Imagine that you inherited a large apartment house where a core of tenants pays enough rent to cover all your costs and then some.

Life is good.  You could retire on the income and live well, but there’s a catch.  You’re not that old and it occurs to you that now and then one of those tenants dies.  You can’t wait them out; you need to replace a few now and then, and there’s no guarantee that the replacements will pay as steadily as the tenants before them.

How do you maintain yourself in the style to which you’re accustomed?

Well, you’re a businessperson, right?  So you decide to expand the apartment house, calculating that, though not all of the tenants in the new apartments will become steady payers, enough of them will break out to broaden the core, making your business more reliable and more profitable.

This works pretty well for awhile, but another snag comes along.  You have more apartments now, more moving parts.  You can’t do it all yourself anymore.  Those apartments require supers and porters and rental agents.  You have to add on layers of management.  And management is expensive.

So you keep expanding.  You build apartments of all sizes.  Some of them are grand sprawling four-bedrooms, major commitments of money to build and market that you hope will command big, big rent.  Others are studios that cost a mere bag of shells to build and require little marketing but don’t yield much.

Business chugs along.  You’ve grown now to the point where you don’t just have the one giant apartment house, but also all these other apartment houses that you’ve built or bought, all on the same business model — a few steady-paying tenants carrying those who are more problematic.

You’re sitting pretty for a number of years, but trouble looms.  It’s a bitch; nothing in life lasts forever.  There are always new complications.  It turns out that some other landlords have begun poaching your best tenants, offering them new kitchens and nicer amenities.  So you have to match or exceed them, leaving you less money for the tenants in the studios, some of whom may become your best payers, but they aren’t yet — and who knows which ones ever will be, because you can’t predict where your next best tenant will come from, which makes you pretty reluctant to invest much in any of those studios.

Meanwhile, you now have this vast empire…all these managers requiring office space and big salaries and paid vacations and health insurance — ugh, health insurance!  Every week, regardless of who’s paying his rent or not paying, these managers expect to receive their paychecks.  They expect to come to the office and have the lights go on.  They expect to be rewarded a little bit more this year than last year, and so on.  It’s to the point where you have to allocate forty percent of every rental dollar to overhead.

You’d like to be lying on a beach somewhere, but instead you feel like a guy on one of those old steam ships, sweating to shovel in more coal the faster the ship goes.  And that boiler is a beast.  You’re now living to feed the beast!

To make matters worse, because of competition with other landlords these days you’re hardly making any money on the authors — er, tenants — in the penthouse.  You wish you could cut them loose, but you have two problems.  The first is social.  You’ve gotten used to talking at cocktail parties about the glamorous movie stars who live in your buildings.  If you turned all your penthouses to studios, who would you talk about — the bookkeeper in 23D?

The second problem is a business problem.  All those people in the newer studios barely add up to the revenue of the tenants in the penthouse.  If you let the penthouse tenants walk out the door, you won’t have a big enough rent roll to feed your peeps.  Crapola!  You may be tired of shoveling coal, but you can’t just stop the ship without the whole thing breaking apart.

So what choice do you have?  You keep throwing money at the penthouse tenants, trying to keep them happy to cover your overhead, while you wait for an unpredictable few studio tenants to strike it rich and become good payers.

To keep the studio people coming, you make a lot of promises you know you can’t keep.  You tell them they’ll receive new tile in the bathrooms and new fixtures and the wallpaper of their choice when in reality they’ll be fortunate to get a slick of new grout and a paint job.  And if they don’t become good payers really fast, they’ll be lucky if you even bother to repair that leaky toilet.  Maybe they’ll get tired of stepping in puddles and resolve to do it themselves — that’s happened before.  Better yet, maybe they’ll depart and make room for a studio tenant with shorter odds of financial breakout.  Because you’ve learned that if a studio tenant doesn’t break out really fast, he’s unlikely ever to do so.

Boy, you’ve put yourself in a corner — not that you’re proud of that.  In fact, you’re harboring a dirty little secret.  The secret of your operation is that you’ve been playing a numbers game all along, and you can’t change that now.  All you can do is try not remind yourself that each of those numbers you’re playing involves a person’s life — or, at least, his or her pursuit of happiness.

