Major publishers are in trouble. Publishers Weekly reports declines across the board at all five major publishers. What is happening here is not new, as much as publishers would like you (and themselves) to believe. For the past four to five years, publishers have found growth almost exclusively through acquisitions, mergers, layoffs, and the largesse of their primary retail account, Amazon. All of those forces have run out of room.
As self-published books took off and began commanding a growing share of the book trade every quarter, publishers were able to weather the storm mostly because of increased profitability as more of their business moved to Amazon. Even as they damned the online bookseller, they profited from lower returns rates on physical books thanks to Amazon’s predictive on-time ordering. (The returns rates at bookstores could be around 40%. Amazon shaved those to under 5%) Publishers also made bank on ebooks as Amazon paid publishers their full amount while discounting to the bone and taking the hit on the retail side. When publishers fought for a return to agency pricing, they fought for an end to this discounting, which has pushed more and more sales to self-published authors. Those sales (those readers) are probably never going back.
Let’s dispel a couple myths: The first is the idea that book sales are languishing because there hasn’t been a breakout hit like (whatever book sold well the previous year). I’ve been seeing this line trotted out for two decades, whenever a publisher has a lull. Usually it’s a single publisher explaining their performance in a quarter due to “Not having a hit like we had in Insert-Book-Title-Here last quarter.” These days, it’s the running excuse for the entire book trade. And it’s absurd. Think about the number of damning things publishers are saying about themselves when they make this quarterly excuse:
• They are admitting that they can’t create a bestseller
• That none of their marketing and promotional tools work!
• That book sales are either all luck, or…
• Completely dependent on the talents of the authors that they have historically abused.
Beyond the weirdly circular reasoning of, “The reason we didn’t make as much money this quarter is because we didn’t have a book sell a ton of copies this quarter,” there’s a lot to be wary of in the above bullets. As a writer (the peeps I care most about), it should be eye-opening. None of the promises a publisher makes to you can be kept. It’s out of their hands.
Whatever they tell you they’ll do to make your manuscript a bestseller, they said to thousands of authors in the past year, and they failed at all attempts. Meanwhile, I know of a dozen self-published authors who have broken out over this time. I had a married couple on the boat for lunch this week who are both deciding when they should quit their day jobs, as they are steadily making 5 figures each month. If you go to writing conferences, you’ll run into dozens of silent success stories like this.
Probably the most damning evidence that publishers can no longer drive sales is the sad excuse for books that have kept them afloat. Last year, it was a rejected rough draft of To Kill a Mockingbird, published against the wishes of the dying author. This year, it’s a play not even wholly written by JK Rowling. And over the last two years, it has been coloring books hiding the slide in physical book sales. None of these things are books. Publishers are no longer in the book trade; they are in the what-the-hell-can-we-do-to-make-a-buck trade.
The irony here is that for years we’ve heard that major publishers are all about Literature, with a capital L. And Amazon is about diapers, and Google is about data (scanning all books), and Apple is about devices (selling iPads). The reality is that all of these companies are about profits, so their actions should be compared, not their motivations, which are largely the same. Their actions tell us about their philosophies as they pursue those profits.
Major publishers have colluded in order to screw the reader, have offered ever worsening book contracts to screw the writer, and have resisted innovation in an attempt to harm their top retail account. Higher prices, fewer rights to authors, and fewer sales channels have been where they’ve exerted their muscle. Let that sink in.
The actions from the west coast have been quite different. The new publishing leaders (Amazon, Google, Apple), have opened their markets to more voices, have paid higher wages to writers, have passed along greater savings to readers, and have increased choice and availability in formats.
There has been some good news from the smaller publishers, as indie publishing houses figure out how to compete. Some medium sized publishers now offer the print-only deals that the Big 5 are loathe to offer (I’ve signed four more of these deals in the past year, and I know of other authors who have seen them as well). My agent and I have also seen hard terms of copyright with some of these deals, limiting the terms of copyright to five or seven years. And some of these publishers have dabbled with promotional opportunities at Amazon that major publishers have avoided for fear of making more profits alongside their biggest retail account (bizarre).
What can we expect to see next? Well, what if we started from scratch, today? What kind of book trade would we build? It wouldn’t be the large big-box discounters like B&N (which just changed CEOs again, and is probably 2 to 3 years from going under). If I was building the book trade of today, I’d mostly do what I described in this blog post if I was a publisher, and this blog post if I was a bookstore owner. What we really need back today is Waldenbooks, with a small footprint store in every mall and in a lot of strip malls. Like a Gamestop or GNC type of franchise, one that people can buy into and have the freedom to run like a community indie store. Those are the kinds of stores Amazon is building (they just announced another in Chicago). It’s the opposite of what B&N is thinking of doing (selling wine and opening cafes).
The Big 5 are going to become the Big 3 or the Big 0 eventually. Medium sized presses that are doing the right things will eventually overtake them. The first major publisher to go all-in with Kindle Unlimited will make bank and survive (and seriously impact indie sales overnight). Amazon is going to continue to dominate in print, ebook, and audio, because they think about the reader first. Indie stores are going to do well because the world is urbanizing, and people will support local shops and continue to buy books that they never actually read. And writers are going to have new opportunities in gaming and VR spaces, as well as the genres that publishers neglect, until the day that AIs are writing all our books for us.
Until then, you can expect publishers to make pretty much every mistake they’re capable of making. Ingrained biases and wishful thinking will continue to lead the way. A recent survey that showed more people prefer print books over ebooks will be taken as gospel, when Amazon knows from their data that ebook readers read an order of magnitude MORE books than print book shoppers. So while publishers mold their business decisions around the people who read two books a year, Amazon will continue to cater to the readers who would consider this a slow weekend. It doesn’t take a genius to sort out who is going to win market share when that sort of lunacy is taking place.
Five years ago, I called for publishers to do whatever it takes to gather data on their readers’ habits, even if that meant giving away ebooks or partnering with Amazon on every promotional opportunity they could (in exchange for some also-boughts data). Instead, they have pushed up the price on the one format they could easily track and use to entice readers to get onto mailing lists. They have fought with Amazon over the discounting that was only hurting Amazon’s profits. And they have resisted subscription services that have seen actual growth (Kindle Unlimited) while dabbling in services that were operating like Ponzi schemes.
These are the same publishers who damned B&N as the devil until it was too late, and then saw B&N as their savior. In a few years, while profits are still plummeting, and publishers are blaming it on the lack of a bestseller like Book X from the year before (probably a rejected rough draft of a play about a paint-by-number artist), they’ll turn to Amazon to save them and have to wrestle with a beast that they created. And all of it was unnecessary.
All they needed to do was treat their authors better, do more for their readers, and pare down their costs. The Amazon formula for success. Instead, they’ve done the opposite on all three accounts. And they wonder why times are tough.