Month: May 2012

Let’s talk about barriers to entry.

When you’re trying to build a competitive business, you want to build a barrier to entry that’s as high as possible. This stops any old Jonny-come-lately competing with you. Traditional publishers have had a long time to build that barrier. Here’s what they have:

1. Editorial staff – they have the best. After university, when I became a scientist and then started an IT business, I wondered what had happened to all those brilliant English Lit students. I never came across them in science, healthcare or business. They’d simply vanished! Then I became a published author, working with brilliant editors like Elv Moody, Polly Nolan, Clare Argar and Jessica White at Scholastic Children’s Books UK. Suddenly the answer to ‘what did you study at university’ was invariably ‘English’.
   The best and brightest English Lit. graduates often aspire to work in publishing. They get paid in sixpences and have to work in That London. And still, it’s devilish hard to find a good job. You’d better believe that traditional publishers employ the best editors you will ever meet.
   What you could do: However, some great editors have been laid off. Many now work freelance. You can find them via various literary consultancies. There’s never enough money in publishing – your coin will be as good as anyone’s.
2. Designers – Similarly, some terrific artists work in publishing. Book jacket design is a real skill. However, there are plenty of freelance graphic designers, too.
3. Supplier relationships. Traditional publishers know who are the best printers, they have contracts with the distributors, warehousing, etc.
   What you could do. I checked the website of Bookmarque, the printers who print Joshua Files. They’ll print short runs (say, 1000 copies) of offset-printed books and deal with indie publishers. They can hook you up with a warehousing-distribution supplier to handle fulfilment. Even Scholastic Children’s Books now use Harper Collins for fulfilment.
4. Bookseller relationships. When I was first published, SCB took me to the Galaxy Book Awards, specifically so that I could meet the key buyers of children’s books from WHSmith, Waterstones, Gardners and Borders. It was quite a revelation to realise that the key decisions in children’s books were made by a small handful of people. Publishers have those relationships. You don’t. It’s theoretically possible that I myself could work the phone to persuade Sainsbury’s to buy my next book directly from me. But I’m putting all my eggs in the online retail market. You have to draw the line somewhere, or hire a salesperson.
5. Opinion-former relationships: Excellent relationships with critics and the key opinion-formers in fiction have a lot to do with books getting good reviews. It’s not that critics are having their arm twisted. It’s simply that if you are my friend, you are more likely to look kindly on a book that is close to my heart, in which my employer has invested major moolah, and you may be less likely to point out any hideous flaws. Friends are inclined to be nice to their friends. Publishers take pains to be nice to opinion-formers, invite them to dinners, conferences, etc. This is simply good business practice. It’s not ever going to reach the levels of charm-offensive as the pharmaceutical industry schmoozing doctors at sales conferences in Cancun. But it’s on the same continuum.
   What you could do: Not much. If your book is truly brilliant (e.g. you are Junot Diaz, Mario Vargas Llosa, etc) and you persuade a critic to review it, you may get a good review.  You can pay for a Kirkus Review, if you have a strong nerve. Kirkus Reviewers are famously brutal. (A Kirkus reviewer disliked Invisible City but was rather more favourably impressed with Ice Shock.)
6. Media contacts: We live in an age that values the written word less than ever before. No sense throwing your hands up in disgust about how society is going to hell in a handcart. Computer games and YouTube and social networking were not available in Dickens’s time, there was little enough entertainment that his sometimes intractable and always colourful tales were blockbusters. When I was at high school I used to scribble bawdy Blake’s 7 scripts in the central pages of my maths books, rip them out and pass them round my classmates, who were always demanding more. Intelligent people, when bored, will read almost anything. Nowadays they can just check out their friends on Facebook.Therefore, it’s not easy to get the attention of media for a books. There are channels, including specialist TV and radio shows. But they preach to the converted. Harry Potter didn’t get huge by preaching to the choir – the story of a children’s book selling 30,00 copies burst onto the mainstream media. (When Invisible City sold 40,000 in the first four months, the media reaction was a big, fat meh.) By the time Twilight went mainstream in the US it had already sold around a million copies. The bar is higher now.
   What you could do: Publishers employ dedicated publicists to get their authors media coverage. If you want media coverage, you need to, too. Not cheap, but this is where you might want to put your third thousand pounds. Don’t expect magic, but if you are a nobody (not already a household name) this will level the playing field against traditionally-published nobodies, i.e., most fiction authors.
7. Literary festivals: It’s not clear how many copies are shifted as a result of an appearance at a literary festival. Unless you are already a Name, you’re unlikely to garner any publicity from the appearance. Publishers are probably quietly on the fence about whether they should continue to throw budget at sending authors to Edinburgh, Hay, etc. However, I was surprised to hear that it’s not just up to the publisher whether an author is invited to a literary festival. My friend Professor Paul Broda, a molecular biologist who published a beautiful volume of biography about his parents being Soviet spies (Scientist Spies), told me that anyone could apply to go to most literary festivals, and he was planning on doing just that.
   What you could do: Like Paul, you could apply to the literary festivals to appear on their programme. The fee (usually around £150) would probably cover your travel expenses.
8. Foreign Rights: Publishers and agents have the foreign rights marketplace sewn up. They have relationships with dozens of foreign language publishers and party with them at trade fairs in London, Frankfurt and Bologna. Many a book advance is actually paid for by the sales of foreign rights, sometimes to publishers who themselves fail to recoup the advances. So long as your originating publisher makes money, you will probably continue to have a good relationship with your publisher. Business is all about relationships and those with people who lives thousands of miles away take careful nurturing. A self-publisher can rule out foreign rights sales, unless their book hits it big, which is unlikely.
   What you could do: If you’re feeling very energetic, you could try getting in as an indie-publisher to the International Rights section of a major book trade fair and hustling 40 publishers over two days. This is well beyond most authors I know. Even some agents prefer not to engage and leave the foreign rights sales to the originating publisher.  Your best bet here is to have a literary agent who handles foreign sales, doesn’t mind you self-publishing a book they might have sold and agrees to handle your foreign rights. You can find them in the telephone book next to the Tooth Fairy. (actually, seriously, I can see literary agents increasingly agreeing to do this.)

