The Business Rusch: The Biggest News of The Summer
The marvelous Tom Dupree, one of the best people I’ve ever worked with in traditional publishing, wrote a great blog last month. In it, he claims that the biggest news of the summer so far, maybe even the biggest news of the year, isn’t the fact that Apple lost the anti-trust lawsuit the Justice Department brought against it, or even that Barnes & Noble continues to search for its brand in this brave new world of publishing.
Tom believes—and I agree—that the biggest news in publishing this summer is the merger of Random House and Penguin. He writes:
As of July 1, in the wink of an eye, there were no longer a Big Six of trade publishing, only a Big Five. Later this year, we may well hear of another proposed consolidation; my old compadres at News Corp‘s HarperCollins (who sniffed around Penguin as well, but too late) are rumored to be holding powwows with CBS’s Simon & Schuster. Hachette (used to be Warner) and Macmillan are the only other Bigs, and if a Harper/S&S merger took place, they’d probably have no choice but to get married themselves.
Go read Tom’s blog. All of his analysis, from a guy who’s been through these kinds of mergers not once, not twice, but many times, is spot-on. I’m not going to replicate it here.
Instead, I’m going to focus on the writer’s side of this whole mess—and yes, indie-only people, I will touch on some things of concern to you. Bear with me.
I’m going to start with Random House’s letter to agents, sent the week the merger was announced. The letter was ostensibly written by Random House’s CEO, Markus Dohle, but of course, anyone who has worked in a corporation knows he didn’t write it. A small brain trust went into composing this letter, and trying very hard to put a positive spin on something that might not be positive for the little guys—writers, agents, and readers. However positive the spin, there are a lot of scary word choices in a document that runs a little over 300 words, at least, from a savvy writer’s perspective.
First, let’s deal with something Tom also discusses in his blog. This is from the first paragraph of that lovely little letter:
In this new partnership with Penguin, we will be retaining the distinct identities of both companies’ imprints. You and your clients will benefit from an extraordinary breadth of publishing choices, and editorial talents and experience. Our Random House imprint leadership remains endowed with tremendous autonomy and financial resources to decide which books to publish, and how to publish them. We expect this to continue in our new business.
My response to that paragraph, like Tom’s response to the overall merger, is “yeah, right.” Because we’ve both been through this before—Tom as a person working inside the corporate structure, and me as a writer on the outside of it.
Let me give you just one example.
In 1996, Penguin merged with Putnam to form Penguin Group. When that merger was announced, everyone published by both megacorporations received letters, promising “autonomy” and a wide breadth of publishing choices. The new imprints would not compete against each other, or so we were told.
But, as Tom says, such mergers create “redundancies” which are, unfortunately, people. (That’s why the Brits say when someone loses a job, they’ve been “made redundant.”) Sometimes (often), the bean counters at these places don’t look at what employees actually do, but at their job descriptions. (“We don’t need two senior editors in that department; we only need one.”) That’s how one person ends up doing the job of six.
Anyway, in 1996, we were told that Penguin and Putnam would not compete. In 1998 or 1999, I put The Disappeared, my first Retrieval Artist novel, on the market in the form of a proposal. Several editors were interested; two wanted to pony up money.
They were Laura Anne Gilman, who had started her career with Putnam, and Ginjer Buchanan, who had spent her career with Penguin. Laura Anne was working with New American Library’s science fiction and fantasy imprint, Roc Books. Ginjer was working for (and still works for) the imprint Ace Books.
Because we were all friends, Ginjer told my agent at the time that she was bowing out of the bidding. “We’re not allowed to bid against each other these days,” she said to my then-agent, “and Laura Anne can pay more money for this.”
So they decided—not me—that I would be a Roc author. I ended up with no auction, which I would have had a few years previously, and only one editor with an offer on the table.
It worked out well; Laura Anne was wonderful to work with. Then she left editing, after many other in-house jobs got consolidated and many other employees were made redundant, and went to work on her own writing career (which is a boon to readers everywhere, imho).
When she left, someone at Penguin Group assigned her authors to other editors. Ginjer Buchanan fought for me and for the Retrieval Artist series. She worked hard to brand the covers—successfully, in this kind of transition—and she kept the series alive in-house probably longer than she should have, given the corporate politics. She had wanted the series in the first place—when she worked for another company—and without changing jobs, somehow, she got it.
Watch. In a few years, similar things will happen at Random Penguin. And all that “autonomy”? It’ll last as long as it takes the giant conglomerate to swallow the merger, let the bean counters “examine” the system for “redundancies” and figure out what can go and what can stay.
Or, I should say, who can go and who can stay.
There are now five behemoth publishers. And several mid-sized publishers, like McSweeney’s or Soho or Kensington or Sourcebooks. But the days of pitting editor against editor to buy a series or having a sales force work hard for your book otherwise some other enterprising company might snatch you away are long gone.
