_This is the eleventh and final part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here, or collected in a single pdf file.
On a more personal level, editors—real, living breathing people, not just the faceless corporation—can reach individual readers in an extremely cheap, effective way. By creating Facebook groups to crowdsource parties, such as what Lorin Stein did for Bolaño’s 2666, or writing personal blogs about books and publishing, editors and independent presses can start to build alliances with readers who believe in what the press is doing.
One of the biggest growth areas—maybe the only growth area—in publishing is in the realm of graphic novels. Again, there are a lot of reasons for this, but one significant reason is the fact that graphic novels (and comic books more broadly) have always cultivated a fan culture in which readers interact closely with the publishers, writers, artists, etc. In our “web 2.0” world, interaction is key, and people who feel engaged with a project or organization are much more likely to do the sorts of things that will spread the word and increase sales and readership. As demonstrated by the success of BzzAgent—a word of mouth company that mobilizes hundreds of unpaid “BzzAgents” to spread the word about new products—word of mouth marketing is extremely effective. The more people who love what you’re doing and feel like they’re helping you to do it, the more they’ll get other people involved, and the more successful you’ll be.
It’s not a complicated concept, but one that sleek, savvy small presses are more likely to capitalize on than amorphous, nondescript commercial houses. Indies also have a chance to leap ahead in terms of using e-books to reach readers. With a loyal fan base and authors who aren’t looking to make millions off their intellectual property, independent presses can play around with the current models, giving away free e-books or selling them at a very low price, all in the interest of generating excitement about a particular author or work.
It was clear to me when HarperCollins announced a special iPhone tool allowing people to access excerpts of HC books by visiting the Harper website on their phone that the big presses are insanely out of touch. The activities of the Institute for the Future of the Book, such as their collaborative online reading of Doris Lessing’s The Golden Notebook, or their theorizing about how presses could be structured in a world where content is completely free, are much more cutting edge than what the big houses are doing.
One other thing worth mentioning is the nonprofit model and recent variations on it. Since the revenue stream for nonprofits is diversified—usually about 50% from sales, 50% from donations—these houses are more protected than other presses when the bottom falls out of the market. Granted, foundation giving is slowing up for the time being, but individuals are still donating. And individuals who understand the value of what nonprofit publishers do will continue to donate and help these presses through these rough times. Furthermore, collaborations between nonprofit presses and universities has proven to be very advantageous to both parties, giving the press additional, crucial resources, and giving the university new educational opportunities for its students.
With independent, nonprofit, and university presses doing most of the literature in translation, there’s a chance for the sales of translations to continue to grow in the coming years. As the industry retracts and readers of the literary community consolidate, translated literature could come to the fore, attracting new readers. And as more presses like Melville House, Archipelago, Europa Editions, Counterpath, Ugly Duckling, Graywolf, and Open Letter come onto the scene with reasonable expectations and a willingness to experiment with new ways of reaching readers and new models for how to survive and fulfill one’s mission, the literary world might not be as bleak as some might think.
This is the tenth part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here. This is the penultimate part of the series . . .
Currently the marketplace is dominated by the idea that books should be enjoyable and useful, an entertainment alternative equivalent to watching TV or surfing the Internet. But, to be honest, books aren’t as immediately gratifying as a TV show. People who really read, who buy lots of books, are often attracted to the unique things the medium has to offer that goes beyond simple amusement. This discrepancy between books as simple entertainment and books as unique medium could be one of the reasons behind the dismal numbers reported in the NEA Reading at Risk and To Read or Not To Read reports, which found that in 2006, 15-34 year olds spent less than 10 minutes a day reading for pleasure. And that between 1985 and 2005, household spending on books fell by 14% when adjusted for inflation.
Independents driven by an editorial vision—houses like New Directions, Archipelago, Europa Editions—are in a better position because they aren’t trying to appeal to an enormous range of pleasure seekers, but are engaging with an active audience that is dedicated to the idea of serious literature. These houses are “deep” publishers doing a lot of books within a certain aesthetic range. Commercial presses ten to be very horizontal—publishing a few titles from a huge range of categories. Most importantly though, is the genuine desire to connect with their audience.