Speaking of happiness, your management team wants to take a meeting.  They’ve just learned that a new competitive threat has crested the horizon.  Someone out there has created a way for tenants to cheaply build their own studios.  And now you also hear that the rental agents — seeing how you’ve been treating your studio tenants — are getting into the game to compete with you.

Your dilemma is this: you have to pay through the nose to keep the penthouse people happy in order to feed the beast, but your source of new penthouse people — less demanding than the old penthouse people — will dry up if you don’t have enough studio people moving in.

What to do?  You sit around the conference table with your management team.  They’re your friends, your colleagues.  If they lost their jobs, how would you spend your time…dealing with the studio people yourself?  Becoming just another schlep?  No way!

Your legal counsel hits upon a solution, buried deep in clause XXX.14(b) of all existing leases.  She thinks you can argue that if there are any studios to be built — no matter how easily, no matter how cheaply — those tenants must go through you.  Tell them they have no choice.

Why would a studio tenant take that lying down, you wonder.  Then it hits you, double-barreled: there’s a business reason and a social reason.  The business reason is that it would be very expensive for the studio tenants to fight you, and they don’t have the chops.  But the social reason is more powerful.

You know that most of the studio tenants are socially insecure.  They put up with the treatment they receive because by living in your buildings they can tell their peers that they live next door to celebrity tenants.  They even occasionally share the elevator with one of these celebrities on the way up to the penthouse.  Although the studio tenants never ride all the way to the top, living as neighbors with the celebrities gives them a sense of validation that they wouldn’t get if they built their own cheap studios off somewhere in an unknown neighborhood.  People sniff at those new neighborhoods at cocktail parties.  In fact, you’ll reinforce that insecurity every chance you get.  Those new neighborhoods — they’re Nowheresville, man!

For these reasons you leaving the meeting feeling pretty good about your attorney’s solution.  But then the phone rings and you learn that you just lost two penthouse tenants to the company that produces the do-it-yourself studios.

Uh oh.  You’ll have to spend even more money retaining the old penthouse tenants or the beast will starve, but how much less can you offer the tenants in lower apartments before those self-built studios start looking all the more attractive to them?  What happens when most of your existing tenants choose to become authors of their own fate?

This is not a problem you can solve by constructing another building.  Come to think of it, when was the last time you checked that original apartment house for structural integrity?

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J.E. Fishman, a former Big Six book editor and former literary agent, is author of the thriller Primacy, which Publishers Weekly called "appealing" and Kirkus called "good, boisterous fun." His mystery novel, Cadaver Blues, was serialized in 2010 on TNB and you can still find it here if you dig deep enough. It's now available in ebook and paperback. His financial thriller, The Dark Pool, was published this year, and his new series of police thrillers, Bomb Squad NYC, will be published in February 2014. He blogs here and at the Huffington Post. Please visit and follow him at his very fancy and expensive official author website.

53 responses to “Who Killed Random House?”

  1. Greg Olear says:

    You didn’t even mention the collapse of the real estate market overall…

    What I do like about the apartment house you describe is that, because it is a (figurative) co-op, the owners had a lot of say over who got in and who didn’t. That part was always well regulated. With the new, condo model, it’s going to be more difficult to know anything about a new tenant, because anyone with the kale can buy in.

    • I think I completely disagree. I can’t decide. The problem is that phrase: “well regulated”.

      Do you mean it’s well regulated in that it is well policed, or do you mean it has high standards for regulation?

      Because I’d disagree on both counts, at least lately.

      At least in an actual apartment building the landlords answer to third parties who require regular inspections. Do landlords need a license to lease? Is there a body that governs over landlords to prevent landlords from being slumlords?

      Because technically, anyone with the kale can buy the apartment building Joel has imagined. See, for example, Dave Eggers. Who basically bought the apartment building of which he is the penthouse tenant. The McSweeney’s example is enough to derail the entire conversation, really; if Eggers founded, and is an editor at, McSweeney’s, which publishes the novels of Dave Eggers (among other authors), was the National Book Critics Circle effectively recognizing a self-published novel when What Is the What was a finalist for its award in 2006?

      One of the great things about TNB, in fact, is we’re tenants in charge of maintaining our own apartment building, for all intents and purposes.