These megacompanies aren’t about books or authors or readers. They’re about profit. And they’re not even about long-term profit. It’s important for these megacompanies to make money every quarter for their stockholders.
Which is why, for example, my Retrieval Artist series eventually ended its run at Roc. Not because the series wasn’t earning money—it was. In fact, it was growing, little bit by little bit. It just wasn’t earning enough money. The bean counters believed that something else in that slot would earn more profit for that quarter.
Not that it would have mattered. Other company policies hindered the series’ growth, particularly the policy of taking the previous books out of print before the next book in the series appeared. You can’t grow a series without giving readers a chance to start from the beginning.
That emphasis on quarterly profits infects all major industries right now. This is why the United States’ financial press doesn’t understand Jeff Bezos. He’s all about long-term profit and building a solid company, not earning extra bucks for the shareholders, until the company no longer functions well.
This emphasis on quarterly profits started infecting the book business in the 1990s, and we’ve seen the results. Smaller books that readers love became unavailable. The blockbuster mentality, which we’ve all seen in the movie industry, began to infect book publishing. It became harder and harder to “grow” a series. Instead, books sold by high concept—one line pitches that could be distilled for a sales force that increasingly wanted “Harry Potter meets Twilight,” so that they could sell the book without reading it.
If the book didn’t do well this quarter, cancel the contract and/or publish the next book “dead” (meaning put no money behind it), and find a book that will sell, preferably by another author. The less the publisher pays the author, the more rights the publisher can acquire, the more the publisher hedges his bets against failure.
Look real hard at the movie industry, because its focus on weekend box office should look familiar. To see the impact this kind of thinking—the short-term thinking—has on creative endeavors, look no farther than this piece in Forbes. The article talks about the dearth of movies made for, by, and about women, but it could easily be about Hispanics or blacks or Asian-Americans. The article could also be about the dearth of westerns (The Lone Ranger was a test of that genre? Really? John Wayne is rolling over in his grave) or the decline of the war movie or the end of the small comedy.
It’s all because the bean counters believe that the public will only see certain kinds of movies, and the public—in this case, is young men between the ages of 18 and 35. In books, the audience is considered older, grayer and more female—women buy the most books, according to studies, so the megacompanies cater to women as well as to male business travelers.
Thinking—of course—that anyone else who buys their products are insignificant. Of the 15,000 titles that Random Penguin will publish in 2014, most of them will have “blockbuster” potential, and will be similar to what has been done before. They’ll also be tweaked and prodded and forced into molds that the books might not have been involved in.
A number of professional traditionally published writers have told me that they’re being told what to write by editors younger than them, that the entire staff of a publishing house (including sales) gets to weigh in on everything from the title to the trajectory of the novel. Writing by committee is a particularly Hollywood way to write—and not that conducive to artistic vision.
A lot of writers are still selling their novels to traditional publishers in the hopes that their novels will become blockbusters. The perception that traditional publishing is the only way to have a large selling book or to make millions on your writing comes from articles like this one, also in Forbes.
Every year, Forbes tallies up the “World’s Top-Earning Authors” and invariably, they’re all traditionally published. Why? Well, Forbes explains it to you:
FORBES bases its estimates on sales data, published figures and information from industry sources between June 2012 and June 2013.
In other words, the only place Forbes gets its data is through traditional media. If you earn a million dollars on your latest indie published title, well, that’s between you and your banker. Amazon doesn’t give out the sales figures, nor would Kobo or any other e-book publisher—because that’s your proprietary information. They don’t do it with traditionally published books either.
That information is released by the publisher. So if you’re an indie published writer, and you’re making tens of millions, the only way to get on the Forbes list is to broadcast your earnings to every damn media outlet you can find. (Which I would not recommend, by the way, since you’ll discover relatives that you never knew you had.)
This year, E.L. James tops the list. If you read the article, you’ll see that it—like so many other articles on E.L. James—conveniently ignores the fact that she was published indie first. The articles all make it sound like traditional publishers created the Fifty Shades of Grey phenomenon, when, in fact, they simply jumped on a bandwagon.
That bandwagon did move 70 million copies in the United States in the first eight months of traditional publication, and E.L. James earned $95 million. But—the books made so much money for Random House that they then gave out $5000 bonuses to every employee in the company to share the wealth.
And now, because traditional publishers look on books as produce, articles are complaining about the fact that publishing revenues are down this year, partly because the Fifty Shades phenomenon skewed last year’s numbers.
I’ll be honest. James probably would not have earned $95 million in one year if she had continued to indie publish her books. But I can guarantee you that she won’t earn $95 million off those three books five years from now either.
