AT THE END OF THE MILLENNIUM

 Like a world held between the gravitational pulls of two stars, the publishing industry is suspended between two great paradigms. One is the familiar industrial model built around tangible objects: bound volumes of paper manufactured on printing presses, warehoused in depots, transported in vehicles and sold in stores; the other, newly born, can be described as virtual. The sun of traditional publishing and bookselling has illuminated and warmed us for a millennium, but it is unquestionably fading, while the other, fueled by the prospect of direct communication between authors and readers independent of physical means of manufacture and distribution, scintillates with possibilities. In the balance lies the fate of one of civilization’s most precious artifacts, the book.

How is the transition from one system to the other affecting authorship today? What challenges can writers expect in the next few years? Is it possible to plot a course using coordinates that are not yet precisely fixed? In this series of articles I would like to describe the old and new models and speculate on how the roles of authors, editors, literary agents, booksellers, and even readers are changing – or must change – to adapt to evolving conditions.

A Dying World

The best way to understand the differences between the two paradigms is to analyze the ways that traditional texts are distributed versus electronic versions. Looking unsentimentally at the publishing process, it is essentially one in which the writer’s text is delivered to the reader by means of a distribution medium. The process adds value to the work, converting a collection of words into a product for which money can be charged.

Printed books today are published and distributed through an industrial complex consisting of brick and mortar editorial offices, printing plants, warehouses, and retail stores. After being edited, the author’s text is printed and bound. The physical object called the book is then transported from station to station in fossil fuel-powered vehicles. These peregrinations add cost to the original text and they are supposed to add value.

Whether they add value any longer has become debatable.

The distribution model of the book industry is a consignment one. Books are returnable to publishers for full credit, meaning transportation of books back through the chain of brick and mortar stations from whence they came. This practice was originally created as an admirable incentive for booksellers to take chances on new writers. Most other manufacturing processes place the burden of disposing of unsold goods on the retailer, such as in-store sales at increasingly high discounts. Not so for publishers.

For most of the twentieth century a modest and stable rate of return stimulated the book industry’s growth. In the 1980s and ‘90s, however, the return rate for trade books (fiction and nonfiction of general interest) began to soar to unprecedented levels of fifty percent and even higher. One does not need an advanced degree in business to perceive that it is almost impossible to make a profit selling one unit of a product for every two manufactured, especially when the manufacturer is compelled to fully refund the purchase price to the customer. Indeed, it is hard to imagine a less efficient delivery system.

As cash grew shorter and shorter, publishers developed strategies to raise more of it. One was to pursue branded authors who could guarantee profits. This strategy seemed sensible in theory but failed in practice as shrewd agents demanded and got huge prices for their household-name clients, guaranteeing only that that many authors would get rich while their publishers lost money or at best broke even.

Other publishers sought mergers with larger houses or rich conglomerates in the hope of becoming major players in the bidding for those household-name authors. Like many a chemical reaction, this approach generated much light and heat, but as time went by the new entity found itself hobbled by the same cash flow problems that had triggered the merger, only on a larger scale. This insatiable hunger for capital led to a new round of acquisitions, and this time not of marginal presses but of giants like Simon & Schuster, Doubleday, Macmillan, Putnam, Warner, Harper, and St. Martins.

In the process, the unique personality and culture of each company that succumbed were destroyed. Those executives fortunate enough to survive the acquisition found themselves in a surreal corporate culture that seemed to have little to do with the values that got them there. Editors became disenfranchised as they lost touch with the wonderful and mysterious process by which art and literature are created. Many left the industry, to be replaced by editors whose mandate was to acquire books and authors that would guarantee high sales. This emerging culture can be characterized by what was aptly described as a blockbuster mentality. It has become the prevailing one in today’s book business.

Authors, too, became disenfranchised as they confronted a world that rewarded bestsellers prodigiously while giving short shrift to newcomers and modest performers. Publishers could no longer afford to carry promising new writers until they justified the investment with a breakout book. Authors were now expected to hit the ground running with perfectly crafted, highly commercial hits. An agent I know, asked by a brilliant but penniless author how he was supposed to support himself until he completed his breakout opus, advised him, “Drive a goddam taxi.”

Had the plethora of mergers and acquisitions that shrank the number of publishers to a handful of behemoths achieved a literary renaissance, perhaps we could rationalize that it was worth all the turmoil. But it did not. After each consolidation the patient continued to hemorrhage. It became obvious that gigantic publishers hemorrhage the same way that tiny ones do; it’s just that gigantic publishers have more blood to lose and the losses can be disguised in the financial reports of their parent companies.
Like many a dying patient, publishers have lived in denial about the underlying cause of their chronic losses. Yet, the reason has been in plain sight all along: the returnability of books is killing the business.