Despite having all the necessary resources and reach, commercial houses have historically been pretty bad at truly engaging with their audience. The websites for HarperCollins and Random House are aesthetically disastrous, and have little that draws a reader back or starts an electronic “relationship” with its fans. You may find excerpts and basic book data on the site, but you’ll also find an Obama book next to a cooking book next to a Michael Crichton thriller. There’s not much of a voice present on these sites, and there’s definitely not a sense of community. It’s as if the commercial publishers can only view readers as clients rather than supporters.
This idea that a press partners with its readers rather than simply treating them as customers is a concept that I believe will shape the future of publishing. For ages publishers have cut themselves off from their readers. For instance, the general public isn’t allowed to attend Book Expo, since publishers only want to deal with people in the industry. And the chain linking an editor with a reader is enormous, stretching from the author to agent to editor to sales department to wholesaler to bookstore buyer to bookseller to reader.
There are two main reasons that I think the iPod has been such a cultural force (aside from the “cool” factor): it isolates the user and makes him feel like a unique individual, while providing the listener with a greater freedom of choice than ever before. Parallel to the rise of the iPod and its message of individuality, social networking sites allowing people to connect and share information and recommendations have become more and more popular as well. Each of these innovations allows creators and producers to directly interact with “customers.” This combination of individual enjoyment, the empowerment of nearly unlimited choice, and instant access to a community of like-minded people is incredibly powerful and, in my opinion, is the setting the publishing industry should cultivate to engage and energize a large group of readers willing to explore and enjoy all types of literature.
This is the ninth part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here. There are still a number of parts left to post, but these should all be up before the end of the month.
Stage Four: What Happens Next?
Although it seems that everything is doomed (remember what I said about publishing folks?), I believe that amid all this chaos, potential or otherwise, there are reasons to believe that independent publishers, booksellers, and works in translation all could thrive.
Assuming Borders doesn’t make it, or at least a significant shrinkage in chain stores, an opportunity will open up for independent bookstores to make a comeback. For years these stores have been battered out of business due to the volume discounts, enormous floor space, and nationwide branding efforts of the major chains. But at this time, when, thanks in part to the greed that destroyed the financial sector, people are focusing more on “buying local,” independent bookstores can fight back. There have been a number of studies on the economic impact of buying books from a local store, including one conducted last year in San Francisco that found that a 10% increase in book sales in the local market would result in increased economic input of $3.8 million, 25 additional jobs, and $325,000 in additional retail activity. These arguments should appeal to a larger segment of customers than usual during this current/forthcoming recession. In the wake of a Borders collapse there would be a lot of underserved book communities where a niche store could step in and succeed.
One reason indie stores could make it in this sort of climate is the modest nature of their business model. Rather than try and be everything to everyone, stores with specific identities that are integrated into the local community—like St. Mark’s, City Lights, McNally Jackson, Shaman Drum—tend to succeed by cultivating and serving a specific group of loyal customers. Additionally, a number of stores are playing around with the idea of becoming nonprofits. Shaman Drum is transforming into the Great Lakes Literary Arts Center and expanding its community activities and offerings. The indie store as literary center is the antithesis of the box store, and exactly what we need in our world today.
In terms of niche marketing, Amazon UK recently announced a “Literature in Translation” store highlighting works of international authors and presses that publish a lot of translations. This isn’t dissimilar from the annual Reading the World program in which independent bookstores display a host of translated titles in order to draw the attention of readers to the wealth of great books that are available from writers born outside of our borders. This sort of niche marketing—or not even marketing, just providing information about a particular type of book—is highly effective and can make a big difference sales.
It might seems self-serving (or self-delusional), but I think that independents on the whole—nonprofits publishers especially—are in a better position to weather this storm than anyone else. I’ve long believed that the role indies play in book culture would continue to grow in the future, mainly because these presses are branded, they have a particular mission and vision, and their expectations are modest enough to allow for them to publish “real” literature instead of books that seem profitable.
This is the eighth part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here. There are still a number of parts left to post, but these should all be up before the end of the month.
The most frightening news of recent times involves the Borders chain. In March, Borders put itself up for sale and had to borrow $42.5 million Pershing Square Capital Management. Borders couldn’t find a buyer, and as a result, had to issue warrants to its largest shareholder, giving Pershing Square even more control of the company. And if that wasn’t bad enough, along comes the financial collapse, and Borders Group Stock falls from $7.80 to $2.44.
