June 08, 2011
My friend John Moore is an entrepreneur with an excellent record of picking successful companies and managers, investing in them, then nurturing the ones he controls and profiting from this activity. John is CEO of a small exchange-traded company called Acorn Energy that has absolutely nothing to do with book publishing, but if you have a few bucks lying around, I’d suggest that you buy the stock (ACFN: NASDAQ). (Full disclosure: I have bought shares and also received a few options for helping him out on some projects.)
Acorn takes controlling stakes in companies that it thinks are a step or two away from breaking out big-time. It’s like a publicly traded venture capital firm with a specialty in the energy business. You’d think they’d be invested in the piping-hot solar energy space, but they don’t have a nickel there. Why? Because, as John likes to say, “I don’t want to cast my line where the other boats are; I want to be fishing where the fish are.” In other words, John tries to follow the money, not the herd.
Like anyone in his position, John spends a great deal of time pitching investors and explaining his business model, which focuses on improving the existing infrastructure through energy intelligence, rather than trying to reinvent the industry, which he thinks is a losing game in the near term. In his attempts to win people over to his way of thinking, he often argues against current prejudices, and he’s pretty convincing, too. In fact, John is a master of the pithy phrase.
I think one of John’s best phrases with regard to business investment is: “Don’t be distracted by shiny objects.” I have thought often about that as I’ve laid the groundwork for Primacy and Verbitrage. The shiny object, in John’s way of thinking, is the seemingly attractive element that will cause you to waste time and money — a kind of business mirage.
Naturally, we don’t always know with certainty what constitutes a real opportunity or a distracting shiny object until we’re deep into things. For example, many book publishers for years considered e-books to be distractions from their main business, then got caught with their noses up in the air when the market later took off. Sometimes shiny objects do clarify into profitable ones. Still, caution may be called for more often than not.
I don’t have a crystal ball, but the following are three things that I strongly suspect will prove to be shiny objects in the long run. With all the money and time in the world, they might be worth the investment, but with limited resources, not so much. Still, I don’t claim that they’re completely worthless, just difficult to justify in the scheme of things. In other words, there may be a lot of boats in these waters, but perhaps not enough fish to withstand the crowding.
Shiny objects often share certain characteristics. The main one is that “everyone’s” doing them or wanting to do them, and, in consequence, that very fact erodes their value tremendously. Nothing better illustrates this than the clunky old analog book tour.
There was a time when people paid attention to book tours. When they started out, they were special, available only to select authors that the major houses really wanted to push. These early tours often had success moving product, but then too many authors piled in. Now, I’d bet that in totality book tours have cost publishers and authors way more money than they ever earned back. Despite this likelihood, however, upon meeting an author with a book coming out, every man on the street wants to know: when’s the tour?
Unless you’re already famous — in which case, needless to say, the ways of mere mortals do not apply — stay away from the book tour. In fact, even famous people can attest that signings don’t always work out. I once edited a book by a famous person who subsequently sat in a Wal-Mart for two hours and received all of three visitors, one of whom, according to his co-author, was looking for directions to the bathroom.
For the non-famous who go on book tours, this three-visitor total is often the norm, not the exception.
The counter-argument is that book tours aren’t only about what happens in the bookstore, but are (1) an opportunity to do local publicity and (2) a way to get a few stores to feature your book. In reality, the local publicity angle is not all it’s cracked up to be and the money one spends in travel just for a quarter-page in the unread bookstore newsletter would be better spent on more targeted marketing.
These days, it is the rare book tour, indeed, that pays off for its publisher or author. More often, these things “everyone” wants are little more than shiny objects.
Since I see “everyone” plugging their book trailers these days, I wondered whether I needed one. I don’t have any filmmaker friends who’d be willing to donate their time, so I figured a trailer would cost me at least several thousand dollars, possibly more. On the other hand, if the trailer went viral it could sell thousands of books, right?
Well, yes, and as my father often says, if his grandmother had wheels, she’d be a trolley car.
So before going after this possibly shiny object, I consulted Chris Saridakis, one of my advisory board members. Chris has been a pioneer in Internet marketing: an early investor in more brand-name companies than I have space to mention; among the first six employees of the original Internet advertising agency, DoubleClick (now owned by Google); and the founder of another one, PointRoll (now owned by Gannett).
