How Useless are Book Publishers in the Digital Age?

I'm a big fan of Matthew Yglesias at Vox, and he definitely caught my eye last week when he boldly declared that "Amazon is doing the world a favor by crushing book publishers."

The essence of his argument is that, in the old days of print books, publishers played a valuable economic role because they converted typewritten manuscripts into printed books and got them into the hands of distributors and retailers. The digital world is different because "transforming a writer's words into a readable e-book product can be done with a combination of software and a minimal amount of training."

Yglesias is not particularly subtle in his thesis: "In the brave new world of e-publishing . . . publishers are getting squeezed out because they don't contribute anything of value." Note that he's not saying publishers contribute less value than they use to but rather that they don't contribute anything of value at all.

Evan Hughes shot back with a defense of the publishing industry in The New Republic, offering the interesting analogy that "a publisher’s list of books is in essence a risk pool, a term most often associated with health insurance." Authors would be a lot worse off, he argues, without that insurance, and many great books wouldn't be have been created had a publisher not been willing to take a chance with an advance. They even publish things like poetry that aren't particularly profitable, using their more lucrative titles to cover the bills.

This, to me, isn't a particularly strong argument in support of publishers' value. There are any number of ways an author could fund his or her next project if getting money upfront was the main thing preventing him or her from getting a successful book to market: loans, for instance, or using new crowd-funding sites like Kickstarter, or an old trick many authors have long resorted to with some success—working a day job.

Publishers offer a lot more value than just advance funding, and I say this as an author who has both written for traditional publishers as well as self-published my own eBooks. Here's just a few valuable things they do:

• Working up front in the proposal stage to guide and shape the concept of the book. The mere process of trying to sell a book often helps refine and improve it.
• Providing set deadlines to encourage authors to actually finish the damn book (for me, this part is actually a huge value)
• Performing a range of editorial services: page editing, line editing, proofreading, index creation, etc. (though we fight like cats and dogs over that last one during contracting.)
• Graphic design: one of the key best practices for making eBook sell? Have a professional looking cover. It makes a big difference.
• Illustrations: novels don't need photos or illustrations, but many other types of books do. Publishers frequently pair authors up with photographers or illustrators and handle the work of sizing and getting the images ready for production, which takes time and skill even with all the great new software available to us.
• Typesetting and layout: sure, in the digital world this is a lot less important and difficult than in the print world, but formatting an eBook is still a lot of damn work, and it does take a certain level of technical skill, including HTML coding. There's a reason why there's an entire subindustry out there that sells services to help self-publishing authors format their eBooks.
• Sales: I know that we're moving to a digital world, but physical books are likely to remain with us for quite some time. Publishers still have field sales forces that work face-to-face with book buyers and retailers. And, depending upon what kind of books an author publishes, non-bookstore channels like retail chains, gift shops, and specialty stores can be a fairly good income stream for authors.
• Cachet & respect: A publisher's imprint is a significant endorsement, one that makes a book more likely to get noticed. Again, in an eBook world with reader reviews and rankings and lots of social networks for endorsing, this becomes less important, but it still has a lot of value to be able to say, for instance, "Random House is publishing my new book."  
• Publicity & marketing: Yglesias' case is at his weakest when he declares that "publishers are terrible at marketing," and that assertion is worth looking at in more detail.

Here's the case Yglesias makes for how we knows that publishers are bad at marketing:

• Authors always complain that publishers don't market their books well
• If publishers were any good at marketing then they would have a lot of leverage over Amazon instead of vice versa
• Authors may one day discover that they do have the power to market their own books. 

Wait, so authors do have the power to market their own books and they are also constantly whining about how their publishers are awful at it. So, how come more of them aren't out there doing it themselves?

Maybe it's because marketing your own book sort of sucks. Publishers may be lousy at marketing, but many authors (myself included) are even worse at it or, more to the point, don't really enjoy it and are happy to have someone else do it for them. Even the publisher that I think did the worst job of marketing one of my books managed to get review copies into the hands of dozens of publications and get it reviewed quite widely. Just the mailing alone is expensive and very time consuming. 

Will review copies matter when paper books go away all together? Emailing someone an eBook or PDF version seems far less likely to grab their attention than a nice, well-packaged book. I suspect that means packaging and gimmicks and buzz generation—a.k.a. good old PR and branding—will become increasingly important in the digital era.

