Gazing Into My Occluded Ball (Cont.)

Last week’s post discussed the pressures on the publication industry that have and will continue to cause massive dislocations in the traditional model. This week provides my sense of what the future will bring.

The objective of the publishing industry in its entirety is to provide consumers (those who read) with words they want to read in a form they want to read it. Although I expect paper and ink books will continue to represent significant revenue, digital sales will explode. Eventually physical books will be to digital books as horse and buggies are to automobiles: a niche market. The music industry is already heading this way with revenue from digital sales expected to surpass revenue from CDs in 2012.

To try to understand the future publishing world, let’s temporarily stipulate that all sales must be electronic; paper and ink are gone.

So: no bookstores, no presses, no warehouses, no book returns, no shipping costs, no waiting for the mail, no wrapped presents with pretty bows under the Christmas tree.

This does not necessarily mean the elimination of all publishers. Between the author’s “final” draft and what the consumer reads we will still need editors, copy editors, layout, conversion to required electronic formats if a single platform does not arise, and “cover” design (a picture to help electronically sell the book). Traditional publishers have the resources to do all this work, but an author need not choose a publisher.

Alternatives? An author could hire each provider separately for a fixed fee. Genre boutiques providing bundled services could form, specializing in, say, mysteries or steam punk. Such boutiques would not need to be in a single physical location since they share work electronically. Perhaps literary agencies will contract or provide those services for their authors—forcing changes in Association of Author’s Representatives acceptable practices.

How will consumers learn about new books? I’ll coin a new term here: friend-perts. Historically, we relied on expert reviewers in newspapers or weekly periodicals to make recommendations, or we used the physical bookstore with knowledgeable salespeople. We are now moving into the social media arena of friend-perts. Amazon already does this with its if-you-like-this-you-might-like-that recommendations, and its people-who-bought-this-also-bought-that. Amazon allows people to post lists with their recommendations. Facebook, Twitter and similar social networking mechanisms will offer close encounters of the electronic kind for your friend-perts to share information. Already websites that sell just about everything post ubiquitous “reviews” of their products and provide the ability for other users to rate how useful the review was.

Many of these friend-perts are amateurs; others are paid shills. It is difficult for consumers to tell which is which, but over time “trusted” voices will emerge. Consider the effect Oprah had whenever she recommended a book.

I don’t want to diminish all the things literary agents can do to help authors and their careers, but from an unpublished author’s perspective, literary agents are first line gate-keepers for the publishers. When internet booking of travel became prevalent, travel agents did not go out of business, but they no longer had much business just booking a flight from X to Y. They needed to switch to value added services; so too will literary agents. If there are no publishers, literary agents will need to turn into career counselors to justify payment—and that probably should be fee based rather than percentage of revenue based.

All this brings us back to the creator of content, the author. Three items are still critical to authors. They must write. They must find a way to entice readers to read their words. They must be paid for their efforts.

In the conversation between Joe Konrath and Barry Eisler, Joe told Barry he would need to write more. I think Joe is right. To make money, authors will need to have works available and the 80/20 “rule” in business will probably come into play. That rule suggests that 80% of your profits will come from 20% of your customers. But to do that, you must have multiple products a customer can buy. You must write a lot.

Writing time conflicts with objective number two, enticing readers to read your words rather than someone else’s. Somehow authors will need to become known so friend-perts can recommend them. For nonfiction this is called having a platform. With the demise of publishers, fiction authors will need to develop their own platform. Many people have written on this subject, so I will only add that this trend is not a pendulum authors can wait out until the trend reverses. Self-promotion is here to stay.

All of which leaves the subject of the author being paid—the reason why Barry Eisler turned down the half million bucks St. Martin’s Press offered. Most authors have funded their own R&D and will continue to. From an author’s economics perspective all revenue from the author’s content should go to the author, less the expenses of getting product to the consumer. Those who provide services along the way to publication should be appropriately compensated including a profit margin commensurate to their risk.

If the author takes control of her product, she retains all the risk. Editors, copy editors, Amazon, etc. all must be compensated for their time, selling platforms, etc. but have very little risk. Editors should charge by the hour or by the project. Amazon can make a good living on a per transaction charge. Authors can set the retail price to maximize profits. (Right now, many electronic books are priced too high to maximize electronic profits because publishers are trying not to undercut the price of print books.)

If an author chooses to shed some of his financial risk, he can enter into agreements to sell off shares of a book (or even shares of himself) – that is essentially what the author does in a traditional publishing contract.

Will the cream rise to the top in this brave new world? That depends on what you call cream. People will buy what they like. Was Shakespeare the best playwright of his time? I have no idea because by the time I got to high school he was the only one left standing as far as my teachers were concerned, and although I might have sworn differently, none of them had direct experience with Elizabethan playwrights either. Did you know Shakespeare and his players physically helped build the Globe? Whether or not Shakespeare was the best playwright of his time, I suspect he was the best entrepreneurial playwright of his time.

Of course we still have physical books, and publishers and thriving literary agencies. Following the old ways when the rules are all changing may work for a bit; but much sooner than later, those who figure out the new paradigm are the ones who will succeed.

~ Jim