An Open Letter to Big Publishing
Author and regular visitor Lily White LeFevre has taken a Reason essay about the demise of Kodak, then excerpted and annotated it to apply to Big Publishing:
You may have heard of confirmation bias, whereby people choose to notice and believe whatever rumors, news stories, and quasi-academic studies confirm their basic worldview. Well, get your mind around existence bias, where the mere fact of a person’s, business’s, political party’s, or country’s existence is taken as unspoken and unchallenged proof that the same entity will exist in largely the same form tomorrow, the next day, the next month, the next decade, forever and ever, amen. This despite the fact that the Western world, and the United States in particular, stands out in the history of Homo sapiens as the most vigorous producer of constant, dynamic change.
. . . .
Yet there is a glowing ember of real hope in this gloomy picture, and it lies, paradoxically, right alongside our inability to detect it. The same revolutionary forces that have already upended much of American commerce and society over the past 40 years, delivering us not just from yesterday’s bogeymen but into a futuretastic world of nearly infinite individual choice, specialization, and autonomy, are at long last beginning to buckle the cement under the most ossified chunk of American life: [big publishing]. A close if idiosyncratic reading of recent U.S. history gives us a blueprint for how to speed up that process of creative destruction in the realm of [publishing]. Because it’s not true that nobody predicted such history-altering innovations as the Internet, nonviolent resistance to totalitarianism, and the home-brewing renaissance, among a thousand other happy developments in the modern world.
. . . .
Nothing in 21st-century life seems as archaic, ubiquitous, and immovable as the [six largest publishing conglomerates]. … While rhetorically and theoretically at odds with one another at any micro-moment in time, the [six houses] manage to create a mostly unbroken set of policies and governance structures that benefit well-connected groups [themselves, distributors, booksellers] at the expense of the individual [authors and readers]. …
But what if that’s the existence bias talking? What if the same elements that extend the incumbents’ advantage threaten to hasten their demise? Luckily, economists have a particular fondness for studying what [the big six] have become: the longest-lived [oligopoly] in American history. But while researchers have done interesting work explaining how [shared monpolies] collude with one another to carve up captive markets, they generally fail to address the most interesting moment of all: how customer-unfriendly collusion and customer-empowering technology combine to produce an inevitable consumer revolt, sweeping one or more of the dominant players into the dustbin of history.
. . . .
Technological advances gave consumers choices that Kodak’s fat bureaucracy was unwilling to provide. Writing in the Wall Street Journal in November 2006, William M. Bulkeley explained how the implications of this insight ranged far afield from the world of processing photographs:
“Photography and publishing companies shouldn’t be surprised when digital technology upends their industries. After all, their business success relied on forcing customers to buy things they didn’t want. Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus to get the good stuff. . . . Eastman Kodak and Fuji Photo Film had a highly profitable duopoly for 20 years before digital cameras came along. They never dreamed customers would quickly abandon film and prints.”
When given real choice, especially the choice to go elsewhere, consumers will drop even the most beloved of brands for options that enhance their experience and increase their autonomy. We have all witnessed and participated in this revolutionary transfer of loyalty away from those who tell us what we should buy or think and toward those who give us tools to think and act for ourselves. No corner of the economy, of cultural life, or even of our personal lives hasn’t felt the gale-force winds of this change. …
…Kodak couldn’t count on a guaranteed revenue stream: Consumers abandoned its products, and now the company is basically done. The history of private-sector duopolies and even monopolies is filled with such seemingly sudden disappearing acts: The A&P supermarket chain—if you’re under 40 years old, or from the West Coast, you probably haven’t even heard of it—enjoyed a U.S. market share of 75 percent as recently as the 1950s. Big-box music retailers and bookstores were supposed to bestride the land like colossi at the turn of our new century, but Virgin megastores have all but disappeared, and Borders has been liquidated. Dominant newspapers in one-paper towns were able to book some of the economy’s highest profit margins for four decades—more than 20 percent a year, on average, positively dwarfing such hated industrial icons as Walmart—yet with the explosion of Web-based competition, these onetime mints are now among the least attractive companies in the economy.
