Publishers

NYMag has a very good article on how big old publishers are faring. It is not a happy tale. It illustrates once again the perils of financially engineered consolidation (think banks and car companies). Book publishing used to be a business in which small firms, run by passionate editors, found great authors and developed personal relationships with them. Occasionally, they struck it rich when one of their authors "caught fire" with the reading public.

Today feels like the calm before the storm. Publishers are worrying about the recession. That is a small wave and will soon pass. But we won't be returning to normal when GDP growth resumes. The three big digitization waves -- Google Book Search, e-books, and print on demand -- will have a far bigger and more lasting impact.

Publishers did quite well during the first phase, when retailers got "Amazoned." They sold more of their back catalog (i.e. they enjoyed the long tail).

On the surface, all is well with the Kindle. Publishers get the same percentage from an e-book that they get when a retailer sells a print version of the book, and their costs are lower. Amazon is playing along. But when it gets more traction, it will squeeze.

Publishers have to figure out not so much how to negotiate with Amazon (competition from other consumer electronic devices will take care of that), but how to remain relevant to authors. Even saying this seems contrarian. Publishers have had all the power till now. The bane of an author's life has been to find a publisher. Plastering the wall with rejection letters and recounting tales of arrogant editors are rites of passage for every author.

Unbundling Publishers

But what services exactly do publishers provide to authors? Let's disassemble the package:

1. Advances. Newbies don't get them, and the rest don't need them.
2. Editing. Do you have a social network that could give you constructive criticism?
3. Cover design. Yes, a great one can make a book. But how much do graphic designers charge?
4. ISBN. Here is an interesting one. To be a publisher, you need international standard book numbers (ISBNs). This is actually what defines you as a publisher. An ISBN is a 13-digit number that uniquely identifies a book or book-like product that is published internationally (read more about it here). The application process that takes about 15 days and costs about $250 for 10 titles.
5. Marketing. Some authors will say, "What marketing?" For mega-star authors, publishers have to spend a ton on marketing to recoup their advance. Authors who don't get advances won't expect much marketing and will end up doing a lot of the work themselves, which wouldn't be so bad if they were getting 30%, rather than 10%.
6. Brand. An author may realistically know that the publisher won't do much marketing and yet still want a brand-name publisher. The reason is partly to feel good: "Wow, I am a real author now." But it is also a rational calculation. Which is better, selling 100 books and keeping 30% or selling 300 books and keep 10%? That's right: it is about the same. Does a brand-name publisher increase sales three times?
7. Retailer shelf-space. Publishers take a big risk on their "sale or return" policy with major retailers. So, you might get retail shelf space, but that is changing, as we will see below.
8. Amazon "shelf space". This is unlimited, so your publisher will get you in here. But any publisher will get its authors in there. Technically, any entity with an ISBN is a publisher.

If any entity with an ISBN is a publisher, then authors could act as their own publishers. Or we could see cooperative publishers emerge. Or alternative publishers, such as indie and network publishers, could grow stronger.

But let's consider first how book retailing might evolve.