Marion Maneker, columnist at The Big Money, responds to Penguin CEO John Makinson’s WSJ OpEd. He makes the point more clearly than I’ve yet seen it that the book industry suffers from “oversupply and too much risk.” It’s not digital per se that is the real problem; but digital just makes it easier for others to exploit weakness in the business, to big pub’s disadvantage.
Yet, as we’ve tried to illustrate numerous times before, the “investment” idea of publishing—that publishers buy the risk from authors in exchange for the reward—is exactly the economic model that is collapsing for publishers, with or without the threat of digital distribution. Makinson seems blind to the basic facts that his industry is facing a crisis of oversupply and too much risk. As publishers pull back from buying the rights to as many books as they try to husband their capital in fewer, more successful titles, they will open the door for new hits to be developed outside of their control.
Amazon’s new 70 percent royalty opens the door for enterprising authors—and authors are shockingly enterprising—to invest in themselves. If Makinson thinks this can’t or won’t happen, he should look at the last 20 years’ transformation of research and development in the U.S. economy. Corporations once accounted for the vast majority of new ideas and technology. But the venture capital revolution of the 1980s and 1990s created an entirely new economic landscape for the launch and creation of new products and technology.
Now companies find it more efficient and productive to buy established companies. Self-published authors have been doing a version of this for decades, too. Amazon and Apple (AAPL) are now making that much easier. Through a combination of forced circumstances and a desire to limit their exposure to failed book projects, publishers like Penguin will continue to chase the book projects that come with the most publicity attached, leaving the rest to self-fund through digital distribution. [more...]