      • J.E. Fishman says:

        Interesting point about Eggers, Will. It has been observed by others that we are living in a winner-take-all society. Seems like, in some sense, Eggers is just one more example of that. But, in another sense, at least he’s trying to pull other writers along with him.

      • Greg Olear says:

        I’m going to stop the house analogy to respond.

        Where I think the record companies went wrong is, rather than serving as arbiters, developers and salesmen of musical talent, they tried to manufacture stars based on image. They stopped caring about the music. It used to be that being on a record label meant you were good; it stopped having that meaning, when so many indie acts were clearly better than the shit being shopped by the major labels.

        The key here is development. If you think a band (or a writer) has talent, then invest in that talent by being patient. That is, ultimately, how the “penthouse residents” of our analogy were created in the first place, for the most part. It’s no accident that the studio system, flawed though it was, created some of the best and most lasting movies; unlike today’s what-have-you-done-for-me-lately Hollywood system, studios developed their signed talent, and didn’t let one failure destroy them.

        • Joe Daly says:

          I agree that fostering talent is the key to producing quality, but how do you run a business on patience? The reality is that an industry based on creative processes can either function as a true business, meaning it must sell product, which often requires diminished quality on some level. Alternately, the industry can find another model for existing outside of traditional business. But it’s one or the other.

          The record industry, and apparently publishing as well, has been devastated by the perfect storm of record company greed meeting pop culture explosion (the demand), meeting technology advancing exponentially beyond the both. Basically the companies have lost their monopolies on releasing their respective products, as people figure out how to cut out the middle and upper levels and release stuff on their own. The glut of material has diluted the talent pool to the extent that I think the new mission statements of music and publishing should no longer be cultivating the talent from within, but identifying the talent that’s already out there and finding a way to lift it to a position of prominence over the rising tides of mediocrity.

        • J.E. Fishman says:

          I think Greg means something like the following: if you (Mr. Publisher) think a group of authors is good enough to publish, then get behind them and stick with them.

          The challenge as far as Greg’s assertion goes, as I see it, is not so much that you can’t run a business on patience but that the marketplace always gets the last vote.

          As for Joe’s other points with regard to the record industry, I completely agree but would add the following: The Internet is not a mass medium; it’s a niche medium — the long tail. If the niches can be reached profitably BY ANYONE and a consumer’s time and dollars are finite, what does this do to the mass market? And if the mass market dies or diminishes, what does that do to major publishers who, with regard to smaller books, have been relying almost solely upon the expertise of their authors to reach their respective niches?

        • Greg Olear says:

          I should add that my comment should not be construed as me grousing. I’m fortunate to have a publisher that has been patient with me.

          And this touches on what I was talking about, re: selection:

          http://www.thenation.com/article/37484/trouble-amazon

        • J.E. Fishman says:

          Thanks for sharing this link, Greg. It deserves to be the subject of a whole comment thread of its own, but I’ll leave that to readers of The Nation. (Well, I did comment there myself, too.)

          In any case, neither Amazon nor POD nor self-publishing nor e-books will be going away just because mainstream publishers wish they would. Nobody likes competition except the demand side of the marketplace, without which there’s no commerce at all.

          Figuring out the future of publishing won’t be easy, but I think you’ll agree that it behooves all us creative types to keep an open mind.

    • J.E. Fishman says:

      Yes, Garrison Keillor predicts that in the future everyone will be an author…and everyone will earn $3.47 a year in royalties!

  2. “because you can’t predict where your next best tenant will come from, which makes you pretty reluctant to invest much in any of those studios.”

    Which is part of the crux of the problem, really. The publishing industry makes a completely dichotomous claim; on one hand, it states it is a business that knows not just what is good and bad but also what will sell (with the caveat that what may sell may not actually be good, and vice versa), but on the other hand often notes it can’t predict which books will do well and which won’t.

    • J.E. Fishman says:

      By “good” I think acquiring editors — and, remember, I was once one of them — really mean “stands out in the genre,” or something like that. So quality has always been relative. But the bigger problem of not being able to predict what will sell — other than a seat-of-the-pants estimation — is a complex one. Publishers have never done much (or any) market research. One of the reasons is that they don’t have the time during the acquisitions process, but a bigger reason is that they can’t afford it, given their resources relative to the number of books they publish. Also, however, the publishing cycle has traditionally been so long. It’s hard to predict what will sell a year from now, especially if you NEVER do market research AND most books are unique in some way…taste driven rather than need driven.