A couple weeks ago, Borders issued a memo to Independent Publishers Group, stating that Borders would “not be paying [IPG] for two months due to anticipated excessive returns.” Borders claims to have cash on hand and access to credit, but this is a very frightening message for the entire book world, sending a message about Borders long-term stability. And of course, the independent presses are the first to have to deal with this non-payment . . .
If Borders were to go bankrupt—and this is still an if—it would be one of the greatest catastrophes to hit the publishing world in decades. Even after liquidating as much stock as possible, publishers would receive massive returns, millions of dollars would be lost, and going forward, publishers would have 1,100 fewer stores to sell to.
Even worse, without a Borders store next door, a lot of B&N outlets would become superfluous. B&N could easily close down a number of stores to improve their financial standing, reducing sales outlets even further.
A lot will depend on the upcoming holiday sales season, about which there have been mixed predictions. To some, books are the perfect gift. Lasting, thoughtful, and most important in our economic crisis, relatively cheap. Random House recently launched a campaign to promote just this idea. Books=Gifts started last week and in the near future the New Yorker will do an e-mail blast to 25 million newsletter recipients pushing this message.
Meanwhile, Motoko Rich of the New York Times wrote an article for the November 11th paper about the market’s nervousness. Barnes & Noble chairman Len Riggio already sent a memo predicting a horrible shopping season, and HarperCollins just reported that first-quarter operating income plummeted from $36 million last year to $3 million in 2008. And a lot of people are expecting a serious downturn in January, regardless of what happens in the next six weeks. Bookstores are already cutting orders, and presses are trimming print runs.
Borders closing and a downturn in sales adds up to a doomsday scenario in which commercial houses are buried in inventory and bad debt, and have to cut costs severely (including personnel) to try and rebuild. A lot of independent presses could just go away overnight. And Barnes & Noble and Amazon would have a lot of power over publishing houses, allowing them to essentially set whatever terms of sale they desire.
This is the seventh part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here. There are still a number of parts left to post, but these should all be up before the end of the month.
Stage Three: Financial Collapse, the Borders Situation, Distribution, and Other Bad News
Over the past few years—and the past few weeks—a number of events have occurred that have shaken up the industry as a whole. Some are more severe and immediate than others, but each event is shaping what the future publishing world will look like.
Even if you’re not a consummate reader, it’s been hard to miss the steady decline in book review coverage. Across the country newspapers (facing their own set of challenges) have been laying off book review staff in favor of running much cheaper syndicated reviews, such as those from the Associated Press. In the past year, a number of standalone books sections — including the L.A. Times Book Review — have been folded back into the paper. Book review editors such as Teresa Weaver at the Atlanta Journal Constitution and Oscar Villalon at the San Francisco Chronicle have lost their positions. The New York Sun, which, for all its crazy off-the-wall editorial opinions had one of the most cosmopolitan arts sections in the world, ceased publication at the end of September. And the magazine scene isn’t much better. The situation is so dire that the National Book Critics Circle started a campaign to “save book reviewing.” From a publisher’s perspective, this decline is really bad news—the fewer outlets available for review, the more difficult it will be to get any attention for your titles. Especially when everyone’s reviewing the same twelve books . . .
Distribution is one of the key problems for all independent presses. It costs a fortune (rates such as 26% of net sales plus 4% of returns, plus standard storage, catalog, and set-up fees, are not at all uncommon) and despite everyone’s best intentions, giant distribution companies aren’t ideal for getting books into stores. When sales reps are responsible for selling books from more than a hundred presses, it’s physically and mentally impossible to know all the titles they represent and to be able to specifically pitch each of these books to bookstores.
Back in the fall of 2006, AMS—then the parent company of Publishers Group West—went bankrupt, and, as a result, stopped paying the dozens of publishers PGW distributed. And if that weren’t bad enough, this happened around the holidays, and PGW wasn’t able to ship titles to stores during the most profitable time of the year for the book industry . . . Eventually, Perseus bought PGW (they bought Consortium earlier in the year), bringing together an enormous percentage of independent presses in America under one roof, but not before some serious economic damage had been done. Soft Skull almost went under and was eventually sold to Counterpoint, and presses are still laying off employees because of the lingering effects of this collapse.
