In a well-attended public meeting (“we’ve learned our lesson, taken a great deal of enormous value from our effectively admitting guilt in DoJ collusion case. We’ve completely reformed our business model to be as transparent as possible, while behaving in as ethical a manner as possible. There are no more secret deals, not with each other or anyone,” said the CEO of one of the big 5 publishers) in New York’s Central Park (“It’s cold but at least we save money for essentials, like publishing books people want to read, and paying writers,” said the famous editor Ms. Ess Pon.) momentuous decisions about the future of publishing were reached today.
In a statement issued afterwards to the ever critical and always sceptical arts press, they said:
“The DoJ prosecution has been the wake-up call we needed, which made us finally realise we’re not an oligosony operating like a cartel at times. It’s a sellers market now, and we no longer control that, any more than we control access to retail display space or the pricing of books. We’ve been in denial for years, but now we’ve decided to move on and take effective steps. Accordingly, instead of devouring our own vitals in a futile quest to turn the clock back, we’ve taken a long hard look at what we need to do to survive the end of our almost total control of buying, and the ability to prevent anyone else from effectively selling reading matter. There are plenty of examples of industries who had monopsony or oligosony positions that ended, and not a few with monopoly or oligosony positions that were lost, because of changes. We’re going to learn and emulate those who survived and flourished after this, and stop burying our heads in the sand and trying to turn the clock back, and hurting our suppliers and customers, because that’s what the failures did. It’s all about being valuable to our suppliers and to our buyers, and everything in our new business model is focussed on that end. We’re middlemen, but we can provide great editorial and proof-reading and cover services, making better books. So long as our cut is small enough to be adequately covered by the value we add, we know we’re on a winner, sure to be popular with readers and authors alike. To make us cost effective at this, we’ve banned meetings from work-time, and are firing all the staff who do not actually do these things for 7 of their 8 hours a day. The senior staffers whose only task was dealing with B&N and mass distributors have voluntarily resigned, as this is such a diminishing piece of our business, we don’t need them any more, and what was the point in burdening customers with the cost of their salaries, which did so little value add for them? We’re setting up our own competing e-commerce sites and will be paying authors a larger percentage than Amazon, because we can, selling direct, and that’s what competitions about, isnt it? And we’re paying them for linking referals that end in purchase, because that’s such common sense we can’t think why we didn’t do it years ago. And to save money, as they add no value to readers or authors – and that’s what surviving and thriving the end of old status quo means… we’re selling or ending our leases on the ridiculously expensive offices in NYC. We’re going to spread out across America, picking on the cheaper areas because in an electronic age we really don’t benefit at all from being in a hothouse environment, but we do need to connect with our possible readers (and we’re going to be hiring people from these places and going to try for more science and commerce and technology graduates, instead of the same old liberal Arts, East-coasters. We want to reach all our possible readers, not just a tiny subsection who think and vote and live as we do.) We’re changing our buying strategy dramatically, if you’re a red state deer-hunting truck driver, or a blue state vegan gay political activist, there’ll be books designed to appeal you, in approximately the proportions you make up in the population. After all what on earth could ever give anyone the mindbogglingly dim idea that one size fits all? We know that the blue state vegan gay political activist won’t pay for a book intended to appeal red state deer-hunting truck driver, and we’re not so stupid as to assume the inverse could be true. And we’re in this to make money, for ourselves, obviously, but also our suppliers. That’s why books with appeal a 2% population section won’t make up 98% of what is for sale any more.
We’re using Baen and even Amazon as positive case studies and role models, to teach us about flexibility and things like great transparent accounting and reliable payments. And we’re all collecting real stats and hiring professional to make sure they give us the cutting edge over competitors…
Oh, and you do all know it is April the first, don’t you?” 😉
It would be nice if it were true
What got me going on this was another author who is an ex-editor, and still well-connected saying the publishing powers that be feel themselves terribly hard done by by the DoJ collusion prosecution. They’re innocent, they just don’t have the money to fight. That’s just how they normally do business, sharing information that would get you fired in any other industry and if the DoJ had looked at that they’d have realized there was no case for publishing to answer. The individual didn’t quite get my point that publishing _was_ just like any other industry, and rather than letting them off, that actually just meant they’d got off incredibly lightly because the DoJ didn’t look closer. They should be contrite and reform – that is the point of the action, and if they haven’t, well they deserve what is coming, but why the collateral damage has to hurt with them, is a shame. I’ve read various industry insider blogs – and one thing is painfully obvious: Denial still rules, and not one of them has realised that the end of control of access to retail space (which effectively made them the only buyers and sellers) means they should look at other industries that have gone through the same, and learn from them.
Ah, if only it were true. This was such a wonderful “announcement” to wake up to. I thought, for just one moment, sanity was coming to the industry. Then I realized it was just our favorite Monkey having at us on April Fools Day.
Good one, Dave!
grin. Too implausible. It fell apart the minute I suggested they’d learned valuable lessons. It was totally in smithereens when I said they wanted to save money spent on their own comfort for the sake of books.