      The disingenuous part comes in when publishers promise their authors all kinds of support that they know they can rarely ever deliver. It’s never been spoken (at least in my experience), but I think they are conflicted about both knowing that an author spent a year of her life (or two years or ten years) on a work and knowing that they can’t often offer a level of support to match that stake.

      • “Publishers have never done much (or any) market research.”

        I can’t sit here and say I have even an ounce of the publishing knowledge you have JE but from my perspective as a reader, I think you’re dead on with this comment. Sure, part of getting the word out about your writing is shameless self-promotion but the other part, if you’re lucky enough to be published by one of the big dogs, is their backing, their ability to create exposure for you, the writer.

        There’s always the saying for a writer to “know their audience.” I’m just not sure those behind the desk marketing the book know the writer’s audience or potential audience.

        Take for example, the recent creation of the TNB Book Club. I’m joining. But why? Because through my time on this site, I have come to understand that, on a greater scale, what most people recommend here I end up digging when I get my own copy. I’m trusting their judgment. I’m trusting that the TNB book selections will be pretty damn spectacular and not suck . . . which is to say, I think Brad, Greg, and all the other editors here understand their (the TNB) audience, the same way Almond didn’t know the TNB audience a couple of months ago when he ragged on Joe. (Totally not trying to bring up that discussion again but I think it serves a purpose in making my point)

        • J.E. Fishman says:

          Hasn’t it always been true that most people read what they’re told to read? It’s always been a sea of noise out there, and few of us have the time to wade through it. We rely on friends, colleagues, experts (or reviews) to tell us what’s good or useful or will appeal to us in some way.

          Here is the No. 1 way big publishers “create exposure for you, the writer”: they buy prominent space at the big retail chains. This is the secret sauce of how you make a bestseller. It’s not a guarantee, but it means more than almost anything else a publisher can do. Why? Well, first of all, the store is big and people are lazy. But, second, it’s the chain’s way of telling you what to read.

        • Yeah, it has. I’ve always come at books the same way I used to go at buying new music. Take a look in the Thank You section, the blurbs, etc. and see who’s on the list. It turns into a domino effect: one leading to the next. I guess it just irks me to go in a bookstore and there Glenn Beck’s big head is or Sarah Palin or Barbara Kingsolver. Then again, I guess it’s always been that way. A lot of talent gets pushed under all the crap. Same with music. Lou Reed won’t be out from and center but somebody hot at the moment will with far less talent. Steve Hely’s satirical novel How I Became A Famous Novelist manages to prod this reality very solidly. If his axis writers in the story isn’t a fictional Nicholas Sparks or Dan Brown, I’ll be damned.

        • *aren’t* not isn’t. The blood sugar is a-running low.

        • Except for the fact that brick-and-mortar book stores, as a retail business, are tanking, aren’t they? Every time I turn around a Barnes & Noble is closing and another indy book store is shuttering its windows. I mean, I guess if we mean Target or Walmart as big retail chains that’s different. The book tables at CostCo are fucking gigantic.

          One of the brilliant things about the Kindle/iPad/nook is that the target market for those devices is basically the same as the people who read more than a few books per year. Which most people don’t. Most read one, if I’m not mistaken. I’d have to look it up.

        • I was at the local indy bookstore a few days ago. Get this. Even though customers keep asking for my books they said just bring in 5, instead of the usual boxload. “We’re barely making it,” the owner said.

          It didn’t make sense. They are going to lose sales!

          Dude. It’s bad.

        • J.E. Fishman says:

          It is very hard to see how independent bookstores — as we grew up knowing them — will survive as anything but a niche business in cities with major foot traffic. On the other hand, Amazon created a lot of sales for smaller books that may not have done any numbers without what the independents used to call “hand” selling. Now come e-books, the final nail in the independent coffin. The shame of it is that authors will lose that feedback loop from knowing the local bookseller.

        • Uche Ogbuji says:

          Hmm, I can’t see with your last sentence. Surely the smart author will sell e-books on line, but will *also* print high-quality copies to sell locally, including in independent stores. The hard copies will be less profitable, but will be a sound way to build a following who go on to help expand the reach of the on-line offering.

