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Book publishing crisis: Capitalism kills culture

12 November 2012

From Salon:

Around the same time a devastating hurricane smashed and flooded its way up the East Coast, leaving millions homeless or without power, another storm collided into a professional subculture based in New York City. While the second storm is only metaphoric, the transformation of publishing could have far-reaching consequences not only for those who work on Union Square, but for readers and writers across the English-speaking world.

As with Hurricane Sandy, it will take a little while to discern the long-term consequences of the Penguin and Random House merger, the news of which was somewhat obscured by the storm and the election. But the short-term impact is not pretty — and it follows other recent bad news from the books world. The Free Press, known primarily for smart, contentious nonfiction from Emile Durkheim and Francis Fukuyama but also the publisher of Aravind Adiga’s best-selling Indian novel “The White Tiger,” just collapsed. Several well-regarded editors are now out of jobs as the imprint is merged into Simon & Schuster.

. . . .

The get-big-or-go-home strategy may allow bulked-up publishers to stand up to Amazon, which has become the industry’s Goliath. “The book publishing industry is starting to get smaller in order to get stronger,” the New York Times judged.

Lke a lot of publishing folks, Jonathan Galassi, publisher and president of Farrar, Straus and Giroux, doesn’t know quite how to read all this. But it’s significant: “Publishing is going through a sea change,” he tells Salon. “It’s going to be different when it comes out.” Whatever else is happening, “It feels like a contraction to me.”

. . . .

Will publishing continue to slide, gradually, or will it fall apart, like newspapers – which have lost approximately a third of their staffs since the recession and seen advertising revenue sink to 1953 levels — and record labels – where annual sales of the top-10 albums have gone from over 60 million to about 20 million in roughly a decade. Members of the creative class have been here, and it hasn’t worked out real well for them.

“It’s really painful,” says Ira Silverberg, a veteran editor (Grove/Atlantic, Serpent’s Tail) and agent (Sterling Lord Literistic) now serving as director of literature for the National Endowment for the Arts. ”I’m sure I’ll have tons of former colleagues looking for work, and they won’t find it. Regardless of what [executives] say, it’s going to be a smaller business.”

. . . .

The digital revolution has effectively marginalized traditional publishers, as the center of financial gravity shifts from Manhattan to Silicon Valley and Seattle. “Like record labels, publishers have become arms suppliers in the cold war between technology companies,” Robert Levine writes in his 2011 book “Free Ride,” about the Internet’s damage to the culture business.

. . . .

One thing that could have made this story end differently is if the United States had a significant cultural policy. We have a trade policy – we protect industries we value – and we have an anti-trust policy designed to protect consumers. We have arts and humanities endowments that assist institutions. But our cultural policy is mostly to let culture fend for itself in the open market. It works great, but sometimes it doesn’t.

Many counties in Europe have cultural policies, Levine points out. Germany has a thriving book business – with many independent bookstores and a rich mix of publishers – because the government forbids price discounts in most cases.

“If you’re a minister of culture,” Levine says, “it’s your job to further culture. It’s seen as something government should do. If you left it all to the market, almost no one would write anything in Swedish … because it’s such a small market.”

Link to the rest at Salon and thanks to Meryl for the tip.

Big Publishing, Self-Publishing

53 Comments to “Book publishing crisis: Capitalism kills culture”

  1. “The digital revolution has effectively marginalized traditional publishers”

    But empowers authors. Authors produce culture. Not publishers.

    • Quiet, son. You’ll tip the con.

    • That’s really what the industry needs to get through its thick skull.

      Say it with me, publishers:

      “Authors produce stories. Readers consume stories. We are just the middle men.”

      • There is an old saying that it is very difficult for a person to understand something when their salary depends on their not understanding it.

        I would add to this that it is even more difficult for a person to understand something when their self-image depends on their not understanding it.