There’s no need to rehash the epic financial collapse that has rocked the world economy and is sending us into a global recession, but it is worth pointing out some of the more direct effects of this situation on the publishing world. First of all, uncertainty and recessions always kill advertising budgets. Companies take out fewer ads, magazines that rely on ad revenue suffer, and the whole publishing industry slows down. This is especially true in conglomerates that consist of a publishing house, a newspaper, TV network, etc. The media is fueled by advertising dollars, and the lack of advertising could send shockwaves through the publishing industry, on the balance sheets at particular companies, and in terms of further reducing outlets for reaching readers.
I’ve heard off-the-record stories about magazines being in serious financial trouble, and I’ve heard of publishers drastically cutting their list in preparation for tough financial times. [See the Houghton Mifflin Harcourt story from yesterday.] None of this bodes well for literature, much less literature in translation.
This is the sixth part of a presentation I gave to the German Book Office directors a couple weeks ago. Earlier sections of the speech can be found here. There are still a number of parts left to post, but these should all be up before the end of the month.
There are a few key differences between the commercial houses and the independents that are worth pointing out aside from the discrepancy in the number of employees and the amount of money each publisher tends to have.
Independents rarely do their own distribution. The lion’s share are distributed by a handful of companies: Independent Publishers Group, Consortium, Publishers Group West, and Perseus. And to complicate things (more on this in a minute), Consortium and PGW are both owned by Perseus. This means that sales reps selling the press’s books into stores work for the distributor not the press itself. And a press looking to sell its books across the country has very few choices on how to go about doing this.
On the plus side, nonprofits are able to receive grants and donations, including money from the state and federal government, a huge benefit that will be touched on below. Donated income makes up a significant part of a nonprofit’s budget, and supports all publishing activities, from paying authors and translators to printing and promoting books.
Just because of the scale, indie presses don’t have quite the same pressure to hit sales goals as commercial houses do. Expectations are more modest, as are advances and marketing budgets. Rarely do you read of an independent spending millions of dollars on a particular book. At the same time, there isn’t as much money available for marketing and publicity, and as a result, overall sales levels tend to be lower at an indie press . . . except when it comes to literature in translation.
It’s worth dwelling on sales expectations for a moment, since it creates such a radical difference between commercial houses and nonprofits. At your typical nonprofit, employees are involved in all aspects of the business. An editor can also be the publicity person, the marketing director might also be in charge of grants. Salaries are slightly lower than at the big houses, but in terms of total cost per book, nonprofits tend to get a lot of bang for their buck. In other words, the average operating expenses—rent, utilities, salaries, benefits, etc.—for a book published by a nonprofit are considerably lower than those of a big house. Obvious, I know, but this means that a press might only need to sell 5,000 copies of a title to breakeven, instead of the 15-20,000 needed at a commercial publisher. Suddenly, the pressures of finding a best-seller evaporate . . .
This isn’t even looking at a situation like the one for Open Letter. As a trade-oriented house that’s part of a university, we don’t pay rent, yet have access to certain things other nonprofits don’t, such as a funding base (alumni) and an endless supply of interns. The stakes are automatically a bit lower, which allows a press to focus more on its mission while expanidn the possibilities of what it can publish.
With a smaller staff, a more manageable list, and reasonable sales expectations, independents are in a better position to invest a lot of time and effort into promoting the literary fiction and books in translation it is publishing. The stereotypical image of an independent (or even better, a nonprofit) publisher as someone who is extremely passionate about the books they’re publishing, someone who spends all his/her time obsessing and worrying about the press, about reaching readers, about finding ways to keep the press afloat, really isn’t that far off. And this contributes to the overall marketing of a press’s books.
Indie presses tend to have a stronger editorial identity than commercial houses, and cultivate a sense of customer loyalty that doesn’t exist for Random House or Simon & Schuster, or others. Soft Skull, Archipelago, New Directions, these are presses that are clearly branded, that readers trust in, and that fans are willing to take chances with. An obscure Finnish author published by Archipelago means something entirely different than one published by S&S. Although indies and nonprofits have fewer resources, there are some advantages to being small, nimble, and focused.
This is the fifth part of a presentation I gave to the German Book Office directors last week. Earlier sections of the speech can be found here. And we’ll probably be posting bits and pieces of this for the next week or so.
