The Business of Blockbusters: Good?

I’ve been internally fuming ever since I read this Blockbuster or Bust article in the Wall Street Journal by business school professor Anita Elberse. Elberse is most famous for her take-down in the Harvard Business Journal of the long tail theory. Now she’s back, ready to defend the “blockbuster model” employed by publishers (and movie execs, music moguls, etc.).

The “blockbuster model” is exactly what it sounds like: publishers pay millions in advances for high-profile books ($2.5 mill to Sarah Silverman, $1.25 mill for fricking Dewey, the list goes on) in hopes of finding a “mega-hit” that makes up for the mediocre sales of the rest of its list. Or, in business-speak:

Most large media firms make outsized investments to acquire and market a small number of titles with strong hit potential, and bank on their sales to make up for middling performance in the rest of their catalogs.

OK, yes, that’s a model. A dominant one in fact. One that—to many—seems a bit rocky, especially when you consider how publishers decide which titles to throw their checkbooks at:

Rather than putting all its eggs in one basket, wouldn’t it be smarter for a publisher to place a larger number of smaller bets — particularly in today’s harsh economic climate?

Hardly. Despite its double-or-nothing daring, the blockbuster strategy remains the most sensible approach to lasting success.

Consider, first, how these bets come about. Given the variability in execution in books, and the constantly shifting tastes of consumers, it is extremely difficult to forecast demand for a new title. The one useful indicator of commercial potential is its resemblance to an existing bestseller, so a project can be tagged, say, “the next Tipping Point“ or “a hipper Harry Potter.” This similarity is an indicator that’s evident to any editor or publisher who sees the proposal — and thanks to busy agents, many do. As a consequence, there is heavy convergence of interest on certain properties, triggering competitive bidding situations.

“It’s like Marley & Me meets The Bridges of Madison County.” Hold on while I gag. . . . Yes, this sort of “this book is like best-seller exhibit A, so it will be a best-seller as well” powers a lot of editorial decisions. But is this really a good thing?

(This article absolutely drives me crazy. It’s like my economics classes—I completely agree on the description of the situation and how it works, but when it comes to value judgments on whether this situation is “good” or not, I feel diametrically opposed to what business people stand for.)

It’s clear that Elberse is valuing is the business of business, the business of profit making, over the cultural contributions publishers can, and do, make. Spend big bucks, put a lot of weight behind the book, make a ton of money, move onto next mega-hit. (cringing)

At least she sort of recognizes part of the potential downfall of this model:

When a publisher spends an inordinate amount on an acquisition, it will do everything in its power to make that project a market success. Most importantly, this means supporting the book with higher-than-average marketing, advertising and distribution support — which is exactly how Grand Central handled Dewey‘s launch. To do otherwise would be foolish: If a product like Dewey fails to draw readers, Grand Central knows its profitability will be severely hurt. With such high stakes and money tied up in a few big projects in the pipeline, the need to score big with a next project becomes more pressing, and the process repeats itself. The result is a spiral of ever-increasing bets on the most promising concepts, creating a “blockbuster trap.”

So, in this trap, publishers keep spending more money to get bigger books with bigger potential returns, causing them to spend even more money on even bigger books. . . . I hear that sort of idea worked out really well for the banking industry, so why not? Besides, you can’t break out of the cycle, right?

But what would happen if a publisher like Grand Central decided to stop making large bids like the one it placed on “Dewey” and systematically walked away from the most sought-after — and therefore expensive — new properties?

First, agents would stop sending such a publisher their most
promising book proposals. “If you are constantly backing out of big-ticket auctions, your list is going to hurt,” is how one publishing executive explains it. “You are going to get a stigma that you don’t play for the big ones, and you are going to get shunned out. Agents will no longer consider you for what they feel are their best projects.” Publishers can’t afford to cost-save themselves out of the market. Even if they could develop extraordinary competence in finding gold in the “slush pile” of hundreds of pieces of unsolicited material received each week, the dividends would be limited. After one success, the talent the publisher had nurtured would discover the value of an agent.

Uggghh . . . But wait, there’s more:

Book retailers like Borders and Barnes & Noble want to see evidence that a book is worthy of their scarce resources. They like nothing better than to know that a book publisher has made a significant push for a title and is planning an extensive marketing campaign. In most media markets, support from the biggest retailers is decisive. A significant share of books is bought on impulse, so significant shelf space and room on display tables (“pile ‘em high and watch ‘em fly” tactics) are particularly important. A blockbuster strategy helps retailers to use their resources effectively, too.

Yeah, no, that’s great. Who really gives a shit about quality, about culture, about the benefits of reading? In my opinion, this is one of the main reasons our industry is in trouble, and one of the causes for the so-called “decline in reading.” The primary examples used in this article—Dewey, Nicholas Sparks—are not good books/writers. But crappy books like this are force fed through the system because of this “all-or-nothing” sort of model. Reputation and “marketability” lead to undeserved astronomical advances, causing publishers to promote these books at the expense of real literature, leading impersonal box stores to assault the eyes and sensibilities of readers.

Again, in my opinion, this sort of short-term payoff mentality that runs throughout this sort of publishing—and business schools—damages culture. Maybe it’s fine for cookbook publishing or whatever, but in terms of literature, I truly believe that we have to take a more rational, tempered, long-term approach. Look at the Penguin Classics list. Included are tons of the greatest authors of all time and works that have survived. That have added something to our culture as a whole, that weren’t published just to try and make back the $1 million advance.

I had some hope that the financial collapse would bring everyone back to earth and back to the idea that you can “make enough money” instead of always trying to drive up profit margins in an industry that has never been particularly profitable.

Unfortunately, if this “blockbuster” mentality continues to be “the most sensible approach to lasting success” we’re in a lot of trouble. Thank god for university presses and nonprofits. And I want to personally thank Ms. Elberse for giving me something to get all fired up about, and for clearly laying out (in an negative image sort of way) all the reasons why people need to support nonprofit presses (and independents) in order for real literary culture to survive.