The authors and consumers Upper management wages and bonuses
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Rent, utilities, taxes, middle
management, corporate retreats, marketing, returned books, high
advances that didnt earn out, distribution chanels, etc.
$$$$$$$$$$$$ General staff, royalties to authors $$$$$$ Misc
expenses $$ A Random Traditional Publishing House: really top Heavy
Its all balanced on price point and product quality. The authors
and consumers Writer $$ Distribution $ $$$$$ $$ Big publishers cant
function on a low price point. Their over head is too high. They
have been taking cuts cutting measures for years. These include,
but are not limited to spending less on marketing and not providing
editing Big publishers cant function on a low price point. Their
over head is too high. They have been taking cuts cutting measures
for years. These include, but are not limited to spending less on
marketing and not providing editing Independent authors and startup
publishing houses have expenses that vary widely. But in all cases,
their overhead is significantly less. Independents are learning how
to produce a quality product and are able to sell it for a low
price point. Independent authors and startup publishing houses have
expenses that vary widely. But in all cases, their overhead is
significantly less. Independents are learning how to produce a
quality product and are able to sell it for a low price point.
Independents: A little top heavy, but not really
Slide 3
While the Big Dogs fight to put the genie back in the bottle
instead of innovating: Startups are springing up like kudzu. No
matter how many fold, there are thousands more. And were very, very
dangerous. We erode customer base. While the top ten publishers are
able to control the price point of certain books, they cant stop
the deluge of material. They count on poor quality to be an issue.
Buying trends suggest its not. Many independents are offering free
books on the hopes of making sales on second and third books. And
its working. Consumers will purchase work from authors who gave
away books, if they liked the book. Readers dont care who published
it. These readers are being lured away by cheap prices and
limitless choices. This also includes the back inventory of famous
authors. There are only x number of people who will by books and
each of them will only spend so much. The volume of book sales will
increase as price point drops but higher volume doesnt mean a
larger customer base. Each Circle represents the total number of
people who buy books. Customer base of the top ten publishers
Customer base of middle tier publishers Small Houses Each of these
lines in the blue circle represent the potential erosion of
customers to independents, backlog, and small publishing houses. A
few big companies will survive, but theyll have to be fiercely
competitive.
Slide 4
How I speculate the future will go Some companies start to see
authors as a liability. (Those darned authors. They want
royalties!) These publishing companies may collapse, and if they
do, many writers will face ownership issues over work sold to these
companies. As the publishing industry becomes less and less stable,
more writers will turn to the independent route, if only to protect
their intellectual rights. Success stories will be minimal as lots
of people take small bites out of the proverbial pie. As writers
are unable to eek out a living theyll go one of two ways: become
hobbyists or quit. Even if Amazon undercuts publishers, it doesnt
matter because at some point Amazons distribution networks for
authors will become direct competition to its publishing endeavors.
Steps will be taken to close some of the independent distribution
channels.
Slide 5
Eventually, the erosion will peek. After many of the mighty
have fallen and lots of people havent made any money, a new top
tier will emerge. This top tier will include the publishing houses
who adapted to survive and start ups who successfully innovated.
They will have to share the space with a handful of successful
independent authors. Most agents who tried their hand at publishing
will probably choose one or the other, but a handful will survive
as both. There will still be lots of moderately successful authors
and small companies. However, as time progresses this will narrow.
But, unless distribution channels are closed, the new landscape
will always include some successful independents, the bulk
consisting of hobbyists. These writers will always pose some threat
as business can never compete with the price point of someone who
does stuff for fun.
Slide 6
In summary Few will make any money. Even for the Big Dogs, some
lean years are coming. Publishing companies shouldn't underestimate
the independent threat just because the independents aren't getting
rich. This not really important at this point. Innovation and
adaptation are key to future success for both independents and
publishing houses. The novices who innovate today and get a little
bit lucky, will be the leaders of tomorrow.