Tuesday, October 28, 2008

The Future of the Book Publishing Industry:

In a Disastrous Economy

Terry Burns is a western fiction author as well as an agent for Hartline Literary, and he has written a fantastic article on the future of the book publishing industry. So with Terry’s permission, I am reprinting his article here today.
Molly Noble Bull

Take it away, Terry Burns.

I have my own ideas about where things are and where they are going with regard to the book publishing industry, but I wanted a better look at this subject. I interviewed over 60 editors, agents, and publishing industry professionals. What I found was nobody was publicly talking about it. That made no sense. You can’t turn on any kind of news or comments without that dominating it, The economy is bigger news than the Presidential race. What is the deal?

One place that is talking about it is New York magazine. They ran an article entitled “The End” which proclaimed darkly that: “The book business as we know it will not be living happily ever after. With sales stagnating, CEO heads rolling, big-name authors playing musical chairs, and Amazon looming as the new boogeyman, publishing might have to look for its future outside the corporate world.” Well, now that opened the ball, that’s scary stuff. It went on to say the “current state of unease pervading the book business is on people's minds.” . . .

If that’s true why aren’t we talking about it? Perhaps the largest reason is in order to really understand what’s going on we’d have to talk about stuff that is really boring.

One place there was a lot of book people gathered was the Frankfurt Book Fair. The word from there as reported by Publisher’s Lunch is:

There's a quality to this year's Frankfurt Book Fair, in these perilous times, that leaves one speechless. But that makes for a very short column. The final accounting--and it is all about accounting these days--won't come for a while. So the best handle on the show I found is stolen from a prominent journalist at last night's still-packed Bertelsmann party "So book publishing fiddles while Rome burns?"

With no one knowing just how bad the wreckage of the financial crisis will be when all is said and done, most rights traders appeared to let hope and innocence prevail over market news and went about the business they came here to transact.

Any time you engaged in a serious conversation about the key retailers and wholesalers in peril and the dual impact of a potentially major recession and a continuing liquidity squeeze in a business that always operates on small margins and tight cash, it could only end one way. But for most people that conversation was ancillary to their traditional on-the-half-hour pitches, and a persistent hope that maybe it won't be so bad for books.

As noted previously, here at Publisher Marketplace we reported a record number of deal transactions in the week prior to the show. While most of the biggest books have their primary sale prior to the show, following the recent trend, the better part of rights buyers and sellers insisted they were doing reasonable business. Of course as one person noted, if you weren't prepared to buy, then you simply didn't come.

"That's all we can do, keep selling," one person told us.

One of the more definitive things I found in my search was by Bob Sacks in Publishing Executive magazine. It’s magazine publishing oriented, but still very applicable: He says What does this mean for the country, what does it mean for the industry, and most importantly what does it mean for us and our families?

I don't know the answer to this problem. Nor do I think there is a printer or supplier that I can call for an answer as I have done in times past. This is bigger than anything we have had to face as an industry or personally as family members and providers. There is no road map and there is no past experience to guide our way. Except perhaps to stay calm. That is what I intend to do. Panicked people generally make bad decisions, while calm people tend to be rational and capable of solving the problems on hand.

There are several things to remember. The country, the world, and our industry have gone through this before. In fact, there were many new magazines started in the last depression that are still around today. Did you know that the first issue of Fortune magazine was published in February of 1930, four months after the stock market crash of 1929?

I'll close with this thought -- the magazine industry, the advertising industry and the newly emerging digital information industry are not going to go away. All three will survive, get stronger and be better at what they do. Your job is to stay calm, stick around and be there as they do.

One of my most detailed responses came from Ken Peterson at Multnomah / Waterbrook. He wrote: Have time for just a few things, but happy to help:

1. For publishers in general, the larger concern predated the current economic crisis--that is, the declining health of retail book publishing. People are not buying or reading books as fervently as they used to, and this is not economic per se, but more about the competition of other forms of media for people's time.

