Why Traditional Publishing Will Fail

Posted on 05 June 2013 by Claire Ryan

Book with page markerWith the merger of Penguin and Random House, we now have Random Penguin, a mega-corp that represents about half of the traditional publishing industry. The question now is where do they go from here? How do they, and the other four big publishers, take control back from Amazon and start a new golden age of publishing?

Hah. No, I’m kidding. Sorry, that’s about as likely as me commuting to work tomorrow on a unicorn. My opinion is that the traditional publishers are headed for a slow death, and if there is a new golden age of publishing, it’s already started – and Amazon was the one to make it happen.

Here’s why.

Amazon built the ebook market they have to sell to now

Amazon also built the new self-publishing market, but that was a pretty obvious step when you think about it. They created the Kindle, made buying ebooks simple, cheap and easy, and started hammering nails into the brick and mortar bookstores’ collective coffins. When they opened up the Kindle to direct self-publishing, they were really just completing the circle – from writers to readers, with no need for the traditional publishers.

Amazon created the market, made it hugely successful, and then made 90% of what the traditional publishing houses do obsolete, along with their entire customer base of bookstores. For some reason, they’re not terrified by this.

They have no data and the wrong kind of expertise

Okay, so the big publishers want to compete with Amazon. Amazon has a recommendation engine that’s spent years being refined and improved. It’s got statistical data on book sales that would make the average analyst wet their pants. It’s got teams of the best technical minds that money can buy, all working on innovations and new features and all kinds of exciting stuff to harness new technology and increase sales.

The traditional publishers have none of those things, as far as I know. Royalty payments to authors have a reputation for inaccuracy. They have no idea how or why people buy books, not to the level of detail that Amazon does. They’ve never had to know, up to this point. They have a sales team, yes, but that sales team knows all about selling to bookstores, not to end users. They can talk about developments in the industry and all that, but I don’t see any job openings that might suggest they’re building an actual dev team who might create the kind of platform that could take on Amazon.

They’re building the wrong stuff

Okay, so they’re low on tech knowledge. But you know what publishers do know about? Authors.

Remember when Penguin started up Book Country? And we were kinda enthusiastic for a while, because it was something new at least, but it was not very user friendly? And then it started offering mediocre and largely overpriced publishing packages? And then Penguin bought Author Solutions, the company that makes a living by ripping off authors, and integrated their overpriced crap into Book Country?

Yeah. That’s what I mean, right there. I don’t think it was the only reason Pearson (Penguin’s parent company) bought AS, but that’s the trend I’m seeing. The traditional publishers are still stuck in a business model that doesn’t include actual readers, and it’s easier to stick to what you know even when that’s a bad long term strategy.

The right stuff they build isn’t good enough

So, I get the feeling that someone at the big publishers sort of has an idea about this new technology. The problem is that they’re just not going the right way about it.

Here’s two examples:

Bookscout, the Facebook app from Random House that makes recommendations based on your likes. Nice idea, but, well, Amazon already does that. Just not on Facebook. As far as I can tell, no one uses it and I’ve never heard of it before today.

Bookish.com. This was a big thing, a recommendation and bookselling website pushed by three of the Big Six, but the problem is that it’s just not bringing anything new to the table. It launched, got a burst of traffic, and now it’s not really going anywhere, if Alexa.com is to be believed.

Challenging Amazon is going to take a lot more than this.

They’re not helping their customers

What I mean here is that they’re not really doing much to help bookstores. The independent stores seem to be weathering the Amazon storm better than the big chains, and yet they’re partnering with tech companies like Google Books or Kobo. Chain bookstores are becoming more like Target or Walmart.

The point here is that the traditional publishers are almost completely dependent on bookstores, so maybe they need to be a lot more involved in keeping bookstores open and stocked with books.

Their biggest customer base is slowly dying out or stocking products other than books to survive, right now. Could the publishers not offer them more money for premium display space? Give them a bigger discount on books? Anything would be better than nothing, and it looks like nothing is happening.

In Short

Look, the basic problem here is the same as it was with buggy whip makers a hundred years ago when cars were just getting popular: technology has moved on. The big publishers are in the business of selling paper books, and paper books have their place, of course. But the future of reading belongs to the tech companies like Amazon, who know how to make the best use of the ubiquitous technology in our lives. Unless the Big Six – or Big Five, now that Random Penguin is a thing – can wrap their collective business brains around this, they’re doomed.

Yeah, I know you like paper books, person who is now saying ‘But I like paper books and I buy them!’. That’s great and I’m sure you’ll keep buying them. But we have a generation of kids growing up who learned to read on devices like the iPad, and believe me, how they think about books is what you should be watching out for.

So, where to go from here?

Ebooks have exploded in popularity. Self-publishing has done likewise. The paradigm is already in place where authors can use a service like Amazon, or its successor, to sell their product direct to readers and undercut the hell out of anything the publishers put out.

Where the publishers need to go from here starts with figuring out what’s left after you take away all the stuff Amazon has made irrelevant.