          Again let none of us fall into the trap of big publishers with their uni-dimensional thinking.

          Quick, provocative question. How many indie authors have sought out indie/small game developers to see if they can lend plot elements from their books to games?

          To me I see electronic communications and new media as an endless cascade of opportunities, many of which are completely ignored by folks in the book world.

        • J.E. Fishman says:

          Most independents will not be able to do the volume to survive if they’re relying just (or mostly) on books. Some of the smart ones are in the process of reinventing themselves as social gathering spots. While they’re abandoning their “uni-dimensional thinking,” why shouldn’t they charge for author readings? Many music bands now make most of their money on tour rather than selling recorded music.

        • Uche Ogbuji says:

          Yep, good point. I wonder whether authors could work with more musicians to do paired tours, so that people start with something they are already used to paying for (live music), and start to become part of that model’s crossover into other genres. I’ve seen tours by Les Nubians and Saul Williams where the opening acts were readings by poets, and I wonder why I don’t see more such convergence, considering the natural affinities.

    • Aaron Dietz says:

      My goodness, Will, you’ve completely floored me. Yes! They can’t predict it–not really even to a fair degree of certainty!

      And wow, I’m glad. Can you imagine being the author in a world where prediction was 98% accurate? They’d run the numbers, and send you a rejection letter that was like, “Your book has only a 0.08% chance of success. Good luck!”

  3. dwoz says:

    What helps in these kinds of discussions, whether about the music industry or the publishing industry or the movie industry…any industry that produces consumable content…is that it is really an INVESTMENT industry.

    When you sign a book deal or a record label deal (very similar in quite a few ways), the publisher/label is really INVESTING in you. In return for that, they take a pretty high percentage of whatever proceeds may accrue.

    The application of that investment to your creative work is really just a form of leverage. You can sell books…a lot of books…by going door-to-door, town-to-town, and hand them out yourself.

    But ten dollars can put that book in a bookstore in Peoria, or Atlanta, or Telluride, and well, you might take a while getting there yourself.

    From the publisher standpoint, there’s a couple interesting things going on. When you sign a “small” book…i.e. small advance, small initial print run…that book is an asset. The carrying cost of that asset is really quite small. You could carry it for a long long time uncompensated without incurring much if any additional costs. However, because it is an investment model, we can say that the asset that is cheaply carried and dormant has a “sunk” opportunity cost.

    That’s why a small-tiny indy publisher can even exist…it just isn’t terribly expensive to make a book.

    The expensive part is in putting that book in front of a reader’s face. “Little” books don’t get on Oprah. Or if they do, they rode in on a horse made of dollar bills.

    In the new age, putting that book in front of a reader’s face SEEMS to be much cheaper…if it weren’t for those 400,000 OTHER people jamming books into that same reader’s face.

    • J.E. Fishman says:

      A couple of things to add to this…

      A.) Absolutely, yes, all businesses are about allocating capital to where you expect a return on your investment.

      B.) The large publishers are in a bind with regard to their overhead. They need not just profits but big revenue to carry them forward. This is one of the reasons they place big bets. If you run a P&L on Dan Brown’s next book and run a P&L on a very “small” book, they both get the same allocation for overhead as a percentage. The interesting thing is that the small book may actually consume a bigger percentage of overhead than that, whereas the publisher knows that the Dan Brown is going to consume a much smaller percentage of overhead relative to its sales, though the overall number is still much larger. So if you publish Dan Brown and his advance never earns out, you can still feed your beastly overhead (and may eve still make a profit — not earning out an advance is not the same as losing money) but if you publish two hundred small books and none of them breaks out, you consume the beast. Game over.

      But it’s also true that a publisher can cut and run from the big-advance book once they see it’s not working as quickly as they can run from the small book. Happens every day.

      C.) This business model is falling apart. Print-on-demand and electronic books do not require the capital investment that modest initial print runs once did. And distribution is not the bear it used to be, what with so many fewer independent bookstores, etc. So where is the publisher adding value for the author? Editing and marketing. They’d better learn to do a better job of those, because authors are waking up to the fact that they’re not getting their 70 cents worth.