Agency problem. It might be better for the share holders if the money is spent on books, but it is not better for the employees, especially those in mid to upper management.
I’m starting the suspect the stock market is a big part of our economy’s problems.
Ori: To blunder into economics briefly – if the directors and shareholders of corporates had the same risks as an individuals owning a company, they’d be a very different animal, positive for the economy. If shareholders actually owned a share in the business, not an easily trade-able no responsibility piece of paper saying they did, they’d run very differently. A large part of this is of course also a tax issue. As the expenses are deductable, Apple can for example fight the DoJ ruling. The money they spend on lawyers and quite possibly the fine, will merely become expenses, so the taxman will get less.
Seconded. I shared this because it is what I would have written if I were 100 times smarter 😉
I don’t think this tax issue is so big – I’m pretty sure that even in a sole proprietorship, the cost of lawyers you need to run your business is deductible. But the capital gains (taxed once, at a lower rate than regular income) vs. dividends (taxed twice) issue makes things worse. Dividends have to be based on real money, whereas the stock price can be very unrealistic.
Also, the agency problem is huge. Paying directors and officers in stock options means they have an interest in having a high share price in the near term, rather than the long term profitability of the corporation(1). In their defense, a lot of the current share holders might view things the same way and are only holding on to the shares until they can sell them to the next sucker.
But this is a science fiction forum, so enough whining about the imperfect present and lets see how this is likely to develop. A huge portion of the stock market is boomer retirement savings. Those savings have to disappear because the boomers will not be able to retire. They didn’t have enough children. When the boomers attempt to sell those shares, they’ll discover that the generation X-ers they trusted to buy the shares aren’t there(2). This would lead the stock market down.
Since people only buy shares in the hope of appreciation, this process would lead to the stock market going in free fall. I expect that we’ll see a lot of mergers and buy outs, where a group/organization that can actually run the business buys the shares from the public.
So I think the problem is self-correcting. The correction will not be nice, especially not for people whose life savings are in the stock market, but as a society we will probably get a better economy overall from it because we’ll reduce the agency issue.
(1) Interestingly, the tax code supports the interests of those classes. It is almost as if they had some special hold on the politicians ;-).
(2) Assuming the boomers thought about this connection at all, rather than believe that somehow buyers will exist.
So true. Still, it was such a nice dream until reality intruded its ugly head 😉
You had me going for the first paragraph or two. I must say though, you lost me at some point when I was no longer able to maintain my suspension of disbelief. Next time try something more realistic. Like uhhh…
Flying monkeys in orbit around Uranus or something.
LOL. There are flying monkeys around…
I think your subconscious was fighting you. Either that or you deliberately . . . Nah, not our serious Dr. Freer . . .
“We’re going to spread out across America, picking on the cheaper areas . . . “
grin. When Hell freezes over, they will. They’d rather die than change i think.
If the US Congress had announced that it was going to pass a budget containing a trillion dollars US in immediate spending cuts including eliminating the Department of health, Education, and Welfare; and the US Sec. Tres. and head of the Federal Reserve had both announced they were resigning effective this afternoon; and George S0r0s was seen making good on his 2004 promise to retire to a monastery, then I’d believe you. Because that combination is more likely than the Big Six coming to their collective senses. 🙂
Oh a LOT more likely 🙂
Oh, my. How I wish. Alas, it looks as though the merger of Time with Meredith was shot down because ::sniff:: none of the important people wanted to move to Des Moines, where there are only a few “it” restaurants and people don’t really care how important you are. ::sniff::
That sounds SO right it has to be true. Maybe it says something about how unimportant they are, at least in their own estimation.
Shows how jaded I’ve become this past year – reading publishing and ebooks bloggers – that you lost me after the second sentence.
It just piques my curiosity when I also read about profits from the publishing companies.
Then I remember the housing bubble in the US a few years back: too easy credit plus government protection for the banks got way too many folks who really couldn’t afford it into mortgages that then ended up under water.
I wonder where the publishing industry will start its bubble blowout. I don’t think this is a good time to own their stock.
Still, a nice little wish list.
‘profits’ are actually from devouring their own children. IMO They’re making money by 1) getting rid of /outsourcing the staff who actually add value. In the medium term… how long before the better indies start using them? Not long at all, IMO. And in a few cases, start offering profit shares. 2)By selling the family silver – they’ve been digitising backlists – which they may have no rights to, or challangable rights, and selling them, and settling hastily with those who DO challenge, in the hope the rest won’t find out – because if they do, and do get audited and have to pay all of that back… they’re facing vast bills. It’s like farming the soil under a rumbling volcano. Rich and fertile…
Dave, it’s more than that. They’re now doing to bestseller’s statements what they always did to ours, so…
I am reading and watching with great interest. When I put up what work I have accumulated, in December of 2014, a lot of this should have shaken out into some kind of final form. I keep telling myself not to watch the intermediate pieces – as so many of the publishing models available now won’t even exist then – but trainwrecks are always fascinating.