Traditional publishers learned a lot these past few years, and in 2014, started putting their knowledge into action.
Over the next few weeks, I’ll do the traditional media thing, and provide you with my own sort of year in review. All of it will focus on publishing and writing, both indie and traditional, and all of it will be my opinion.
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I started with a comment Dean made about a line in a traditional publisher’s quarterly financial report for the third quarter about the importance of copyright. Dean couldn’t remember what financial report the line came from, so I decided to find it–and of course, I couldn’t. Not fast anyway. But the upshot was that I read a mountain of financial reports for traditional publishers, and honestly, they sent chills through me, considering what’s been occurring with publishing contracts.
Over the past year or two, publishing companies have changed their thinking about the industry.
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Much of the change is in response to 2013’s dismal fall sales, which happened courtesy of the Justice Department’s investigation of six major publishers and Apple for price-fixing. It didn’t matter how that case turned out; the case itself changed business as usual inside publishing.
Business as usual was this: Before that all important Christmas shopping season, publishers consulted with each other about the timing of their blockbusters.
Think of it the way that the movie industry does: When a film that will suck up all the ticket sales of a particular genre (like an Avengers movie) declares it will release in May, other filmmakers in that genre will avoid that weekend. Generally, studios will release a film that they think will appeal to a different type of audience.
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it was smarter marketing to make certain that John Grisham’s latest novel would not compete with Scott Turow’s latest novel, on the theory that legal thriller readers wouldn’t pony up $60 the week of the hardcover releases—they would choose which author they liked best, and only pay $30.
So publishers would contact each other about a year before and informally discuss release dates. Weekend 1 (in September) would belong to Turow; Weekend 6 (in November) would belong to Grisham. But…Stephen King was releasing around that time, and he might take some sales from Grisham, so move the Grisham to Weekend 4…and so on and so on.
When the court case started, publishers couldn’t make these informal phone calls. And traditional book production takes a fraction of the time movie production takes. The publishers released their fall catalogues early in the year, and then the orders would occur, and the release dates would be set in stone.
Because there was no consulting in 2013, a disaster set up: Turow, a former juggernaut author, whose legal thrillers were always an event, was releasing his first book in three years. In theory, his sales would have destroyed any other author’s sales in the same genre.
Just like John Grisham’s sales would in their first weekend. Grisham’s books had ceased to be “Events” like Turow’s, but Grisham had a loyal mass following that bought everything. He got his own release week, generally speaking, just like Turow.
Only in 2013, their releases were exactly seven days apart. Turow’s novel came out on October 15, and Grisham’s on October 22. And Grand Central, Turow’s publisher, learned that readers preferred John Grisham by a huge margin.
Even so, neither book sold at the author’s historic high.
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No book in that fall sold at an historic high. Factors came together to prevent it. Some of those factors were:
1. Publishers could no longer collude on release dates (or anything else, including price).
2. The rise of independent publishing meant a lot of readers, who would have bought a legal thriller from Turow or Grisham because those two authors were among the few still writing in the genre, got siphoned off. Those readers found other legal thriller writers or backlist novels that had been taken out of print when the legal thriller genre “died.” Indie publishing gave readers what they wanted when they wanted it, and a lot of them abandoned the bestseller they sorta liked for a midlist writer they loved and whose book was now available to them.
3. The utter decimation of the newspaper book review section. When newspapers died, they took their book review sections with them. Surviving newspapers cut the “fat” from their pages, including the book section. (Which is stupid to me, because the book section was a guaranteed source of weekly advertising revenue.) Only a handful of book sections survived, and those were in truncated form.
4. Magazines got rid of book review sections as well. Those that kept the review section, like Vanity Fair, put it in (I kid you not) 9-point type or smaller.
5. The reluctance of the book blogger. Book bloggers with large followings don’t feel the need to review a Big Book just because some publisher said they must do so. In fact, book bloggers prefer to be the source of recommendations for the eclectic reader, not the mass reader.
6. The decline of shelf space in the brick-and-mortar store. In 2013, there were fewer paid placements available in bookstores (up front is paid for, folks, as is that new release table). Readers were learning to shop differently.