        These people really, truly believe that they are cultural gatekeepers, raising up the worthy and barring the way of the unworthy with flaming sword and righteousness. Your observation completely obviates that. So true or not (it is) it just won’t fit in their heads.

  2. I have often thought to myself, “Self, if there is anything that would improve life in America more than making the NEA a gigantic government department with a Cabinet-level head, I honestly don’t know what it would be. Someone should look into that.”

    • But they’ll make all their decisions strictly on artistic merit devoid of political considerations, Marc.

      • That’s certainly how the Department of Defense makes procurement decisions, and the Department of Energy makes licensing decisions, et cetera, so the trendline is good.

        • Regulatory capture: it’s what’s for breakfast.

        • Sad thing is that about 51% of voters in the Presidential election wouldn’t know you two are being sarcastic…

          • People, I already had to stop reading one author’s blog this week because she spewed political hate. Could you *not* talk about politics here and let us talking about publishing instead? Please? I really like this blog; I don’t want to have to drop it because a few commenters feel the need to bash everyone else. Thanks.

            • I wonder whether we’re thinking of the same author here. Used to say some smart things about writing and publishing and went completely off the deep end ever since the election.

              • Sadly I can think of at least three writers to whom this might apply. (Although there is a distinguishing characteristic in the prior poster’s note.)

                • If you include both sides of the US political spectrum, there’s probably way more than two. And I find myself increasingly skipping over blogposts even from people with whom I agree politically (sort of, since I’m not from the US), because when every other post is “Why Party X is stupid, evil and wrong”, it gets old fast.

                  But there was a distinguishing characteristic in the OP and the meltdown of the author in question from “makes some good points, though I disagree with author’s politics” to “flat out insane – bring popcorn and wait for the death threats” was pretty spectacular.

          • I agree, Beth. There are lots of other places to discuss politics.

            • Your humble correspondent apologizes, because he didn’t mean to start a political argument.

              However, now that the can is tipped, I would like to point out that although, as I said, nothing would improve American life more than my original suggestion, part of the improving that it would do would be to reignite the gradually cooling Culture War on a scale dwarfing all that had come before. If you thought the NEA provided distracting nonsense for social conservatives and airheaded academics to argue about before, just wait until the Department of Culture’s first Secretary has her confirmation hearings, and submits her first budget proposal.

              I love political melodrama, hence my including this in the “improvement” category. If you are not a fan of this admittedly esoteric art form, no matter what your politics are I hope you agree that we might all be better off not going down this road.

      • Unlike the NY houses do now…

        • If I remember correctly, many of these Ministries of Culture that the author admires & their policies to promote national culture were created to fight the overwhelming influence of US commercial & pop culture in their own countries. There’s an irony here, I believe.

  3. P.G.

    The publishing industry, the music industry? These were admirable people who helped assist the creative culture?

    I’m the Avon lady, what a lot of guff.

    brendan

  4. Yes, mega publishers are in trouble, but have they noticed all the little publishers that are popping up? Some with just one genre? Some put together by (gasp!) writers? With the distribution playing field more fair, I think it will be easier for the smaller (and hopefully more author friendly) pubs to stay afloat.

    What this article doesn’t seem to get is that less mega publishers doesn’t mean less wonderful books on the market.

    • Some of the new small publishers are doing interesting things, Alice.

      • Every time my publisher (which consists of me, although I did talk another fellow I know into letting me publish a few things he wrote which I there might be a market for) breaks its monthly unit sales volume, it publishes a free super short story to thank the readers.

        Let’s see Random Penguin do THAT.

        Let’s see them make the economics of distribution work in the first place, let alone the economics of giving something away. I’m also interested to see how this Kindle Serials thing pans out. Bring back the penny dreadful, says I – but get the pennies up front!

  5. Oh, coming from one of these countries with cultural policy, I must admit it works … as long as you are ready to buy what is sold by the cultural industry, and at their conditions.