However, had she continued to write and sell her erotica novels just like she’d been doing, making a few million here and a few million there, she would still be making millions every year, and the amount would be growing—into her pocket—not into the pockets of a megacompany that, even now, is looking for “The next Fifty Shades of Grey.”
I suspect she’s happy with what occurred—hell, I would be happy with what occurred—but we all know that Fifty Shades is an outlier, partly because traditional publishing had no clue that erotica sold well in e-book format. (Duh.) Now there are already more erotica books from traditional publishers, so the choice has increased, and the sales are mimicking sales in other genres—some books sell more; some sell less.
The point, though, is that Fifty Shades did not come to Random House through the slush. No editor “discovered” the book. Fifty Shades was an already existing indie success. Someone at Random House saw the sales figures and decided to woo E.L. James. The courtship was successful, and the rest, as they say, is history.
Here’s the irony, and it appears in the Forbes article about the bestselling authors. It comes from Michael Pietsch, who just became CEO of Hachette Book Group this year. He was a superstar editor, once upon a time, in a different era, discovering all kinds bestselling writers. He arrived at Little, Brown in 1991—which is now a long, long time ago in a land faraway. I tell you this, because he doesn’t seem to understand how the business model he’s running is different from the business model he started in, at least from this quote:
While the big books are bigger than ever thanks to the dynamics of book retailing and the frictionless e-book purchasing environment, the most important ingredients of a blockbuster never change, says Michael Pietsch, CEO of Hachette Book Group. “I think it’s the surprise and originality that lead to the giant scale,” says Pietsch, whose roster of writers includes Patterson. “That’s why there are all these delicious stories of the book that was rejected by 96 publishers – because people are looking at what worked in the past.”
I’m not even sure there are 96 publishers to legitimately reject a novel of a particular genre any more. But even if there were, the traditional publishing system as it now stands does not publish books that have an original voice or books that surprise.
Those books will now come out of the small presses and from indie published writers, like E.L. James. The indie writers will create the waves of the future, partly because they don’t have to maintain those quarterly profits for large shareholders who care only about stock prices and not about books.
It will be up to the indie writers, then, to make the right choice when traditional publishers come calling. Sometimes that “right choice” is to go with the traditional publisher, but if that’s the case, the indie writer needs to learn how to negotiate a traditional publishing contract—and to walk away if traditional publishers don’t offer anything other than “I can make you a bestseller” (which most indies approached by traditional publishers already are) or “I can get you into bookstores” (which is already happening thanks to changes in publishing) or “I can make you rich” (which indie writers are already becoming, without traditional publishers).
Think of it this way: Yes, E.L. James made $95 million last year, but her publisher made significantly more. So much, in fact, that they gave $26,715,000 in bonuses to their 5,343 employees, something that they had never done before. That’s nearly $27 million dollars that did not go to stockholders. Nor did it go to presidents and CEOs, who often get part of their salary in bonuses. This was extra.
And yeah, it’s nice when the janitors get an extra $5000. But if E.L. James had kept the rights to her books, put some of its earnings into hiring someone to help her get the books to bookstores, maybe she could given that $27 million to the charity or charities of her choice. Or helped the homeless in her hometown. Or funded a scholarship for needy kids.
Of course, she wouldn’t be on the Forbes list. People who make a lot of money indie don’t talk about it much, because when they do, some wag wants them to “prove” their numbers by revealing the sales. Some writers, like Amanda Hocking, do. Others decline.
Ultimately, though, it’s not about money. It’s about creativity and control. If you want to be creative, original, and surprising as a writer, then publish indie. If you want to forge your own path to bestsellerdom, publish indie. Indie allows for creativity and control.
You’ll have no control in traditional publishing. But a lot of writers do find they can be creative within the confines set by their traditional publisher. It’s just not possible to be solitary in that environment any longer. Just like it’s not possible to produce a blockbuster film without input at every single stage.
When you go traditional now, particularly if you go to the Big Five, realize this is not the publishing industry you grew up in. Think of it like you’d think of joining a team to put out a blockbuster movie. Cover your backside and make sure you’re ready to be a team player.
Because the numbers that the Big Five need to sustain their shareholders will not come from the midlist. And the ground-breaking novels that become bestsellers will be indie writers who seize some kind of traditional publishing dream. So you’ll be playing in someone else’s sandbox.
There are a lot of folks in the film industry who do great things in someone else’s sandbox. There’s nothing wrong with that. But those folks know what they’re getting into.
And right now, many writers do not.
Hell, you can see from Pietsch’s comments that he doesn’t even understand all the changes in his industry.
Publishing is in a new era. The biggest news of the summer merely confirmed it. It’s time for everyone in the industry to admit this isn’t your grandparents’ industry any more. It isn’t even your older siblings’ industry. It’s a brave new world, and we all need to accept it.
“The Business Rusch: The Biggest News of the Summer” copyright © 2013 by Kristine Kathryn Rusch.