2. Consequently, long before this crisis, many houses have been cutting back on their new acquisitions and trying to focus their strategies on fewer titles that hopefully will sell better.

3. The economic crisis is likely to cause publishers to reduce staff before end of year. Some of this will be in editorial, but much more will be in publishing services and marekting.

4. Fortunately, at Waterbook Multnomah, we are not cutting titles drastically, but all year we have been more careful and more focused in what we acquire. It doesn't seem like we will be cutting staff, but all year we have been shifting a few people from a bookstore focus into Internet and church development channels.

5. I can't stress enough the importance of writers being smart about writing what might sell. The wise writer needs to address the potential market of the idea first, before writing it.

6. Anything that was marginal before--poetry, children's books, etc--is even more marginal now.

7. A writer does not need to write a best-seller but should think about bigger, broader subjects an avoid writing on subjects that are niche ideas or well-worn categories. It will be nearly impossible now for an unknown author to get acceptance for a book about, say, the challenges of grandparenting of stepfamilies" (a niche of a niche) or simply yet another book about marriage.

8. It's also more critical now than ever before that writers develop their own promitional opportunities. They need to be proactive online, in blogging, facebook, etc. They need to think about establishing an email newsletter, building a list of fans. They need to think about speaking ops, media ops. Publishers more than ever are looking for authors with self-promotion built-in.

Another house says, “The key thing I want writers to know is that they need to be realistic about their advances. Publishers are focused on making sure that every book earns out within the first year. The days of progressively larger advances with each new contract are over--unless the author's sales can be proven to have increased. Sales and Marketing are definitely looking at past performance as they sell today's new book. So be realistic, if the last book sold 10,000 copies, don't expect the next publisher to advance beyond that. The author will see the money if they do better. I would much rather have them get continuous royalty checks than be seen as an author that does not perform to expectations and does not earn out the advance.”

Bethany says: We are not cutting our list as other houses have. We are always looking for strong stories and the economy won't end that. That said, the performance of your first book is more crucial than ever. Folks with poor sales track records are having books cancelled and are having a difficult time finding new publishers. We're leery of taking on cancelled contracts. You need to make sure your first book gets a strong launch.

Andy McGuire at Moody writes: We do seem to be getting more conservative with our sales projections on various projects as the economy struggles. With that, we end up lowering the advances offered. I would advise authors to think about sharing the risk with the publishers a bit more. If the author really believes in his/her work and thinks they can help the publisher reach the market, then perhaps offer to go with a very low advance (or no advance) in exchange for a higher royalty rate. Then, if the book takes off, everyone wins. That said, many books don't take off, so I know this is a big risk for a hard-working author. But desperate times...

Dan Penwell from AMG: We are cutting back some on titles and moving certain spring 2009 books to the summer or fall/winter. The slow economy and buying from the internet (rather than retail stores) have made things tough.

Another extensive response from Nancy Lohr at BJU Press: Regarding BJU Press and the economy: We are trying to reduce the unit cost of each title in this way. This is only a piece of the puzzle, but it is a piece.

We know that we cannot change the economic environment we all find ourselves in, and we know that for believers the hand of our good God is not shortened. So we are looking for ways to control or manage what is in our human purview. We are continuing to acquire manuscripts that meet our mission, but I am probably being a bit choosier.

So what can authors do? They can work to write fine literature that will stand the test of time, that can remain in print without looking dated or faddish. They should wait to submit a manuscript until they are truly finished. We read too many pieces that look more like a draft than a polished submission, and even if my assistant passes me a diamond in the rough, I can't spend the time it would take to help finish the piece.

Our advance against royalties has been based on what we project an author would earn in the first year of sales, and that is likely to go down some during this period of economic uncertainty as the initial risk is shared between publisher and author. This is a reality that we all have to acknowledge, like it or not. If earning a living is the goal (and that is noble), then the market has to be a consideration. If the ministry of the written word is also a goal (one that we won't know the results of in this life), then the market an author approaches can be expanded accordingly.