7. The rise of the algorithm. Online bookstores would send out targeted marketing e-mails to readers based on previous purchases. Sometime in 2013, online bookstores changed their home pages so that a reader might see only the types of books that interested her. This is changing back in late 2014 because Amazon has realized what a cash cow coop advertising is. Now, when you log onto Amazon or Kobo or Barnes & Noble, you will see a scroll of bestsellers along the top (relatively small) before you see all the “recommended for you” books. But that sales venue is nothing like walking into a store and seeing John Grisham’s latest stacked in piles of twenty everywhere.
There was a lot of gloom and doom throughout the entire traditional industry in 2013 because it was clear to everyonethat the old system wasn’t working. The old system, based on velocity and constant push of new product, was actually falling apart.
So traditional publishers did what all businesses do when something isn’t working: they reassessed. They studied financial sheets and looked at two things—where their business lost money and where it earned money.
The publishers had a surprising realization: those backlist titles they threw up on Amazon and one or two other sites because everyone was demanding ebooks? Those damn things were selling and making the company an astonishing amount of money.
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Here’s how Houghton Mifflin Harcourt stated that in their third quarter results:
The increase in product profitability was primarily driven by a $17 million reduction in product cost…
You’ll find little phrases like that one in all the financial reports of the major publishers.
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Ebooks—at any price—are an astonishing revenue boon to traditional publishers. I say astonishing, because I’m pretty sure that no traditional publisher realized how well these things earned until they reassessed their entire business model.
The protectionism that sparked the price-fixing case from the Justice Department? That desire to make sure no ebooks sold so that customers would only buy hardcovers? That’s so 2012.
Where publishers discovered that they lost money was on marketing and any attempt to push velocity. Ad buys in book publications, doing a ton of up-front promotion to spark interest in a book, pay-for-placement in a brick-and-mortar bookstore, all had very little effect on sales, unlike the past.
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The present is pretty simple: the bestseller numbers have flatlined significantly. In the past, a new release by John Grisham would have sold at least half a million copies in its first week.
Last month, Gray Mountain, Grisham’s 2014 release, sold 122,506 copies in its first week, the highest selling fiction title out of the gate for the entire year. (The closest competitor? Top Secret Twenty-One, the latest Janet Evanovich title, which sold 88,997 copies in its first week. (As reported in the November 14, 2014, Entertainment Weekly Chart Attack [no available link.])
Neither sales figure would have gotten the Evanovich or the Grisham on any chart before the ebook revolution. Those sales figures are extremely low.
I spent much of the fall of 2014 asking serious readers if they heard that this bestselling author or that bestselling author had a new release. Every question I asked was about an author with a fall release, and every person I asked, in my informal sample, said no.
I was particularly shocked to see the anemic promotion for Lee Child’s latest, Personal, which came out on September 2, 2014. Personal is a Jack Reacher novel, and Jack Reacher is a well known character—so well known that Tom Cruise played him in a film—10 months before.
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Writers haven’t yet realized what they’ve signed. Nor have a lot of this potential cases become lawsuit worthy. Writers have yet to complain about the contracts because writers are still working to fulfill those contracts.
Although you’re hearing whispers. The entire controversy over L.J. Smith who wrote The Vampire Diaries for twenty years is a contract dispute. Smith signed with Alloy Entertainment, a packaging firm. Smith got nothing from the sale of The Vampire Diaries to television, nor does she get anything from all the marketing and merchandising rights. In fact, Alloy Entertainment fired her a few years ago—which was all within the legal boundaries set by the contract.
Packaging firms have existed for decades. The packaging firm owns the rights to the entire creation (the “world”) and the writers are simply contractors with no rights in the work whatsoever.
When traditional publishers can devise contracts that essentially do the same thing, they do. And writers, desperate to be published, signed those damn things.
Signing those publishing contracts is more dangerous now than it was fifteen years ago. Because fifteen years ago, books would go out of print, and then the contract would end.
Now, books don’t go out of print.
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Traditional writers who go blindly into this world will get screwed worse than they ever have before. Traditional writers who go in with their eyes open might gain some benefits at the expense of a book or two or three.
Generally speaking, the writers who go into traditional publishing are risk-averse. But it would seem to me that the only writers who should go into traditional publishing are writers who appreciate and understand risk.
PG is very happy to see Kris posting again about the publishing business, traditional and indie.
In PG’s astoundingly humble opinion, nobody writes on this subject as well as Kris does.
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