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Lessons from the Book Business

Books matter, but they don't make much of a business. Never have, really. But its problems provide useful insights for any business struggling to find its way in the new digital world, as we see in Have We Reached the End of Book Publishing As We Know It? an entertaining look at the turmoil that is book publishing in the latest issue of New York magazine.

The problems of publishing are attributed to the struggles of book retailers to stay alive as reading wanes and shoppers move online, the inability of publishers to stop throwing big money at unproven authors, and whether wants to corner the market.

Bigger is not necessarily better. But these are problems caused by the corporatization of publishing, writes Boris Kachka. "By the nineties, five big conglomerates were divvying up the spoils....suddenly an industry accustomed to 5 percent margins was being run by media moguls aiming for double digits."

Change what's broken. Those double-digit margins were supposed to come from savvy new marketing techniques and better talent. That gambit failed -- huge advances given to authors have worked about as well as Alex Rodriguez's contract (here are even more of the worst sports contracts ever). And it turns out that "traditional marketing is useless" in the book industry, Kachka writes. Outside of Oprah, "nobody knows where the readers are, or how to connect with them," he notes. Mostly, the smart, savvy people in the industry appear helpless to stop doing what they think should work, even though it obviously isn't.

Face your fears. Mostly, the book industry is portrayed as cowering from a variety of fears: fear of eliminating the printing press, fear of Barnes and Noble becoming the only significant national chain of booksellers, fear of Oprah retiring. None of this is helping.

But a couple of brave souls are going in a different direction.

Adopt new business models. The new HarperCollins imprint HarperStudio is a skunkworks that offers authors no advance, but half the profits on their sales. That breaks with the traditional publishing model of an advance plus 15 percent of any profits (7.5 percent for paperbacks) after the advance is paid back. Bidding wars for new talent that doesn't pay off have damaged the book industry's ability to make money. HarperStudio is a small attempt -- it aims to publish two books a month -- to get back to sanity.Adopt new technology. Nobody in the article seems quite sure what to do about ebooks. Though Amazon's Kindle and the new Plastic Logic reader are definite improvements on the past., it remains a technology with a track record of failure (read a book on your PalmPilot lately?), But print-on-demand technology, online subscriptions, and online reader 'salons' are being touted by one person described in the article as "an indie publisher."

Go back to the future. "You can't turn a camel into an alligator" is the memorable quote from Ira Silverberg, an editor turned agent quoted in the piece. He thinks the business needs to go back to the genteel patronage model, where rich book lovers indulged in their passion and everybody made just enough money to stay in business. That's seen as an unlikely option.

But, a blended model that combines the old way of doing things with new technology might have a shot at success. Kachka ends by putting out the call to entrepreneurs to help the book industry turn a new page.