The Pareto Principle.
Also known as the 80/20 rule, wherein 80% of sales are generated by 20% of the customers. When applied to the way publishing gambles on blockbusters to subsidize its titles that lose money, it might be more or less 20% of the authors make 80% of the sales.
Publishers look for and sign new authors in a neverending search for the next blockbuster book that will sustain the 20%. Very often a new author will be taken on in favor of renewing a current author’s second or third book if the sales don’t meet expectations (which could mean that it did, in fact, make money, but not enough to satisfy the bean counters).
Last month, I was involved in a rigorous discussion on Dear Author, wherein author Courtney Milan likened publishing’s ability to support this model to pooling risk or, more precisely, flood insurance. I found the flood insurance specificity to be flawed and said why, but really I found the whole “risk pooling” argument flawed, but couldn’t articulate it, so I remained agnostic on the subject for the moment.
Now, after having stewed on it for a while, the better (read: more polite) analogy would be research and development—except without so much the development part.
Recently, president of Farrar, Straus & Giroux, Jonathan Galassi, wrote an extraordinarily unorganized, incohesive rant op ed piece in the New York Times concerning whose rights are whose once the publishing house has put its resources into a manuscript to make it a salable product. Quite frankly, other than the amusing fact that he (an editor) wrote an essay not worthy of a high school freshman learning the basics of English composition, I don’t give a shit about what he thinks the publishers’ value-added rights are.
It was his exemplar of an author long dead, into whom marketing resources were invested to make him that success, that struck me as disingenuous. And a non sequitur. Or ignernt. Dude. You do realize that very few new authors are given these kinds of resources, right? Publishers throw new authors at the wall to see who sticks. There is no “development” counterpart to “research.”
Given that, I’ve moved on from a publisher’s resource allocation to be “risk pooling,” to “research and development,” to “shotgun approach.”
Hang with me—I know I’m only about the 1,537th person to say this, but I do have a point.
So yesterday on Teleread, Rich Adin from An American Editor opined that the way to save publishing is to kill the paperback. When the usual suspects (me) broke out with the usual reaction (Are you out of your fucking mind?), he shot back with, “Well, do you have any better ideas?”
Never mind I have no interest one way or another whether publishing remains profitable, and it’s not my job to put little slips in the suggestion box that will be ignored, and people (readers) have been screaming their fool heads off about what they want which would keep publishing profitable and publishing’s just not paying attention, I will tell you how to keep publishing profitable:
Do less research.
Put a little more development into your research.
Quit getting caught up in auction fever.
Embrace the e-book and treat it as deferentially as you do your other formats and respect those people willing to pay for it. Court them. Cultivate them. They have money to spend on books. Really.
The point is to make every title profitable, or as close to it as you can get.
But I don’t really think you care.
A little known bookkeeping fact…
When a publishing company grosses more than a million dollars a year, they are not permitted to cross revenue streams. The profit from a blockbuster novel cannot be used to cover the losses on any other book. Expenses and profit must be compartmentalized per book. So, the ‘pooling risk’ bullshit doesn’t apply from a tax standpoint.
Yeah, if you look at it purely numerically, you can cover your losses that way, but not from a tax perspective. If you have 80% of your books fail and only 20% succeed, that is a huge loss that cannot be eased through tax means. That’s why huge publishers who make a lot of money each year don’t want to take financial gambles. If they sign your book and it doesn’t even make back its advance and publishing costs, that’s a cost they have to simply absorb. From a strictly business point of view, you don’t do that. You gamble only on what you know will make you money, because you have shareholders to pay who want to see dollar signs, not losses.
In the big-name publishing world, money is what talks, and at the end of the year, when the books are run and taxes sent in, they want to see more money, not less.
Yet they seem to be claiming poverty everywhere. I’m more than willing to believe there’s loads of Hollywood accounting going on.
What leaves me slack-jawed in all these discussions is the assumption that readers will simply buy what they’re told to, like if a book was never going to be issued in paperback we’d all trot off to buy the three-times-more-expensive hardback. Well, a quick death is easier than a long, lingering illness, I suppose.
Every time — every single time — I’m in a big box bookstore (okay, it’s Barnes & Noble) I am stunned by the number of romance authors whose names I simply don’t recognize. A year ago, I assumed that ignorance was my own fault. But after more than six months of reading online reviews, Twitter chat, and direct/indirect marketing from certain authors themselves, I finally get the point.
I don’t recognize the 80% of the authors because no one else bothers with them. Their publishers may have thought those books worthy as fodder for the masses (in which case it’s the writers of the back cover blurbs who are really earning their salaries, not the editors), but not worthy of any sort of marketing. Or, at least, any marketing I ever see.
