Thursday, August 14, 2014

It's not just about Amazon vs Hachette

So much digital ink has been spilled on this topic.

And our brains love binaries, the things that can be reduced into two opposing ideas. So naturally we want to think that in the publishers vs. the web giant sweepstakes one side is “good” and the other is “bad”, one is “right” and the other is “wrong". It makes it all seem like we live in a rational world where there are easy answers and, really, who doesn't like that.

Well it turns out it’s not only about Amazon vs. Hachette. It’s really about the individual creator in the new marketplace. What is actually on the table is a combination of the following: the new opportunities available to writers today, the new kind of hustle required to be in the game, and the forces of reintermediation that are at work. These are the new middle men -- the search engines, the content aggregators, the social networks, the e-tailers, and the distributors -- or, in other words, the channels through which all digital information now flows. The original promise of the Internet was one of of a massive decentralization of power. Any one, regardless of size, opinion, or financial resources could have a digital presence. And that remains true. But what is also true is that in the digital environment we also  have oligopolies, not unlike the 'big 4' or 'big 5' model of the analog world, in which a handful of companies dominate an industry. 

When it comes to discussions of creative content and the Internet we should probably know better. 15 or so years have elapsed since the music industry became the first major casualty of the digital environment. See that gigantic waterslide to the left? Those are global revenues from the sale of music from the late 1990s until more or less now. And that’s with the things that have staunched the bleeding, the most significant of which would be the appearance of the iTunes store in 2003 (that would be the momentary plateau in the graph). After years of lawsuits -- between labels and artists, between labels and fans, between artists and fans -- perfect hindsight shows us that though a certain amount of creative destruction definitely takes hold when technologies shift dramatically, so does a substantial portion's willingness to pay, provided the price point is right and the devices and systems for doing so provide people with what they want and are ridiculously easy to use. But don't expect customers to believe in the need for the customs of the analog world, such as bundled products and services, the cost of manufacturing, warehousing, and shipping things that come in cases and boxes, incremental costs (i.e. the cost of creating more than one 'unit', of something, which in the digital environment is close to zero), and the complete unknowability of audiences. Things are different now, and they're going to continue to look less like the past and more like something that we don't yet fully understand.

And yet, in many ways, very little from the learnings of the music industry in the digital age has made an impact on related industries. Consumers are still often paying analog prices for digital goods and services, being offered bundles when singles could be easily made available, and are having to wait for release dates set by industry, even though the constraints that were the reasons for delayed release dates no longer exist. So, the other day I posted an article from the Financial Times entitled “Authors should back Amazon in the battle with Hachette” to my Facebook page, mentioning that the publishing industry may be in the same place the music industry was over a decade ago, and how that may well be a good thing for us all, as we now have the benefit of several cycles of missteps and better steps to point to. Note: paywall may be in effect in the link, so I’m excerpting what I think is the pivotal issue from that article, and that’s the identification of the value chain, or stack as it’s sometimes referred to (interesting that one uses a horizontal metaphor and the other uses a vertical one), as a way of thinking about the processes involved. Whether that 'publishing' is books, music, magazines, or even online video, the idea of discrete nodes of value that can be snapped apart, lego style, and moved out of the control of the traditional intermediaries is key.

From the Financial Times article:

What matters to the success or failure of a book is the quality of conception and execution of the underlying project, the competence of the editing, and the effectiveness of marketing and promotion. Most new self-published titles fail these tests; in particular, the lack of a competent editor is often obvious. But this is also true of many titles now published by established houses.

Some existing publishers will thrive on the basis of their strengths in author support services. But most will not. Savvy and well-advised authors, often helped by agents, will be able to buy editing and marketing skills with the receipts from a much larger share of the sales proceeds than the traditional royalty model allows. One of the lessons of the new world of music is that the balance of revenues has shifted from publishing rights to live performance and merchandising. The blockbuster advance for authors will be replaced, as has to some degree happened in music, by securitisation of future revenue streams. Venture capital funding of book projects – perhaps starting with university textbooks and practitioner handbooks – is possible.

The post led to a flurry of comments by two people in particular. One, a veteran of the indie publishing industry and host of a podcast about books, and the other a photographer and author now working outside the system of publishers and advances and able to make things work to his advantage.

It's helpful to look at the value chain -- or stack, your choice of orientation -- and see the various tasks usually handled by publishers that writers now have the option to handle themselves, or hire someone to handle on their behalf. 

The big cut that publishers in these industries take was, at one time, essentially a kind of tax creatives had to pay for the substantial investment companies had to make to be book publishers, music labels, film studios, and the like. It took millions of dollars and years of relationships and much specialized knowledge to navigate those industries, so getting past the gate came with a steep price. Now, less so. But these are the best of times (anyone can get in) and the worst of times (again, anyone can get in). 

And now, with a non-binary mindset, I invite you to listen in on the conversation..sort of a textual podcast, brought to you here with the blessing of the discussants of course.

                                        Note: The article referenced above can be found here.

And that's how it can be done. Vigorous discourse, and without any flaming or shaming. I hope you've enjoyed this bout of electronic eavesdropping and that you'll click through for Part 2 of this post. We'll look at the financial pie of the traditional vs digital book industry, in Part 3 we sharpen our pencils and size up the eBook market as a whole, in Part 4 we look at some new approaches being tried out by publishers big and small, and in Part 5, how the initially self-published author of 50 Shades of Grey accomplished in 2 years what took other authors decades.

Opinionated content bonus: This writer says Amazon is doing us all a favor in its efforts to squeeze out the Big 4 of the book publishing industry. Click here for more.

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