From The Creative Penn:
What has changed in the publishing industry over the last few years? What can authors learn from the DOJ vs PRH court case? How can mid-list authors thrive in uncertain times? Jane Friedman talks about these things and more.
Joanna Penn: How has the pandemic and increasing online sales changed the more traditional publishing industry? Because I feel like indies, like myself, we were already doing everything online. But I feel like the pandemic has really shifted traditional. So what are your thoughts on that?
Jane Friedman: Yes, I mean, first of all, the pandemic was great for traditional publishing, generally. I mean, there are supply chain issues, of course, which are still affecting everyone. But print book sales were up 9% in 2021, and for a mature industry that is astonishing. And they’re still doing pretty well in 2022. Comparatively, I think they’re down maybe 5% versus last year, which is still great. It’s above where we were in 2019.
Something interesting that happened too, is that Bookshop.org and independent bookstores are in a better position — Bookshop being the online retailer that competes against Amazon. They’re very flexible, they’re more focused on the things that only they can do well, and they’re benefiting from people who want to consume more conscientiously. I think the Bookshop founder said ‘virtuous shopping’, a virtuous alternative to Amazon is what he was hoping for. And they have, they’ve succeeded.
There’s now a UK version of Bookshop. I think there might be one in Spain. So, yeah, I think the pandemic really helped the launch of that because they were established in January 2020, having no idea what was about to happen.
The other thing that was very positive, for novelists in particular, is that adult fiction sales came back after many years of decline. So at first, it was believed this was driven by comfort reads. But now I would say it’s probably more TikTok driven. Sales are also more backlist oriented. Part of that is the shift to online sales, but TikTok is also, again, driving some of that.
And I think the other piece of good news for maybe all, well, I think it’s good news for all authors, is that The Big 5 aren’t actually selling as much combined as everyone else. So I do see that it’s a very diverse market. And I know we’ll talk about some concerns about the market a little later. But I think generally, books have done really well the past few years, no matter where you’re sitting in the industry.
. . . .
Joanna: So you mentioned The Big 5 there, and one of the things I really wanted to talk to you about is what’s shocked the publishing industry, or a lot of authors anyway. In September 2022, the US Department of Justice took Penguin Random House to court over the potential acquisition of Simon and Schuster.
And the proceedings of the trial brought to light a lot of surprising things, or perhaps only surprising to authors and people who didn’t know much about the industry. So I wanted to hear what were some of the things that stood out for you because you did a ton of commentary around this.
Jane: Yes, so the things that shocked the average person and even a lot of authors, frankly, that have been in the industry a while, the big CEOs of these enormous companies saying they don’t know what will sell. You know, portraying the industry as just a lot of random bets.
People have casually said that for many, many years that it’s a ‘throw it against the wall and see what sticks’ sort of industry.
But I guess there was this assumption that if you put a big CEO on the stand, and you ask them questions under oath, that they would show more business acumen than they did. So I think that was very shocking to people and discouraging. Like, they were denying they had any responsibility over what books would do well.
I think the other reality that was thrown into stark relief, is that most books aren’t getting a lot of marketing investment.
Unless there are already clear indicators after the book releases that it’s going to do well, then the publisher will funnel more support toward it. But unless the book is getting one of these really big advances, there is just a lot of waiting and seeing, rather than proactive marketing and promotion.
The other thing that came out is that — and again, if you study the industry closely like I do, this was not a surprise, but I think for the general public, it was shocking — that most books don’t earn out their advances. And publishers knowingly pay more to get the books they want, knowing the advance won’t earn out, rather than negotiate on anything else.
They don’t want to give up their eBook rights, their audiobook rights, they don’t want to really mess around with the royalty rates. They are really just paying a lot more upfront to run their business. And obviously, only The Big 5 are able to play that sort of game, the smaller publishers can’t. And that’s part of what the trial was about.
Link to the rest at The Creative Penn
I want to know what is so virtuous about bookshop.org…
It isn’t Amazon. 😉
I would express surprise at a longtime NYC-centered publishing person expressing shock and dismay that “the big CEOs of these enormous companies saying they don’t know what will sell. You know, portraying the industry as just a lot of random bets,” “if you put a big CEO on the stand, and you ask them questions under oath, that they would show more business acumen than they did,” and “unless the book is getting one of these really big advances, there is just a lot of waiting and seeing, rather than proactive marketing and promotion.”… nope, no surprise. Apparently, nobody paid attention a few years back when the exact same things were said, also under oath, in US v. Apple. Either that, or it was far too early in the fashion season to raise any questions regarding the emperor’s new clothes… which is at least equally likely (ask Andrew Wylie, presuming that he’d actually give a clear, direct, honest answer).
We should also disabuse people of the unstated assumption, and widespread notion, that “the publisher doesn’t show a profit unless the book earns back its advance.” We’ll leave aside the “honesty questions”: Over what period, whether other income is considered, whether remainders are factored in, whether the “profitability” in a cost-sales projection actually relates to profit as would be shown in audited corporate financial statements, and so on. The critical point is that in most commercial publishing — varying widely across the publishing industries — the publisher’s GAAP-compliant books would indicate a line-item, fully-extended profit-excluding-extraordinary-dividends when sales and other income are such that the calculated royalties are from 65% to 80% (roughly) of the advance. And the more profitable the particular publishing industry, the lower (as a proportion of the advance) the actual-profitability point tends to be.
Put another way, the “must earn back the advance to be profitable” is like looking only at a baseball player’s batting average to determine whether he/she is an “offensive threat” — excluding home-run history, walks, steals, various forms of sacrifices and “hit into fielder’s choice,” forced errors, even hit-by-pitcher. I wonder what Mr Beane (not Mr Bean) would have to say about that…