Last month, I kicked off this series with a post about what Haywire Books is here to do—offer a select group of writers a home while they build their audience. I beat up on the model for big publishing without offering a perspective on the pressures the big five out of New York are facing. Beyond the pressures all large organizations face—legacy systems, stakeholder obligations, demanding shareholders—publishers of all sizes are facing some enormous uphill battles.
The Disruption in Publishing
A publishing insider recently told a friend of mine that he expects we’re about to witness the rapid and wholesale collapse of literary publishing. That might be a bit extreme, but mainstream publishing is going through a major disruption—with competition from unexpected sources, rapidly changing technology, economic pressures, and more.
Even in the 10 months since I decided to start Haywire Books, we’ve seen some major industry shake-ups:
Thompson-Shore, one of a few very big printers, filed for bankruptcy.
Barnes & Noble, teetering on collapse, was recently taken over by an activist hedge fund.
Tin House, an esteemed literary organization, is shuttering its magazine after 20 years.
These are all small things that few people outside the literary world are paying attention to, but they point toward something seismic underfoot.
The Elusive Consumer
The current disruption is a continuation of something that has been happening in publishing for 10 years or more. It’s impossible to generalize, but the New York publishing world has been facing a number of pressures on its business for a long time, and much of it has to do with the changing consumer.
If you made a pie chart for how people spend their days, you’d have a big chunk for sleep, a big chunk for work, a chunk for socializing, and a chunk for entertainment and media. Fifty years ago, the media chunk was limited to three TV networks, books, newspapers, magazines, and radio. Now, that chunk is fractured into a thousand pieces, ranging from Five-Thirty-Eight election coverage to Buzzfeed listicles to binge-watching Game of Thrones.
Books are a smaller piece of the pie.
To make matters worse, the nature of work has changed. In corporate America, executives and HR people talk a big game about “work-life balance,” but I would argue “work-life integration” is a better term for it. Thanks to smart phones, we’re connected all hours of the day, so very few jobs anymore are clock-in, clock-out operations.
I know I’m certainly guilty of this, and most people I know who work for companies complain about spending all day in meetings, and then they have to catch up on emails or work on projects at night after the kids go to bed. The hours that used to be about leisure are now about work—catching up when you’re swamped, or business development, or networking, or building your personal brand. Instead of reading a novel over lunch, today’s worker-bees are scarfing down sandwiches in their cars between meetings, ticking through emails (or, reading about the latest political scandal).
So, the “entertainment” slice of the pie is smaller and more fractured. Consumers are harder to reach and harder to hold.
Inflation Woes
Because of those elusive consumers, book prices haven’t increased as fast as the cost of paper, freight, and human capital. Raise the price of a book, and fewer people will buy it—yet all the inputs into making a book have gotten more expensive.
I just pulled a few books off my shelf from yesteryear and ran them through this inflation calculator. In the list below, you’ll see the price, format, year of that edition, and what the inflation-adjusted price would be in 2018:
Larry Brown, Joe, $19.95 hardback (1991) - $37.14 (2019)
Jeffrey Eugenides, Middlesex, $15 paperback (2003) - $20.89 (2019)
Richard Ford, Rock Springs, $18 hardback (1987) - $40.15 (2019)
Shirley Jackson, The Lottery, $13 paperback (2000) - $19.19 (2019)
Annie Proulx, The Shipping News, $14 paperback (2001) - $20.34 (2019)
Anne Tyler, Ladder of Years, $24 hardback (1995) - $40.05 (2019)
As you can see, if the price of books had kept up with general inflation, we’d be looking at $40 hardbacks and $20 paperbacks right now, which is more than most consumers—with unlimited media and entertainment options in their pockets—are willing to pay.
An Unforgiving Supply Chain
One final pressure in the publishing system is the supply and distribution chain. Below is where the money for a $20 book sold in a store would go. Some publishers may have different deals with wholesalers, or have their own fulfillment channels, or may get tremendous printing discounts at high volume, but the general math is:
$8 (40%) – retailer
$3 (15%) – wholesaler
$1 – freight
$1-3 – distribution (warehousing and fulfillment) fees
$2-3 – printing
$1.50 – author royalty
$1.50 – publisher profit
“Profit” might be the wrong word, because out of that bucket, you have editing, copy-editing, proofreading, design, marketing, and operating expenses such as accounting, your website, etc.
Fees for those publisher services are all over the map, but consider a 300-page book. If a fast editor or proofreader goes through 10 pages an hour, it’s a 30-hour job to complete the book. Thirty hours at $35/hour is more than $1,000. So, a thousand dollars for editing, five hundred for design, a thousand for marketing, and five hundred for general expenses, and you suddenly have to sell 2,000 copies of a book to break even.
It’s no wonder every publisher now is putting out books with typos. You have to conserve somewhere, and it’s not going to be from the printer (who might decide they’re better off making cardboard for Amazon than printing your book), the retailer (who can’t keep the lights on and make payroll without that 40%), or the shipping company.
All of the above is about print books distributed through traditional channels. E-books and audio books are different animals, but it’s safe to say the legacy print business is in dire straits. The big bet I’m making with Haywire Books is that as the old business collapses, there will be more opportunities for small, nimble, niche publishers to fill the void. Here’s hoping, anyway.
Photo by Stephen Radford at Unsplash