Obviously there’s more that goes into the resistance of commercial publishers to translations—such as the fact that most editors are monolingual, that without investing a lot of time in international literature it’s hard to know which titles and authors are the most important, that there aren’t as many agents for international works as for American and British writers, that only select editors attend the Frankfurt book fair (it’s all about selling, not buying)—but it all adds up to a situation in which America is “too isolated, too insular,” where we “don’t translate enough and don’t really participate in the big dialogue of literature,” which is how Horace Engdahl, the permanent secretary of the Swedish Academy, recently categorized it.
Prejudices, financial losses, and bum legs aside, a number of translations are published in the U.S. every year. In January, I started keeping track of all original translations of fiction and poetry published or released in America this year. (In part because nobody else was. Bowker—the company that keeps track of all statistics about American publishing eliminated “translation” as a category years ago.) I didn’t count children’s books, or graphic novels, or retranslations of classics, or paperback versions of previously published titles. Instead, I focused on works of adult fiction and poetry that had never before been published in English.
According to my records, all of 340 translations were published in the past year. Of those translations, 269 are works of fiction, 71 of poetry. More relevant to this presentation, the six big houses—Hachette, Macmillan, Penguin, HarperCollins, Random House, and Simon & Schuster—and all their various subsidiaries, published a total of 69 works in translation, or 20% of the total. Most of these 69 books are from Houghton Mifflin Harcourt (10), Penguin (9), FSG (9), Knopf (8), and HarperCollins (6), five of the one hundred and thirty presses and imprints that published a translation this year.
In the same way that poetry has fallen to the shoulders of the independent press, approx. 80% of all works of literary translation are now being published by independent, nonprofit, and university presses, which generally don’t operate on the “big advance-big return” model described above.
This is the fourth part of a presentation I gave to the German Book Office directors last week. Earlier sections of the speech can be found here. And we’ll probably be posting bits and pieces of this for the next week or so.
Stage Two: Translations, Economic Censorship, and Independent Presses
So where do translations fit into this? Well, basically they don’t. The famous translator Esther Allen once turned me on to the term “economic censorship” to help explain the financial reasons for why big publishers shy away from doing books in translation.
First off, in deciding to do a translation, a publisher is assuming the cost of paying a translator in addition to all normal expenses.
The current going rate for a translation is $125/1000 words, so, for a 70,000 word novel, a translator should get paid $8,750. That’s not a huge amount—especially compared to _Dewey_’s $1.25 million—and frequently at least part of this is offset by grants from foreign governments. But on a profit and loss statement, it is an additional cost that doesn’t exist for books originally written in English.
Still, that doesn’t explain why big publishers shy away from translations. They have the money to spend, and if they thought a book would sell hundreds of thousands of copies, $10,000 is really just pocket change. But how many translations sell hundreds of thousands of copies? Answer: almost none. Over the past week articles have appeared in both the New York Times Book Review and the Wall Street Journal pointing out just how few translations make the best-seller lists. In fact, Roberto Bolaño—currently the hottest author in translation, considered to be one of the greatest writers of all time, and the one foreign author everyone seems to be talking about—has yet to crack the Times Best Seller list.
To be quite frank, with the exception of certain breakouts like Bolaño, Per Petterson, and Carlos Ruiz Zafon (whose books aren’t of the same caliber as the first two), literary fiction in translation sells poorly in the States. I’ve heard that even Saramago was selling in the low thousands (or high hundreds) before winning the Nobel Prize. It’s in no way unusual for a literary translation to sell in the 2,000 copy range. And publishers who sell 4-5,000 copies of a translation feel like they did an excellent job.
Dismal sales figures, along with the additional cost of translation helps make foreign books unappealing to corporate publishers. Sure, you can get the rights on a dime (most advances for literary translations are under $10,000), and you have an almost unlimited number of authors to choose from (rarely do foreign books go to auction), but if you’re only spending a few thousand dollars, your sales and marketing department isn’t going to do much to help this book find its audience. They have to spend their time and energy on the million-dollar advance books—the ones that really matter.