As a self-publisher you will probably be looking at accessing only about 30% of the retail market (i.e. the online sector). You won’t see much media coverage (neither do most traditionally-published authors). Like all but the front-list authors, you won’t be invited to dinners, conferences or literary festivals unless you work the phone very hard. You won’t meet the opinion-formers and if you do, you will be a self-pubbed author, ewww. (‘Not that there’s anything wrong with that’ is not yet politically de rigeur in publishing.)

Good luck if you’re prepared to try all this, but like hiring a sales force, I draw the line at much of this. I prefer to work the 30% online retail sector hard and use aggressive pricing, like million-selling self-publisher John Locke.

Access to 30% of the paperback retail outlets, 100% of the digital outlets, your own marketing efforts and the opinions of ‘ordinary’ readers (i.e. not critics) are all you have. However, you get to keep 35% royalties as opposed to 7.5%. So you have to sell five times fewer* copies to make the same as you would from sales of a traditionally published book.

Even five-times fewer will be difficult, without the boost of proper marketing. That’s why you need to do some.

Next: Designing the experiment: ebook only? Or dare you print, too? If you have established readership, you may have to.

*:

Hello, business pedants.  Yes, I know that five-times is a guesstimate. That compares the lower Amazon royalty to the MMP royalty. But on ebook a publisher may give you 20%. However, you might choose the 70% royalty option at Amazon (if you choose to retail at over $2.00) So overall I’m averaging it out to five-times.

They’re everywhere, these days, pointless predictions about the future of publishing. Pointless because the reality of the future will be dictated by a technology that no-one has yet foreseen, far less anyone in publishing. Why not anyone in publishing? Well, mainly for one reason.  And it isn’t that publishing is full of nitwits (because it is not.)

The publishing industry is based on a business model that may well be out-dated – the scarcity model. (Gabriel Garcia Marquez, Agatha Christie and Junot Diaz and assorted literary masters, etc have few equals on the planet, therefore those who control access to their works – publishers – control the market).

It is not this factor per se, which makes it unlikely that a technological innovation is coming from within this community.

It’s that when your business gives you a particular mindset, developing anything that depends on having a radically different one is nigh on impossible. 