  4. An interesting and thought-provoking tale, told to an audience all elbowing each other as they scramble to get to the apartment managers.

    • Joe Daly says:

      Well said, Nick.

      This piece was like a horror movie for me (and I mean that as a compliment to J.E.), as I consider making writing a primary job. After reading this piece, it almost feels like paying top dollar for a condo downtown, while a quick survey of the skyline reveals ten cranes building ten more buildings, signaling imminent and irreversible dilution of the condo market.

      Good stuff J.E. Scary, but good. Also appreciate Will’s comments. Cautionary tales, indeed.

      • Uche Ogbuji says:

        Joe, you don’t seem to be the sort of person who would be stuck in a rut of writer tradition, so I would be more thrilled than scared. There is indeed a huge future for writing, just not for traditional publishers.

        • Joe Daly says:

          Thanks, Uche. That is the perspective that won’t just help me into this brave new world, but it’s likely a requirement for any successful go at it. It’s certainly going to be an interesting time ahead for the futures of so many of the creative arts.

    • J.E. Fishman says:

      We sure are elbowing each other, aren’t we, Nick? When all’s said and done, I still want that damn imprimatur.

  5. Autumn says:

    @JE: I liked your last comment about the author getting their 70 cents worth. I don’t believe that this is the death of RH or any of the “beast” publishing houses, but I do think it’s yet another signal of even more change a-coming. Houses will need to be leaner and meaner, providing elegant editing, innovative marketing, and beautiful design (somebody still has to design those e-cover thumbnails, not to mention 4-color illustrated books) on a much smaller budget.

    The book will survive. The publishing houses will survive, or the literary agencies will turn into publishing houses, and some of them will become large, successful publishing companies, and then they too will find themselves unable to meet their own costs…and so on and so forth.

    • J.E. Fishman says:

      Well, o.k., the title is overstated. I think RH and others have more time than they think but will have to reinvent their business models or they will slowly fade away. Telling Andrew Wylie that they won’t do business with him because he has the power to create a more rewarding deal for his authors is the flailing of a desperate business, I think. I completely agree that the book will survive. Because people evolved telling each other stories. We NEED stories. Whether we authors NEED publishers, only time will tell. I wouldn’t count on any particular outcome yet, but business models that are unsustainable…well, as the saying goes, if something can’t last forever it won’t.

  6. dwoz says:

    One thing that has to be considered in the “self publishing” model, whether it be via killing trees or killing electrons…

    That the real job of publishing is getting the word out. Doing the mechanics of assembling folded dirty paper into a book is easy.

    When you DIY, you are now your own publicist, your own sales manager, your own distributor. You are not writing when you are doing that stuff.

    And catching the viral wave lottery is not a good business plan to bank on, if that’s what you’re using to put food on your family.

    • J.E. Fishman says:

      Self-publishing is just one of many models. I completely agree that most writers don’t want to be self-publishers. They want to spend their time writing. But that doesn’t change the fact that the big-publishing business model is standing on shaky ground. For one thing, in the future, agents may find themselves more greatly empowered. They may be like brand managers for an author’s work, forcing licensees to cherry pick more than they (the licensees) would like… For another thing, well-established authors might force a different division of revenue. These are only some examples that should scare (or should I say, are already scaring) mainstream publishers. No one yet knows where things will go, but the times they are a’changing.

  7. I’m straddling both worlds. The corporate end leaves a lot to be desired in many ways, but being able to grab your book at Borders and show it to a friend might be 77% of the reason we all started writing in the first place. I am going eBook (prepare for a wave of self-flagellation/promotion starting around the end of the year) as well. Why not get your action in as many games as you can? The real drawback is the increasing requirement to spend more time talking about yourself than writing. Can we invent a model that involves more writing?

    • J.E. Fishman says:

      There has been book promotion for as long as there have been books, almost. Dickens and Twain both hit the lecture circuit to sell their books. If they lived today they’d be all over the morning shows. No doubt many of us, however, by disposition would prefer the Salinger model.

    • Joe Daly says:

      What about a model where you spend most of your time writing, and then one day a year, do something publicly obnoxious, but with consequences that are inconvenient at worst, and entirely manageable. Act like the public scrutiny and media shit storm is an unwelcome intrusion, and when everyone asks why you did what you did, angrily tell them, “You’ll just have to read it in my damned book! Whore!” You could say that to chicks or dudes.