There is a positive correlation between an organization’s former dominance and its present inability to cope with 21st-century change. As technology business consultant Nilofer Merchant has aptly put it, “The Web turns old industries on their head. Industries that have had monopolies or highly profitable duopolies are the ones most likely to be completely gutted when a more powerful, more efficient system comes along.”
Link to the rest at Lily White LeFevre
For all the Big 6 folks who read this blog (and I hope there are some, because if there aren’t, they are all doomed), forget about Kodak, except as a bogeyman to motivate your employees. Study IBM. IBM was in a very similar position, but Kodak is essentially bankrupt and IBM is still in business. They don’t own the entire computer global computer industry anymore. In fact, in many ways they are a minor player, but they are bigger than they ever were when the owned the whole thing. Why? Because the industry is so much bigger than it used to be. They eventually realized that “computers” meant more than giant behemoths that filled an entire room. They used their dominant position in mainframe computing as leverage into other markets. They even created a new market for personal computers that contained the seeds of their own eventual withdrawal from it at the very beginning. In short, they evolved. They had their share of missteps along the way (they hope no one remembers OS/2), but they were able to embrace change. Nowadays, they aren’t much of a hardware company. They aren’t even much of a software company. They are a powerhouse in the services business. Get a clue. Your most abused employees are your only hope for future success. The people who do the dirty work of turning a manuscript into a book, the copy editors, the cover artists, the folks who do layout and design, are the ones who can turn your only real asset (the backlist) into something of value (e-book and POD files). If you’ve got a clue, you will start shedding the overpaid star editors, all the layers of non-productive types who sit in meetings all day, and most your managers as soon as you can. Buy them out if you have to, but dump them. Stop over-paying for big name advances, kill the returns policy, and start looking for new partners. Take some risks. Do all this even if, especially if, the rest of the Big 6 don’t. Your current path is leading straight to the corporate graveyard.
Well said, William.
I’ve made the argument over the past few years that newspapers should do exactly what you’re advocating, but they’ve done the exact opposite. They shed bunches of the little people who were responsible for producing the actual products, downsized their offerings while raising prices and erecting barriers on readers, and propped up ineffective and bloated management structures that leech away a sizable portion of their remaining assets while offering very little of substance in return. Hence, they’re continuing to hemorrhage money quarter after quarter going on six years now, and only the most deluded print-philes still believe newspapers have any kind of substantive future. Hopefully, book publishers won’t make the same mistakes, but I’m not holding my breath.
Newspapers have also gotten rid of a lot of their content producers, by which I mean investigative journalists. A rare and dying breed, they are, at least in the US. Most of them should stop pretending to be news-related and just concentrate on being entertainment glamour-mags.
I hate that I get better world news in one hour of BBC than I do in almost any format in the US. (A few newspapers and one radio station excepted.)
Sounds like Big Publishing should send you a check for consulting services, William.
I doubt that is going to happen. Honestly, I don’t much care that these corporate yahoos are blundering into the same hole that Kodak, et. al. dropped into, but I worry that there is a real chance of a substantial part of our cultural heritage is going to be stuck in limbo as the Big 6 go out of business but the digital rights are encumbered by litigation while the price for print books soars out of the reach of the average person and library. That would suck. These blind fools are stewards of a public resource and I have no confidence in their ability to act in their own self-interest, let alone the public interest.
You hit my worry right dead center. First we ramp up copyright terms to ridiculous lengths, and then we leave it in the hands of idiots.
OMG you made me remember OS/2. How could you do that to me? I never did get my sound card to work.
The memory of OS/2 basically a curse we pass around. You’re it now. Get rid of it quick. The last person alive who remembers OS/2 is going to go crazy.
…but I *liked* OS/2, she said wistfully. You could do true multitasking and the only other PC option was piece-o-cr*p Windows 3.1 which didn’t. I could take data *and* check my email! You forget how bad things were back then. You whippersnapper
Well-said, Lily. Well-said.
