OpinionElgan: Why book publishing needs the Silicon Valley wayBook publishing would thrive by working more like the technology industry By Mike Elgan
Computerworld - The book publishing industry is in trouble. Book sales are declining, and the quality of books is in a precipitous freefall. The reason is that the industry is clinging to an obsolete business model. And the whole process of discovering new talent is broken beyond repair.
What the stale, gloomy New York book publishing industry really needs is a blast of California sunshine. Like the book publishing industry, Silicon Valley is in the business of cultivating, nurturing and funding intellectual property. The difference is that the Silicon Valley approach works, and the book publishing industry's doesn't -- at least not anymore.
Books are a unique business, but at its essence, a publisher is above all an investor. Much like a Sand Hill Road venture capital firm, a publishing company plays kingmaker by discovering, guiding and, above all, investing in the right talent.
Sure, publishing companies employ brilliant book designers, editors and others who collaborate to produce high-quality products. But they don't have a monopoly on those skills. Any author can hire great book designers, editors, printers, marketers and everyone else in the creative chain. What most authors can't do is invest $150,000 to produce and market an untested book. Ultimately, the ability to invest -- and the experience and wisdom to invest wisely -- is the only uniquely valuable thing about publishers.
The broken model
Here's how book publishing is supposed to work: Joe Author decides to write the Great American Novel. He bangs out a couple of chapters in his spare time, cobbles together a polished book proposal and goes hunting for a literary agent. Most real agents are maxed out with clients, but after six months of dedicated searching, he finds one, who then spends weeks or months shopping the proposal to major publishing houses.
The agent finds an editor at a major New York publishing company who believes in the writer, and so the agent negotiates with the company to decide all the details, including the fee structure. One of the most important elements of a writer's contract is the advance payment.
An advance is simply a loan to the writer from the publishing company that will be paid back from the writer's own royalties after the book goes on sale. Agents and authors want a big advance because the publishing company has to work hard to market the book in order to recoup its investment in the advance.
Joe Author, with a $40,000 advance check in hand, quits his job and starts working full-time to finish the book. Working with the agent, the author polishes the manuscript and submits it to the editor. The editor edits. The designers design. And eventually -- somewhere between one year and 18 months after the original submission -- the printers print, the distributors distribute and the marketers market.
That's how it's supposed to work. That's how it used to work. But nowadays, that's not how it works. The economics of publishing have evolved to the point where investing in a first-time author like Joe is way too risky. When you combine the advance and the editing, production, manufacturing and distribution costs, the publishing company is in for between, say, $50,000 and $200,000.
Publishers nowadays make their money by investing in a sure thing: Anti-aging books by Suzanne Somers; political propaganda by cable news blowhards; any book associated with TV, movies, blogs or Twitter feeds; and any book by an established author.
The result of this disconnect in the talent discovery system is that the quality of books is declining fast. Investment in authors requires a "platform," meaning some claim to existing fame. Oprah Winfrey has the ultimate platform, but so do TV and movie stars and even authors who have succeeded in the past.
Browsing a bookstore is like picking through trash in a garbage dump looking for something of value. Meanwhile, entire generations of brilliant authors never get the investment necessary to enter the system. Authors (like Joe) without an existing platform don't get book deals, with far too few exceptions.
And that's why the industry is dying. The content is skewing toward trash. The public is becoming less enthusiastic about books not because they have other diversions but because books are becoming less exciting.