Don't get me wrong, I know some of these guys, even worked for them once upon a time. This is at once both an indictment of the status quo at the Big Houses and a testament to what small houses like Buddhapuss Ink are trying to achieve. Yep, it's the Brave New World of publishing 2010.
In Tip to Streisand, CEOs Miss the Way Things WereIt could be the best of times but mostly it's the worst of times, at least as viewed for the majority of this morning's opening conference panel at BEA featuring a variety of executives from across the business: Moderator Jonathan Galassi from FSG, Esther Newberg at ICM, Bob Miller at Workman, author and Authors Guild president Scott Turow, Skip Prichard at Ingram, and David Shanks at Penguin USA.
For the better part of the one-hour and twenty-minute session, most panelists--with no offense a senior, and not exactly youthful group--were weighed down by the challenges and obstacles of the digital transition rather than its possibilities. Everyone's share is under duress--making the value of any particular book, ostensibly the panel's theme--worth less in the marketplace, even as the universe of written content and the means of delivering it expands at an exponential pace. It wasn't until the very end of the session that Ingram's Prichard was able to declare that "overall it's one of the most exiting times to be in the business." He underscored that "this is a creative industry at its heart" and "using that creativity and technology together...it's going to be an incredible five years ahead," acknowleding that it could be "challenging and difficult for many." Penguin's Shanks agreed that there is "no question there is a bigger readership" to be captured with the rise of epublishing. Workman's Miller had pointed earlier on that there is plenty of opportunity for those who can change their models to fit the times: "it's incumbent on us as publishers to overdeliver at reasonable prices."
Put another way, what's potentially threatened is the panelists and their respective interests (or companies), not the books themselves. Turow and ICM agent Newberg quickly took hold of the agenda at the panel's opening, questioning ebook royalties across the board. Turow noted that 25 percent of net revenues "is not in our view what it was in paper publishing" and Newberg bluntly said, "I'd like to hear a publisher explain why we can't have half of the royalties on the backlist" ebooks.
"That didn't take long," moderator Galassi noted. Unsatisfied with Shanks' standard version of the explanation--that ebook royalties are higher than paperback standards, even if lower than hardcover standards, and that legacy publishers have to carry both old-world and new-world infrastructure costs (even though new e-only companies don't have those cost concerns)--Newberg repeated "we're talking about a brand-new thing. What are you doing to jusify not giving us 50 percent of an ebook?"
With no takers, Newberg added that ICM is negotiating with multiple houses and "we're getting different terms" from different companies. "At some point we're going to have to go public about who is giving us what. And some of you are going to look bad." Later she admitted her ideal on compensation is that "it's never enough."
Separately, Ingram's Prichard noted that publishers large and small are "coming to us saying we want to outsource" infrastructure and supply chain investments, including "larger publisher saying we really need to change the model."
About 30 minutes in Galassi tried to retake control of the panel, reminding its members that "the title was supposed to be the value of the book."
On that theme Galassi said, "I agree with Scott that it was a mistake to ever let Amazon put ebooks out simultaneously and charge the price that they did. All of a sudden all editions are happening at the same time effectively. I think it's going to have a negative effect on the paperback editions." Newberg was confident that "the paperback is going to go bye-bye."
Or will it? Later on, however, Shanks emphasized that for now "the paperback market is not over. There are still hundreds of thousands of places you can buy paper-format books," and print books remain over 90 percent of the business. He added, "we need to protect as long as we can the apparatus that sells physical books. It would be terrible if the booksellers ran out from this event and said 'this is it, it's over.'"
To that point, ABA ceo Oren Teicher reminded the audience that "physical locations can sell digital content, too," adding, "we've got to put them together. That's going to help all of us." But there were no dramatic answers from the panel for booksellers wondering how they survive the dual onslaught of price competition and rising ebooks and ecommerce.
Galassi's concern is that "the value [of a book in the marketplace] has plummeted. I don't think that there is going to be a pick-up in volume" to make up for those lost dollars. He argued for the essential "worth" of a book, but Prichard noted "it's not in a vaccuum.... What that book is worth is dependent on the market."
Miller underscored that there is no turning back on pricing. "We can lament this forever" but as some point have to "kiss it goodbye. The downward pressure" on pricing "is upon us. We're going to have to adjust accordingly."
Teicher asked "is there a compromise...somewhere in the middle" between 99-cent-books and 27-dollar-books, adding "isn't there a way we can do this together?" To which Miller quickly replied, "No, not together." Rather, "it's something we will do differently book to book. I don't think we can sit and decide" pricing as a group.
Returning to the royalty issue in a calmer frame of mind, Galassi admitted that "I'm worried about authors' compensation" going forward. But Prichard noted later in the discussion, "for all the concerns about author compensation, we're still seeing a title explosion."
Among other exchanges, Newberg predicted ebook prices will rise "when you publishers start to enhance these ebooks" but Galassi asked, "who has the time for the enhancement," worring that with all the features added in, "you could be in there forever." But Miller cautioned against reacting harshly to new forms before, imagining people in Gutenberg's complaining "these books are going to be a real time-suck."
Miller argued that "the physical object will regain its magic" even as epublishing rises, and he and other panelists recommended that publishers "spend more time making beautifully-made physical books." But Prichard said "I have to disagree strongly" with the idea that a beautiful product can hold the line on value. "I think that's going to be under enormous pressure with the digital move." When it comes to "the quality of the paper" and the art of design and typesetting, "the vast majority of readers...don't care."
Newberg lamented that Miller had recently "abandoned" his new model of publishing after trying to woo agents and authors. "I'm scared to death. One of the only good things about being old is that I'm not going to have to deal with this for long."
Article from May 25, 2010 issue of Publisher's Lunch