Evolving world of publishing

I’ve followed Mike Shatzkin for years. Mike offers strategic consulting to the global book publishing business and posts every 4-6 weeks on happenings in that world. His latest post, which considers the end of the general trade publishing, got me thinking.

Mike’s premise is that “General trade publishing will be soon be recognized as an artifact of a trade that no longer exists. It doesn’t make sense any more for the organizing principle for title acquisition and marketing to be “if it works in bookstores, and we are confident we can convince them it will, we can do it”.”

Mike Shatzkin’s article compares the publishing world of the 1990s with today’s environment. I love making diagrams to reflect what’s going on and have attempted to highlight the differences Mike Shatzkin described in the following diagram.

  • It’s no surprise that Amazon is the elephant in the room. We’re all aware of its reach and influence. It operates as a home for writers who self-publish or are hybrid authors and as a publisher with at least 7 imprints. Through its electronic delivery and marketing machine, Amazon bypasses – and reduces the influence of – distributors, wholesalers, bookstore chains and small bookstores. In two earlier posts, I’ve also looked at how Amazon manipulates its best seller lists to feature its own authors. See here and here.
  • Self-publishing is an increasingly viable alternative for authors. In addition, for authors published by the ‘Big 5’, self-publishing offers an alternative source of revenue for books declined by their publishers, a more lucrative option in the face of declining advances, and/or a way to promote their backlists once they regain rights to those books. An increasing share of books are self-published.
  • Self-published authors along with Amazon reach readers directly. They bypass wholesalers and distributors, are infrequently sold through bookstores, and are less likely to be on library shelves.
  • Today, bookstores are roughly 25% of book sales. This means that it’s increasingly difficult for publishers to make the same margins they did in the past publishing a new book.
  • Audience-specific and topic-specific markets – particularly for non-fiction but also for fiction – are the way of the future. Publishers need data and marketing mechanisms to reach them.
  • General trade publishers who created profitable businesses based on selling 80% or more of their titles through bookstores must find, and are finding new mechanisms to reach readers. Unfortunately, Amazon has such a head start that this is a severe uphill climb.
  • E-books have upended the old world. With e-books more than 18 million titles are available at the click of the mouse. As a result older titles are taking a big share of revenue away from new titles.
  • Print on demand changes the need for large print runs. Print-on-demand also means that older titles that might have gone out of print under the 1990s model can in concept remain in print forever.
  • Today, a news event can trigger immediate marketing and sales from the backlist. The emphasis here is on backlist. Such sales undercut the sales of new releases.

Let me add a few of my own thoughts:

  • Bookclubs – remember the book of the month club? – are much less significant than in the past.
  • Between the 1990s and now, several book chains and many small bookstores have disappeared.
  • With the proliferation of cheap books, either through services like BookBub or self-published authors or tools like Amazon Prime, libraries do not have the prominence with readers that they did in the past.
  • Big Box stores sell books at discounted prices. They are one distribution channel Amazon uses to sell print copies of their authors.
  • Through its own pricing strategies, Amazon is training readers to expect cheap books.

According to Mike Shatzkin, all of this means that the notion of ‘general trade publishing’ is almost an anachronism.

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M.K. Tod writes historical fiction. Her latest novel, TIME AND REGRET was published by Lake Union. Mary’s other novels, LIES TOLD IN SILENCE and UNRAVELLED are available from AmazonNookKoboGoogle Play and iTunes. She can be contacted on FacebookTwitter and Goodreads or on her website www.mktod.com.

Lifetime Value of an Author

On my first (and now defunct) blog, One Writer’s Voice, I wrote about the dynamics of making money as a traditional author. With the rise of self-publishing as an increasingly viable way for authors to bring their content to readers, I thought it might be helpful to reexamine that notion.

Let’s consider the writing industry, a term I prefer to “the publishing industry” because it puts the emphasis on those creating content and implies a shift in the balance of control amongst writers, influencers, publishers and agents. One statistic from a 2008 case study on the industry is: 20% of a publisher’s titles generate 80% of its sales and profits. In other words, publishers lose money on a significant percentage of their books. Without doubt, authors whose books continue to lose money are either swiftly, or not-so-swiftly, dropped by the publishers who took them on. Of course, many authors go on to earn money for their publishers over time as illustrated below.

Author profitability

Costs represented in red include editing, new author support, advances and royalties, advertising and promotion, production and distribution. Revenues (in green) include book sales, foreign rights, subsidiary rights and so on. One could argue with the exact size of each bar on the chart, however, the point is subsequent books create synergies, sparking sales of earlier books and reaching wider audiences. In theory, publishers along with authors and agents gradually earn a return on their investments.

Costs are changing with adjusted publishing, distribution and marketing channels. Authors are taking on different tasks – some might argue to the detriment of their primary purpose of content creation. Revenues might increase if authors can reach readers more easily and create demand through other than the traditional mechanisms. I’m sure all this has been said before.

What does the equation look like in the self-publishing world or in a blended world of traditional and self-published authors?

Life time Value Self-Pub

 

A number of self-published authors are subsequently taken on by traditional publishing houses. Is this a different way to share risks between authors and publishers? Will it result in better choices on the part of publishers?

Lifetime value blendedAgain, the diagrams are conceptual, don’t pay too much attention to the size of each bar on the charts.

Questions to consider: Which costs should authors bear? How can authors participate more effectively in advertising and promotion? How will the ever-changing dynamic of technology affect the costs of publishing? Who should benefit from a different cost to revenue equation? What responsibility do readers have?

And … what can authors do to manage costs? Reach more readers? Work effectively with publishers? Write productively?

The charts make the process look simple and we know that it is anything but. Self-published authors struggle to break even despite writing more books. Self-published authors may be taken on by a traditional publisher and still not break through to better sales.

What seems clear is authors must write many books in order to have a hope of earning an income from their writing. Unless, of course, they are very lucky 🙂