I used to work in the information business. (Here’s a paper I gave at ONLINE 1998.) There were conferences galore with sessions about the future of the information business.

Ha. No-one got it right. Some kind of inter-library global information network was the future. Then it was CD-ROMs. Then it was the Internet and paid access to private databases. Then it was intelligent agents.

Here’s what I rarely heard about: ebooks, e-readers, tablets, apps, social networking. And this was only TEN years ago.

For this reason, take a massive pinch of salt before you believe anything that anyone predicts about the future of publishing. This is an industry which did not invent or finance the development of the Internet, Facebook, the first apps or the first e-reader. (Amazon is a new player in publishing. They are fundamentally a technology and logistics company.) Massive mistakes have been made by HUGE decision-makers. I present m’learned friends with the example of Rupert Murdoch, he of media mogulness. I point at the glaring errors of his purchase and subsequent development of Pointcast and MySpace.

That said, I’ll have a go at this game myself. Why not? (Sam Missingham @samatlounge recently tweeted “If I had a penny for every ‘the future of publishing’ article ever written, I’d be coining it in.” Sorry Sam, here’s another and still no coin.)

I too haven’t ever personally developed any innovative information technology and I work in publishing, which makes me brilliantly qualified to gaze into my own crystal ball.

1. The number of self-published novels is going to soar. This sector within the industry, leaner in costs than any publisher can hope to be, is already providing significant competition. When (to date) over 140 authors have sold over 50,000 ebooks, that is major. It begins to chew rather convincingly into the midlist. Therefore…
2. The midlist will go. (You don’t say, MG.) Yes, it’s been said before, by Seth Godin and other soothsayers of the publishing tribe. This is no longer soothsaying. It’s happening. The word on the street, in the coffee bars where authors meet, is that advances are lower; in many cases so low that the author can’t afford to keep writing for a living. This is basically the midlist author being told to kindly go away.
   (Btw I have no problem with this at all. It is basic business sense. As Nicola Morgan reminds us, publishers are in it to make money. Enough money to pay their salaries. We all have to make a living. Nothing wrong with making a living selling rewritten fan fiction, Pulitzer prize winning fiction and celebrity memoirs, if that is what people want to read.)
3. The midlist will migrate to self-publishing, or as I believe it may soon be called, micro-publishing.  Sales of 10,000 copies (a respectable midlist sales level for the UK territory) could realistically translate to a gross income of $10,000. In this sector, the overheads will be stripped to the bone.
1. The intellectual property – i.e. the content – will be free. This is the authors stake in the business.
2. Editing will be by freelance editors, perhaps even cooperatives of authors working for credits within the organisation, to trade against having their own work edited.
3. Jacket design will also be via freelancers. Hurray for this, because the graphic designers have often had a rum deal by their agencies. They already rely on freelance work. Some co-ops/micro-publishers may even retain freelance designers.
4. Marketing will be left to the author. It practically is anyway, to which traditionally-published author after author will attest.
4. Print won’t go away. Many people love a paper book. Createspace may well take over the entire micro or self-publishing sector for print. As a recent user of their service I have been blown away by the ease and efficiency of this service. The minute that CS set up in the UK and Australia, their main competitor, Lightning Source, may have to forget about the self/micro-publishing sector and concentrate on printing books for traditional publishing. Createspace  and Lightning Source allow authors to print and distribute books at a price which both competes with traditionally-published books in the marketplace, and give the author slightly more royalty than they’d get via a standard book deal.
5. Traditional publishers will have to spend ever more on marketing, to compete with the self-published books, which in electronic version at least will be substantially cheaper. An increasing number of books in this sector will be authored by the very authors they developed and then discarded. At that moment, the self/micro publishing sector will no longer imply ‘amateurish’ but ‘books by authors who typically sell fewer than 10,000 copies, but could be very good indeed’.
6. These bigger marketing budgets will force traditionally-published authors to be instant hits. The debut author will begin to feel like a football player taking a series of penalties at a high-stakes game, having to score a goal with every shot, or risk elimination from the game.
7. The guaranteed big-hitting authors will realize how profits from their sales are increasingly being used to subsidize the development of new talent which can have only one role to the business – to usurp them. What will they do? First they’ll have their agents hike up their percentage royalties. If your books are making millions, you might feel that a bit more than 10% of that should come your way.