On the author side:

  • Distribution? No longer important. The Internet, and POD technology, takes care of that.
  • Editing and cover design? Authors can buy those services as they need them, for less than what they’d give up in royalties.
  • Getting into bookstores? Now we’re getting somewhere, but that’s going to be less and less important as time goes by and ebooks become more of the market. So this is a perk, but not something to be relied on.
  • Prestige? Well… for some authors, yes, but this attitude isn’t going to last as self-publishing becomes more accepted.
  • Expertise? Yes. Absolutely. The publishers know about books.
  • Networking? Ah, now this is the big one. This is something they can offer that Amazon can’t. The big publishing houses have all kinds of contacts that authors can take advantage of.

On the reader side:

  • …I got nothing. It’s not like they were offering anything to readers to begin with, and they’re not really offering anything special now.

There isn’t much, is there? And this is why I think the publishers are ultimately going to fail: the few things that they can offer that no one else can are just not enough to sustain a business their size.

Solutions?

The big publishers have a very rocky road ahead of them. I expect there will be more mergers, but this isn’t going to change things. So here’s what I think they should do.

Hire programmers. Hire them out of Google or Microsoft if you have to. Have them build a Netflix-style service for books, tailored to an individual’s reading speed, that automatically sends new recommended books to them, with a skip function if they don’t like the blurb. But seriously, anything that Amazon can’t offer is what you need to look at.

For gods sake, just accept that ebooks are cheap. Indie authors look at your $14.99 price point and laugh all the way to the bank, because they at least know how to optimize the price for maximum profit. I know you don’t want digital downloads to cannibalize hardcover sales, but if you don’t get over this, you’ll never survive.

Reading is now competing with movies, TV, video games, music and a whole list of other pasttimes. You’ve got to innovate, to develop new ways of getting your books in front of people and to find ways of engaging them that doesn’t feel like social media cargo cult stuff. Hire a team to do R&D. Look at tie ins to other mediums. You’ve got contacts in Hollywood, get out there and use them. Look at viral advertising. Stop pretending that you have to keep readers at arm’s length, and turn your brand into one worth remembering. All those different imprints, by the way? They’re making sure you’re virtually unknown among ordinary people who read books.

While you’re at it, start moving your business away from large warehouses full of physical books. (Expensive, collectable physical books will still sell.) Lower the print runs and set up POD centers that can produce small orders of books locally and overnight them to bookstores in the area.

Start an online program for independent bookstores, where they can see which authors are doing book tours in their area, so they can contact them. Set up an in-store affiliate program – if people buy a physical book, they can get the ebook at a big discount and download it right then and there.

Forget Author Solutions. No savvy self-publisher is going to give you the time of day if you push that overpriced crap on them. You want to really pull self-published authors in and make money off them? Open up your Bookflix service to them, and start profit sharing on the same terms as Amazon.

Final thoughts

I still think the big publishers are doomed, unfortunately. The changes they need to make are just too big, and they move too slowly. I expect to see them shrink like nothing else in the next decade unless, by some miracle, they completely change their business model in the next few years.

For what it’s worth, though, I still don’t apply most of this to Baen, and maybe Tor. If any publisher or imprint has a hope of surviving, it’s those guys. Independent bookstores will also survive, because they’re small enough and nimble enough to change when and how they need to.

And authors? Authors will always write and sell books. Now more than ever, that’s pretty damn easy.

(Usual caveats apply about this being my own opinion, etc etc, as an observer of the industry. Take with grain of salt and all that.)

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14 Comments For This Post

  1. P.A. Wilson Says:

    Great points, Claire.
    The only comment I have is that Amazon didn’t hammer the nails into the publishing industry’s coffin. They forged them and hammered them in all by themselves.

  2. Laura K. Cowan Says:

    Why Baen and Tor? This all seems like good info except for the fact that certain companies do survive the wreckage of industry changes like this if they can figure out how to adapt and have enough financial wherewithal to weather the storm until they figure out what works. I would love to see another post on this topic that talks about why you think these publishers will survive, and any others.

  3. Kathryn Goldman Says:

    You provided good recommendations for how traditional publishers can innovate to save their businesses. I really like the idea of distributing e-books in a Netflix-type approach. But I think you’re right, they won’t do it because they are not nimble enough.

  4. Claire Ryan Says:

    Well, Baen and Tor seem to have a handle on actually connecting with readers – genre readers, anyway. I’ll always give them the benefit of the doubt because they’re at least trying new things that don’t feel cargo-cultish.

    That’s a good idea for a post, I’ll think on that a bit.