So . . . we are staying the course knowing that the Lord is in command. We are learning what we can to do our work better, and we are staying true to our purpose. What does the future hold for JourneyForth? That we don't know - whether we will prosper financially or not. But, as my pastor reminded us yesterday, no matter what happens to our 401K plan, we still have a 419P plan - "my God shall supply all your need according to his riches in glory by Christ Jesus."

An editor at a large house offers advice for the Dennis Hillman at Kregel writes: Hi, Terry--sorry but am at Frankfurt bookfair, so will have to be brief and this is a German keyboard.

--everyone wants to cut cost. Less room for a marginal book.
--there are too many books chasing too few customers. something has to give in next year. publishers have to scale back or go under.
--authors need to educate themselves about the business of bookselling. know something about the market conditions that pertain to their particular project. Who really is the reader--it's not all Christian women from 15 to
75 years of age.
--understand culture. there are generational shifts in readers as well.

I only found a couple of agents talking on the subject. One of course was Chip MacGreagor as he was asked on his blog: "Would you suggest writers with a ready book proposal hold off a bit -- perhaps submit later? Is there anything we should do differently in light of the economy?"
No way. I'm with one of the commenters who noted that publisher and bookseller stocks are down because the overall market is down. There's a mad rush to sell, and that's artificially driving down stock prices. But Amazon is a well-run company that makes good money. Barnes & Noble, Borders, and Books-a-Million may be facing a squeeze, but they're still the three largest bookstore chains in America. And all those publishers are still in the business of creating and selling books. Things may slow down in terms of acquisitions while everyone gets their bearings, but eventually the publishers will still need to be acquiring new titles, since selling books is the way they remain in business. The one thing I'd say is that, in a weak economy, the core truths of book publishing become even more pronounced: have a big idea, express it through great writing, and support it with a strong platform. If an author walks in with a small idea, or a book that's only 80% done, he or she is going to find a very tough time getting a book published.

It took a huge amount of research to get this much direct information – compared to the waterfall of information on the economy in general. But you’re sitting there thinking what does this mean to me as a writer?

I haven't seen a cutback in books coming out, but then the books coming out now have been in the pipeline for some time. Still I’m doing deals right now, October is usually a good month for me.

I guess what I think it says is that we’re going to see a more cautious approach to acquisitions over the next months and see it taking longer to get decisions. The advice at the beginning of this talk to stay calm and have patience is appropriate. That gives us time to make that submission as good as possible, because the competition is going to be stronger than ever. Books that are simply “finished” won’t get it done, because the market is looking for books that are excellent. Should we quit writing and quit submitting? Of course not! Just keep doing business as usual . . . with a little more patience.

And finally, I believe much of the response of the economy is going to depend on whether we turn out and vote in November and how prayerfully we consider that vote.

You are invited to stop by Terry’s website and look around.


Your Coach for the Journey, Tiffany Colter said...

I am so glad you posted Terry Burns' research. What a HUGE help to writers!!

I have studied it since he posted it to the loop.

Molly Noble Bull said...

Thanks, Tiff,
Everybody wants to know what is going to happen to the book publishing industry. I know the article is a little long, but it's so timely, I didn't want to ask Terry to cut it. I'm glad I didn't.
I want to apologize for posting my article last night instead of this morning. But my computer was acting strangely. I was afraid if I didn't post it last night, it might not get posted at all.

Catherine West said...

Good to hear the news is not all bad. I guess we just keep at it and hopefully doors will open at some point!

Molly Noble Bull said...

Thanks for writing, Cathy. They say that movies tickets and books sold better during World War II than at any other time. Depressed people need to be uplifted. Humorous books and movies should do well about now.
Please visit the Bustles and Spurs blog and read my article on Texas Ranches. It might cheer you up, too. You will need to scroll down.