Sales, marketing, and publicity departments at big presses generally treat literary translations as red-headed stepchildren that they have to live with, but really don’t love. Advance sales to bookstores are paltry, not much effort goes into getting coverage for these books, and as a result, sales are wretched, the publisher loses $15-$20,000 on the book, and, in a world where profits have to keep increasing year in and out, the desire to publish more works in translation is quashed. Going back to the horse race metaphor, sure, occasionally a Bolaño comes along and a publisher can cash in, but most translated titles are like a horse with a bum leg. It’s much more profitable to get world rights to a mediocre American author and sell rights to a couple dozen countries. Now that’s a horse that can “win” in a major, global way.
This is the third part of a presentation I gave to the German Book Office directors last week. Earlier sections of the speech can be found here. And we’ll probably be posting bits and pieces of this for the next week or so.
Switching over to bookstores, it’s worth pointing out that, unlike other parts of the world, America doesn’t have a fixed price policy. Stores can discount books however they’d like, which has resulted in a fiercely competitive market where Amazon.com undercuts brick-and-mortar stores, Costco sells books as a loss-leader, and traditional independents stores have a hell of a time staying in business. Although Amazon claims that they survive on a “long tail” model (i.e., the idea that single copy sales for an infinite amount of books is far greater than a huge amount of sales for a small amount of titles), most stores operate on the same principle as the big publishers: you make your money by selling a ton of copies of a few select titles. That’s what drives Barnes & Noble and their huge stacks of books, and is the reason why one additional percentage point discount (chains frequently get a 46% volume discount whereas independents get 45%) can lead to enormous profits.
Paul Slovak, the publisher of Viking Penguin, once mentioned that he believed that at any moment in time everyone in the country is reading the same twelve books. Obviously he’s exaggerating—a bit—but it sure seems that way. The books on display at a chain store in New York City are almost identical to the ones on display in Denver, or in Peoria. To explain why that’s the case is actually a bit more complicated than it might first appear.
What it comes down to is which books the big presses have decided to really push. It’s almost like a horse race—you need a winner to keep betting, you have a bunch of horses in your stable, and you put all your cash on the ones you think will “break-thru.” These are the books that the houses advertise all over the country, that they push hard to media outlets, and for which they decide to do extensive author tours. They also use a lot of co-op money to promote these books. Co-op money is cash that a publisher gives to a bookstore to display and promote its books. For example, the front tables at the chain stores are paid for, as are the end caps, as are other special displays.
With these books on display, and heavily discounted, throughout the country, and online, with big, trustworthy publishers spending lots of time and money promoting these particular titles, it’s no surprise that these become the books that everyone is reading.
This is the second part of a presentation I gave to the German Book Office directors last week. Earlier sections of the speech can be found here. And we’ll probably be posting bits and pieces of this for the next week or so.
Although it’s a bit more complicated than this, the survival strategy of commercial publishers is the “a few big books float the boat” model. This is the idea that most books published by a house will lose money, or at best breakeven, but that every year a few titles will explode, far outselling their costs and generating enough revenue to keep the house afloat. You often hear publishers say things like, “we publish those kind of books so that we can do more literary stuff.” That’s a friendly way of saying that they need some obvious money making books to sell well, otherwise the publishing house would be screwed.
Anecdotally, it often seems that these “break-thru” books are completely accidental. Like Jonathan Franzen’s The Corrections or most any book that Oprah ends up selecting for her book club. “Unexpected successes” pop up every single year. Nevertheless, from the top CEOs on down everyone feels the pressure of acquiring, or marketing, or selling, this year’s “big book” and reaping the profits that come along with these sales.
As a result, huge amounts of money are bandied about on concepts and names. Many of which don’t work out so well. A few recent examples are listed at the end of the New York article, including the $8 million advance to Charles Frazier for Thirteen Moons, a book that sold approx. 368.000 copies, leaving $5.5 million of the advance unrecouped. My personal favorite is Dewey: A Small-Town Library Cat Who Touched the World, which is described in typical movie-pitch comparison style as “_Marley & Me_ meets The Bridges of Madison County in this heartwarming true story.” Advance? One and a quarter million dollars.
Having spent so much on books like these, publishers are then obligated to spend a vast amount of money marketing and publicizing these big acquisitions. Granted, a good deal of the advance money is made up by selling translations rights to countries all over the world (a one-way street as I’m sure you already know), but these titles are also expected to sell really well.