Fifty years ago, my dad worked at the local A&P while he raced on the old stock car circuit. The family gave him grief about wasting his time. He quit racing and went to work for St. Regis Paper, a “real” job. Now, both A&P and St. Regis are long defunct, and NASCAR is a multi-billion dollar business. You never know, folks.
What a story!
Here, here!
That is an excellent cautionary tale! And I will thank you on behalf of Matt Welch for the compliment. It’s his eloquence, I just “remixed” it to apply it to publishing and away from politics.
2012 is certainly getting off to a remarkable start. So far there has been rather hysterical rants from the bunkers of the big six publishers that E-Books are bad for us, or that B&N’s failure will lead to the end of the world as we know it, and that they are somehow victims in all of this.
More and more authors, ( people who create the product but are under no obligation to sell their rights to the product if they don’t want to) are leaving the big six, self publishing, which I have to say is a “trend.” That means something the big six are not likely without massive effort to change. The more success self published authors have, the more certain that this trend continues and accelerates with time.
At some point in the future, there is this flash revelation across the board of authors that Self Publishing is the first and best choice, and legacy publishing is by far a less diserable choice.
In the distant far off future, CEO’s, agents, and executives of the publishing houses talk about the good old days at a local bar. They muse about what went wrong. They complain about how terrible everything is now, and horrible Amazon is for the world. Most of all, they say disparraging things about how stupid authors are that they traded a chance to be published by them all just so they could make more money. Another round of drinks come. Most get a taxie home. One is stopped for a DUI.
Hehe Good scenario!
There’s that comment attributed the Gandhi (disputably so) that is very appropriate: “First they ignore you, then they laugh at you, then they fight you, then you win.”
Right now, the big publishers seem to be in a fighting mood. William pointed to the most tragic part–a huge amount of cultural heritage could potentially be sunk with a publishing collapse (for a taste, look up the rights saga of Alan Moore’s Miracleman comic series).
As someone who has worked and still works with big publishers, I have an interest in seeing them survive. Many of my friends are worker bees in that world. I’d rather they fix the machine by abandoning a fatally flawed business model. (I’ll let you in on a little secret–it does not take 18 months to edit and produce a book. It takes 18 months to get all the necessary signatures from constantly vacationing higher-ups to release a primed and ready book to print.)
But I’m not going to hold my breath.
That makes it sound like a lot of major corporations, failing and not–if you trimmed the fat AT THE TOP, you’d be better off in the long run.
Bingo! The underlying problem is not just too many people at the top, it’s the coordination costs that are built in to the traditional publishing model. Anybody remember this quote from Jamie Raab (SVP at Hachette)
She has no idea that “a lot of people in this kitchen” is the problem, not a comparative advantage. Most of those people aren’t contributing to the publisher’s value stream. The value stream for a publisher is the actual work that adds value to a manuscript from the time it is delivered to the time becomes a published book (in whatever format). For most immersive books (to use Shatzkin’s term) you really only need a copy editor/proofreader, a cover artist, a blurb writer, and book designer (typography and layout). Add in the author and exactly one person to manage the process. You have a team of 5 + the author. Hire people to do those five jobs that you trust to do a good job. Then, get the !@#$ out of the way. How long should that process take? I don’t really know, but eighteen months seems pretty excessive.
The situation with traditional publishers is not at all analogous to the one with Kodak today. Kodak is actually an example of doing something right finally. For one thing, Chapter 11 is not a “demise” of anything; for another, Kodak’s film division is the only one that actually made any profit, and thus they are keeping that part going. Yeah. The obsolete, nobody-uses-it-anymore film-producing part of their company. Because a lot of photographers still use film. Tell me how that is anything like what’s going on with the Big Six publishers. Instead, it is their obsolete, nobody-needs-it-anymore business plan that is dragging them all down the tubes. And unlike Kodak, they don’t have anything as specialized as film to offer people. Writers don’t need a traditional publisher to print and market a book any more.
Now, if Amazon ever gets hold of some film-manufacturing equipment and decides to corner that niche market, that’s when Kodak will be toast.