    You know this “lobby” thing ? We’ve got them too, and they influence the policy just as well as other lobbies…

    In fact, they almost use the government as an arm for their own policy.

    • I thought we’d just been through that era when so many small publishers were gobbled up in the early ’80s and the big book chains took the independent book stores to the brink of extinction. Although, it wasn’t a “cultural ministry” dictating, I got awfully tired of the big publishing houses putting out basically the same stuff that crowded tables and endcaps.

      Lovely things, Libraries. The rise of the Internet stores and self-publishing platforms is just as rich for an eclectic reader who doesn’t bother with the New York Times Bestseller list.

      • When I was a kid, the state I lived in had state liquor stores. If you wanted hard liquor, you bought it at the state store, and you paid the state price, and if you wanted something they didn’t have, you didn’t get it.

        Why anybody thinks this will work any better for books than it did for liquor, I’m sure I have no idea.

  6. I love you, PG. You post the most interesting things. This is going to give some people I know a lot to argue over. *sends link to friends*

  7. “Since their previous efforts were judged to be collusion, maybe a merger is the only option left.”

    I robbed a bank and all I got was this lousy Penguin.

  8. Capitalism doesn’t kill culture, it kills the big businesses that ride parasitically atop it, freeing culture to really thrive.

  9. Of course people would still write books in Swedish, and sell them too. People who speak Swedish would still write in Swedish, and some of our best translated works are by Swedish authors.

    Honestly, that argument misunderstands books and writers (and readers) so much that it calls into question how much they even understand their own industry. But then I guess that’s the point.

  10. I love it when articles like this lie to authors as a way to get their support. This:

    “As with much of the Internet-driven transformation of the creative class, authors hoping to make a middle-class living with a modest advance will increasingly be out of luck.”

    Increasingly, as in they never had any luck at getting a middle-class living, but now they have even less of a chance?

    Odd, since royalty rates have quadrupled for indies, and profit grabbing, er, I mean sharing, has decreased?

    Of course, lying to authors is standard operating procedure, but still. It’s mind-boggling to me how they say these things with a straight face.

    • It’s difficult for people who haven’t been totally immersed in an advance-driven industry to understand how fundamental people who are consider advances to be. And, to the extent that participants in an advance-driven industry configure their economics around advances, they’re right. If you need a steady supply of advances to make your business model work, the idea of doubling your royalty rates and halving (or eliminating) your advances is terrifying. And if you think that paying authors advances which may or may not earn out is the best way to ensure the existence of Professional Authors, of course you see a model without significant advances as a threat to the whole idea of Professional Authors.

      You may agree with them, or you may not. As a former participant in an advance-driven industry (not to brag, only to give context: I’ve negotiated five and six and one or two seven digit advance licensing payments) I see where they are coming from. I still think they’re overreacting, to put it politely, to the “threat” they perceive. But there are indeed people who can say this with a straight face because they honestly believe it.

      • From where I sit (*not* having been directly involved with it, I’ll admit) the advance-based model sounds similar to a skeevy payday loan operation, with the exception that the payday loan people don’t insist on taking a cut of your paycheck in perpetuity.

        • It can have elements of that, and I can see where you’d get that impression, but in my experience (which is limited to the entertainment industry, but runs pretty much its entire gamut) most advances in terms of sheer volume either do not earn out, or barely earn out and trickle off. Many content creators earn as much from advances that don’t earn out – or advances/options on properties which eventually don’t even generate a licensed product – as they do on actual royalties a lot of the time. There is risk, and substantial risk, that the licensee is assuming from which the licensor is largely insulated. There is absolutely nothing skeevy about an arm’s-length, mutually agreed license agreement which includes an advance on royalties.

          • There is absolutely nothing skeevy about an arm’s-length, mutually agreed license agreement which includes an advance on royalties.

            No, but there is something very skeevy indeed about an advance against all rights (or rather, ‘all the rights the publisher can grab’) being the only deal ever offered.

