May 24, 2013
Reports of Publishing’s Death Are Exaggerated
Posted on Dec 7, 2012
By Susan Zakin
Byliner didn’t charge for the download of Krakauer’s piece, but soon established a model through which writers and Byliner split proceeds from the usual $2.99 download price in half, minus 30 percent for distribution by online stores, including Amazon and Apple. Although the division made sense on paper, it is also symbolic of what publishers such as Tayman and Spillman call a “partnership” between themselves and writers, a model they say is very different from old-school publishing.
Byliner, with its philosophy of sharing both risk and profit, has attracted original writing from a number of well-known writers; in addition to Krakauer, Margaret Atwood, William Vollmann and Alexandra Fuller have also contributed. All are still writing books published by major houses. But a couple of years ago, profits from the stories they post on Byliner would have gone to traditional publishers of either books or magazines. Last week, Byliner landed a first round of serious financing from a lineup that includes venture capitalist firms, along with book distributor Ingram and Random House.
Byliner and similar online publishing venues The Atavist and Longform tend to publish established authors. Unlike Salon, the feisty Internet startup that broke major stories in the 1990s, these sites aren’t necessarily pioneering innovative content. Emerging writers are gravitating to websites that pay little or nothing at all, like The Rumpus, which helped make Portland, Ore., author Cheryl Strayed (“Wild”) a best-selling author. And some writers are choosing to keep control of their own work, betting that it won’t be long until technology advances sufficiently to make distribution as accessible as e-book publishing is today.
Midsize dead tree publishers such as Tin House and San Francisco-based McSweeney’s are also expected to benefit from changes in the industry. These firms are steeped in publishing’s greatest strength: quirky creativity. Tin House editor Spillman says that Barney Rosset, once called “the most dangerous man in publishing,” is his literary hero. Rosset, the founder of Grove Press and Evergreen Review, published D.H. Lawrence, Samuel Beckett, Pablo Neruda, Octavio Paz, Kenzaburo Oe, Harold Pinter, Henry Miller, William S. Burroughs, Jean Genet, Eugène Ionesco and Tom Stoppard. Five are Nobel Prize winners and several are writers whose work was banned on several continents. (One might note that having your books banned was not, in those days, a good sales ploy.) In the end, Rosset’s writers sold millions of books. But if there was a strategy on his part, it was decidedly long term.
“Barney Rosset invested in people like Samuel Beckett,” Spillman said. “He wasn’t worried about having one Stephen King. For a corporate publisher, if they give someone a $40,000 advance and the book only sells 5,000 copies, it’s a disaster. Whereas for us, if we sell 5,000 we’re happy. For literary publishing, the pressure to have every single book become a breakout book is kind of unrealistic. It doesn’t do for a long-term relationship.”
But is it still possible to operate like Rosset at a time when the cost of everything seems astronomical?
“Absolutely,” Spillman said. “The word nimble comes to mind. Places like Graywolf, Soho, McSweeney’s, they all have very low overhead versus a company like Bertelsmann. When you get that big, it’s very hard just to cover your overhead.”
The good news is not that a change is gonna come, but that it may happen sooner rather than later. Chris Anderson’s 2006 book, “The Long Tail: Why the Future of Business Is Selling Less of More,” argues that our culture and economy are moving away from a relatively small number of “hits” and toward engaging a large number of small markets. In the past, small retail outlets like bookstores depended on big hits because they had limited shelf space. But when infinite shelf space (à la Amazon) is taken into account, the true shape of demand is revealed, Anderson writes, and it’s less hit-centric than we thought. Selling less of more results in just as many sales as engaging a small number of large markets. (To torture a metaphor, Monty Python fans could call it the “Every Sperm Is Sacred” business theory.) Anderson uses the music analogy: Cheap Internet distribution has allowed services such as Rhapsody and iTunes to cater to virtually any market cheaply, no matter its size.
But as new business models emerge, they bring new struggles for writers and publishers, as revealed in the fight between Amazon and Apple. With the behemoth Amazon discounting best-sellers to gain market share, five major publishing companies cast their lot with Apple. Apple would distribute books at a price set by the publishers, with 70 percent of the cover price going to the publishers and 30 percent to Apple.
In April, the U.S. Department of Justice sued both Apple and the publishers not for antitrust violations, but for allegedly colluding to raise prices. A few months later, three of the five book companies agreed to a settlement that allows Amazon to continue using best-selling e-books as loss leaders—a practice Authors Guild President Scott Turow calls predatory pricing—as long as the publisher’s entire e-book list does not lose money over a 12-month period.
Sen. Charles Schumer, D-N.Y., protested the settlement in The Wall Street Journal, claiming that it could “wipe out the publishing industry as we know it and make it much harder for young authors to get published.”
Reading the Authors Guild’s letter of protest regarding the settlement to the chief of the DOJ’s antitrust arm is a fascinating precis of Amazon CEO Jeff Bezos’ brilliant if ruthless business strategy. The Authors Guild characterizes it as vertical integration: Amazon is publishing print and e-books, as well as distributing them but so far, Apple is confining itself to distribution.
One of the Guild’s most compelling arguments against the DOJ’s settlement is market share. Amazon controlled 90 percent of the e-book market before Apple entered the fray; now that slice is down to 65 percent.
Why should writers care? If Amazon dominates virtually every aspect of book publishing, the company will be able to reduce authors’ royalties dramatically. Both established authors and self-published writers would be forced into the Amazon corral.
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