And then there's writing press releases, and distributing them to the press (and figuring out the emails of everyone to send them to), and coordinating book tours. Authors despise book tours already, but how much more tiresome will they be when we have to make all the arrangements ourselves?

Book publishers, in other words, offer quite a bit of value to authors. The move to eBooks may be diminishing and changing that value, but it's a gross overstatement to say that publishers "don't contribute anything." 

Yglesias is absolutely spot on, though, in his point that the demise of hardcopy books—that is, the need to print and distribute physical books—changes the equation dramatically, just as the decline of printed newspapers and magazines is reshaping the equation within the news industry.

The really interesting question is what book publishers might look like in the future. Sure, an author today could conceivably go 100% eBook (passing up the not insubstantial slice of income that hardcopy books still generate) and pay a freelance editor to handle the editorial functions, a freelance photographer for illustrations, a graphics designer for cover and layout, and a PR person to do the marketing. That would involve not just finding and hiring and signing contracts but also paying and, possibly, firing those people, too. An author, in other words, could basically create his or own virtual publishing company and spend a awful lot of time doing all sort of things except for actually writing. 

It's true that many traditional book publishers don't do these things very well, particularly when it comes to producing and marketing eBooks in the new world of branding, social media, and in-person events. But, that just suggests that we are likely to see the rise of new, more agile, and more effective digital book publishers in the future, not the demise of the publishing function itself.

   

Moving from "Mobile First" to "Mobile Only"

The concept of "mobile first" development--that is, developing for mobile device contexts first when creating a user experience and then adding layers of enhancements for larger form-factor devices--has been around a good four years or so now. (The term was coined by web designer Luke Wroblewski way back in 2010.) But, it's still taking a long time to work its way into people's minds.

On a regular basis I hear from clients that they have on their list of upcoming projects "our mobile app"--either launching a mobile app for the first time or enhancing the one they already have out there to make it more useful and "drive adoption." Though they may even cite "mobile first" philosophies, it's clear that in practice a "mobile app" for their organization is still a sort of adjunct to their core business--something generally being pleaded for by their sales and marketing departments so that they have something new and shiny to brag about or, unfortunately all too frequently, because their main competitor just released a mobile app and they desperately want to say, "we have one, too!"

But, the world is shifting beneath our feet even as we race to catch up with the last iteration of mobile technology. Increasingly, mobile devices are ceasing to be another way our customers can do business with us and are instead becoming the only way that a large number of our customers will do business with us. And, that means that for many users it's not a question even of "mobile first" but of "mobile only."

In the first stages of mobile application development, applications tended to be about "accessibility"--giving users a way to access those functions they needed--checking their email, looking up the status of an order, finding the nearest retail location of a store--when they were away from their office or their homes and not able to access their computers. It didn't have to be as rich and effective an experience, and it didn't have to be a complete experience. It just had to let them get a few basic things done.

In most companies' initial forays into mobile-enabling their business, they typically looked to their web site and selected the top 5 or 6 functions that their customers or members needed--with an eye, in particular, for things that would be useful when someone was out and about doing things like shopping, commuting, and eating at restaurants. And, that made sense when you looked at mobile devices as an adjunct, something used when a regular desktop or laptop computer wasn't available.

But, increasingly mobile devices are becoming the primary way of accessing the Internet by a significant number of Americans. The Pew Research Internet Project reports that in 2014, 64% of Americans use their smart phones to go online and, of them, 34% go online primarily using their phone and not via a larger device such as a laptop or desktop computer. Not surprisingly, those numbers skew even higher if you just look at younger Americans. 83% of 18-29 year olds, for instance, have a smartphone vs. 49% for 50-64 year olds.

For businesses, that impels an entirely new mode of thinking it comes to mobile strategy. Can our customers do business with us from initiation through the full breadth of the customer lifecycle? That is, can they find us, shop for and purchase our products, maintain the relationship for customer support and maintenance, and ultimately renew or buy more of products--all on a mobile phone?

For some innovative businesses, like Uber, the answer is a resounding yes. Despite being a long-time and repeat Uber user, I didn't even know whether they had a consumer web site until I checked it out while writing this post. (It turns out they do, but you can only update your profile and view trip history, not actually buy their products--that is, request a ride--through the browser site.)