It’s worth taking a moment here to look at the math and explain a bit about how book sales work in America. I believe this is pretty similar to other countries, but not entirely. In the States the big publishers have their own sales force and warehouses, both of which cost a pretty penny, but are necessary to ensure that a publisher gets the largest market penetration possible. (More on this when we talk about independent publishers.) Each of the different outlets publishers sell to—wholesalers, independent bookstores, chains, Amazon, Costco and Sam’s Club, libraries, etc.—receive a different discount, usually in the range of 45-50%.
Sticking with Thirteen Moons, the retail price on the hardcover edition is $26.95, so, for each sale, Random House can expect approx. $13.75 in revenue. Leaving all subrights sales aside, and using New York’s sales figure of 368,000, Random House made approx. $5 million in sales of this book. A huge figure for a lot of presses, but a number that’s less than the initial advance, and definitely less than the total costs that went into publishing and promoting the book. I’ll assure you that this wasn’t the book that allowed Random House to do all their “literary” breakeven titles this year.
Nevertheless, this book sold exceptionally well compared to many others. I was recently talking with a former editor at one of the big six publishers, who said that titles he acquired usually sold in the 5-7,000 range, far less than the 15-20,000 copies his bosses expected his books to sell, sales levels that would’ve allowed the book to breakeven. He also said that he always thought his sales were incredibly low (publishers always, always lie about print runs and sales, so the numbers you see in print are inflated) until someone from another big house shared privileged sales info leading both editors to realize that most literary titles just don’t sell very well.
On Friday, I was invited by Riky Stock of the German Book Office to give a presentation to GBO directors from around the world about publishing post-financial collapse. Which is a pretty big topic, and one that will probably dominate conversations post-holiday season, especially if the retail sector struggles as much as people are predicting. Anyway, this is an admittedly incomplete, overly simplified look at the industry, the reigning sales models, and what might happen in the next few years. Oh, and it’s extremely long. I have no idea how many parts this will turn into, but it’ll last for at least a week or two
Stage One: Overview of the Publishing Marketplace
It’s no secret that publishing folk like to complain a lot and are somewhat addicted to “doom and gloom” prognostications about their industry. Sales are never what they should be (nor are salaries), there can never be enough book coverage for a hot title, everyone is under a lot of pressure to meet unrealistic expectations, and with thousands of over-educated, well-read people entering the work force every year, no one’s job feels safe. See this year’s surprise firing of Jane Friedman, CEO of HarperCollins. Or the fact that Peter Olson stepped down after profits at Random House dropped 4.7%. That’s not to say that publishing people can’t relax, or don’t enjoy the business, but it has—increasingly—become a business, and the strings and complications that go along with increasing profit margins impact all the various aspects of publishing and are altering the industry and literary culture as a whole.
There’s a famous publishing joke that goes, “Do you know how to make a small fortune in publishing? . . . Start with a large one.” Throughout modern times, publishing has been a small margin industry. Rich people got involved because of the glamour, the importance that comes from shaping our culture, the joy of working with intelligent artists. Not to mention the cocktail parties. (Nowadays, you can add free books to that list.) Rarely—if ever—did people start up publishing houses with the idea that this would make them millions. Same goes for bookstores and bookstore owners. In the best of times, these businesses aim for 3% profit margins. As conglomerates took over the industry though, and houses started merging, the expectations jumped to the 10% range, fundamentally changing the rules of the game and, in my opinion, pushing the industry into its current tenuous position where a lot of people are filled with anxiety and dread.
This past September, Boris Kachka wrote a nice overview article for New York magazine about the current state of publishing simply titled The End. In this piece he examined several components of the book business, providing evidence about how the system is essentially broke. Here’s how he summed it up:
“Sales at the five big publishers were up 0.5 percent in the first half of this year, bookstores sales tanked in June, and a full-year decline is expected. But pretty much every aspect of this business seems to be in turmoil. There’s the floundering of the few remaining semi-independent midsize publishers; the ouster of two powerful CEOs—one who inspired editors and one who at least let them be; the desperate race to evolve into e-book producers; the dire state of Borders, the only real competitor to Barnes & Noble; the feeling that outrageous money is being wasted on mediocre books; and Amazon.com, which many publishers look upon as a power-hungry monster bent on cornering the whole business.”
Kachka’s main focus is on commercial publishers, which is fine since the big houses are great case studies in what’s gone wrong, and besides his focus on the major houses leaves me something to add to the conversation.
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