      • J.E. Fishman says:

        I think you’re onto something, Joe.

      • Tom Hansen says:

        Haha I like it Joe. That kind of self promotion is right up my alley. Considering the dumbing down of America, the big publishers business model worked well for a long time. But at the same time they were doing crazy unsustainable things financially, like paying a 1.25 million advance to Andrew Davidson for The Gargoyle, which ended up selling 30 some thousand copies. That and Dan Brown slacking are what sunk Doubleday. But it was the same model Hollywood were using forever. What I see happening now is similar in some ways to gave rise to the independent film movement. The big studios continued churning out junk movie after junk movie, blockbuster after blockbuster, ignoring that there was a whole audience out there that wanted something more substantial. Eventually that audience caused the rise of the independent film scene. This is a great piece JE and some great comments everyone.

        The problem I see in the future with books as regards grabbing a bigger share of people entertainment dollars (and paying us some damn money) is that books are more of a cerebral medium. They’re not like music (hearing) or movies (seeing), books require thinking, and the failures of the US education system means there just ain’t that many people that can or want to read.

  8. Simon Smithson says:

    There’s a good line in Greco’s The Book Publishing Industry: ‘The bottom line is that there is a bottom line’.

    True that.

    I think we’re probably going to see a lot more flailing. Who saw the iPad coming? Who saw the Wylie deal coming? Who saw the rise of the Meyers and Browns and Rowlings? Not I. Does anyone know with any real certainty what to do next?

    Not I.

    Some stability would be nice.

    That or a good angle for gouging a slice of the pie for myself.

    Fascinating stuff, Mr. Fishman.

  9. Uche Ogbuji says:

    Very fascinating piece. I must confess that I have no idea how those landlords ever built such empires in the first place considering their lack of innovation and change in business model for so many years. Your analogy (and I tend to judge analogies harshly) does a good job of describing the inevitability of collapse, so well done.

    Joe asks “how do you run a business on patience?” and I think it gets to the heart of the matter. If you ignore boom and bubble businesses, which make a lot of the headlines, but are a tiny fraction of actual commerce, almost all business does in fact run on patience. Think of, say, a GE. They hire plenty of bright students out of college and patiently wait for them to grow into their potential. GE more than other companies is ruthless about weeding out those who don’t, but GE is able to do this because it expands and diversifies and changes markets and market strategies constantly, and it expects most of those key changes to be driven from within. This gives it the sort of leverage and resilience that mono-model publishers can’t match.

    I purposefully picked GE as an example because of its fearsome, but long-lived reputation. It might be easy to say one can’t treat creative types like engineers and expect them to become stars eventually just because they’re young talents, but I say why not? As an engineer with a dominant creative side, I personally can’t see the difference. Talent is talent, and quality is quality, and in both cases a good idea isn’t worth shit without the moxie and determination to work it through, even if it means refashioning the world in order to do so. I think a lot of businesses do have that wherewithal, but I think that big media never has, and that is why it is dying, now that the fuel for its mono-model is running dry and its competitive advantage washing out in a sea of commoditization. From a pure Adam Smith perspective, good riddance!

    Just think: why did something like TNB not emerge from publishers? Why did something like The Drudge Report and Huffington Post not emerge from newspapers? The inventive energy is not with the incumbents. They are just dead companies walking.

  10. J.E. Fishman says:

    Uche’s rhetorical question: “Why did something like TNB not emerge from publishers? Why did something like The Drudge Report and Huffington Post not emerge from newspapers?”

    My answer: Publishers thought they were in the BOOK business, when they should have realized that they are in the STORY business. Newspapers thought they were in the NEWSPAPER business when they are really in the NEWS business.

    Love your analysis, Uche. You’re a smart man. Wearing my entrepreneurial hat, I’d go into business with you any day.

  11. Paul A. Toth says:

    The major publishers disgraced themselves beyond all redemption when they started taking pitch meetings. Let’s hope the house falls, randomly or not.

  12. […] business model is unsustainable, and that big publishers, like Darwinian creatures, must adapt or die.  (Same thing for whoever decides what makes the book review pages of The New York Times).  He […]

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