            And if you believe that most advances in the entertainment industry don’t earn out because the books are scrupulously and honestly kept and there really was no net profit, why, I hear there’s this lovely bridge. . . .

            • Now this I really must take exception to.

              There is absolutely nothing immoral about asking for an all-rights deal. There’s not even anything immoral about asking for an all-rights deal at a low royalty and low (or no) advance. It’s not very smart, in that eventually the licensor may find out that they could get a way better deal elsewhere, feel cheated, and leave, but selling dear and buying cheap are not inherently wrong. (A case can be made, as a man once pointed out, that it’s morally wrong to allow suckers to keep their money.) They’re just a business model. Sometimes it works and sometimes it doesn’t.

              In the long run it usually doesn’t. Sometimes the long run is longer than others, as tradpub is finding out. Had they not been working authors over with the rubber hose lo these many years, they might not have quite such a feeling of standing on the deck of the Titanic watching the lifeboats row away now.

              And I think that most of them don’t earn out because the products don’t sell. When I say entertainment industry I am thinking BIG. Toys. Games. Movies. Books. TV shows. A lot more money goes in than comes out most of the time. When it hits, it hits big. When it doesn’t hit, you get fifty million dollars worth of Jar-Jar Binks toys sitting in a warehouse and George Lucas taking his fifteen points and eight figure non-refundable advance all the way to the bank. Hasbro’s bank. And with the returns system, publishing’s greatest historical folly, this is doubly and triply and doubly to the triply true.

              That being said, creative accounting can turn what looks like a profit into a losing deal if your lawyer doesn’t know how to structure a licensing deal. Did you see the other post about tax avoidance? This is payment avoidance. Both parties to a deal are going to look to maximize their advantage. That’s totally ethical. (Lying about how you are going to calculate sales/royalties is not.)

              Actually fudging the numbers, or deliberately using a system designed to underreport sales *coughTradPubSalesCalculationscough* isn’t creative accounting: it’s cheating. More to the point, it’s breach of contract (unless your lawyer is a moron) and/or fraud, and it’s legally actionable. I think that the first one is very common and makes people feel cheated, but it’s not cheating, it’s business. I think the second one is actually pretty rare but it does happen, and when it does, you come down like a ton of bricks. (You ain’t never been audited until you’ve been audited under one of my audit clauses. >:) )

      • Marc, I haven’t done a full study on this, but if I were to ‘guesstimate’ the number of authors who are currently making a sustained middle-class income off of their advances from Traditional Publishers, the number I would come up with is this:

        113.

        Yes, there are possibly 113 authors in the world today who are able to make a middle-class income off of their advances. (Although, I admit that number may be abit generous).

        Everyone else has a day job.

        While they put their piddly $2,500 advance toward marketing their book, and new writing software.

        I don’t mean to be harsh, but if the Salon writer doesn’t know that, they should re-think whether they are the right person to be writing an article about publishing.

        • I am not an expert in publishing law per se, and I have serious doubts myself that all that many authors, in the grand scheme, get advances which are sufficient to enable them to live a comfortable middle-class lifestyle.

          However, I bet the number is way higher than your estimate. In the several hundreds, at least. Most professional authors just get down in the dirt and auth. They’re too busy cranking out pages to send to Harlequin or whatever to get into Internet debates or even fill out author income questionnaires. :)

          If you give me the caveat that the ones who get enough advances are the ones who’d earn a comfortable middle class living off royalties anyway, I’d be very confident that it was in the several hundreds. There are a LOT of books being published. Fewer than once there were, but lots more than you might think if all you look at are the big chain sales.

          • Marc, despite the fantasy that writers can get huge advances and make millions, the fact that writers can’t support themselves by writing is an Industry axiom. Advances are low. Royalty rates are ridiculously low, from 4-7%. (Harlequin, btw, is one of the worst, and is currently being sued for defrauding its authors). There are huge numbers of books being published, but until recently, only the big names and the celebrities saw any money from it. The Publisher and the Bookseller were making money, but very few authors were making anything other than chump change. They ALL had day jobs.