  5. Laura K. Cowan Says:

    Awesome. I would love to hear your thoughts. I’ve heard a lot of blowback lately about how so many people are prematurely crying the death knells of traditional publishing, but when you serve it up as straight up fact like that, it’s pretty obviously true, if not in every detail than at least broadly so, and the concerns are industry-crushingly big, so publishers should be spending more time paying more attention and less being defensive. I thought they had a handle on it finally, but the talking points coming out of BEA were just self-comforting head in the sand kind of stuff. Ah well. Amazon already has game point for the next few years. My concern as a new author is that marketing is still so difficult on your own unless you do fit into one of these genres like sci-fi or romance with voracious online readers, so I’m trying to discuss the options with traditional publishers to see if they can get my visibility up while leaving myself the option to go back to self-publishing when I gain some traction. I don’t want to get trapped in their vortex, but big publishers who can be flexible could still really help bigger authors, at least, and I think I have the potential for that. Thanks for your thoughts!

  6. Claire Ryan Says:

    The marketing thing is a problem, yeah. Go get my handbook from Smashwords if you like, it might give you some more ideas. I tend to come at it from a technical background, and trust me, you’ve got options if you know where to look.

    Having heard some horror stories about contracts from the big publishers, I’d still be wary. Or at least I’d look it over with an IP lawyer on speed-dial.

  7. Ryan Petty Says:

    Great post. Thanks!
    I take issue with only one small thing, this paragraph:

    •Networking? Ah, now this is the big one. This is something they can offer that Amazon can’t. The big publishing houses have all kinds of contacts that authors can take advantage of.


    What I would say is that it’s not that the traditional publishers don’t have networking power, but that so much of the industry’s power resides with the literary agencies and 3rd party author services professionals (former employees of trad publishing)… so, it’s not controlled as much as you might think by the traditional publishers as business entities. Also, I expect shakeouts are coming in the industry and a lot more talent will be jetisoned from the big houses (one of the things shareholders expect from mergers and acquisitions… one of the things that drives quarterly results…) and that means more talent with more networking relationships on the street….

    One more thing: I think we all underestimate just how many writers are vying to be published the traditional way… even now. How big the slush piles and back logs are… How much ego is still tied for so many of us to being accepted by brand name houses…. The pull of brand name publishing (near meaningless as it actually is to readers, in book selection), is powerful for many writers when it comes to the ego drive for acceptance… and it keeps the trad publishers supplied with what? Content. And remember, much, if not most, of the publishers’ money is made not on book sales but on subsidiary rights. But they have to have the books (content) to have the subsidiary rights. We are in an era just dawning where the trad publishers are starting to (sometimes) have to pay more than they’ve ever paid for fewer and fewer rights… but they are working every angle to hold on and make sure, in the aggregate and on average, that they are paying less than ever. So quite the push and pull going on. I cannot call the horse race but it’s interesting standing at the rail.
    Thanks for sharing your observations, insights and wisdom.

  8. Claire Ryan Says:

    Good points there, thanks for adding this.

  9. Alan Says:

    I’d put Angry Robot and some others in with Baen and Tor.

  10. Graham Storrs Says:

    Nice summary. One thing the publishers are doing that you didn’t mention is creating digital-only or digital-first imprints. This looks like a healthy hedging of bets to me and, for the author, the best of both worlds (full disclosure: I just signed a two-book deal with Pan Macmillan’s Momentum) , but I’d like to hear your thoughts on it.

  11. Claire Ryan Says:

    My thoughts on it are that it’s just not that innovative. What’s new about a digital only imprint? What are they offering to readers that could draw them to books published through this imprint? They’re still not getting the most basic problem, that these efforts completely sideline readers in favor of selling services etc to authors, and that market is heavily saturated.

    The Random House digital only imprints have already been slammed for having awful contracts, which does suggest that publishers are not learning from the self-publishing industry.

    Apart fromt hat, one of my points above was that the publishers are intentionally fragmenting their brand with all the different imprints, and this is no different.

  12. Graham Storrs Says:

    “What are they offering to readers that could draw them to books published through this imprint?”

    Nothing, except quality control. I’ve only really got experience of Momentum but they select MSs the way any other publisher does, then put them through Pan Macmillan’s editing process, then sells the books just like any other publisher would. All money flows to the author, as it should. As a reader (and one who reads a lot of self-published material) I’d certainly like to see more books available from a brand i trust.

    It’s a shame about the Random House thing. It’s nothing like the Momentum deal and seems to have tarnished the whole digital-only approach (e.g., you said it was about “selling services etc to authors” – which just isn’t true except in a couple of high profile cases).

  13. Rinelle Grey Says:

    Some great points raised here. I, too, think traditional publishing will die. Possibly even faster here in Australia (where there are so many restrictions, and books are WAY overpriced compared to importing them from the US, even after you pay postage), where most bookstores have already disappeared.

    At this point, I don’t think many readers look to see whether a book has a publisher or not, they buy based on the blurb, cover and reviews. And price, which is one place where us indies really can compete.

    I’m curious what you think of the hybrid models that are emerging, where the author retains ebook rights, and publishers buy only the print book rights?

  14. Claire Ryan Says:

    As far as I know, only Hugh Howey has pulled off that particular gambit.

    I think most publishers will still try to take ebooks rights from first time authors, as rights grabbing seems to be their standard MO. But the indies who build their own audience online and sell print later to the big publishers? More power to them. They’re clearly making decisions with their business and career in mind.

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