20 December 2011

Publishing In The Golden Age of Competition

There are numerous parts to the debate currently swirling in the publishing industry.  One part is the question of the value traditional publishers provide to established authors. Another part of the debate is whether new authors can bypass legacy publishing on their way to success. Some suggest that this is the dawn of a new and golden age for writers. Others argue that things won’t change much after the dust settles. The best way to become a successful author will remain the first contract signed with a traditional  publisher.

The familiar tends to give us the false impression of stability and permanence. History reminds us that it is easy to underestimate the power of new technology. Western Union turned down an offer to purchase Bell’s telephone patent because telegraph communications were more efficient and reliable. The telephone patent, today, is widely regarded as the most valuable patent ever registered.

Some believe that the large publishing houses have been caught in a draft, will survive almost intact and will continue to enjoy their monopoly and influence. The current flux is similar to catching a cold, a temporary disruption from which they will eventually recover. One of the arguments to support this point is that publishers have hard drives upon hard drives filled with mid-list titles that soon will be published as ebooks. This large back catalog will flood the market and will effectively kill whatever challenge to their hegemony was posed by the advent of e-publishing. The likes of Amanda Hocking and John Locke will prove to be historical aberrations. Writers who are not established will have to compete with this huge backlist of “new” releases.

Some who believe in the value of legacy publishing don’t have convincing arguments but are really hoping that the status quo remains and the publishers maintain their market dominance. Their position comes from a vested interest in the order of things or out of respect for the proper order of things. Legacy publishers, after all, have played an important role in society for the past five centuries.

This article argues that legacy publishers are part of an industry that is forever changed. The biggest competitive advantages they previously enjoyed have lost much of their value. The infrastructure that specialized in printing and distributing books is becoming superfluous. Talented, creative and knowledgeable writers will greatly benefit from these changes.

Consider these propositions:

Legacy publishing specializes in servicing mass markets.
Technology enables readers to find what they like.
The market for books will grow.
Technology empowers writers to create niche markets.
Specialized knowledge, talent and creativity are the trump cards of writers.

Legacy Publishers Cater to Large Stagnant Markets.
Before a legacy publisher agrees to publish a book, they need to feel secure about which readers will read it. Their universe of readers is artificially defined by genres and types of books. They are forced to serve large, well-defined market segments. This is due to the limitations of their business model which is based on wide-scale distribution. The feedback loop between the market and the publishers is necessarily slow and cumbersome. Accurate information on what the market cares about and would like to read is not readily available. Many tastes are ignored for lack of information or want of market size. This legacy system stifles creativity because the prudent course is for publishers to minimize the risk of bad investments. When you enjoy what amounts to monopoly or cartel status, there is no incentive to develop niche markets. Publishers do not have strong incentives to experiment with anything outside of what they believe to be the tried and true. On the contrary, recent competition from independent publishers made them more conservative.

Technology Empowers Readers to Find What They Like.
Publishers are forced to acknowledge the ascendancy of ereaders or face their peril. Consumers are the beneficiaries of technological innovations that give them more choices than ever before. Search and recommendation algorithms for books will continue to improve. Search technology is a recent development that came after the widespread adoption of the Internet. As recently as the 1990’s, the most helpful algorithm for finding a book was the Dewey decimal classification system. For the most part, you also had to be physically present at a library or a book store. Choice was very limited and the publishers had tremendous power because they decided what to print and therefore what was available for people to read.

The Market for Books Will Expand
As ereaders and the number of ebooks proliferate, the population of avid and regular readers will increase.  Ereaders and tablets attract new readers and they make existing readers more voracious in their reading habits. In large part, this is because readers have more choices and have quick access to what they like to read. Finally, ereaders are a form of storage for portable libraries that reside on the devices. In a society that values literacy, there is no downside to everyone owning a portable library. Young children should have one suitable for their age as soon as they learn to read.

