images.jpgHaving been in business for over 40 years I am continually amazed by the publishing industry’s inability to understand how business really works. This industry has been in its little walled-off corner of the world for so long that its executives don’t have a clue about the real world. A perfect example of this was demonstrated at a recent conference I attended when Peter Osnos asked the head of a major publishing company about publishers’ historic lack of direct contact with customers (they deal mainly with intermediate buyers). She replied that with the agency model she now has contact with her customers because she can raise and lower prices and see what happens. Huh! Screw around with your customers, experiment with their goodwill – this is “contact”? Unbelievable.

Another example of this is shown today by Evan Schnittman, the outgoing vice-president of OUP, who complains about higher royalties being demanded by authors and that this view is “built on the self-serving and reductive assumption that e-books can and should be viewed as separate from a book’s overall economy . . . The object of this ploy is to dissect the intellectual property into as many different pieces as possible and negotiate them on the open market in order to maximise the deal.” The Bookseller reports: Schnittman—who joins Bloomsbury as m.d. for group sales and marketing next month—told The Bookseller: “All parties are to blame, but it feels like there is a land grab attempt at establishing rates for what are primary rights being dressed up as secondary.”

Blame! Land grab! Primary and secondary rights! What Schnittman fails to comprehend, too long in the industry, I guess, is that the rise of ebooks and the entry of companies like Apple and Amazon have moved the world from the Secret Garden of the publishing industry into the world of real business – the business that has been going on around them since the invention of capitalism. Amazon and Apple don’t care about the ethereal “value of the hard cover book”, they care about making money. There are no “publishing industry intangibles” here, just naked lust for profits. This is the way that all of capitalist industry works, except, of course, for the publishing industry. Of course there is an attempt to “dissect the intellectual property” and to “maximise the deal”. This is normal, natural behavior in the capitalist community.

As an outside observer, I am just mesmerized by the fact that publishers don’t recognize this. On top of that they seem offended by the fact that the rise of ebooks and the entry of real businessmen, in the guise of Apple, Amazon, etc. is starting to bring the reality of real-world business to their Garden.

Royalties are a perfect example of this. Up until digital publishing and ebooks there never was any real negotiation between an author and a publisher. The publishers could, more or less, dictate the terms of the royalty because they had no competition. Thus the author was never a real party to the negotiation. Now, with the rise of ebooks and with the rise of major players such as Amazon, who understand how to do business, and with a new competitive landscape being pioneered by such firms as Smashwords, the author has finally gotten some bargaining power. He has an alternative to the rates dictated by the publishers. Of course he is making, as Schnittman calls it, a “land grab”. He should be making a “land grab”. It’s in his interest to be making a “land grab”. He’s the producer of the product and, as such, is entitled to make a “land grab”. This is the way business, outside the publishing industry, works all around the world. Sorry, guys.

What’s the “solution” for publishers? Well, I think it is pretty simple. Start hiring executives from outside the industry at the highest levels. There is no more walled-off garden and current management is not trained or equipped to deal with the world outside it. Publishing is becoming just another business, like any other business, and it needs real business people to deal with the changes.


  1. It’s mesmerizing in the same way that Mythbusters last night on TV was fascinating. You watched the slo-mo of the rocket sled with the giant knife approaching the junk car with the dotted line painted down it’s dorsal midline.

    At the end of the process–two halves of junk car, right along the painted line. That was inevitable. You know it’s going to happen, you just want to know what the details of the carnage are going to be, and watch them happening, several times and from various angles, in ghoulish fascination.

    It’s too bad that the myriad publishing employees who will be the carnage aren’t junk cars. Go publishing execs, may you be the engine block.

    Jack Tingle

  2. Are Amazon and Apple really different entities from bookstore chains? I wonder.

    One thing that separates publishing (of all sorts) from most ‘real world’ business, is that publishing is a monopoly business, and is conducted according. Most of publishers’ efforts go into securing those monopoly licenses from the authors (the monopoly holders).

    Grocery chains can offer generic Cheerios, and pharmacy chains can offer generic medications. But nobody can offer a ‘generic Dan Brown’ — so the comparisons between publishers inevitably involve apples vs. oranges.

    If only Danielle Steele negotiated non-exclusive licenses to publisher her novels, and 3 or more publishers all offered them, then truly: publishers would have to pay attention to bookbuyers as their ‘customers.’

    Amazon is now maneuvering itself into position as ebook publisher in fact, which is why the traditional publishers are absolutely desperate to hold onto the ebook rights as essential to the original ‘primary’ contract.

    If Danielle Steele and Dan Brown and the other bigshots of best-sellerdom separated ebook rights from hardback and paperback rights, they could get deals with Amazon, Apple, and other ebook packagers in non-exclusive deals.

    I pity the publishers. They can only lose in this one, just as they lost with the big conglomerate media corporations came wooing them. The big publishers have made themselves dependent on the big-selling author names (in part to please the conglomerate parent companies, and in part as a result of dropping mid-list authors) — yet it’s these big names who stand to make the most in a break to self-represented deals on the ebook rights.

    That puts the big publishers right in between Scylla and Charybdis. Smaller, indie publishers, still run out of love of the books they publish, with small expenses and based outside the expensive major metropolitan areas, should be the coming stars of traditional publishers.


  3. One thing to remember is that businesses don’t really like free markets. It’s hard to make money in free markets. Businesses love monopolies, because that’s where the big money is, and if they can’t manage a monopoly, then a small group of like-minded ‘competitors’ is next best. Ebooks, because they remove barriers to entry, are opening up the market, and the publishers don’t know how to adapt to a suddenly freer market. They can’t, and maintain the business model they’ve had for years.

  4. While I cannot disagree with the principles of Paul’s article above – I’m afraid he is quite naive about contracts.
    Most writers are desperate to get published. They will sign any contract, more or less. Most are offered a contract by one publisher and they are so keen to get into print that they sign. So there is little opportunity to demand this and that and the other. This is how writers got themselves into the mess they are in in the first place, aided by the publishers who have always been driven by a deeply exploiting instinct.
    The few who have multiple offers and alternatives can follow all of the good advice Paul gives and we have all shared in these blog comments in recent times. Good luck to them – but they are the few.

  5. I really don’t see the publishers waking up before it all falls apart. They’ve got too much invested in paper books. Unlike Cheerios, books get returned for credit to the publisher when they don’t sell. So every pBook that doesn’t sell because someone bought a eBook instead is a real hard cost and risk to printing that plays out longer than other industry sales cycles.

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