And I’m done taking the blame. I feel I do my homework as a consumer of romances. I can tell which 20% of authors are worthy of my notice. I no longer think there’s a gem in all those Who Is This? novels at B&N — instead, I assume there isn’t a five-star, grade A book hiding in plain sight on those shelves.
So, I’m with you, Moriah — publishers should stop going for quantity and start concentrating on quality. If they say, “Oh, but we think all our books are equally wonderful,” they get the look. The look that says, “You are so full of it — you know which authors are selling and which are not.”
And no more paperbacks? Are you kidding me? What is this: Bradbury’s Fahrenheit 451? I know I’ll get an e-reader eventually, but I think paperbacks are around for a long time. Let’s just make them GOOD paperbacks reads.
@Ann Marie
I know it! Hubris, ignorance, or contempt? Who knows?
@Magdalen
Brilliant, as always. Insert the Amen Chorus here. Really.
Studying pedagogy in grad school, I came to the conclusion that to cut through the academic BS and see the principles applied honestly, one need only look at professional sports, because the goals are so unambiguous and the criteria for success so clear.
When it comes to publishing, I would suggest baseball’s farm team system as an analogy. Way down in the bush leagues, in terms of raw opportunity costs, players are pretty much paying to play. By the time they get to double and triple-A, well-run teams turn a profit–by putting on fan-centered shows at prices fans can afford.
They’re not making the big bucks, but they get by. It’s in the self-interest of the major leagues that they get by so cultivated talent can rise to the top. Extending the metaphor, the big houses should look to self and small publishers as farm teams where talent can be discovered and developed and new markets explored with little risk.
The beauty of such a system now is that keeping the “box scores” is so easy with the current technology.
Agreed.
On the ebook tangent– I don’t know why the ebook format isn’t automatic for all new books, nor (here’s my rant) why those ebooks are so expensive—except to cover the ginormous advances paid to authors. The cost to produce an ebook vs a paper and ink book is minimal. I’m shocked that some small presses are pricing their ebooks at the same price as the trade paperback version. And now, some of Kindles new releases are $14.95? That is just ridiculous!
@Eugene
They’re already doing it. Quietly. IMO, what they want are semi-decent works with authors who are proven self-marketers. If the editing’s sufficient, they don’t even have to do much to that. Slap a new cover and ISBN on it and distribute it.
@Karlene
IMO, the goal of the big publishers and smaller presses, is to kill or, if that’s not possible, greatly impede the progress of ebooks. Prohibitive pricing is an excellent strategy to that goal.
As far as why the ebook format isn’t automatic for all new books, I think it’s because A) ebooks in all their forms are a giant mystery, B) they think an ebook has to look like the printed page, and the designers/typesetters don’t want to lose their jobs, and C) they’re scared of piracy. Personally, I think C is a valid fear—I fear it too—but ebooks are here. They can evolve with them and have a hand in their evolution or they can die. Not my or your problem.
In Galleycat’s micro summary of the eBook Summit, there was this quote:
I about fell off my chair laughing because that’s what you and I and Eugene have done.
But I’ll tell you where that job should go—the designers and typesetters.
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I really don’t understand why book publishers don’t offer free e-book downloads with hardcovers like the film studios and record companies offer codes for free digital copies. It makes so much sense. Then again, media corporations rarely do anything these days that makes sense.
@Persephone
I’ve actually thought about putting a burned CD in the print versions. Thing is, I’m as frightened of piracy as anybody (maybe more, because I’m alone), so I might not put in a code, but I would put in a CD. Still on the fence with it, though…
Here’s development on steroids. I don’t think I’ve ever read a book by James Patterson, but I respect him a ton after reading this. Of course, it’s Patterson setting the ground rules and dragging his publisher along for the ride, not the other way around.
I’m a little late, but Magdalen’s comment is exactly how I felt when I went to B&N two weeks ago. I’ve been hanging out online for about six years (geez!), and have been a long-time member of AAR and have either a passing or intimate familiarity with the top reader/reviewer sites online. I also read Romantic Times ever so often. But I remained stumped by the sheer number of authors (and not even category authors, mind you) whose names and books were utterly unrecognizable. And what’s worse is that I looked at their blurbs, read a few pages, and saw why they had zero, zilch, nada buzz. Naysayers online do like to say that we in the internet writing/reader community are far from the “average” reader, but doesn’t it look funny when the books no one talks about online are the ones left moldering on bookshelves at B&N?