.25 Billion in book sales is Amazon’s? – This is a big ol’ question mark, because Amazon isn’t saying. Kindle Direct Publishing and the menagerie of imprints are, if nothing else, a growing fraction of Amazon’s book sales, and could be a significant fraction. How we parse it can make a big difference. If Kindle ebooks, CreateSpace print-on-demand, and Amazon Publishing account for exactly zero of Amazon’s [estimated] $5.25 Billion, that means Amazon really is selling 35% of all adult and juvenile trade books. I’d say the combined-Amazon-book-cheetah is getting close to a billion dollars, though, because the fraction I keep hearing for Amazon’s share is closer to 30%.

Ebook cheerleaders and Amazon partisans keep sharing anecdotal stories about just how great things are on their side of the dome. How much of Amazon’s ebook sales are Kindle native?

I might read the Forbes article and think 19.5%, but now I’m just rubbing it in.

How about used books, also available from Amazon – Are sales on Amazon’s marketplace figured into that $5.25 Billion? They shouldn’t be, as Amazon only collects fees on these transactions and the sales are actually banked by the seller-of-record. While used book sales wouldn’t impact the reported sales from the AAP, they certainly affect the public perception of Amazon as an online “book store” and that means Amazon’s mindshare for books is bigger than $5.25 Billion and the estimated dollar figure for “book” sales is almost certainly off.

George Packer did an excellent job describing how many publishers feel about Amazon. Forbes, in reporting on the article, pulls out some numbers from his article (in a mildly condescending way) for their puff-piece-listicle but adds nothing to the original, or the conversation.

##

I’m not done.

Forbes: “>50%: The decrease in the number of independent bookstores over the past 20 years. There used to be about 4,000 in the U.S.; now there are fewer than 2,000. Amazon’s arrival on the scene is only part of the story here, of course; the decline of the indies started with the debut of big-box stores like B&N and Borders.”

Do you want to go there, Mr. Bercovici? Amazon, Big Boxes, indie bookstores, wow things have changed but from the tone of the Forbes author we get the impression that Amazon’s “part of the story” is supposed to be the largest part. Let me show you how we provide context for a story:

[blockquote]

“The Wasserman piece [“The Amazon Empire: How the Online Colossus Snuffed Out Competitors and Their Next Battle for Publishing” : Steve Wasserman, 3 June 2012, The Nation article reposted at Alternet.org] is a long read, but a good one. Please note that in 1994, if the figures/fractions quoted are correct, then in the year Amazon launched 55% of the total book market was selling outside of bookstores! – we have short memories, it seems, and a long list of assumptions to work through when it comes to book retail. If Amazon were merely displacing book-of-the-month clubs and hoovering up the book retail that (in the 1980s) was happening in grocery stores and newsstands (newsstands! remember those?) then their stratospheric growth has a ready explanation that doesn’t involve the death of book stores. In 1994 the big-box-bookstores were just getting started: Borders & Waldenbooks were still owned by K-Mart (yes) and hadn’t been spun-off yet, that division consisted of 1,102 mall stores and just 75 Big Boxes; B&N had 268 stores alongside 698 (B. Dalton) mall locations. (Remember mall bookstores? I used to buy books there every weekend. The local mall had two bookstores in it. Good times, good times.)”
[/blockquote]
Let’s Talk About The Business, Then. : Rocket Bomber, 8 May 2013. [some edits for clarity; it’s OK, I cleared it with the author]

In the last 20 years, two multi-billion-dollar bookstore chains rose — and one fell. A hell of a lot has changed in 20 years.

In 1994, Viacom owned Simon & Schuster and was buying Macmillan USA; now in 2014 Macmillan (via the original UK root) is back in the US book business – but under the imprimatur of privately-held German firm Holzbrinck. Viacom spun off S&S, as the publishing arm of CBS. Hachette Book Group USA (Hachette Livre being the bookish face of French multimedia conglomerate Lagardère) was born in 2006 with the French purchase of Time Warner Books — and more recently Hachette has also added on Disney’s Hyperion. (Hyperion, I’ll remind you, was built by Disney from scratch in 1990.)

Rounding out “The [old] Big Six” – HarperCollins is only 25 years old, assembled from parts by Rupert Murdoch’s News Corporation over the course of the 1990s. And everyone is shadowed by the Randy Penguin merger: the imprints of Random House already read like a directory of 1947 New York publishing houses; added to Penguin’s haul the new Penguin Random House is set to publish half of all adult trade books (or more). That merger isn’t even a year old yet.

Publishing has gone on, of course: the day-to-day of editors and booksellers is of more immediate import than the boardroom maneuvers and empire building going on behind the scenes, but the corporate shenanigans still matter. It’s not that the publishing world suddenly changed in November of 2007 — a monolithic seeming industry that was already beset by supervolcanoes, tsunamis, and major tectonic shifts also got hit by an asteroid. (If a few bookselling dinosaurs are wandering around looking confused, I think they can be forgiven.)