Authors Are Creating Niche Markets. The old paradigm of competition in publishing assumes that markets are already defined and tend to remain static. The business model of the legacy publishers relied on this paradigm and it proved successful.

It’s easy to fall into the trap of thinking that a few leading authors who are standouts in a particular genre are “the competition” for new authors. Their books are prominently displayed in the remaining bookstores and are reviewed and critiqued by respected voices. But this type of thinking misses the point. In the information age, new authors don’t have to compete with established authors for the same readers. Social media tools allow unknown writers to jump into the fray and carve up new niches that previously didn’t exist. There is no killer tool, but rather a large and growing number of media platforms. Writers can use podcasts, videos, blogs, facebook and twitter to test and create their brand and build a rapport with an audience. The old metaphor of a pizza pie limited to eight slices is stale and no longer accurately represents the market for books.

Amanda Hocking wasn't "competing" with any established authors when she released her first book.  An apt metaphor that explains the strategy of creating a niche market is staking claim to a plot of ground and cultivating it into a garden. It’s easy to give a few examples. A writer can cater to an audience that is primarily interested in contemporary urban short stories or romance novels set in medieval England. These potential markets won't care about and won't notice the coming flood of mid-list ebooks. Does anyone know the size of the market for science-fiction stories that focus on nano-technology?

A lucrative niche for an individual author doesn’t have to be large by conventional standards.

Writers and Readers are In Direct Communication.
Today's communication technologies empower authors as well as readers. Years ago, it was mostly a one way conversation with a reviewer telling the public the relative merits of a new book. This information was mostly limited to newspaper and magazine reviews that were of the utmost importance to a particular book or an individual author.

Today, by contrast, authors have a virtual arsenal of communication tools at their disposal and a geographic reach that is bounded only by language. If the author chooses, the conversation with his readers can be two-way, ongoing and dynamic. Author and audience can influence each other.

The Real Competition
The new competition is between forms of communication. On one level, it is the battle of the old way of communicating to mass markets versus the new way of communicating to niche markets. On one side are the anointed, respected voices who speak to the masses on behalf of legacy publishing and selected authors. On the other side are writers who are able to maintain a meaningful relationship with their audience. Each method has its benefits and unique advantages.

Talent, Creativity and Access to Markets
Every business school student knows that an entrepreneur can develop a soft-drink that tastes better than Coke (the real thing), and that the big challenge is to market and distribute this new product effectively. Technology allows writers to create and service niche markets based on their specialized knowledge, talents and creative disposition. The problem of access to markets and the challenge of physical distribution are both solved by digital technology. These previously served as a moat that protected the cartel of legacy publishing from competition.

A Glimpse of the Future
The changes in publishing began almost imperceptibly and recently have been gaining momentum. The tip of the iceberg is the small number of successful, name-brand authors who are starting to self-publish. Established authors will begin to evaluate their options in light of their audience size and the opportunities afforded by technological advancements. There is no doubt that the existing infrastructure of traditional publishing remains a valuable business asset. But as e-publishing matures and the economic ramifications play themselves out, the declining value of a publisher's services will become more pronounced. Authors will negotiate tougher deals (do I own ebook rights?), demand more services or walk away from contract offers.

Amazon is now handing out publishing contracts and its business specialty used to be that of a retailer of non-perishable items that could be shipped. Who else will want to finance authors? Google and Apple are in the ebook and ereader business and facebook recently purchased an ebook company.

The golden-age metaphor for writers has yet to prove itself. The mythology of legitimacy and authority inherent in being an indispensable institution for 500 years will continue as myths are wont to last long after the historical conditions that created them are only a memory. Economic realities, however, will continue to erode the already diminished cachet of traditional publishing.


See also: Steve Donoghue, Authors Take Control of the Publishing Process

1 comment:

  1. Very interesting, I've always wondered how the big publishing houses were handling the Indi invasion that e-publishing has made possible, but I hadn't head about the back log of books before.


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