RicDay on Publishing

Yesterday’s announcement by Amazon that they have retained Larry Kirshbaum to head their publishing operations should not have come as a surprise. It was inevitable.

The shift to digital has confused and disrupted a great many publishers. The "big six" conglomerates have been especially confused, because their business models are not built for this.

Brand Identity

When those conglomerates were formed via the acquisition of multiple imprints, the corporate umbrella absorbed the imprints and stopped promoting their brands. The absorbed publishers had mostly been specialists in particular genres: readers knew the kinds of books Knopf published, versus the kinds of books they might find under the Dutton, Bodley Head, or St Martins Press imprints. Those imprint brands represented a filter, allowing a reader to make a judgment whether a book by an author they did not know might fit their reading preferences.

Author Brands

In the world of conglomerate publishing, the author-as-brand idea took hold. Best-selling authors had their names trumpeted on the cover; the book title became secondary while the publisher identity all but vanished. Print marketing took on board the approach of detergent vendors: buy lots of prime display space and push the author like crazy.

Successful authors were encouraged to turn out multiple titles fast; either make a successful novel into a formulaic series, and/or we'll help you bring on board a co-author or two so we can increase the churn rate. That this resulted in lower quality writing was irrelevant: has Tom Clancy written anything really worth reading since The Hunt for Red October? Doesn't matter, he's sold millions of copies of books with his name on the cover.

The Digital Disruption

The "sudden" popularity of ebooks startled traditional publishers. I'm sure that many thought the advent of ePUB and Kindle were yet another short lived abberration. "People love and want paper" was their mantra.

When it became apparent that ebooks were starting to sell rather well, most publishers took the cheap-and-dirty way out: they sent print PDFs of their backlist books to the cheapest offshore conversion shops they could find, then tossed the resulting files out into the ebook world without bothering to check the quality.

The quality, of course, was godawful. Those print PDFs had all sorts of (typesetter) code in them which the semi-automatic conversion operations couldn't handle. Word spacing marks caused adjacent words to concatenate; en dashes turned into peculiar characters. What readers saw were patches of junked up text in the ebooks they were buying, and their perception of product value plummeted.

Windowing

While ebook sales were rising, prices at retail were falling. Amazon and others aggressively discounted ebooks to drive market adoption and market share.

Publishers hated this, so they decided to "window" ebook releases, refusing to produce ebook versions of new titles until they had enough time to milk the much more profitable hard cover market. Digital scans of hardcovers multiplied on torrent sites.

Agency Pricing

Conglomerate publishers also hated Amazon's $9.99-and-under pricing strategy. So they fought back, insisting on an "agency" arrangement that would let them set the retail price. Amazon had little choice but to accede; the five largest conglomerates which pushed for agency pricing represented a significant portion of Amazon's book sales in all formats.

A Side Dish of Rights

The conglomerates are multinational. They have a corporate presence in most every market which is significant to their book sales. Author contracts are written for publishing rights per country and print books are published in each country. This both avoids the cost (and retail price) penalty of shipping books around the world, and provides certain tax structuring benefits to the parent company.

Of course, ebooks suffer no real shipping costs. The world of the Internet is also a much smaller place today and communication also knows no real boundaries. So I can go to LibraryThing, or GoodReads, and learn about books published all around the world which might interest me. Problem is, I cannot buy most of those books, because their publishers are still stuck in the 1950s rights model. I can find a fair number of those books on torrent sites, however.

Amazon's Interests

Amazon is a data-driven, consumer-facing company. Their business interest is to sell to the consumer what the consumer wants, when the consumer wants it, and do it better and faster than anyone else. To do this, they are heavily invested in analytics: they track customer buying and seek to match each customer's interests to product displayed when the customer visits. They monitor customer behaviour, respond rapidly to customer feedback, and operate a highly efficient delivery system for the products they sell.

Book publishers do almost none of these things. To book publishers, the customer is the retailer, or perhaps a step before that, the distributor (for smaller publishers whose distributor also provides the sales team who talk to retailers).

Book publishers historically have gathered little or no demographic information on those who read their books and mostly do not have systems in place to do that now. In fact, an amazing number of publishers don't have their own ecommerce websites, having (quite wrongly, in my view) believed having such a website would be competing with brick and mortar retailers.

The Disruption

The signs have been there for a while: Amazon has been building an ecosystem which would allow it to replace the publisher. Yesterday's appointment of Larry Kirshbaum is just another step in that direction, albeit a large one.

What Amazon seems to be saying is, we've had enough of this obstructive, consumer-unfriendly approach by publishers and if you won't release ebooks in a timely fashion, at an attractive price, we'll do it because that is what consumers are demanding and we believe authors also want.

Next

Watch for Amazon to aggressively pursue a world rights strategy and a very flexible pricing strategy. They will be offering authors inducements to join them. They may test alternatives to the royalty advance system; I think a royalty "escalator" arrangement tied to volume sold could be an interesting approach.

Barnes & Noble will have to respond. They have already indicated that they see their future involving more digital and less brick and mortar, and have some publishing experience (Sterling). An interesting approach for B&N would be to continue shedding big box stores and all the supply chain headaches associated with stocking them. Instead, us the brand to build micro stores in well trafficked retail locations, and equip them with Espresso machines to print on demand, on the spot. Also use the retail sites to sell Nooks and provide Nook owners with the means to purchase ebooks on the spot.

Whatever happens in the months and years to come, I think there is a good chance that we will look back on this mid-May weekend as a bit of a watershed in book publishing. One of those "tipping point" moments when an industry which had been sitting up and begging for it for a long time, finally got shaken, not stirred.

Opinions?