Monday, January 5, 2009

More Upheavals In Book Publishing

Ya know, I got out of book publishing just in time. Sometimes I feel like an airplane passenger who arrives at an airport to connect to another flight, and later hears his original flight crashed shortly after taking off from the connecting airport.

Here's exhibit A from yesterday's New York Times. And despite the fey "everything's gonna be fine!" response at the end from the well known has-been Michael Korda, I suspect most people in book publishing today know the good times are really gone forever and things will never be the same again.

A lot of these changes are long overdue. In particular, the return on investment for sales conferences and trade shows such as BookExpo America has been very, very questionable for over a decade; they are more like class reunions, with plenty of opportunities for excessive drinking and extramarital fornication, than they are serious business meetings. In the professional and technical publishing areas I'm most familiar with, I've long questioned the effectiveness of spending to attend and exhibit at various professional society meetings. Two decades ago, I was at Academic Press and each month marketing would circulate sales reports showing how many books were sold at events like a regional meeting of biochemists. Now it might seem impressive to have sold $1500 of books in two days at such an event, but when you added up the travel costs of having an editor and marketing person attend the event and staff the booth, and then you did the math, and you realized Academic Press actually lost almost $2000 by exhibiting and selling books there. . . . . . . . . . witnessing that sort of nonsense firsthand is one of the things that motivated Carol Lewis and I to leave Academic Press to found HighText/LLH.

Robert Gottlieb, quoted in the Times article, is correct when he says excessive spending on travel and entertainment is "small potatoes" compared to other problems publishing faces. But the waste on travel and entertainment is symptomatic of the poor management found throughout much of the publishing industry. Exhibit B is this story from the Wall Street Journal. The author of that piece is an associate professor at the Harvard Business School, and it is more than a little worrisome that someone responsible for training the next generation of business leaders does not recognize the book publishing strategy she describes, with what seems to be approval, is actually nothing more than the strategy of a sucker at a Las Vegas blackjack table with all their chips bet on a hand, sitting on 17, and asking the dealer to hit them with another card. That's not a "strategy"; that's desperation!

The real problem with book publishing today is the number of parasites consuming the revenue stream from the end purchaser. There is the discount given to the retailer. . . . . . and the "co-op" payments to retailers to get shelf space for a publisher's titles. . . . . . and the additional discounts to wholesalers like Ingrams which service smaller booksellers and small orders from larger stores. . . . . and don't forget shipping and printing costs, both of which have grown faster than the list prices of books.

There is hope among some publishers the practice of allowing retailers to return unsold books for credit can be abolished. But doing that is going to be about as easy as getting a junkie off heroin. More promising would be a rapid expansion and use of print-on-demand technology to allow the same just-in-time inventory management techniques that many other industries are now using. The practice of sinking a lot of capital into printing a big inventory of books----and the costs of shipping, storing, and processing that inventory-----is something the book industry can't sustain much longer. Sadly, I see very few larger publishers willing, or able, to consider alternatives to the existing printing and distribution model.

Meanwhile, Google is moving ahead in digital publishing while most print publishers are passively watching. It wouldn't surprise me if Google isn't the largest "publisher" in the world in a couple of decades.

Speaking of Google, I am amazed and dismayed at how inept book publishers are in using tools like Google's AdWords and AdSense to direct web searchers to their titles. Try this experiment: enter the term "programming C#" in Google and see what you get in terms of ads on the search results. You get ads for contract C# programmers, C# programming seminars and classes, etc., but no ads for books on C# programming. Brain dead. . . . . . . . just brain dead.

Yet I wish I was in good health and able to work long hours, because there are sensational opportunities out there for entrepreneurs willing to embrace the digital publishing revolution. The iPhone appears to be emerging as a very potent eBook platform (more here). I look forward to seeing what creative, visionary publishing people will do with these new tools.