In response to my question, Chris observed that 48 hours of video hits YouTube every minute. If the average clip lasts three minutes, by my calculations that’s 960 videos posted per minute, 1.4 million per day, 41 million per month, 500 million a year!
“So,” Chris said with a smile, “what do you suppose are the odds that your book trailer will go viral?”
Well, these numbers just apply to the boring people, right? I’m an interesting person who wrote a great book that will inspire a truly outstanding video. I mean, while for other people the odds might be as good as their getting attacked by a shark at the fish store, my odds will be more akin to winning Powerball on a Tuesday in May.
Yeah, I know: they don’t do Powerball drawings on Tuesdays. Case closed: shiny object.
True confession #1: I am on Facebook and LinkedIn. True confession #2: I also have a Twitter account. True confession #3: I would be really, really happy if I could get five thousand Facebook “friends” (all that I’m allowed) and a million Twitter followers. Until that day, however, I’m a skeptic about social networking as a tool for selling books.
Apparently, I’m not alone. In early April of this year, the author James Ellroy posted this on his Facebook page:
Dear FB Friends,
Fuck Facebook!!!!! — It has proven to be worthless as a book-selling device, and is nothing but a repository for perverts, reparation-seekers, old buddies looking for handouts, syphillitic ex-girlfriends looking for extra-curricular schlong and hack writers begging for blurbs. For those looking for the REAL Ellroy shit, go to my wigged-out website: JamesEllroy.net.
He’s not my “friend” anymore, I presume because he wasn’t kidding with his “sayonara.” And, no, I never asked him for a blurb.
Notwithstanding this trenchant goodbye, there is no doubt that some people have built decent followings on the social networks. But I suspect that it’s also true that most of the low-hanging fruit has already been picked. If you happened to begin working the social networks just as they were hitting warp speed, you may have achieved more than your wildest dreams. But with 500 million people on Facebook, most users find themselves hanging around in places where everyone who’s shouting can’t rise above the noise.
Tweets get lost in the infinite crawl and everyone is trying to sell something on Facebook. (Notice that I didn’t put “everyone” in quotes in that sentence — because I mean EVERYONE.)
But what are you talking about, Fishman, you effing square? I am out there creating a persona. I post clever stuff and people comment. I’m developing a relationship with people who will go on to buy my book. And it’s all FREE.
Well, one thing’s for certain: you’ll get what you paid for.
In my humble opinion, people who spend an hour a day cultivating their Facebook audience are ignoring the concept of opportunity cost. How much is their time worth? What else could they be doing with that time?
Well, that depends on the person, of course, but in these situations it is often helpful to find a dull analogy to bring us back to earth. Let’s look at Facebook as a kind of direct mail model where you expose a bunch of people to a proposition and hope some will bite. In direct mail, you are lucky if you get a two percent response rate. If you got five percent and you were in that field, you’d be considered a business genius and would probably be one of the most successful people on earth.
Let’s say you spent an hour a day really working Facebook and, by the end of a year, all your efforts have yielded 5,000 “friends” — the maximum. Let’s further stipulate that, because they’re your “friends,” you manage to sell a book to five percent of them — enough to make any direct marketer proud — 250 books. Woohoo!
Now do the math, while presuming your royalty is an optimistic eight dollars per book (never mind how I arrived at that figure — you ain’t gonna beat it). So you earned $2,000 but expended, say, 360 hours to achieve that. You’re working at a wage of five-and-a-half bucks an hour. If that’s all you’re worth, then so much for paying back those college loans — ever.
The counter-argument, once again, is that one of these “friends” of yours may be really important, someone who can do something that can lead to the sale of hundreds of copies or more — can take you viral. But if that’s your goal — and it’s a worthy one — why not spend a couple of hours trying to get directly to that person rather than hundreds of hours cultivating people who aren’t your friends and, let’s face it, never will be? And, needless to say, those who really are your friends will buy the book anyway. Just send them an email, for cryin’ out loud — that will take minutes.
So I strongly suspect, by this logic, that social networking is that shiny object, a distraction from afar and nearly worthless up close. Why do I do it, then? Well, you can never be too careful, and I don’t put in an hour a day there, to be honest, more like an hour a week. If you’re not my “friend” or “follower,” you should be. I promise not to waste your time any more than I waste my own.
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