Most other businesses, especially ones with older, more established business models, are somewhere on the spectrum from "not mobile enabled at all" to "somewhat fully mobile." But, many are starting to catch up. Almost all the big retail banks now support check deposits on their mobile apps, which may well do away with the last reason many of their customers have to ever visit a physical bank location. In an interesting digital and bricks & mortar hybrid, the major retail pharmacies like Walgreens and CVS have apps that let their customers print photographs directly from their phone and pick them up at their convenience that the nearest retail location.

That key question--how could customers do business with us solely over their mobile phone?--needs to be at the front of minds when we are formulating our digital commerce strategies and designing our online use experiences. After all, if our company isn't the one doing it, there's probably someone else out there who is

Let's Just Embrace the Term "Big Data" and Move On

Over the past few months, every time I've had a conversation in which the phrase "Big Data" is used, the speaker inevitably does the whole air quotes thing and immediately apologizes for using the term. It's easy to understand why. Like "cloud computing" and "service oriented architecture", it's one of those terms that got co-opted by the marketing department and slapped upon anything vaguely related to its original meaning. If you're at all interested in the underlying technology and its potential value, uttering the phrase "Big Data" makes you feel like you're selling snake oil.

But, snake oil, it turns out, was really effective at treating arthritis and bursitis. Big Data technologies won't cure every or even most of an organization's data problems, but they are really good for a lot of legitimate things. And, we really do need an umbrella term that can sum up in two words a whole set of complex concepts, like processing large volumes of data, handling unstructured data, real-time stream-based analytics, focusing on correlation rather than causality, tolerating messy data, new types of data stores and highly-scalable parallel processing techniques.

For a while, I tried to come up with a new label to apply to this bucket of technologies, approaches, and techniques--"Advanced Data Management," "21st Century Analytics," things like that. And, everytime I trotted out one of my neologisms in conversation, I had to immediately back up and explain what I meant, and eventually I would end up saying, "You know, 'Big Data'."

So, let's take the term back from the snake oil salesmen and embrace Big Data. It's a perfectly useful phrase, and it will save us an awful lot of time pausing and apologizing and explaining what we mean.

Disruptive Technology & the Publishing Industry: A Look Backward

These days, you probably have in your home an example of a technological innovation that utterly and violently reshaped the entire business model of the publishing industry. In fact, if you're like most Americans, you probably have more than one of them. They offered publishers much easier and wider distribution of their products, but in exchange they slashed publishers' per-unit revenues by some 90% and reduced authors' earnings to mere pennies. Predictably, it  set industry veterans to wailing and gnashing their teeth, declaring that the business was doomed.

No, I'm not talking about smart phone or Kindles or iPads or even laptop computers. I'm talking about paperback books. The market disruption they caused happened 70 years ago.

Disruptive Technology, 1940s Style

A Paperback Revolution

The American Paperback Revolution began in 1939 when Robert F. DeGraff founded Pocket Books. DeGraff's books were small (4-1/4 by 6-1/2 inches), printed on cheap paper, and bound in semi-stiff covers. They sold for twenty-five cents. In order to expand their market, Pocket sold the books not only through bookstores but also in drugstores, newsstands, and railroad stations. Two other companies quickly followed Pocket's lead. Penguin Books, which had been operating in England since 1935, opened a U.S. branch in 1939. Two years later, magazine publisher Joseph Meyers began Avon Pocket-sized Books. The industry stalled during the Second World War, when paper supplies were strictly rationed, but after the war at least two dozen more firms raced into the market, including New American Library, Bantam, Fawcett, Popular Library, and Dell.

Let's look at some of the parallels between these two disruptive phenomena in the publishing world: what the rise of paperbacks did to traditional hardback book publishing in the middle part of the 20th century and what eBooks and online journalism are doing to the print publishing world today. (For convenience sake, I'll roll eBooks and online journalism/magazines into a single category called "ePublishing")

Lower Costs

Paperbacks: The low cover price of the new paperback format--twenty-five cents for a paperback compared to between two dollars and three dollars for a typical hardback--made books more affordable for the average reader, but they slashed the per-unit revenue for publishers by almost 90%

ePublishing: While traditional publishers are fighting to keep their prices from being slashed a full 90% (which would be pricing an eBook around $2.50 vs. a $25 hardback), they've been knocked down quite a lot—and, there are plenty of $2.99 and even $.99 options out there competing against them. It's even worse for journalism, where ad revenues online are a mere fraction of those of print.