            You said that your experience is in the world of entertainment. The world of Publishing is very different. Authors are not expected to be able to support themselves off of their books, they are expected to have a day job.

            That is what all the fuss is about! All the money was being taken by the Publishers, and it’s a complete wake-up call that if people self-publish, they can actually make a living off of writing. People are stunned.

            And the author of this article absolutely knows this. Anyone who has been around Publishing for awhile knows that authors can’t make a living off of what they are given for advance + royalties, much less advances alone. For the author of this article to imply that they have been is manipulative and dishonest. Which is a common way that authors are treated in the Publishing Industry.

            Anyway, if you still don’t agree, Marc, I don’t think we’ll find a meeting of the minds at this point, so we can agree to disagree if you want.

            Although, you could do some research. Try publishing with a Traditional Publisher. See if you can live off what money they give you. If you can sustain a middle-class income, let me know. I’ll be very happy to hear it!

        • There is one reason to disbelieve your figure, Mira: I believe there are more actors making a middle-class living (or better), & acting notoriously pays crappy wages.

          But if you can verify that number…

          • Geoff,

            Read the article PG just posted today: Self-publishing industry explodes. One quote from there:

            “A book that netted a $50,000 advance just a few years ago would be fortunate to snag a $10,000 one now. “They say that 50 is the new 40,” Aunapu added. “Well, in publishing, $10,000 is the new $50,000″

            I don’t know anything about the business of acting, but I do know about this business. And I can tell you it has always been assumed in the Industry of writing that authors would need a day job to survive, because advances and royalties are so minimal.

  11. “If you’re a minister of culture,” Levine says, “it’s your job to further culture. It’s seen as something government should do.”

    A bail-out of the publishing world? Right. That would fix everything.

    “If you left it all to the market, almost no one would write anything in Swedish … because it’s such a small market.”

    This is just plain insular hogwash. Or perhaps the Big 6 forgot to send the memo to publishers in Non-English speaking countries that their market is too small to actually exist?

    Last I heard books written in Icelandic are doing great in Iceland. People tend to prefer to digest their literature in their native language. Writers write in the language they’re most familiar with. Publishers will pop up where there is a market share to profit from.

    • Iceland actually has a very active domestic publishing industry and actually the highest per capita amount of book published.

      That whole Sweden remark was just more insularity from the US publishing industry who frequently seems to forge that the rest of the world exists.

  12. The contrast in tone between this and the Hugh Howey article are pretty remarkable, no?

  13. Emile Durkheim? Really? Is the author of the article aware that Durkheim died in 1917 and that all of his works are in the public domain?

    You might need the Free Press to publish Francis Fukuyama and Aravind Adiga, but Durkheim should be readily available at Project Gutenberg or at your local university library.

  14. “One thing that could have made this story end differently is if the United States had a significant cultural policy.”

    When nobody buys your stuff because they don’t want your stuff, try to get the government to buy it.

  15. Capitalism kills culture? Wow! So what is culture? Is classical music culture, but rock-n-roll is not? A painting in classical style is culture, but modernist art is not? Any book published by big publishers is culture, but an Indie published book is not? Before 20th century when socialism decided to take under its wings the “culture,” culture was created without any such socialist benefactors. Oh yes, there were rich benefactors, actually patrons, but they paid for what was appealing to the eye, and the ear, and the tongue, not as charity. This is an elitist attitude; the masses cannot know what culture is. They are too unsophisticated.
    Capitalism stands for the survival of the fittest; the best composers, writers, painters, dancers and all other artists will succeed because the masses will approve and consume their work. But the masses are wrong; we need a big brother to tell us what culture is, to groom only the cultured artists, and to extinguish any non-culture according to a select few gods of culture.
    Creativity and cultural bureaucracy don’t mix.

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