A Random Traditional Publishing
House: really top Heavy
Upper management wages and bonuses
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Independents: A little top
heavy, but not really
Rent, utilities, taxes, middle management,
corporate retreats, marketing, returned
books, high advances that didn’t earn out,
distribution chanels, etc.
$$$$$$$$$$$$
Writer
General staff, royalties to
authors
$$$$$$
It’s all balanced on price point and
product quality.
Distribution
Misc expenses
$$
$$$$$
The
authors
and
consumers
$$
$
Big publishers can’t
function on a low
price point. Their
over head is too high.
They have been taking
cuts cutting
measures for years.
These include, but
are not limited to
spending less on
marketing and not
providing editing
Independent authors and
startup publishing
houses have expenses
that vary widely. But in
all cases, their
overhead is
significantly less.
Independents are learning
how to produce a
quality product and
are able to sell it for a
low price point.
$$
The
authors
and
consumers
While the Big Dogs fight to put the genie
back in the bottle instead of innovating:
•
Startups are springing up like kudzu. No matter how many
fold, there are thousands more.
•
And we’re very, very dangerous. We erode customer base.
•
While the top ten publishers are able to control the price
point of certain books, they can’t stop the deluge of
material. They count on poor quality to be an issue.
•
Buying trends suggest its not. Many independents are
offering free books on the hopes of making sales on second
and third books. And it’s working. Consumers will purchase
work from authors who gave away books, if they liked the
book. Readers don’t care who published it.
•
These readers are being lured away by cheap prices and
limitless choices. This also includes the back inventory of
famous authors.
•
There are only x number of people who will by books and
each of them will only spend so much. The volume of book
sales will increase as price point drops but higher volume
doesn’t mean a larger customer base.
Each Circle represents the total number of
people who buy books.
Customer base
of the top ten
publishers
Customer
base of
middle tier
publishers
Each of these lines in the blue
circle represent the potential
erosion of customers to
independents, backlog, and
small publishing houses. A
few big companies will
survive, but they’ll have to be
fiercely competitive.
How I speculate the future will go
•
Some companies start to see authors as a liability. (Those darned authors. They want
royalties!) These publishing companies may collapse, and if they do, many writers
will face ownership issues over work sold to these companies.
•
As the publishing industry becomes less and less stable, more writers will turn to
the independent route, if only to protect their intellectual rights.
•
Success stories will be minimal as lots of people take small bites out of the
proverbial pie.
•
As writers are unable to eek out a living they’ll go one of two ways: become
hobbyists or quit.
•
Even if Amazon undercuts publishers, it doesn’t matter because at some point
Amazon’s distribution networks for authors will become direct competition to its
publishing endeavors.
•
Steps will be taken to close some of the independent distribution channels.
Eventually, the erosion will peek.
•
After many of the mighty have fallen and lots of people haven’t made any
money, a new top tier will emerge.
•
This top tier will include the publishing houses who adapted to survive and
start ups who successfully innovated. They will have to share the space with
a handful of successful independent authors.
•
Most agents who tried their hand at publishing will probably choose one or
the other, but a handful will survive as both.
•
There will still be lots of moderately successful authors and small companies.
However, as time progresses this will narrow.
•
But, unless distribution channels are closed, the new landscape will always
include some successful independents, the bulk consisting of hobbyists.
These writers will always pose some threat as business can never compete
with the price point of someone who does stuff for fun.
In summary
• Few will make any money. Even
for the Big Dogs, some lean years
are coming.
• Publishing companies shouldn't
underestimate the independent
threat just because the
independents aren't getting rich.
This not really important at this
point.
• Innovation and adaptation are
key to future success for both
independents and publishing
houses.
• The novices who innovate today
and get a little bit lucky, will be
the leaders of tomorrow.