The way people read has changed; the things people read have changed. Your options in the 1980s consisted of newspapers, magazines, mass market paperbacks, or maybe, rarely, an amateur newsletter or ‘zine — now people read more than ever but we’re staring at a screen, and occasionally it’s the screen we keep in our pocket. You can start your day reading an news aggregation site, follow up with a few expert blogs, churn through email, go back to the blogs (the funny ones), check your email again, waste time on tumblr, twitter, reddit, and then finish up by reading fan fiction in bed before falling asleep. You don’t even need to fire up your old-school-desktop-PC to do any of it, and seemingly, amateurs are in control of all of it. You can spend 14 or 15 hours of every day staring at a screen, reading.

Reading Demand has not changed. In fact, given all the new options, it may be increasing. The ways we meet that demand have adapted to the new tools — primarily the web, which is still the best part of the internet. Like the internal combustion engine revolutionized agriculture and oh-by-the-way also could be used for personal transport, the concoction of url-html-http that we call the web has revolutionized publishing (“the act of making something public”) and we’re still in the very earliest days trying to figure out what the ‘oh-by-the-way’ impact is going to be — on society as a whole, and on our personal lives. In 1914, whether we were riding in a horse-pulled omnibus, a steam-cable trolley, electric street car, or driving ourselves in a horseless carriage — we were still just going about our day. Motels, drive-ins, drive-thrus, the Interstate Highway system, and suburban cul-de-sacs came later.

Book retail, like all non-food retail, will suffer as we make the online & digital shift. The “major book publishers” may stall out as a ‘forgotten’ $15 Billion a year industry — no longer growing but instead, just serving the same niche for decades as we re-align our lives around the new technology. That doesn’t sound that bad to me. I know, ‘If you’re not growing you may as well be dying’ but if there were ever an industry that was readymade for a caretaker role, the stereotype of the quirky local bookshop supplied by small, early 20th century publishers fits perfectly — direct from central casting; a cliché right out of the gate.

Amazon isn’t the only thing to impact publishing and bookselling.

[blockquote]

“Let’s go through that again: In November of 1998, B&N had their own website, 15% of the book market, was looking to buy Ingram — the company supplying Amazon with more than half of their inventory at that point — and was being run by a driven, ruthless bastard whose modus operandi was buying up companies to either consolidate operations or just get bigger. Can I remind you that at that point Riggio had also bought Babbages, Software Etc., and GameStop and had built up this sideline into a chain of 500+ stores?

“This raised all-kinds of antitrust flags, apparently, so it’s no wonder the B&N/Ingram merger didn’t go through. I think when the deal went sour, Riggio took a step back to reappraise strategy. GameStop was spun-off into its own company and Barnes refocused on books. B&N built a massive warehouse of their own, and took up in-house distribution and logistics like a new religion. This quiet and behind-the-scenes stuff isn’t as flashy as mergers or new store openings, but the efficiencies B&N built over the 2000s are part of the reason they’re still open today, after 4 years of recession and shrinking consumer demand.

“Amazon borrowed a billion dollars (no exaggeration: they were carrying $1.4 Billion in debt by 1999) to build up the infrastructure they needed following this close call — 15 years ago the market changed, more distribution and warehousing was brought in-house and verticals were built. You might also be forgiven if you pointed to 1999 as the year Amazon changed strategic focus: from building a website and sales portal to building a business.

“I find it amazing that in 1999, the owner of a physical, brick-and-mortar bookstore chain was precluded from purchasing a book distributor (even when neither was the only player in their individual markets, and on the cusp of market changes already in motion and being trumpeted by both online-sales advocates and voices in the business press) — and the same sort of monopoly-building in 2012 is not just condoned by the state, but is being actively supported so long as some Justice Department lawyer can buy his ebooks for $9.99 instead of $14.

“It is said Amazon has 30% of physical book sales and 60-70% of all e-book sales. 15 years ago, Barnes & Noble was blocked on anti-trust grounds when they had only 15% of the book market. I find this fascinating.

[/blockquote]
Rocket Bomber, ibid.

I wrote that longish piece last year, and George Packer did all my research and a hell of a lot more to write the 12,000 word article that inspired an ongoing, and very relevant conversation about books.

That’s how you cite “raw data” and put things into context, Forbes. It’s fine to pretend that you’re the ‘serious’ one in the room, and that publishers and book partisans are the ones engaging in “overheated rhetoric”. But if you’re going to present to all the world as a business publication: at least do us a favor and learn about the business.

(And get the math right, too, while you’re at it.)



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