10/01/2014 12:50 EDT | Updated 12/01/2014 05:59 EST

It's Time For Publishing Houses To Change the Game

Publishers should dominate this service business; like Faber, they just need to start. Book production and retailing, whether by companies or individuals, is fully commoditized now also, so the key is to occupy the space held by, say, yoga instructors, dentists, psychotherapists, interior designers -- services for which you are as likely to pay more, to get a better job, than to pay less.

While Amazon does not in fact have a monopoly on book retailing, whether physical or digital, it does appear to have a monopoly on our imaginations when it comes to discussing the future of publishing. All our ruminations, conversations, and dreams seem to collide with its implacable cliff face, one that stretches as far up as we can see. Some try to scale it, some pound their fists against it, some bargain with it (can you bargain with a cliff?), some fulminate atop one of the boulders scattered at its base, and some are content to sit on the rocks and fish, there being a remarkable abundance of fish teeming in the various coves and narrow precipitous inlets.

What no-one in the publishing industry seems to do is turn to the right or left, and see what things look like to the East, or the West. Or turn around, and head South, across the ocean. Well, one, EDC, a provider of books to schoolchildren, did announce a couple years ago that it would cease doing business with Amazon. This was seized upon as some remarkable occurrence since it is, nominally, successful. But they always had an Avon/Tupperware-like sales channel whereby their most passionate customers re-sell to their friends, a multi-level-marketing organization, in the parlance. That is not universally available to different types of publishers, extremely difficult to build from scratch, and prone to corruption. But I believe there are paths to success for authors and publishers but instead of struggling with Amazon, you must, as the philosophers might say, you must struggle with yourself. Know thyself.

Two years ago I wrote an essay (8,000 words) "On The Business of Literature" in which I told a story that publishing that was historically accurate yet gave an account of publishing radically at odds with the one publishing tells itself today. The key takeaway, for this discussion here, is that publishing is not anti-technology in its heart, nor it is anti-capitalist in its heart--in fact, publishing was the ur-technology, the first moment at which humanity could mass reproduce perfect facsimiles of anything it had made, and that it was ur-capitalism, when money accrued to machines (the printing presses) rather than labor (the monks). And the entire history of publishing was one in which those process became ever more refined. Better machines, faster machines, the invention of proper retail environments in which consumers could browse the books, better distribution methods, four-color printing, just-in-time inventory, desktop publishing, the story of publishing is the story of making books cheaper and more convenient.

Amazon, therefore, is not a commodifier of books. We are. Bezos is simply taking what we taught him -- see the Penguin founder Allen Lane's desire to make books as cheap and ubiquitous as a pack of cigarettes -- and taking it farther than we were capable of taking it. As such, there is no way for publishing, with its current self-understanding, to beat Amazon for there is but one trajectory: cheaper, faster, easier.

A key secular trend in world economics is the shift in employment from manufacturing to services (following the previous one from agriculture to manufacturing, one which started, of course, with books). Publishing, unfortunately, while it acts like it is in the business of culture and ideas, has a business model that is pure manufacturing, and to the extent that is does not in fact need to manufacture the bits that compose an eBook, the business model is designed to mimic a manufacturing model as closely as possible. Publishing must stop fooling itself that it is in the culture business, and now take steps to actually be a culture business.

Where would that start? For answers, lets look at two European literary publishers. What!?!? How on earth could two European literary publishers be pouting the path forward for publishing. Aren't they the most backward? Stodgy status-quo defenders with ebook marketplaces that are a fraction that in the U.S.? Well, you'll notice that I've never claimed that the true transition publishing is facing is from print to digital. It isn't. The true transition is from manufacturing to services.

Framed another way, what are the key attributes of a commodity? One is that it is fungible --there's no significant different between milk from this dairy or from that dairy. While that is true for many general interest publishers, it's not necessarily true at the level of the author. It is probably more true than many would care to admit, but let's just assume it isn't. The other key attribute of a commodity is that its price is determined by the overall market function. And that, just looking at the narrow band of prices that exist or paperbacks, or hardcovers, or ebooks, in any given language market, that is clearly true, so brutally, clearly, frankly true that it is astonishing we can ignore it.

Bezos, therefore, is playing by the rules of the game, a game publishing invented. As the saying goes, though, if you don't like how the result of the game is going, don't try to change the rules. You can't and vast amount of time and energy are being wasted by publishers across the world trying to change the rules of the game. You made the goddam game, guys, you can't change the rules.

Instead, change the game. Which again means, move from manufacturing to services.

As such, the move by a newly independent Dutch publishing house with four, largely literary imprints to create new start-up business adjacent to it is particularly illuminating. The most immediately interesting of these is a self-publishing operation called Brave New Book which, crucially, isn't merely one more mill churning out ePubs and PDFs from Word docs, but an entity which differentiates itself by offering high value editing, design and reviewing services. The Italian digital publisher Bookrepublic has created a content marketing agency aimed at teaching storytelling to brands, Lagenzia, adjacent to its increasingly commoditized ebook distribution business.

Then, to take an English-language example, the august U.K. independent Faber has launched a creative writing program called Faber Academy. In the U.S., the creative writing instruction business is worth several billion dollars and it is largely run by universities using them as a profit centre to subsidize more expensive faculties. Publishers should dominate this service business; like Faber, they just need to start. Book production and retailing, whether by companies or individuals, is fully commoditized now also, so the key is to occupy the space held by, say, yoga instructors, dentists, psychotherapists, interior designers -- services for which you are as likely to pay more, to get a better job, than to pay less.

Books, as any honest author will tell you, have always been a terrible way to make a living. Look at Malcolm Gladwell -- his books cost the same as any other writer, but it costs $100,000 to hear him speak. Books are commoditized. Speeches are not, something both management consultant and poets in the U.S. have long since learned -- since the typical one-day workshop or lecture in the case of both professions is likely to generate more income than a year's worth of royalties. That is now becoming true for publishers also. But books are powerful tools to engaging with the culture, no-one would pay what they pay to book Gladwell, or pay what they pay to get an MFA from program run by Michael Cunningham, if it were not for the books they've written. So we will all continue to create books, and let Amazon run the warehouses and the e-commerce, while finding new, uncopiable, high-value, high margin activities, some like teaching and branding and fashion, that we can already see, many of which we have not yet seen. Books began the industrial revolution, they can partake of the services revolution.


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