8. The swollen mid-list will be joined each year by those eliminated from the latest round of penalty kicks. They’ll have homes (micro-publishers) to go to and fans to read their books. Yet more competition. By now, consumers may hesitate to may more than $3 for a ebook, especially since more and more of their favourite authors are available in this form and at this price.
9. At some stage, traditional publishers will start to introduce more onerous (e.g. post publication) non-compete clauses into their contracts, to stop an author walking away and becoming the competition. Agents may well collude, because otherwise they too will see their own share of the royalty walk away.
10. At this point any debut author has entered a truly high-stakes game, where they literally bet their future on the publisher’s promise to make them a hit. But debut authors are often relatively naive, having spent most of their time and energy learning how to write a great book. They probably won’t be able to make an honest assessment of the likelihood of those promises being kept.
11. Some debut authors will be badly burned and may lash out. Their stories may put other authors off trying the traditional publishing route. The burn-rate would have to be bad and the lashing out vehement, because the need for the kind of validation which a traditionally-published book can provide is strong.
12. Debut authors who enter via self-publishing, on the other hand, will be posting self-publishing success stories, or nothing at all. Since expectations are so low, there won’t be many bitter, angry burn-outs.
    This may make self-publishing the most attractive route for new authors. A publishing professional said to me recently ‘I don’t know why new authors bother with agents or publishers now’. (major aside – Mind you, the elderly Sir Edward Abrahams, the multi-millionaire developer of the cephalosporin class of antibiotics, once told me that he couldn’t see why young people did PhDs any more, since science had become such a rubbish career. And people are still enrolling in PhD programs. Sometimes folk become disillusioned. Doesn’t mean it is over for everyone.)
13. The new route to traditional fiction publishing could be this: you self-publish a book, it sells well and gains critical acclaim on Goodreads or Amazon. At this point you approach an agent or possibly, they approach you (as happened to Amanda Hocking and EL James). Or conceivably, the micro-publisher itself starts to act as an agent, directly selling rights to foreign publishers and traditional publishers who promise to big up their author’s books.
14. Unless you are celebrity, in which case, you can write what you like and it will be published. Regular Jo authors shouldn’t envy celebrities this – these people have done whatever it is they have done to become famous, now they are reaping the fringe benefits. If this is the route you desire, then become a movie star or pop star. No point griping that some folk want to read what Justin Bieber has to say rather than what you have to say.
15. The slush pile will vanish, the midlist will vanish, and fewer books will be traditionally published, but those which are will receive greater marketing funds
16. Advances will go but royalties will increase.
17. If Dan Brown, John Grisham, JK Rowling, Lee Child and all the other multi-million selling authors each decide to hire their own editor, publicist and sales person, and start selling their books at a price which would compete with the new, cheaper midlist books, then the big publishers may well collapse. If I worked for their publishers I would be instructing the levels of loveliness around such authors to go up by a significant notch.

There are probably some readers laughing and thinking, tell me something I don’t already know, genius.

Because this is already happening. In 2011, the high profile debuts were “The Emerald Atlas” and “The Midnight Circus” – two manuscripts that were discovered and sold by agents. (Well maybe not the former, which was written by the screenwriter of a top TV show, but basically, it was the usual route.)

In 2012, the high-profile publishing ‘debuts’ had already sold millions – as self-published ebooks by authors Amanda Hocking and E.L. James.

Yes, we can tell ourselves that this is temporary, that once the novelty of a self-published book being successful wears off, the media will stop writing articles about them.

But that belies a fundamental truth about what how media of any kind succeeds – people like to read/watch that which lots of other people read or watch. It doesn’t matter if what everybody reads or watches is not of the highest quality available. What people crave is a shared experience.

Amanda Hocking and E.L James demonstrated that you don’t need a costly marketing campaign to sell a million ebooks. Of course, a costly marketing campaign helps. But there isn’t going to be cash for every book to be heavily marketed. And crucially – many of these costly campaigns are going to fail.

Well, hey. Remember what I said at the top of this post. I am a mere author. I’ve been part of the publishing industry for less than five years. The track record predicts that I can’t predict anything.