Wider Distribution

Paperbacks: The distribution of paperbacks, which were sold not only in books stores but also in convenient locations such as drugstores and train stations, caused books to be more widely available than ever before

ePublishing: Now, you don't even have to find a retail establishment. You can download a book from your bed, on a train, or while driving down the road in your car, and you can catch up on the latest news and read your favorite long-form journalism anytime, anywhere, too.

Wailing, Lamentation, Gnashing of Teeth

Paperbacks: Publishers declared it was the end of an era and they were all going broke. Authors echoed the sentiment and, except for a early adopters who embraced the new genre, most "serious authors" rejected paperbacks as both cheapening and an assault on their income.

ePublishing: Ditto.

And the Sky Did Not Fall

Paperbacks: The book publishing industry got along just fine once they factored the economics and distribution requirements of paperback publishing into their business models. Authors learned to how to value and sell their paperback rights, and they became a major chip in their contract negotiations with publishers.

ePublishing: We will see. But it seems likely that the sky will not fall, either.

A Boon to Authors

Raymond Chandler
Grumpy about Paperbacks (at first)

In the end, what appeared at first to be a major threat to authors' livelihood turned out to be an economic boon. We'll use Raymond Chandler, the acclaimed Los Angeles detective novelist and creator of private eye Philip Marlowe, as an example.

At the start of the Paperback Revolution, authors had few options for making money from their books beyond traditional hardback royalties, for the sale of subsidiary rights was not a major factor.

Before paperbacks, the reprint market was limited to a few firms like Grosset & Dunlap, who produced cheap hardback reprints in small print runs--and paid even smaller royalties. In 1940, Raymond Chandler made a whopping $200 from Grosset & Dunlap's $1 reprint edition of The Big Sleep, his first novel, which they produced from the same printing plates used by Knopf, the original publishers. 

The movies industry was in its heyday, and authors could sell the movie rights to their books, but the returns were small tiny compared to the prices bestsellers fetch today. In 1941 and 1942, Chandler sold the screen rights for his second novel, Farewell, My Lovely to RKO Pictures, and those for his third, The High Window, to Twentieth Century-Fox. His combined take from the both was $2,750--a nice bonus, for sure, in 1942 dollars, but not enough to be the foundation for a career.

Enter the new cheap, widely-distributed paperbacks editions. They increased authors' potential audience and allowed them to keep their books in print long after they ceased to be available in hardcover. These developments rewrote the terms of professional authorship in the United States, giving previously-struggling novelists a new means of earning income from the new works and, equally or even more important, from their back catalog of things they had finished work on years before.

The paperback industry had gotten started in the late 1930s, but it was largely put on hold by World War II paper shortages. Still, by the beginning of 1945 nearly 750,000 copies of The Big Sleep and Farewell, My Lovely, Chandler's first two novels to be reprinted in paperback, had been sold. Four years later, over three million copies of Chandler's works had been published. Despite the penny per copy royalty, with large sales the returns on the reprints were becoming significant.

 Chandler had suspended writing novels to pursue income writing screenplays for the studios in Hollywood, a business that paid well but he thoroughly detested. In 1947, he wrote to his agent, "I am a damn fool not to be writing novels. I'm still getting $15,000 a year out of those I did write. If I turned out a really good one in the near future, I'd probably get a lot out of it."

Chandler could not live on the reprint royalties alone, but they provided a significant portion of his income and helped accelerate his return to novel-writing as a full-time profession in the 1950s.

Electronic publishing likely stands to be a boon for both authors and publishers, too, once they figure out how to navigate the new electronic landscape. We'll look at the way some of them are doing just that in an upcoming post.

It's a good reminder of how disruptive technologies often play out in an industry. At first, it seems like the sky is falling, and not every established player adapts their business models correctly to survive the change. Those that are able to adapt, however, often come out on the other side stronger than they were going in.