Different Ways to Look at Book Business

Last summer, one of Bob Lefsetz’s emails arrived in my inbox. I like Bob’s take on music, the music industry and culture in the broadest sense. I don’t always agree and on this morning, I found myself in that position.

Bob was writing about books and the myriad mistakes that the publishing industry was making:

Now I’m hesitant to recommend books unless they’re slam dunks. In a short attention span economy people want to go deep, but to get them over the hurdle, to get them invested in a book, is a huge step. Meanwhile, the inane book industry is doing is best to kill the Kindle, with readers and bookstores singing hosannas, not realizing they’re relegating themselves to second-class citizens in the digital economy where we all live. Music revenue goes up with streaming and publishers believe by charging more for digital books they’re winning. That’s why Kindle sales are off. Used to be all digital books were under ten bucks. Makes sense, doesn’t it, with no printing and no shipping and no returns? But now, oftentimes the paperback is cheaper than the digital equivalent. ON AMAZON! People pay attention to price. And they’ll pay for convenience, but not if they think they’re being ripped-off, and this just sticks in my craw. T-Mobile revolutionizes the mobile business with competition, by lowering prices, but the publishers are a cabal supporting unrealistically high book prices to their detriment. And ours. And now I’m off on a rant, but no one is more self-satisfied than those who work in the publishing industry. The only reason they can survive is because there’s so little money in it. If there was any cash, Silicon Valley would swoop down and disrupt them. Which is what Bezos tried, instead he’s now revolutionizing news with the “Washington Post” and voice-activated computing with the Echo. If someone is not turning over bricks in your space that means you’re too far from the mainstream.

End of rant. Because now I’ve lost all the readers, because they love their physical books, and the non-readers, because they don’t give a shit.

Not sure what posessed me that morning, but I felt I could respond to his rant with my experience from the world of book publishing. For some of his more popular posts, Bob will send a follow-up with a collections of the responses he receives.  The next day he shared my response and unless you subscribe to his newsletter, you never saw it.

Bob,

Long time listener, love the show.

I have worked in book publishing for the last 15 years and have played in just about every role of the ecosystems – author, agent, editor, publisher, bookseller, foreign rights. It’s been a trip to watch all the change over that time and I don’t think that change has the same effects across all media industries.

Your rant about books, digital and pricing is one near and dear to my heart. Here is my take.

Most book publishers look at the world as one of scarce attention.  They use price discrimination as their mental model for how the economics of the industry should work. They think they sell a product with a limited shelf life, like a baker or cruise ship company.  Release the expensive hardcover, followed by the less expensive paperback, followed by the now largely retired mass paperback.  This creates high profits early in the cycle for the people who really want the book and attempts to open up other segments of demand as the price goes down. Since most books don’t sell many copies, they are doing their best to maximize profit early in the sales cycle.

You and Amazon share the worldview of price elasticity – if you lower the price, more people will buy it. I have run experiments with publishing projects and found this is true.  Lower prices sell more stuff. Here is the trick: Can you sell enough volume to make up for lost margin?  If you are selling a Top 100 title, I think the answer is yes.  For the thousands of other books in the long tail, this is the wrong answer and you can’t make the margin up on your hits.

Subscription services are the end game of a world of price elasticity.  Books are different animal though.  I can watch an entire season of Orange Is the New Black in the same time it takes to read the latest from Stephen King. Most people read one or two books in a YEAR. True readers might read ten to twenty books in 2017. Having a thousands of books to choose from and pay a monthly fee doesn’t make sense to even the one percent of readers.

And higher prices didn’t kill digital books. Yes, sometimes, I like to press a button and being able to start to read a book now.  Others like their books in the cloud rather than on a shelf. Turns out only 10% of the market has those needs right now. The screens that most people use (phone and laptop) are not great for reading. Research shows people read slower on devices. The 550 year old codex format is still a better device for the vast majority of people who like to read books. This is a technology problem. Maybe something like VR gives us a better way to read books.

Look for the market to move to shorter books with shorter chapters to fit better into our widely varied, time segmented media life.  You already see this in YA and business.

Thanks for listening.

It feels like a good day to share all of that. This morning, I flew down to Santa Barbara to attend Bob’s Music Media Summit.  I am here to listen to folks from a different segment of the media business and hear how they are dealing with the shifts and changes in the business of music.

 

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